Saving the American Auto Industry

December 8, 2008.

Saving the American Auto Industry
By T.S. Khanna

The American Auto Industry that built, not long ago, many dream cars, with a moving living room comfort, is being decried today. Not saving it would be a disaster. Saving it without the application of sound economic principles would be even a greater disaster, later.

Some suggestions for saving the industry are presented:
• Fix the auto workers wages for the products to compete in the world market,
• The highest compensation paid to the company’s executives may not exceed some reasonable ratio to the lowest compensation paid to the workers,
• Revamp the industry with a focus on building reliable small cars with a five-star safety rating, giving 30+ mpg, while developing hybrid and electric cars within ten years,
• To minimize inventory expenses, build only to order, by showing sample models at the dealers,
• Reduce the retired workers pensions by 30% across the board,
• At this opportune period of low demand, develop a mutually beneficial agreement with oil producing nations fixing the price at $ 45-50.00 a barrel for the next ten years, not allowing the gas price to exceed $ 2.00/gallon in the USA.

In the Senate and Congress hearings, auto industry CEOs were shamed for using private jets and drawing high compensations while the Cos are going broke. Our nation is also going broke. Our elected officials are responsible for this mess. Should they also not be required to accept an annual compensation of one dollar, without benefits, until the economy is fixed?