Porsche Scorns Automaker Bailout Blog Post at Automotive.com
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Porsche Scorns Automaker Bailout

Posted October 21 2008 04:03 AM by staff 
Filed under: Opinion, Porsche

Porsche hasn’t really been touched by the financial woes that are staggering some of the other auto manufacturers, especially those that are clamoring for aid packages in the U.S. and E.U. With record profits last year and 2008 looking even brighter, Porsche is highly critical of the poor performance and unwise decisions of its rivals.



Porsche CEO Wendelin Wiedeking criticized the way the current global financial crisis is being handled by both governments and the auto industry. Wiedeking cited lack of responsibility and inefficiency by many companies to be the source of their current quandaries. He also condemns operating for private profit but then socializing losses. Of course, he is referring to the aid package in the U.S., as well as a recent request submitted by European carmakers for similar aid.

Porsche certainly doesn’t seem to be held back by the typical concerns of its peers. With its plan to snatch 50 percent of Volkswagen still going and the upcoming Panamera sedan, Porsche appears quite ready to face the future, economic instability or no.

Our take? If it weren’t for all those blue collar jobs getting axed, we’d agree with Porsche wholeheartedly. However, the American auto industry made major mistakes which brought them to their knees, and for the past few years seems real intent to turn around. And what about the German automakers, who have been doing well (i.e., BMW) and had their own share of mistakes (e.g., Daimler and its merger with Chrysler, Volkswagen's disastrous Phaeton, etc.). We have to wonder how'd Porsche would do if it had to cover all its union's health benefits.


via Motor Authority



COMMUNITY COMMENTS
mattcar   (November 16 2008 11:56 AM)

No bailout!!! Look, if the US automakers produced cars that the world needed, they would not have swollen inventories. They have been in decline for decades. Chapter 11 is the logical next step. Look, people can't have it both ways. Unions and executives cannot demand higher compensation and then at the same time not take any blame for the current situation and expect help. This must end!!!

Chapter 11 would provide the car companies the crucial ability to address key problems: (1) reduce extra capacity with plant closures; (2) reduce the dealer network, which is a costly exercise to perform without Chapter 11 and one that drives down prices and profits due to a system that injects too much supply into the market; (3) re-negotiate labor contracts (no more pensions, 401ks only); (4) remove current management and their high pay structure; (5) focus on R&D; (5) replace the marketing and engineering departments that have produced cars that consumers don’t want; and (6) government re-capitalization would be available only after the companies have trimmed the fat.

Will there be layoffs? Yes, this is unavoidable, bailout or not. A bailout would only delay the inevitable. Look, I've heard politicians claim, "Chapter 11 would be disastrous. Even if (the automakers) were able to restructure, (the automakers) likely couldn't get financing." Well, this is where I say hold on. If a company enters Chapter 11 and they have a good plan, then and only then, can the government step in to provide assistance in the forms of loans or equity stake in these companies.
 
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