Ralph Nader On The GM Bankruptcy

Former Presidential Candidate Ralph Nader chimes in on the GM bankruptcy:

Today’s bankruptcy declaration in federal court by General Motors is an avoidable, crude weapon of mass devastation for workers, dealers, auto suppliers, small businesses and their depleted communities. For GM’s voiceless owners — the common shareholders — it is a wipeout.

The proximate cause of the bankruptcy was supposed to be the inability of GM and the government’s auto task force to reach an accommodation with GM’s bondholders. But late last week, the bondholder problem was moving toward rapid resolution, and was clearly resolvable. Why then are GM and its multibillion government financier proceeding with bankruptcy?

The bankruptcy and the GM restructuring plan are the product of a secretive, unaccountable, Wall Street-minded government task force that assumed power because of a Congressional abdication of historic magnitude. By all rights, the restructuring plan should have been submitted to Congress for deliberative review and decision.

There is little doubt that GM’s chronic mismanagement and the deep recession require restructuring and scaling back the auto giant. But the bankruptcy and restructuring plan appear poised to do so in ways that will needlessly harm the stakeholders meant to be helped by Washington’s rescue of GM?

Many, many jobs will be lost that could be preserved. There is reason to question whether too many plants and brands are being closed — a matter that should have been taken up in Congress. Just the closing of hundreds of (GM and Chrysler) dealerships will cost more than 100,000 jobs. These sacrificed jobs will fray communities and impose enormous expenses on government entities that will have to provide unemployment and social relief, while suffering lost tax revenues.

The unionized workforce will see the wage and benefit structure slashed — even though auto manufacturer wages make up less than 10 percent of the cost of a car — so that new jobs at GM will no longer be a ticket to the middle class. This will drag down the wage structure of the entire auto industry — exactly the wrong direction for the country.

America’s manufacturing base will be further eroded, as GM pursues its Grand China Strategy — increasing manufacturing outside of the United States, and increasingly from China, for import back into the United States. Unanswered questions persist about how GM’s valuable operations in China, and unrepatriated profits, will be treated in bankruptcy, or excluded from bankruptcy.

Victims of defective GM products may find themselves with no legal avenue to pursue justice. In the Chrysler bankruptcy, with complete disregard for the real human lives involved, the Obama task force and auto company have maneuvered effectively to extinguish the product liability claims of victims of defective cars.

In a worst case scenario for the GM bankruptcy — involving an extended court proceeding or severe impairment of consumer confidence in the GM brand — all of these problems will be magnified. Again, given the path to resolution with the bondholders, this is an avoidable gamble.

The GM/task force bankruptcy plans appear geared to saving the General Motors entity — but at a harsh and often avoidable cost to workers, communities, suppliers, consumers, dealers, and the nation’s manufacturing capacity. It will also prove to be a complex political nightmare for President Obama.

With the company entering bankruptcy, the next challenge will be to ensure that the government exercises its ownership rights to undo and mitigate, to the extent possible, these damages. Among other measures, this should involve revisiting the serious drag-down, concessionary wage terms imposed on the United Auto Workers; demanding a moratorium on GM’s outsourcing of production of cars for sale in the United States; and establishing successorship liability for the new GM, so that victims of dangerous and defective GM cars can have their day in court.

SOURCE Ralph Nader, Consumer Advocate

6 thoughts on “Ralph Nader On The GM Bankruptcy”

  1. Nader’s book ‘Unsafe at Any Speed’ was loaded with lies.

    He is a socialist shyster and not an engineer. Why expect anything objective from him?

    His associate Ms. Claybrook was part of the Carter maladministration and she did her best to make cars dull.

    Perhaps Obama’s ‘Auto Commissar’ can get the rights to produce a domestic version of the Trabant at the Boxwood plant. A million of these on the road would go a long way to achieve zero population growth.

  2. Yeah…not a big fan of hitching to Nader. He may have been quite the consumer advocate way back, but he hasn’t met an empty deep end he wouldn’t dive into over the last decade or TWO. Nader has trended more into being about Nader than much else. His argument here, while quite opportunistic to get his point into the mainstream media, takes the convenient approach of amnesia when recalling how the automakers even got here. No one should ever forget the dense leadership of Rick Waggoner (sp?) in GM and the loot and plunder Deiter and Company (Daimler) did to Chrysler and the tax haven that followed for Cerebus. Instead, Nader went for immediate history.

  3. While Nader isn’t perfect, he is right that this should have been a function of Congress.

  4. Warning: Rant to follow!

    I question whether there was enough time to go to Congress, since the deterioration of GM has been going on at lightning speed since before the change in administrations.

    Now GM has been “temporarily” nationalized. What troubles me a lot is that we have “temporarily” lost some multiple of 500,000 jobs, when all the collateral industries are factored in to the impact. The BHO administration is taking a big gamble with our money, hoping that the word “temporarily” is the right word in the longer run.

    Moreover, Nader’s foresight has been muddy in recent decades, per Smitty — I agree. He certainly did not see the incompetence coming in the election year 2000, so that, aside from what the SCOTUS did, Nader’s misstatements in the campaign did a lot to damage Gore’s chances, as Gore did his share as well. That was an unforgettable election year, for all the right reasons about a poor choice, and about the lead in provided by Clinton’s behavior and the GOP response to it.

    But I’m digressing. That’s the impact of Nader on my brain. Were the Corvair, and Nader, and Consumer Reports the beginning of the end for GM because they did not respond in a market sensitive manner, instead personally attacking Nader’s sex life, and ignoring Consumer Reports to this very day? That’s pretty stupid management!

  5. I drove a Corvair that belonged to my sister. No problems and no accidents. Those nice turbocharged Monza variants are still desirable to collectors.

    How many ‘progressives’ would like to own a Trabant? This may be an emblem of socialism at its best.

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