Sometimes it seems Michigan’s fragile economy can’t get any worse. Unfortunately, it can. General Motors, the world’s largest automaker, is failing fast, and with its seemingly inevitable crash, all of Michigan will feel the aftershock — which is something the state just can’t handle right now. For the sake of Michigan and the nation, the federal government should grant GM its bailout and save the drowning automaker. However, this loan must come with a number of strict expectations, including catching up to competitive environmental standards.
GM is currently pleading with the federal government for at least $25 billion to protect the jobs of millions of American employees and the economy of states like Michigan. That’s a complicated plea, because GM is largely at fault for failing to protect its own assets. Despite the country’s shift from gas-guzzling SUVs to hybrids, GM’s executives didn’t follow the trend. Refusing to convert their fleet to smaller cars, they instead offered incentives to SUV-buying consumers, adding to the company’s ever-growing debt.
The executives responsible for those poor management decisions need to be held accountable for GM’s decline. Through their refusal to follow an obvious consumer trend, these executives have ignored an opportunity to stay competitive. Further, GM’s finances must be scrutinized. Unneeded and outdated expenses must be slashed, including inflated labor contracts. The company’s health care package and pension plan, both of which are struggling to keep up with changing conditions, demand a critical eye. In this economic climate, those expenses cannot go unregulated if the automakers are to receive federal aid.
Further steps must be taken to reverse the issues that caused this problem — steps that should have been taken years ago. GM’s monstrous SUVs are out. Compact hybrids and electric cars are in, and GM needs to reevaluate its standards to stay competitive, meeting CAFE standards for fuel efficiency and weight. And with a potential bailout in the works, now is the time for GM to show it appreciates the help by doing what’s best for itself, the environment and the nation.
It’s an unfortunate situation, but the government must make the responsible decision for American autoworkers, especially in Michigan: give GM its bailout. Without it, millions of jobs will be lost, causing such a devastating effect that the economy of Michigan could be at stake. But the government must also safeguard against the use of aid for irresponsible expenditures like the extravagant vacations AIG offered its executives after its $85 billion bailout.
Not even government aid can ensure GM’s survival at this point, but it’s in the best interest of Michigan and the country to try. A bailout might not be the optimal solution, but it’s a necessary evil to save both the automaker industry and millions of jobs in Michigan.