Detroit is claiming they need help because of the sudden economic downturn. That didn’t sound right to me. My recollection was that the news out of Detroit had been bad for years.
Sure enough. GM’s losses were 2 billion dollars in 2006 and 39 billion in 2007. Ford’s losses were 12 billion dollars in 2006 and 3 billion in 2007. Ah, the gold old days when we were young and hearts were merry.
It’s no wonder U.S automakers can’t survive a downturn. They can’t even turn a profit in the boom years.
A bridge loan may be necessary to save Detroit, but it isn’t sufficient. Those companies have to change their business models to survive. Reigning in their princely employee compensation has to be part of the change.