We are a community of do-ers. A community of well-educated and plugged in people with good ideas for policy and countless hours spent in the trenches learning the minutiae of law and regulation. We are the Wonks. So who better than we to put on the table a comprehensive plan for the coming restructuring of the auto industry.
My humble contribution is offered, culled from my short stint in venture capital work and longer stint as a Kossack. Please chime in.
The Fonging's TEN POINT PLAN:
- Commit to a $25 to $100 billion "bailout" or "restructuring" plan to reorganize auto industry debt obligations without the need for bankruptcy. Bankruptcy carries the risk of an unsolicited buyout offer from a creditor or competitor and thereby a loss of the industry to another country.
- Require a pooling of all existing R&D from the Big Three into a Future Generation consortium to research on a national basis the green engine technology of the future. The US retains the patent rights and leases them exclusively to the Big Three. The royalties help pay us back over time.
- Invite non-Big Three companies such as Tesla to participate in the R&D consortium in exchange for venture capital. Venture capital to be based on projections of operating capital needs based upon previous SBIR/STTR funding and business plans and projections that have been in circulation at least three years. (To avoid last minute opportunist claims for venture funding)
- If we are funding these guys, they don't need to be using the money to compete with each other, just non-US companies. In that regard, each maker will need to suspend production of vehicles where they are not at least one of the top three in each segment. Some allowances may be given for trucks where all three companies are competitive. Suspension can be lifted once the taxpayers are paid back.
- The US needs a voting representative on each board of directors with veto authority over major policy decisions and decisions to either merge or file bankruptcy. Regular audit authority is also required.
- The Feds will take over the existing pensions of the companies under federal management, and deduct that portion from the requested amount of the bailout. This move will also spur a restructuring of that program into a federally managed pension program that permits buy in from private employees in special categories.
- The states most effected by the potential demise of the Big Three will take management of employees health care as if they were part of the state health insurance system. The Big Three will continue to make employer contributions.
- Entire makes of auto will need to be phased out to reduce duplication of models. There is no need, frankly, for Mercury or Buick. Likely no need for Pontiac and Lincoln and certainly no need for Hummer. Reduce the duplication and focus on the brands with a future.
- Strike deals with foreign producers of commuter vehicles to be sold in the US under a Big Three brand. This worked for Ford Festiva and Geo Metro and is one of the reasons the public is impatient with the idea it will take until 2010 to give us a fuel efficient car. My Geo Metro still runs and gets 45 mpg. They must still have the blueprints somewhere.
- Executive compensation should be limited to the same terms as venture capital executives: paid a minimum stipend plus stock options that cannot be exercised for five years.
The key here is to treat these companies as start ups looking for venture funding and expect the same discipline and adherence to plan we would expect of any new company. The money released to the Big Three needs to be on a schedule for specific known items: NO BLANK CHECKS.