Saturday, November 22, 2008

Saving Detroit: There's a better way than bankruptcy

Why bankruptcy won't work for General Motors is masterfully explained by New York Times columnist Joe Nocera. The nut graf:

"It is a long, difficult, drawn-out process with no guarantee that a bankruptcy judge will go along with everything G.M. wants to do. Several bankruptcy lawyers I spoke to all made the same point: if there is any way these goals can be accomplished outside of the bankruptcy process, then that should be tried first."

But read the whole piece, which details how a U.S. bailout can achieve bankruptcy's goals, but without the fallout that can be fatal to a company as big and complicated as GM.

There's also this interesting piece in the Washington Post's Sunday Outlook section -- "Why Detroit Can't Keep Up" --that explains why international automakers, particularly in Europe, are so much more nimble in going from design to production, and reaching the break-even point with fewer units.

The writer, Bernard Avishai, a former technology editor at the Harvard Business Review, says the U.S. "still has the world's largest proven reserves of intellectual capital. " But the Big 3 needs to unleash that capital the way Silicon Valley does to come up with product wonders like the iPhone.

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