The French Plan For The Auto Industry

Proving that government assistance to industry rarely proceeds logically, the French have announced that they will provide $7.9 billion to their ailing auto industry. The assistance, however, comes with strings.

Addressing a conference of industry executives, government officials and labor union representatives, Prime Minister Fran├žois Fillon said the government stands ready to provide funds to the cash-starved sector. But Mr. Fillon said that recipients of the aid will have to guarantee they will maintain their industrial operations in France. They will also have to provide “exemplary” guarantees on production volumes and their relations with suppliers.

“There is no question of the state helping a car manufacturer that decides purely and simply to close one or more production sites in France,” Mr. Fillon said.

Essentially, the plan is to pour money into an industry that desperately needs to downsize but the condition of that assistance is that not one single plant may be closed. There’s no need to editorialize on this one. Insanity of this degree speaks volumes.

Watch for this sort of thinking as the Detroit auto bailout starts to come to a boil over the next month. Remember, they are due back by mid-February with their plans for survival.

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