Yesterday’s New York Times had an excellent op-ed piece by Mitt Romney on the issues facing the auto industry. Romney’s father, George Romney, was the CEO of American Motors and helped to bring back that struggling company in difficult times. Romney made some excellent points in the piece. Romney is a smart guy, and while there will be some disagreement on particulars, his thoughts on this subject are basically sound. A posting over at Blue Mass Group on the Romney op-ed was titled “Romney might be right. (AAAAGGGHHH!!! It burns!! It burns!!)” . Besides having a funny title the thread has some pretty interesting stuff and is worth a look.

Romney makes a good case for no bailout, with bankruptcy being used as a restructuring tool to make the U.S. automakers more competitive.

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Romney does not just take aim at the UAW, but calls for the ouster of management as well.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

Ah, the planes. The Big Three CEO’s were asked about their method of travel during yesterdays hearings, and it appears that all three flew in to Washington on corporate jets. One wise guy congressman asked if they had considered plane pooling and was met with silence. These guys still do not get it, and just do not appear to have what it takes to change. Two of the three declined to say they would reduce their salaries after a federal bailout. Romney is right. They need to go. And the executive perks need to go with them.

Romney, an astute business person, calls for pumping up R&D, not cutting it back, and wisely calls for a longer view of what constitutes business success. The all encompassing focus on quarterly results has been destructive.

Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.

And Republican Romney does not totally eschew government intervention. He calls for post bankruptcy credit to be extended, as well as government guarantees of warranties during bankruptcy. He also calls for government assistance through accelerated federal R&D in areas like fuel economy, alternative fuels and other areas.

It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

Romney recognizes the importance of the American auto industry, and I believe that it is a vital cog in our economy. We must do what we can to save it, but simply allowing it some additional time as a jobs program makes no sense. For those that say that G.M. will come back and we should take that on faith show us the numbers. How does this work to insure that G.M. will not be back again in 7 or 8 months.

The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

We may all hate to admit it, but Romney is right. The medicine will be applied now, or it will applied in much larger doses later. Read the Romney op-ed piece here.

As an afterthought has Romney sold out to the eastern media elite by penning this piece for the ultra-liberal New York Times?