Electrolux CEO Hans Straberg is taking a hard line against bailouts, telling CNBC that failing companies should not receive any more help from governments around the world.
"Let the businesses that are not fully functional, let the weaklings go in this, don't prop them up," he said. "I understand it's difficult to distinguish sometimes between good or bad businesses, but make sure that those who are not surviving the winter don't survive and instead focus on those who have the strength to grow bigger and stronger internationally."
Straberg added that "We see in our industry that there are some companies that have been loss-making for years, are now propped up during this with emergency loans."
He brings up a key point about the problem with bailouts, and that's this: By providing financial support to failing companies, you put companies that have managed well at an unfair advantage: Either give everyone money or give no one money, but don't reserve taxpayer funds for the management teams that have demonstrated an inability to generate strong returns. It's not fair and, more importantly, it just doesn't make any sense.
Straberg didn't name and specific companies to avoid making enemies, but you can probably guess who he's talking about.
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Reader Comments (Page 1 of 1)
3-08-2009 @ 9:12PM
Allen said...
Mr. Straberg is an executive to be admired. As he states, bailouts only reward inept management and bad corporate behavior, all at the expense of the well managed companies. It is time to draw the line in the sand and end ALL bailouts. The companies which fail will be replaced by new, strong companies. In the end, the economy will be better as a result.
3-08-2009 @ 10:00PM
Scott said...
He is 1000% correct. Darwin's Law says "Survival Of The Fittest"...not the stupidist, most inept or worst. If I throw my money away on bad decisions, who will bail ME out? Nobody. Sink or swim. It's the American way...(or at least it used to be!)
3-09-2009 @ 1:01PM
Ginger said...
Wow -- can re recall Obama and replace him with this guy?
4-17-2009 @ 9:57AM
dave said...
After reading the comments about Mr Straberg, I feel compelled to comment on his remarks and those of Allen, Ginger and Scott. Their comments may seem to be great in these tough times, but if you do a little research on some of Electrolux's US accusitions and how they have taken good viable US companies and gutted them and transfered their products to overseas companies, you might get a different perspective. Electrolux's directive in in the last few years has been to source more and more of their parts and products from these low wage countries and they are currently paying the price with a major recall of some of their poor quality products.
If Mr Straberg is refering to the "Big Three" bailouts, just remember the previous administrations helped create this crisis by giving tax breaks and other incentives to the foreign automakers to locate here in right to work states free of union rules, these "perks" were not available to the US companies, thus creating an unfair playing field.
Also, if we allow the "Big Three" to fail there will be a tremendous amount of job losses that will roll through this country and not just autoworkers. I have already seen a large number of good suppliers going under from the slow down, I cannot imagine what it will be like if they are allowed to fail. The US manufacturing base is deteriorating rapidly and our ability to stay a world power will be fading as it disappears.