The U.S. auto industry represents 1.6 million jobs that must be saved. This includes production workers, workers employed by suppliers and jobs at dealerships. Every economist, no matter how diverse their formulas to restore the economy, stresses that keeping the jobs we have and increasing them is a necessity. If people are not working and spending money, recovery is impossible.

However, while it’s absolutely necessary to keep GM, Ford and Chrysler operating, everyone, with the exception of the heads of the three companies, agrees on the need to bring in new management. These CEOs, and their predecessors over the last 50 years, have watched as each year foreign carmakers took an ever increasing share of the market until the 3 Detroit auto companies are bankrupt. And during all of that time, no Detroit management team ever looked around and said, “You know, we must be doing something wrong.” Then set about to fix it.

In 1958, Ford decided to introduce a new line of cars; the Edsel. The name is now synonymous for a “colossal mistake”. The car was as big as a railroad locomotive, weighed as much and it had enough chrome to chrome plate the Pentagon. When an Edsel became harder to sell than skis in Saudi Arabia, Ford dropped it, but under a variety of different names, Detroit has been building Edsels ever since. Their motto has been, “If it ain’t big, we ain’t gonna make it.” The U.S. automakers simply never had their hearts in building a high quality compact car. Nor did they keep the names of those compacts they did build long enough to gain brand recognition and loyalty. Virtually every year they introduced a new compact with a new name. Detroit’s competition, Honda, has never changed the names of its small family car, the Accord, and its sub-compact, the Civic.

Detroit must be credited for one thing: it finally increased the quality of its cars to be competitive with foreign makes.

Those 1.6 million jobs that depend on keeping the three U.S. auto makers in business are crucial to any hopes of an economic recovery. But for the bail out to do any good, it is also imperative to put entirely new management teams in place. The thinking of the top management of these companies is too entrenched in Detroit-think to leave in place. They have had over 20 years to recognize that they must change and have done nothing.

The anger of Americans at Detroit automakers is such that in frustration many, along with some elected officials, are suggesting we simply allow them to fail, or at least force them into bankruptcy. The latter is not without merit. Delta is an example of how it can be done while keeping the company operating. A bankruptcy judge has the power to require the companies be placed under new management, reduce some of its debt, require that union contracts been re-negotiated and many other actions taken. There is already a large cost reduction ahead under the terms of the most recent UAW contracts. They take effect in 2010. Any bail out should require that this schedule be accelerated.

I would require all cars manufactured or designed using any of the bail out money be made by American workers in the USA. However, when all is said and done, the question is, where in the U.S. auto industry are future-minded, knowledgeable managers to replace those who now run the companies?