I’ve really been waffling lately on how I feel about government assisting the auto industry. On the one hand, private industry should be able to stand on its own, without government intervention. On the other hand, we cannot afford any of, much less all of the big three going into bankruptcy. This is not your standard mom & pop operation. If they reorganize, which is what many legislators believe should happen, than many of their creditors will lose money that is owed to them. This is just fundamentally wrong. Of course, the alternative is for us (you and me) to lend them the money, which is also wrong.
I’m not a fan of Detroit playing the victim card either. I’m from the area and will always consider it home. I have friends who work for Ford and GM, and I want those companies to be the best in the world. It would be great for Detroit and great for this country. The problem is that we have put ourselves at a competitive disadvantage. If our union employees are making $75/hr after benefits, and the Toyota workers are making $45/hr, than we will never be competitive.
I don’t buy the argument that we need more environmentally friendly cars, either. GM makes 18 cars that get 30mpg highway. The problem is not the product, it is the cost associated with the product. In order to compete in this world economy, Detroit is going to have to go back to the bargaining table with the unions and cut themselves a more realistic deal.
Unfortunately, our Congress, in their infinite wisdom, will most likely require more eco-friendly cars in order for the big three to get the money they need to move forward. If they can’t see the real problems, than we are just delaying the inevitable. Detroit’s once lustrous past will be just that, in the past.
The big three auto makers, Ford, Chrysler, and General Motors, are asking congress for a bailout to the tune of $25 billion.
Hey, I’m no genius, but why don’t we take some of the profits of the oil companies and give it to the auto industry?
Certainly the two cannot live without each other, and certainly the oil companies can afford it.
I think that may be a slippery slope. What if your business was to sell hamburgers but you mismanaged your restaurant because you were paying your waitstaff $50 per hour? Should the beef industry be responsible just because they are still turning a profit?
I agree with your slippery slope point. (a favorite argument for lawyers).. but would also add that government funded “Bailouts” for privately owned corporations are a slippery slope as well.
When GM and Ford have faced tough times in the past, they have gone into bankruptcy, reorganized and reemerged. But now that the Federal government has stepped in to save certain other “big business” that have failed tremendously, a precedent has been set. Now when these huge, inefficient companies — with their tentacles weaved throughout our economy — fail big, they will look for a bailout before looking towards bankruptcy… I only hope that by securing a bailout, they don’t end up taking the whole country down with them (as opposed to the creditors, employees, etc… who would have been hurt by letting them declare bankruptcy and/or go out of business).
Well said. At least the legislators are making them come forward with a plan – hopefully one that involves some kind of deal restructuring with the UAW. I still don’t like the idea of legislators having the final say on private business, but this is a unique situation with up to 3 million jobs at stake. I think we should at least give them a chance to make it. This is what the bailout money is for, I suppose.