Disclaimer: I have owned four American made cars and currently own two Fords and one Honda. Just so you know where I am coming from. I love America and am extremely grateful to be living in this country.
As my radio alarm clock was playing this morning I heard a Chevy commercial with the dealership owner all basically begging people to buy American cars. I have a few thoughts about the Big 3 bailout issue. I don’t claim to know all the details of exactly what’s going on with the whole thing, so please feel free to share your insight in the comments below.
My thoughts on the government bailout of the Big 3
- I think it is always dangerous when the government gets involved in business
- I think it sets a terrible precedent for other struggling businesses (or did AIG set the precedent for this?)
- If these 3 companies went under, it would be a pretty big blow to our economy and would ultimately affect all of us.
- All things considered, I think I probably would have voted for it, just because (while I don’t think it is a good idea) I think having these 3 companies go under right now would be a lot worse – in the short term. I guess I think it is the lesser of two evils.
But is it my duty to keep them from going bankrupt?
As I mentioned in the first paragraph, I heard a Chevy dealer begging for my business. I have to admit I was mildly offended. It is pretty much common knowledge that Japanese cars are far more reliable than American cars. You can look at Consumer Reports or just about any other car rating surveys and you will find the same conclusion when it comes to reliability.
Asian cars used to be a joke. But they have been dedicated to creating a better product over the past couple decades, while it seems that American car companies have been resting on their laurels.
I feel really bad for all of the employees of the Big 3 companies. I would be a bit nervous working for a company that was so dependent on help from others to survive. The employees of these companies are the ones who are paying the biggest price. Most of them have been working hard, doing their jobs as best they could, while their executives have not been doing theirs.
Aren’t the CEO’s of these companies to blame? If they had been working on making better products over the last few decades, we wouldn’t even be talking about this. If they had the passion for innovation that some other companies have, the whole world would want to be buying American cars.
Instead, we now have desperate car dealers begging us to buy American cars.
Honestly, I love my country and if me buying an American car were going solve our economic problems I would do it in a heartbeat. But, the truth is, that it won’t. The companies have to make something that people WANT TO BUY or they are going down. It doesn’t matter how many times they get bailed out – until they make a product that people want to buy, they are in big trouble.
If I were the CEO of Ford, Chevy, or any other car company, I would offer $10 million dollar bonuses to the engineers who could come up with a water-powered engine. To many, the idea seems absurd, but is it really that “out there”? I mean is it really more of a stretch of the imagination than man walking on the moon? Or airplanes? The only reason it seems absurd is because we don’t see it all around us!
Anyway, I am done with my rant – what are your thoughts?
{ 21 comments… read them below or add one }
It’s not our job but there are both sides to the story. Maybe a post about pros/cons of what the bailout will mean in the short/long term future.
I believe it is our job to make sure our own spending is in line. I think that we got way to comfortable spending money we didn’t have. I think that goes for individuals and corporations. Now that some eyes are being opened I hope that people start to wisen up and live within their means!
I recently sold my [Korean] car. So I’m not contributing to the automotive industry at all!
No, it’s not our job; and it’s also not a foregone conclusion that without a bailout millions of people will lose their jobs.
What WILL happen is that the current owners of those companies will have to liquidate in order to pay their creditors.
What the government SHOULD do is set up an institution to help enormous companies go bankrupt gracefully. Normal bankruptcy isn’t enough; the law can’t possibly cover a never-before situation like this. So make a law that provides for an institution that can quickly set up a specialized bankruptcy project for the institution that’s failing. They’d hire a project manager, an enterprise architect, and a systems engineer, and design a selloff that would meet certain top-level requirements — for example, paying the largest amount of owed debt, or meeting the most contractual agreements, or costing the smallest possible job loss.
Bankruptcy doesn’t mean automatic destruction of all jobs. The people who are making those claims are trying to sell us something.
Is it our job to see they don’t go under? No!
Failure is often the stimulus for change! They DO need that! Every thing rises and falls with leadership!!! PERIOD! The lack of leadership is astounding. These guys don’t get it!
No it is not our responsibility. When all those automakers go out of business, many of the employees could/would be picked up by all the foreign automakers that have plants all over the US. Toyo’s and Honda’s have a majority of their models made here in the US.
The CEO’s fault?? Are you kidding? The majority of the blame falls on the Unions. That’s one of the biggest expenses and wastes of money. Why are the “foreign” automakers so successful? It’s b/c they aren’t forced to pay out $28/hr for assembly line work like the Unionized Big 3! Why did Toyota sell the same amount of vehicles as GM last year, but GM posted a loss and Toyo had a record profit?
Government intervention is the last thing we need. The government doesn’t know how to run a fiscally sound program. Republicans OR Democrats. Look at the failures that Social Security, Welfare and Medicare/Medicaid are.
I’m tired of always having to pick the “lesser of two evils.” That’s exactly what we were forced to do with this past election. Let the Big 3 fail and let the market work itself out. We may keep Joe the auto worker employed today with a bailout, but no one is thinking about what this does for him and all the other employee’s 10 years from now when we are all living under a socialized economy and complete nanny state.
While I agree that the unions play a very big part…..fact is these assembly line workers get more per hour than my hubby. Hubby works in the airline industry…he had to get 2 yrs of college…plus pass 2 different tests to be a licensed mechanic. To top that off…should his workmanship be shoddy…people’s lifes are at stake. He would be held responsible…prison and a several thousand dollar fine if lifes were lost! Are these assemlyline workers held responsible for their work? Not really! No one goes to prison…when their workmanship fails!
Now…CEO’s….no matter what industry we are talking about are grossly over paid. CEO are suppose to provide some type of leadership….and if their company isn’t, in this case, making a product the public wants….then it is the fault of the leadership…or lack thereof!
Combine lack of leadership with a workforce paid far too much in per hour wages and benefits…you have a receipe for failure!
I sympathize employees of the Big 3 companies about situation they faced with. But there is no solution that would satisfact everyone.
I agree with the comments above that it’s not our obligation to bail them out. I think we’ve really lost sight of an important value in the country … personal responsibility.
Good post! I would have to agree that the unions are mostly to blame. Quality products are also part of the problem. I own a Ford and a Honda and it is night and day between the two quality wise. I think the big 3 might have to bite the bullet on this one and start restructuring. Obviously we don’t want the government running their business for them because we all know how they handle their money. Trust in God in these situations that his will shall be done.
I live in Detroit.
I wrote this : http://upturnedbarbie.blogspot.com/2008/12/coming-from-detroit-my-thoughts-on.html. There’s tons of reference links in it as well. Check it out.
By the way– where was all this protest with the bank bailouts? Makes me upset.
kaitlyn, there was TONS of protest against the bank bailouts (senators claimed that their phone lines were tied up with almost every call being against it), but our leaders paid it almost no attention (perhaps because finance experts were so strongly in favor of it). There’s been comparatively little protest against the auto bailout — except from financial and economic experts, who claim that it’s a terrible idea.
And I agree with them on the latter (I thought that the bank bailout was also a bad idea)… Even if bailing out our financial system could have worked, bailing out a failing industry cannot. There’s nothing being done except giving money to people who are experts at destroying value.
It’s time to sell off the companies’ assets — hopefully in a way that preserves jobs and existing pensions.
-Wm
Kaitlyn, believe me I was against the bank bailouts too! It seems we have “representatives” in Washington DC that are bent on bringing this country down into a all and out Socialistic government!!
Scott, I concur we must trust in God in all situations.
I was also against the financial bailouts but I can see how that bailout was more more important to the entire country than a Detroit bailout would be. Think of it like this, the economy is an car that runs on money. If the money stops then the entire economy stops, but if the muffler breaks it still sucks but the vehicle will still move forward. That’s the major difference between the two bailouts.
There’s a lot of people saying stuff like “millions will lose jobs.” This is false. If the the Detroit auto makers were to completely collapse, the people who used to buy cars from those companies would not stop wanting to buy cars, they would just have to take their business elsewhere. So other (profitable) car companies would see a jump in demand for their products, they would then have to make more of them. Maybe those (smart and profitable) car companies would probably think it would be a wise move to buy some (now unused) car building factories in Detroit and hire people who have experience working in those factories? Just a hunch.
It is not our responsibility and it is not the responsibility of the government to bailout failing businesses. What about the million people who lost their jobs in November? Where was their bailout? Why is Detroit more important than those people? It is the government’s job to create a safe and free environment for people to engage in business for profit. Bailing out the Detroit auto makers would be doing the opposite of that. What if you owned a business that was doing well selling a product that people wanted at a good price and your competitor that sold a sub-par product and was irresponsible with their resources suddenly got a huge bailout from the government. How would feel for running your business properly? How would that be fair to you?
It couldn’t go on forever. The high salaries. The huge retirement plans. The mentality that anytime the process was improved there could be no job “adjustments”. It was like when I worked at Nortel and they used to serve us gourmet food so that we would work overtime (we were paid too). It couldn’t last and it shouldn’t last. They (the leaders of the companies and the unions) are spending money they don’t have and then looking for a handout from mom.
No – it is not America’s job to prevent the Big 3 or any other company from going under. We cannot, as a country, pick and choose what industries we are going to bail out. Locally, Bayliner is closing their plant because of the economy (people aren’t buying pleasure boats anymore). I have a friend who works for Piper (airplanes) and his hours are cut. What the American people want and need right now are the basics. Good, reliable, economical transportation. If the Big 3 don’t want to sell that, then they have caused their own problems.
Exactly. Let the market correct itself. The problem with the “free market” right now is that we have too much intervention. If we step back and let Bayliner, Big 3, whoever else, shut down then that is nothing more than a correction. Just like the housing bubble burst, that was a correction for no other reason than that housing prices were way too inflated.
Those making carriages for the horse and buggy….had to adjust when the car became a viable way of transportation. The government didn’t bail out…the carriage companies, those selling horses , those selling oats..or whatever a horse eats…or those making all that is needed to hitch up a team to the carriage. They adjusted with the times. The big three need to do likewise…and if they can’t…I am sorry. The automobile industry will not disappear….there are other companies besides the big three!
Good Point. Right now Obama is trying to develop a plan to improve the roads in our country. That will create a lot of construction-related jobs – not only for basic construction jobs but also for products and construction equipment – bulldozers, steamrollers, etc. Bottom line is that sometimes we need to adjust with the times. It may be tough at first, but in the end, it works out for those of us who are willing to accept the challenge.
I would question the statement that all three would go under. Ford has already said that they could make it another year. With a little competition out of the way they would be even stronger. I do agree that it would be a tough decision to make, but I think I would have to let them suffer and/or fail. They have learned nothing and we will have to suffer for it.
I have to agree with several others here. The bailout really is just forstalling the inevitable. Unless the “big 3″ make changes to their products and start SETTING the trends rather than CHASING the trends…. they will never win. Taking money from the taxpayers just to stay afloat for an unspecificed amount of time….. ridiculous.
That and the egregious issues with the union, which truly has truly sucked the life out of the American automakers.
I’m sorry to say it this way, but these are two ticks with no dog.
I think the government should be giving financial help to single moms and others who need it. As a single mom I need to watch what I spend every single day in order to get by. Do you think the big 3 auto makers did that? I don’t think so because if they did they wouldn’t be in the situation they are in.