The Auto Industry Bailout

For the most of the summer and especially these last few weeks, the economy and Wall Street has been in the forefront of everyone’s minds.  This humongous event has been the talk of America from the diners in the Mid-West, to the evening dinner tables of the South East, to the corner offices on Wall Street, and to the halls of Congress. 

Everyone is asking what is going to happen to our economy if this crisis continues and what should be done to stop this runaway freight train?  These are all good questions for our leaders to sort out as they debate the current $700 billion bail out that is proposed by the Treasury Department.  Questions that I not sure will ever be answered to everyone’s liking.

One item that has not landed on the  front page of any new papers as it should — the $25 billion bail out of the “big three” auto manufacturers — Ford, GM, and Chrysler.  

For the past few weeks the “big three” have been lobbying Congress for assistance through a direct loan program that was created by the 2007 energy law.  The original goal of this loan program was to offset the “big three” costs to develop and produce an increase in fuel-efficient cars.

Does anyone believe that this loan will be used to cover cost from switching from SUV manufacturing to hybrids?  No way!  This loan is really a bail out of another mis-managed industry that failed to adapt to the changing needs of the U.S. consumer while supporting a bloated, overpaid work force. 

Where is the outcry in the press and the public about this bail out?  Why should the taxpayers be on the hook for the auto industry?  These companies are bleeding money by their own design by getting in bed with the union more than the last 40+ years, saturating the market with a product that was not needed, failing to be innovated, using non-productive manufacturing processes, and employing a bloated work force (blue collar and white collar workers). 

These failings all add up to a poor business model that is just a stone’s throw away from collapsing.  However, why should these companies change their business philosophies, they all know that a “white knight” will be there to save them in their darkest hour.  Isn’t that what occurred back in 1979 when Congress bailed out Chrysler?  Well, history sure does have a way of repeating….

Like Wall Street, the auto industry will be bailed out by federal government and will return back to the status quo once the crisis has ended.  I guess the questions I need to ask is when will these hand outs end and will the airline industry be next? 

How much can the taxpayers absorb?  When will our government let our capitalist market correct itself through its own form of Darwinism?  I just don’t know….I just hope the Democrats and Republicans wake up and see the big picture before it is too late!

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2 responses to “The Auto Industry Bailout

  1. This auto manufacturer bailout loan crap makes me not want to vote. YES, it’s a bailout and a risk. The risk is, they will probably use the money unwisely just like before and not make a profit. Please tell me, how do pay back a loan without profit? And who made the calculated risk to do this? The big three auto mfrs should be allowed to fold. I highly believe the UNION is the main cause of their failure. Think about it. Why should a person with no college education, some don’t even have High Scool ed, make $29/hr for mounting hardware on hardware? Tires, seats etc… I have seen people “Stage” parts like screws and washers and gaskets and push buttons that get paid over $24/hr. Give me a break. No wonder they are losing money. They have to support the morons in their work force. A high scool student can do this for federal min wage!
    Most everything is automated and the unhealthy stuff is done by robots. That’s ridiculous. If one were to vistt one of their plants and audit this you will see it’s true. I have been in manufacturing for 10 years. Positions get a pay increas because of tenure? WTF is that. After 5 years your still an idiot manual robot doing the same thing you got paid for when it was minimum wage! This is NOT fair wage. The big three should fold and the American people should not have to suffer through their reign of OPEC Support terror.
    DROP THE UNION! Or beteer yet, shut down the plant and reopen WITHOUT THE UNION! Sure, promote “Buy American”. I’ll spend my money on some good ol Amercian fun like go see a Baseball game and scarff down 8 hotdogs and a pitcher of beer before I spend a boatload of money on an american car just to help support the afformentioned idiots employed there. Don’t get me wrong, not all are itiots, just the floor rats. If it weren’t for the UAW, US auto prices would be more competitive and affordable to Americans.
    Let’s take a look at this PHEV incentive that was passed also. To take advantage of this incentive, the vehicle you purchase must have soo much battery in it, can’t remember the specs but it was 3x more than any current foreign hybrid uses. Ironically if you look at any vehicles that can qualify, only the Chevy Volt and other US hybrid wannabe vehicles can qualify. Why? Because they are soo inefficient they require that much battery to run. So basically these US autos can not sell themselves and the big 3 need the govt to try and make the deal sweeter. For this reason I will never purchase a US big 3 vehicle again. The American people CAN survive even if the big 3 auto are gone. Need a car? There’s others to choose from? Lose your job because the plant failed to foresee the coming inevitable world change and they blindly charged on building Bradley Tank SUV’s? No problem, other auto manufacturers exist here in the US and when competition is gone from the big 3, guess what, manufacturing increases elsewhere in the US. Incentives for this PHEV bill should go to the vehicles that ARE PHEV. That should be the criterea. Then the consumers can decide WHAT PHEV they want to buy. So, guess what, they will most likely not buy a Chevy Volt and I highly recommend against the volt. This vehicle as well as any other attempts for the big 3 to sell as a hybrid / PHEV is just like their predecessors. They were hogs on gas back then, and in this generation they are hogs on batteries! Nothing has changed and they learned nothing. Tell me again why we are giving these huge loans to the same people that enticed people and sold Americans these poor excuses for a vehicle? I hope they all go under. This will open the doors to the small entrepreneurs like the “AC Propulsion”, “Phoenix Motors and “Hybrid Technologies” or “Black Bay Technologies”. Don’t get me wrong, the Volt is an outstanding concept. I just don’t agree with their business practices therefore they will never get my bussiness again or support. Here’s proof Ford can produce a high mileage car: http://www.carpages.co.uk/guide/ford/ford-fiesta-studio-1.25-3dr.asp AND HERE:http://www.businessweek.com/magazine/content/08_37/b4099060491065.htm?chan=autos_autos+–+lifestyle+subindex+page_top+stories, funny they don’t offer it here in the US, we don’t deserve it?
    Basically IF the big 3 took what “Hybrid Technologies” is doing and refined the process, expand their facility, buy them out and ensure product reliability to “Their” standard then I believe the big 3 can make a come back. Think about it. This little comapny, Hybrid Technologies, takes already built ICE vehicles and convert them to 100% Electric in about 4 days. You get a range of 100+ miles. Good for commute and for soccer practices and runs to the grocery store, run to fast food for the 3 kids and get a beer. That is a perfect idea. So there, I just retooled the big three in less than an hour, my bill is $50Billion please.
    Of course this will not happen because Detroit has this “It wasn’t my idea so I wont bother with it” persona. Sure they’ll probably get the loan. How’s it feel to be left out in the cold for those Americans who lost their homes to bad loans? Govt will bail big auto but leave Americans to fend for themselves and at the same time pay for this friggin mess. Yes, it is true that “We weren’t pushing these larger vehicles, we were just building what our customers wanted,” Mulally said….” (Quote from: http://afp.google.com/article/ALeqM5h4EahO3VBl2HqNDP58DrifgZ_RlQ) but you continued and did nothing to “Adapt” to the market, Just like the dinosaurs, and guess what, the Asteroid of OPEC hit and you cant “Adapt”! Hey Detroit, “Retool THIS!”, bastards.

  2. Pingback: Should GM fail? « My Observations

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