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Wednesday, December 03, 2008

The Big Three

Published by cck at 10:52 PM

I have a lot of thoughts about what's going on with the proposed bail out of America's biggest employer. I'm a fan of keeping auto workers working.

I'm shocked that car companies are being blamed for chasing profits. Sure, it's great to look back and shake our heads at the gasoline beasts - the Hummers, the giant trucks, the Explorers. Man, that was silly! But during the height of the crazy buying sprees, very few were thinking that we should create cars that would be better for the environment, easy going at the pump.

You know who was thinking of all that? Lemme tell you -- (you might have guessed) -- the BIG THREE. That's right folks... Ford had to come up with the Explorer in order to come up with the Hybrid Escape.

I know that there's a certain resonance with build it and they will buy. But, who's to blame for the Hummer craze? It's the buyer right? I mean, no one was forcing aging men to buy tanks to drive down Appalachee, Augusta or Forest Drive. Since when are Americans afraid of making a profit?

Bail out the Big Three. Do it now. Do it before our economy gets worse.


Ryan said...

Bailing out US auto makers will equivalent of giving someone with cancer a painkiller. While it may make everyone feel better for now, it does nothing to solve the rising manufacturing cost driven by unions or the inability of US auto makers to adapt like Japanese and European auto makers to the demand of the buying public. As bad as it may seem, Chapter 11 bankruptcy may be the best solution for the US auto industry. It would allow pensions to be broken and labor contracts to be renegotiated. Not good for a man on the assembly line but better possibly for the other 49 states.

cck said...

RBF - I get where you're coming from. And believe me that this is the first time I've ever (ever) thought about speaking against a union... With two out of every three auto workers receiving a pension, the days of UAW power are over.

However, when you consider the ripple effect of even one of the Big Three declaring bankruptcy -- it's much much more than just the workers directly employed in making cars. You're in Greenville, you should know that after BMW broke ground, companies grew up to supply the auto maker. So now we're talking their jobs too. Ooops, and now we're talking about dealerships. Dealerships are important because when you buy a car you pay (wait for it) state taxes... With state revenues dropping, what happens when states don't receive that stream of revenue.

Oh crap. We're in trouble. I don't think a bail out is a painkiller. I think it's chemo. And we (as voters and our elected legislators) make sure the companies don't start smoking again.

Ryan said...

cck - The meltdown of automakers would not lead to the entire downfall of every city or community that contains or is reliant on a supplier of an auto maker. The world, including the US, will continue to demand the same amount of cars no matter who the maker. I'm sure Toyota, Honda, BWM, and other well run automakers that have already invested in non-union plants in the US would be very happy to purchase some assets, including plants, that may be left open by the dissolution of one or more US automakers. This would also happen with car dealerships. Your assuming that demand will lower when supply lowers but that's just not the case. Due to the investment by foreign automakers in America, US automakers aren't as relevant to individual towns as they were 20 years ago. I recently had a client that was a provider of components for a Big 3 factory in GA. The factory closed so my client evolved. They found other customers. They moved into other industries. Good companies and good societies don't wait on bailouts and help.