12/01/2008 02:27:38 PM EST

Final Ruling on the Automaker Bailouts

posted by yturks


During this recent debate about a government bailout of the US auto industry, I have obnoxiously retorted every chance I got that it's not the "auto industry" that is looking for a bailout, it's Chrysler, Ford and GM that are looking for a bailout.  The health of the "auto industry" basically depends on the demand for cars (and the availability of financing to pay for them).  The existence of any particular company (or three) depends on factors unique to that company.  A short, simple Monday New York Times article anticipating this week's Congressional testimony from the Big Three reinforced my thoughts.

Each of the Big Three apparently is in a very different situation.  Chrysler is on the verge of disappearing. The company itself admits that any government money would be needed to run operations for 2009.  Chrysler seems beyond hope, and a bailout for that company seems to be a waste of money.

Ford is in better shape, and has already begun plans to improve its products. Ford will be asking for money as a financial back up.  If Ford is generally doing the right things and needs $9 billion financial backing, sure, I don't object to that as long as they meet other minor but important conditions to make sure they spend money wisely.

General Motors will be presenting a major plan to overhaul the company. This plan will include various cuts, reductions and reorganizations, including, it seems to me, a reduction in workforce.  This one remains a tougher call. One of the passionate arguments heard in favor of a bailout is that if we don't do anything, too many jobs will be lost.  But if the expectations are correct, jobs at GM will be lost even with a bailout.  At the end of the day, considering my antipathy to how the companies have been run for decades, and my bailout fatigue, I say tough luck to GM.

Final rulings: Ford, you are pardoned.  Chrysler and GM, it was nice knowing you.

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Final Ruling on the Automaker Bailouts | 3 comments (3 topical, 0 hidden)
98% agree (none / 0)
I honestly would not give ford the money either...although they have made some strides, they have persisted with the SUV's and pick-up trucks because they don't want "sissy cars".  After Lee Iacocca was forced out of there, their designs sucked, and ford has basically been making what was easy for them.  They've paid their workers well, so I will definitely pardon them for that, but that's mostly because of the Unions anyways.  I think it's time for some serious investement into new electric companies, and break this cycle of "big name" automobiles controlling everything.  The Japanese have out classed us in our own economy, and have basically managed to maximize their profits, and minimize their losses by taking advantage of commissioned auto parts vs. the full production company.  American auto makers complain about trade barriers, but the truth is even if we exported 500,000 cars to japan, they wouldn't buy them because their cars are more efficient and last longer.  The american car is built to break down after 2 years because of 2 year leases, and the japanese don't do that.  Safety standards in America are high, but quality/efficiency standards are a whole different story.  Some honda civics get better gas mileage than some american hybrids...you don't even want to compare japanese hybrids to american hybrids...Not to mention, once chrysler acquired Mercedes, their quality went down too.

Chris

by chrisandyasemin on 12/01/2008 05:45:52 PM EST

I vote present. (none / 0)
recorded for posterity.

by hazmat on 12/01/2008 08:33:55 PM EST

for the record (none / 0)
one of those "concessions" that the UAW made was giving up the pensions of a lot of workers who had been there for years, and some people retiring early with a buy out, so people who paid 25-30 years of pension got DICK back...my dad got a buy out for $100,000, but that is probably nothing compared to how much he's paid in pension over his life time.  As far as I'm concerned, Ford deserves to tank because they are not following Henry Ford's plans for the company, and thus it is no longer "Ford" its "Visteon".

Chris

by chrisandyasemin on 12/02/2008 11:29:41 AM EST

Final Ruling on the Automaker Bailouts | 3 comments (3 topical, 0 hidden)
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