Bailing Out the Automakers?

Help For the American Automobile Companies
offered by Torrey H. Brinkley

Many and varied are the recent opinions about the condition of the Big 3 American Auto Companies, and what should be done with their financial woes.
Few voices are demanding that GM, Ford and Chrysler be saved from any possible collapse, even if thousands of jobs are lost, and home foreclosures soar any higher in Michigan and Ohio.

---The U.S. Congress, with billions of dollars at their disposal to dole out to financial institutions in dire straights, seem to balk at loaning/giving money to auto manufacturers who actually produce something tangible, that all Americans use and depend upon daily.

---Union leaders scream that up to 3 million jobs nationwide could be lost if production, distribution and sales of U.S. cars & trucks cease, yet union bosses themselves produce nothing, just control things like negotiations & benefits.

---Young workers & students in America have had nothing to do with U.S. cars all along, preferring skateboards, bikes, planes, motorcycles, snowboards and Toyotas/Hondas, and VWs (et al).

---Affluent engineers and urban yuppies also fret not about Chevy, Ford and Dodge products, preferring their jet skis, light aircraft, ski-doos, plus Audis, Porsches, Lexus, BMWs, Mercedes or Italian sports cars.

---America's poor and under-employed certainly can't fathom the job bank centers where idle GM employees go sit, do nothing and collect thousands each month while robots assemble $25,000 Malibus and $60,000 Escalades. If minimum wage folk can barely afford $700 a month apartment rent, they certainly can't comprehend $650 a month car payments (plus $100 a month insurance, $120 a month fuel costs, + tires, repairs and 30% a year depreciation on a newer car).

---U.S. lending institutions have washed their hands of the auto industry and their woes. One by one, banks across America have dropped out of the auto loan business......especially ones who had previously been heavily drubbed by the risky sub-prime housing loans. GMAC, Ford Credit and Chrysler Financial finally realized they couldn't put everybody on wheels.....especially when dealerships were rolling over customers who were $10 to $15,000 upside down in their previous car loans.

Some critics have blamed the Big 3 for bad products, not very economical or often reliable. Others have called for GM or Ford to bring over their European counterpart vehicles (which do have fine engineering and design advantages over most US economy cars). Yet, all such previous imports have flopped in the U.S. market. Besides, the United Auto Workers want to roadblock importing vehciles not made with their "union gloves." The image problem, not so much product design, has been killing the Big 3 recently. Consumer Reports magazine has noted that VW, Mercedes, Suzuki, Kia and Land Rover as much more trouble-prone than typical US products.

U.S. auto manufacturers have done so many things right for over 100 years, and they probably won't fail unless the entire U.S. economy collapses, or the world economy falters. Imagine this:

1) They have provided clean, safe, relaible, comfortable, speedy, personalized transport for rich and poor alike (the poorest driver in a $200 "beater" car shares the same roadway as the driver of a $350,000 Rolls or Bentley, and can arrive at similar destinations in the same time frame.

2) Thanks to American ingenuity, there are private automobiles for families; pickup trucks for tens of thousands of manual labor jobs & industries; sport utilities for scores of athletes & adventure seekers; and thousands of roomy, reliable, minivans to airporter vans for soccer teams & traveling musical choirs; plus fleets full of small, medium & large size trucks to haul food & goods nationwide across roads & interstate highways that connect the entire country!! Ever since the 1960s, many Americans likewise find their identity in the type and nameplate of vehicle they utilize.

3) Few jobs in the USA are not tied into our freely mobile society, compared to the horse-drawn buggy days, or compared to the more isolated localized societies that exist elsewhere. Much employment exists in auto assembly; parts & design manufacturing; service & sales shorooms; our highway departments; contractors building/maintaining garages, driveways, parking lots; our subdivision designers & builders; gas stations & car washes; rental & leasing companies (almost exclusively tied into the Big 3 Auto Companies); auto lending institutions; tire shops & lube centers; automotive computer & navigation systems; marketing, advertising agencies (TV, radio, newspaper, magazines & internet); and all the myriad of customizers of body & engine parts.

If Congress does not choose to bail out the Big 3, what should be done?

a) WAIT. Be patient. Let the US and world economic woes settle down before making rash decisions If the Ford F-150 pickup truck has been the top-selling vehicle in the USA by far for the last 30 years, then why scrap what Americans have been purchasing for something less useful? Remember that gasoline cost $4+ per gallon in early summer, and now we see it priced at $1.60 a gallon in late November.

b) MOVE vehicles the best ways possible. Sell them thru leases, loans or cash deals. We should perhaps consider encouraging businesses and government agencies to purchase autos for use by managers & execs, since they have easier access to cash. The Europeans have been doing this for decades.

c) SAVE money. Ask all Big 3 employees to accept pay cuts (deferred towards better times) from top executives down to union floor workers. Get that $73 per hour cost for a GM vehicle produced down to the $46 it costs Toyota (maybe the UAW would consider doing a little something to help out). Can GM somehow get rid of that $60 billion long-term indebtedness for the health benefits for its current and future retirees?