My friend JnnyThndrs sounded off over at the MaxPC Commport about the talks of a bailout for GM, Ford and Chrysler:
Fuck ‘em.
They’re sunk. Dead men walking. It’s just throwing money into a sewer.
They US automakers have dug their own grave, chiseled their names on a slab of marble and the pallbearers are lining up. There’s no chance in hell they can possibly recover, the only thing now is bankruptcy and selling off their assets to the Japanese.
The way the UAW contracts are structured, they can’t really lay people off – sure, they can close factories, but they still have to pay the employees, up to four years pay in some cases. GM badly needs to axe a couple of brands, but they can’t due to the restrictive dealer structure. There’s no confidence in the cars. There’s no demand for the SUV’s. The US automakers have been competing with substandard vehicles on the basis of price, not quality, and that’s never a good strategy.
Ask yourself: Is there one single model made in Detroit, except trucks, that’s not overshadowed by it’s Japanese or European competition? Have any of you driven an American car made in the last twenty years that made you say “Hey, this is AWESOME, I want one of these?” Sure, a couple of the musclecars are pretty decent, and there’s always the Corvette, but the bread-n-butter lineup from Detroit is largely a bunch of uninspiring shit, and there’s not much in the pipeline to reverse this.
As for management…what can I say. They wrote off little cars twenty+ years ago and either abandoned the marketplace or rebadged imports, then they wrote off compact cars and ceded the largest market segment to the Accord/Camry juggernaut, finally taking refuge in GIANT FUCKING SUV’S. They made money hand over fist for twelve years, but instead of aggressively competing in other market segments, they just gave the money to the stockholders, took huge bonuses and focused only on the short term.
The labor situation is abysmal, the workers and the UAW are stuck in 1936 with an armed-conflict mentality and this cannot be undone. Ever. There’s a good reason why foreign companies come here and build auto factories ANYWHERE but the Rust Belt, even though labor is cheap and the land cheaper. They want a fresh crop of workers, not the descendants of the entitlement-drunk UAW guys that picked up their labor-management ideas from Grandpa and Dad.
Again, I hate to say shit like this, but it’s all factual. Ashes to ashes, dust to dust, and all that, I guess.
Pretty harsh words, but he’s not the only one who feels that way either. A bailout of the Big Three would be viewed by many as rewarding the shoddy management that got the automakers in this position in the first place, and would be unfair to other companies making cars here in the States. What about BMW, Volvo, Subaru, Isuzu, Toyota, Nissan, Honda, Mazda, and Mitsubishi, not to mention bus and truck maker Navistar and Paccar, the manufacturer of Kenworth and Peterbuilt? All of these companies have factories here in the United States, should we look to bail them out as well if needed?
The problem is, that in this time of lost jobs and market turmoil, we really can not afford to have any of these companies go under. The ripple effect would be disastrous – hundreds of large part suppliers are in financial trouble too, and could very well find themselves going under if the Big Three go down.
How bad could it be? It could mean the loss of 240,000 jobs at the Big Three, the loss of 980,000 jobs at the supplier and local dealer level, plus the loss of 1.7 million additional jobs throughout the economy… that’s a potential loss of 3 million jobs. Personal income could decline by $150 billion the first year, and by nearly $400 billion over three years, to say nothing of the lost tax revenues to federal, state and local governments and increased spending on welfare programs. (wikipedia)
That’s pretty bad. So what’s the solution?
Chapter 11 Bankruptcy.
While the credit crisis has accelerated the Big Three’s dilemma, it is not solely to blame for the situation. It’s a commonly known fact that auto execs, workers and unions are overpaid, and that the automakers are in dire need of a dramatic overhaul. Drastic change is needed in the world of the Big Three, and has been for some time now.
Bankruptcy would give the companies a chance to reduce costs, streamline their operations, change their business models, and by extension, change the way the UAW does business in the workplace. Throwing billions of taxpayer dollars at the problem will do nothing to correct the underlying issues that have greatly contributed to the situation.
Yes, some jobs would be lost – namely overpaid executives – and the UAW workers would have to say goodbye to their fat pensions and maybe some of their benefits. It would be a long hard road to recovery, and things would never be the same again.
But that certainly would be better than loosing it all.