Tuesday, November 18, 2008

Automaker Bailout?

This question has been asked often this week. I am honestly not sure what to think right now. I've been asked my opinion a few times this week alone, and I'm so conflicted about this question. On one hand, the automotive industry is one of those cornerstones of the US economy. Or, it was. Also, I'm from Michigan, and I remember how the Big Three represented the green blood of the Michigan economy, and while my nostalgia for the Great Lake State is rather low, I still don't like seeing any state's economy crumble (besides maybe some of the coal economies of apalacia- sorry guys carbon is SOOOooo 19th century). 

However, on the other hand, articles like this really stoke my anti-car nature.  These are the same groups that lobbied(s) HARD against raising the EPA's emission standards, raising the mpg average of the automotive companies fleets, and against the Koyoto Protocol. I mean screw you guys and your making money on heavy, big, huge profit margin SUVs and large luxury vehicles. I'd also like to go ahead and call scenanigans on buying up large chunks of the public transportation systems of Los Angles, Chicago, and Detroit. That was totally a bullshit move guys, you went for the kneecaps on that one. In the 40s, GM started funneling money into a company called National City Lines, whom bought up a bunch of these rail and trolly lines in the cities around the US, and then systematically ran the businesses into the ground while getting more people to buy cars. (This point is debatable FYI). 

Finally, pleanty of other automobile manufactuors are doing just fine. Toyota is struggling with the downturn, but they have pleanty of cash reserves from the sales of the hit Prius (who saw that coming, I mean what a fucking hippy car!?!), and from their sheer market grab of the last decade. Honda is in even better shape than Toyota as they have made fewer risky bets over the last couple of years (this isn't coloquial knowledge, but I don't have sources either). BMW is releasing a whole line of diesel cars in the up coming year, and those should do well w/ biodiesel, etc (also, where is the diesel/hybrid? I haven't seen that yet). 

Really I think the question comes down to where we draw the line? We bailed out the banks in fear that they would stop loaning to the companies that have our jobs, but most American companies don't really have our jobs anymore. They've sent those jobs overseas in order to profit on reduced shipping costs (just like Toyota and Honda have done as well btw- so I'm not criticizing, just stating). Who are the banks supposed to loan to if we don't have companies like GM/Ford/Crysler to loan the money to? How is that loaned money supposed to help out Americans if these companies no longer employ Americans (in the same way and number)? Does it really matter if these companies condense/fail? It would be another piece in the long history of American commerce, maybe the end of a chapter that I for one, would be sad to see move behind me. 

(By the way, the pictures were grabbed from a collaboration between LIFE magazine and Google who is now hosting over 10,000,000 images from the magazine's 130ish years- Link.)


Matt Fate said...

I am conflicted on this too. In general I favor letting natural economic selection take its course, but I empathize acutely with the people who have given decades of their lives to the car companies, who depend on them to continue life as they know it. The heart of the quandary to me is that we all know the corporate aspect of these companies deserves to go down for one bad choice after another, but the pyramid of hard working people beneath them shouldn't just be written off as collateral damage.

Maybe the "life as they know it" part above is a key to unlocking an ethical and sensible position on this issue. Just because they won't have the Big 3 to employ them anymore doesn't mean they won't be able to get new - perhaps even better or more satisfying - jobs. They aren't unemployable by any means, and would actually be freed by the collapse of the entrenched inefficiency and stagnant thought modality of the US auto giants to do whatever they wanted within their capacity, or to learn a new trade they had always thought about but never dared explore.

Maybe loosing their jobs at the auto fab and part supply plants would be more of an opportunity or even a blessing in the long run, rather than personal economic damnation. And it would certainly be an opportunity for new, more efficient (production and fuel consumption/type wise) auto manufacturers to grow in size and rise to take up the torch of representing American automotive engineering ingenuity to our international peers. Just as in a forest, the big trees must fall before smaller trees can flourish in their newly exposed view of the sun and sky.

Another serious beef that I would have with "bailing" them out is that it would be spending our tax dollars to continue pursuing business plans that have proven to fail - the reason they are in this mess in the first place. I heard a quote from one of their CEO's (GM's I think), where he said first of all that he would definitely not be steppiong down for steering the company to this cliff-edge, and secondly that they absolutely needed to be bailed out or they would have to close the doors in January... but they don't want to be told what to do with the money if they get it. They want a no-strings-attached hand out. F that! It would only delay the inevitable at great expense to all of us with minimal benefit. (There was already a $25 billion bailout for the auto industry, specifically to help retool for tomorrow's vehicular needs rather than more of the SUV planet killing factories, and I don't think ANY of that money has gone to the Big 3 because they can't let go of the glory days...don't want to change, don't think they have to. Anyone know more about this? Fact check please.)

So maybe I favor letting them fall. If there is going to be a bail out, turn it into an ex-auto industry worker job re-training program or temporary food & mortgage payment assistance rather than giving it to the companies themselves to continue to squander in unsustainable, and more importantly unprofitable endeavors. Withholding a bailout might also force them to change and evolve towards sustainability and rationality. Do what Government should: help the people, while letting capitalistic selection deal with the companies. The selection process should ultimately produce a stronger economy that will be better able to support the little fleshy beings of whom it is composed.

Jason said...

The UAW needs a little tough love. It derailed the Cerberus deal at Delphi. Today GM suffers a loss of about $2,000 per vehicle sold. On the other hand Toyota whose employees are not part of the UAW earns a profit of about $1,200 per vehicle sold. If GM was able to operate with labor prices near Toyota’s it would have pocketed an additional $29,715,200,000.

GM bailout nonsense

Liz Dembski said...

So, I don't want 1,000s of people to lose their jobs and have the economies related to the US auto industry seriously depressed, but face it, the US auto industry has been in the shithole for some time. I think some serious re-organization needs to take place for anything positive (for the workers and for the economy) to happen.

Strangely enough, this article from the NY Times, by Mitt Romney really resonates with me. http://www.nytimes.com/2008/11/19/opinion/19romney.html?hp