Automaker Bailout? It is unfortunate that the big three auto companies have come to this especially since this problem has been inherited from their past generations. It was hard 20 or 30 years ago to for everyone to foresee how all this would unravel, but it is what it is. 40 years ago it took 4 times the employees and 4 times the space to generate the number of vehicles to satisfy North American consumer demands, but now competitors have moved in and built more modern factories with flexible manufacturing systems and reasonable labor costs. The Big three are trying to make adjustments as fast as they possibly can, but there are many difficult decisions that have to be made in order to resurrect these great companies. Throwing money at them will provide temporary life support, but it will not provide the transplant they desperately need.
History - Big production required big plants and big workforces; Today-flexible manufacturing and streamlined workforces determine sustainability. 5 years ago the bigger the vehicle the better was the rage, but since our national government cared more for environmentalist exaggerated views than our energy policy, Big vehicles went into the tank and the auto companies were left with the bill for their investment. During their hay day, the labor force was desperately needed to maintain sales and production. Now we are left with labor costs that are out of balance and not compatible with the market. I don’t believe that feeding more money into the “Big Three” will return leaner results. It would be more like feeding the obese supersized cheeseburgers and french-fries hoping they will loose weight. Since a diet won’t work, what they need is liposuction.
Politics - Most Democrats are pursuing the executives saying the executives need to start a diet by personally costing their companies less. Most Republicans want the liposuction buy going to the bankruptcy hospital. Who is right? Let me ask you. Would you want to work at a job that you are going to get a pay cut at especially if someone else is willing to pay you what you are worth? Who would take their place? People in low demand? People that are not worth very much because they don’t know what they are doing? I am not talking about those failures at AIG either, they are responsible for their actions over the last 10 years, the current bunch of auto execs have not been on the job more than 5 years and inherited a bunch of bad decisions from the past. What about removing costs that are dragging these companies down. Like unused real-estate, excessive labor costs & Legacy costs that they had to sign up for to keep their labor force in place? These are three costs that their competitors don’t have to deal with. If you remove these three costs, the American Automotive companies become an attractive investment again.
So when it comes to Automaker bailout, just say no, liposuction please.