John Hattaway

The Big Three Automakers (e.g. the three largest auto makers in the United States) are begging congress for a bailout. CEO Rick Wagoner told the Senate Banking Committee that it was not a lack of management, lack of vision, lack of leadership, and etc. that is causing the Big Three to lose money, but a failure in the overarching financial institutions that is causing their problems.

Mr. Wagoner, you are absolutely incorrect. Let me tell you why. First, the vision of the Big Three has been on bigger and bigger vehicles and not on smaller more lightweight and more fuel efficient vehicles. As the prices per barrel of crude oil started rising the production of the SUV and larger car has not diminished. Only after gas hit $4.00 a gallon and oil more than $120 a barrel did the major manufacturers decide to do something. Instead of going back to the drawing board what you did, and not even successfully, was to advertise the line of more fuel efficient cars and not actually produce a fuel efficient vehicle. Granted, an SUV makes more money than a sub-compact; but the money made does not justify the lack of response to the changing economy and as a result does not equate to having a vision. Yes, you saw money and profits, what you should’ve been seeing was a method of lightening the economic burden of the people you are trying to sell cars to.

Foreign manufacturers, because of oil and gas prices, have been producing better cars for a long time. The Big Three in the United States have chosen not to compete with Toyota or BMW or Honda or Subaru or others. The outcome is poor strategy on the part of American auto makers. As a result, and starting in the 70’s, the American people have been screaming for better and more economic cars and have been fed larger and less economic cars. Part of the reason for the alleged apetite of the SUV is they become necessary in a world of SUV’s because the consumer has never been taught or trained to drive them. This is actually your fault. You and your cohorts and associates in the automotive manufacturing. This is not a cause of poor economic times, but the outcome of poor management and poor vision.

Workers are paid for too much money to work in the plants. As a result, the cost of employing workers is passed onto the consumer. We, as consumers, are tired of paying way too much money for cars when the value and reliability of an American car is far less than the value and reliability of a foreign car company. Guess what, your cars, your employees, and your plants aren’t worth it. Sure, your hands are invariably tied by the unions, and you continue to allow the unions to rule the roost and dictate manufacturing deadlines, wages, salaries, and more. This is historically poor management, and currently should be considered poor management. When the cost of a line worker with little to no skills far exceeds the salary of most middle class workers in the rest of the country you are doing something wrong.

I am not comfortable with the notion that your businesses are so important that they can affect the rest of the economy. Yes. It is true they will. But the outcome of greed (see previous paragraph) is an inability to balance costs with sales and as a result, and because part of the income for your companies are the interest rates on new car sales and leases, you lose money hand over fist by paying your employees too much money. You don’t produce anything truly innovate or exciting. You don’t produce low-enough-end products to appeal to a large portion of the population. And you don’t adapt to the current trends and needs of your customer base.

Your problems are not the result of the economy slowing down. No. Rather, your problems are a historical precendent of bad decisions, poor management, and a lack of vision and leadership at all levels and stages of the process. As a result, you don’t deserve a bailout and even though it will ultimately hurt, we don’t need the Big Three Automakers anymore because, quite honestly, you cost way too much money.

What is more important is that you are not as essential as the banks to keep the country alive, or to save the economy from a recession or depression. You are a corporation. They have a life span like most entities. As a result, corporations die. Fortunately, what will happen is that a foriegn company will buy you out and your brands will still exist. You, Mr. Wagoner, will hopefully be out of a job. And to that, I say good riddence.

Unfortunately, for America and for the tax payer, and for the global economy, congress will eventually help you out.

– updated Tuesday 4:11 p.m. 11/18/08

AlGore’s An Inconvenient Truth shows the numbers of efficient cars to profits and capitalization and how foreign companies are doing better as a result of more efficent cars than United States auto manufacturers who are far behind and below legislated standards set up in different countries that are not the United States. Our emissions standards are worse than China’s and people claim China is the worst poluters in the world. Though I am sure many people would disagree with this, AlGore’s premise and the science is supportable and even though I have a friend who lost funding because AlGore, as vice-president, didn’t exactly agree with the nature of the conversation (e.g. that plants grow better and are more abundant as a result of some global warming) the conclussions don’t account for positive and drastically negative side effects (e.g abrupt warming always results in massive cooling and more C02 means better crops).

Also, the New York Times ran a report on the requested bailout for the auto-industry (requires account to login). The reason this is important is because the union and the owners of the Big Three and the union or collaborating on their approach to getting more money. This is a marriage of, effectively, two evils to make sure that wages and the status quo doesn’t become interrupted. The death of the union and the resetting of wages, much like the resetting of housing prices and the stock market and gas prices is all essential for a healthy economy. At present wages and costs are too high for American auto makers to have any hope of competing.

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This entry was posted by smokingpen on Tuesday, November 18th, 2008 at 3:04 pm and is filed under Politics, opinion. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.