Detroit is a large, lumbering giant that nobody seems to care about anymore. No, I’m not talking about the city of Detroit, Mich. I am referring to Detroit’s automakers, the so-called “Big Three” made up of General Motors Corp., Chrysler and Ford Motor Co. The way things are looking, they may be only the “medium few” automakers.
Currently, America’s automakers are aiming to get bailed out by the government before their companies fail, for fear of the possible economic impact of the resulting layoffs and liquidity. The auto industries directly support around five million jobs in this country, and in addition to the comparatively high pay rate of American workers, the Big Three also has to worry about the costs of health care and pensions for these employees on top of their own production. While these responsibilities are a huge cost to automakers, they are not the primary reason for their economic hardship.
The $25 billion requested bailout is a little different than the $700 billion of wealth redistribution supplied to troubled banks and financial firms. This is an industry that produces a product, and they are unable to sell it. American taxpayers should not care about GM if it hasn’t shown any concern for the consumer’s demand for hybrids and other fuel-efficient cars. In its defense, GM’s Chevrolet does have one electric car, the Volt, on deck for release in 2010, but the company appears to think this will be its only saving grace.
If America is going to bail out a struggling industry, there must be more severe sanctions for the money beyond executive pay limitations.
One of the most important stipulations must be, especially for GM, to ensure it starts making greener vehicles very soon. Get rid of the SUVs, leave the trucks and develop better high-mileage vehicles. If the American people have to shell out the cash, then they deserve a quality vehicle that’s as environmentally-friendly as possible.
The fact is, the Big Three just makes a terrible product. It’s no secret that car sales are lagging for domestic automakers, especially compared to foreign-made cars. For the last 30 years, Japanese carmakers have made cheaper, more fuel-efficient and longer lasting vehicles. The unwillingness of American automakers to adapt to changing conditions is a sign of their problems. However, production costs are lower in comparison because of comparative labor costs.
These companies are dying out because they refuse to listen to consumer demand, and using their employees as an excuse to prevent their rightful extinction in the cutthroat natural selection of the marketplace is a cheap move.
If all else fails, the Big Three can go the way of countless other industries and products in the U.S., by selling it to a foreign-owned company. It would be plausible for a company such as Toyota to pick up a failing American automaker and then streamline it. For GM, the removal of offshoots such as GMC, Pontiac, Buick and Hummer would reap the best benefits, as it would then force any new owner to focus on making a single, solid product, rather than dilute a brand name with subpar vehicles. It doesn’t even have to be a foreign buy-out. A merge between GM and Chrysler would prove beneficial as well, according to Bank of America CEO Kenneth Lewis.
However, some of the cost problems could be circumvented by helping the automakers’ body shield: their employees.
Automakers threaten Congress that if they don’t get bailed out, the common working man will be out of a job, health care and pension. So to prevent the consequences of capitalism from occurring — which in this case is the collapse of a defunct industry — the government could take a drastic measure. Instead of supporting the bailout of the auto industries, it would be a perfect time for President-elect Barack Obama to overhaul the nation’s health care system using the Big Three’s employees as the test program before implementing it nationwide.
While such a program may not save the jobs of the American workers, it will at least avoid rewarding a poorly-managed industry and help maintain the health of its employees, even if they do lose their jobs. Only after this can the government begin to expand the health care system to better serve the rest of the public.
At this point in time, the auto industries have no case to be saved beyond their role as support-beam of America’s yesteryear image of growth.
This huge downturn for auto companies should come as no surprise to anyone. Had their unwillingness to offer a viable product for the long haul not gotten in the way, Americans could be in a much better place, it’s part of free-market capitalism, which has been rammed down our throats for too long.
—John P. Gamboa is a journalism senior.
—This column does not necessarily reflect the opinion of The Daily Aztec. Send e-mail to letters@thedailyaztec.com. Anonymous letters will not be printed — include your full name, major and year in school.
The Daily Aztec > State of Mind
THE MINE SHAFT GAP: It's time for an auto evolution
Published: Thursday, November 20, 2008
Updated: Thursday, November 20, 2008
1 comments
Matt
Good job John, you said what has needed to be heard for a long time now. "This is an industry that produces a product, and they are unable to sell it... Get rid of the SUVs, leave the trucks and develop better high-mileage vehicles... The Big Three just makes a terrible product." These are things we have all been thinking for some time, and it shows in our loyalty in sales. I can't be loyal to a company that makes a product that won't last half as long and be as economical as a foreign competitor. You're absolutely right, they don't listen. Unfortunately, those who give their employment to these companies will be at risk as the big three themselves fall into the grave they have ignorantly so dug.
