Unlike the recent presidential election where I found it hard to fathom that there could be actual “undecideds,” I admit I fall into that embarrassingly squishy category when it comes to the possibility of a bailout (or a bridge loan, as the auto makers like to call it) for the big three car companies.
On one hand, having covered manufacturing, and to some extent, the automotive supply chain, for years, I know first hand the damage that will be inflicted beyond Detroit if we let this problem go unchecked and the industry go under. Beyond the shock and confidence crushed resulting from a bankrupt U.S. auto industry, the very intricate and ample supply chain of small and mid-sized companies, some of which have been around for decades, will start to crumble. No doubt, millions of jobs will be lost, manufacturing infrastructure will sit idle and many of these companies will inevitably go under. Here, is the case, my one side argues, for providing some sort of government assistance. Call me crazy, but I don’t see the difference here between this situation and that of the Wall Street bailout. The government lent a hand to the rich, white collar industry, why not do the same for bread and butter manufacturing?
On the other hand, this crisis is not exactly a new development. GM chief Rick Wagoner and his CEO peers told the Senate Banking Committee that the automotive industry was in dire straits mostly due to the recent and precipitous economic downturn. They claimed the industry was on the brink of a transformation, and the recent tight lending conditions and free fall in consumer spending is what’s forcing the industry over the edge.
Wait a second. Hasn’t the automotive industry has been struggling publicly for years, and maybe privately, for decades, trying to move beyond its infatuation with gas-guzzling SUVs and pickup trucks to pursue innovative alternative energy technologies? Haven’t U.S. car companies been desperately trying to reduce their product development cycles, get a handle on lean manufacturing and generally, be more competitive with foreign cars makers? The truth is, this isn’t some bomb dropping out of the blue—this is a firestorm that’s been underway for some time. It’s just that the auto industry hasn’t been able to accomplish the massive directional changes fast enough with any kind of sustainable success.
So I take exception to the auto execs tying the immediate need for government assistance to the recent economic crisis. It’s the sticking point that makes me think maybe we should take a pass on any bailout measure. This industry made it’s own bed. Perhaps, we have to hang tough and let them lie in it.
Now you see why I’m so squishy?
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