All of us know the feeling: The transmission conks out on your old beater, and you face a choice: Spend a couple thousand bucks for a rebuilt transmission or junk the jalopy and start over again.
In essence, that’s what we’re facing with the auto industry. Industry experts and economists tell us that if we don’t reach for our wallets now, it’s going to cost us more - much more — in the long run. When the assembly plants start padlocking their doors, they’re going to take a lot of businesses down with them. Tier-one suppliers - the ones who build the braking and steering systems and other big components — will go under. Then the second- and third-tier vendors - the ones who supply gears and cylinders and semiconductor chips - will get walloped, too.
That’s not the end, though. When the plants die, towns will go with them. Department stores, grocery stores, druggists, restaurants and countless mom-and-pop businesses will struggle because the former-wage earners in their towns won’t be earning wages anymore.
That’s why experts say that the failure of the North American automakers would reverberate through the economy in ways that would hurt us far more than a bailout.
So we should all pony up and save the auto companies, right? Well, maybe. But before we run off on a happy spending spree, let’s think about this for a minute. If we provide American automakers with a bridge loan, who’s to say they’ll bounce back? Would you buy a new car from a company teetering on the verge of bankruptcy?
Then there’s the other question: Can the car companies actually turn it around? History suggests this won’t be easy. During the ‘70s, American carmakers produced so much junk that many Americans don’t trust them anymore. Many still won’t set foot in GM or Ford or Chrysler dealership. And in the coming decade, automakers are facing the additional task of building a 35-mpg fleet. And they’re going to have to appease the powerful environmental lobby by designing and manufacturing alternative fuel vehicles. That, too, is a scary thought; the development costs alone could be enough to bring down a big company.
So, yes, I’m a bit skeptical. But some pretty smart people have said that American automakers can come back. Annual U.S. sales - which have plummeted from 16 million to 10 million - are reportedly going to bounce back soon because we’re now creating “pent-up demand.” Eventually - maybe two years — people will have to start buying cars again. Or so say the experts
So I’ll buy into the bailout, despite my reservations. For me, it’s like sinking money into an aging car. If it works, our national economy will be healthier and we’ll all take a smaller financial hit. If it doesn’t…well, I don’t even want to think about that.
I’m just going to cross my fingers and hope this jalopy can run for a few more years.