Auto Industry Bailout: Pro, Con And Undecided

November 20, 2008

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?

Posted by Beth Stackpole on November 20, 2008 | Comments (6)

January 14, 2009

In response to: Auto Industry Bailout: Pro, Con And Undecided
brb commented:

chehfgh bread

December 4, 2008

In response to: Auto Industry Bailout: Pro, Con And Undecided
Jim Wilke commented:

In my opinion, Fannie Mae and Freddie Mac should never have been created regardless of the benefits they offered to some citizens. When the government is involved in business, it can not escape the urgent need to keep it functioning ... at the expense of its citizens. The same will happen to private business as the government steps in to bail out bad decisions. Those who are bailed out become beholden to the policies and directives of the government who now has a vested interest in how the (once) private business is run. This, in its fully mature condition, becomes socialism; state-run and directed business.

December 3, 2008

In response to: Auto Industry Bailout: Pro, Con And Undecided
C. Blevins commented:

The financial problems were brought on by the govenrment's policies via Fannie Mae and Freddie Mac. These are not "private" enterprises. The Auto Industry is private enterprise. Let it succeed or fail on its own. Otherwise we will become a socialist country with the government controlling everything. History shows that socialism is economically inferior to capitalism.

December 3, 2008

In response to: Auto Industry Bailout: Pro, Con And Undecided
Jim Wilke commented:

While bailouts of private firms in economic hard times may be desireable, it is not the government's constitutional role to do so. Private enterprise is a private affair - both the benefits and the troubles. The success or failure of all businesses affect, to some degree, the well being of US Citizens. The fact that failure of some affects even the world economy in scope, is no reason for the government to sieze its citizen's wealth by law, and hand that wealth over to private enterprise do what some consider to be the greater good in bail outs of businesses that have made poor business decisions. Risk of failure must be real. US citizens will not change bad business practices if they percieve the government really owns their problems.

November 20, 2008

In response to: Auto Industry Bailout: Pro, Con And Undecided
Cosmic Central commented:

Had Rick Wagoner and his two companions flown coach to Washington; with at least a rough outline of a recovery plan and insisted their first order of business upon receipt of the bail-out would be to clear their desks to make room for their qualified replacements; I might have ignored my darwinian instinct and supported him. Instead, the three amigos put on yet another circus act all too familiar to those of us that have actually been paying attention over the years. Thumbs down - let natural selection run its course.

November 20, 2008

In response to: Auto Industry Bailout: Pro, Con And Undecided
R.Lobaton commented:

this is the time when everyone gets afraid
and will make the worst out of them.
thinking the they are doing the best, they will lie,cheat and try to confuse others until they will get what they want.
we are responsible for our own actions.
they need money they need to stop spending it like its free. after all they are call by them self (the big auto industry ) well this is the time to grow and developed.
how to do this simply by cut spending on corporate $20,000 dollars private Jet fee per flight, extra unnecessary salary (we are talking millions ) cut on expenses all over factories they own.
well over all they started small the need to adjust budget do not use tax payers money.
it belong to us.

Design News Partner Zones

Light Matters: The Unsung Heroes of Modern Health Care
First, let's define "no-compromise." In an ideal configuration, this lamp would use a high-brightness LED (HBLED) that is built into a small, integrated package and is able to produce a large quantity of focused light, operate with a high level of reliability and generate no audible noise. Is this difficult? Yes, but it is possible.
Read More

Design Engineers' Portal for Sensing and Machine Safety
Whatever industry you're in, or whatever product you manufacture, the right sensors to automate your plant, and to improve your overall efficiency, quality and safety are a must. You'll find Banner Engineering to be an amazing resource of products, training and people with expertise.