Save the Big 3?

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The talk of the street is whether or not the US Government should bail out the Auto Industry, especially with GM nearly out of cash to cover operating costs. The question is should we save them? It will be catastrophic if one or all of them file for bankruptcy, but on the flip side, their business model is not working. What about the UAW? How do we handle that aspect of their business which is non-existent in the business model of our foreign competitors?

The Big 3 where on Capitol Hill today pleading their case for an acceleration of the $25 Billion dollar loan money already made available as well as an additional $25 Billion in bailout funds. The situation at hand is that providing this bailout money will only stave off a bankruptcy filing for a few months. Costs are out of control, the product line is archaic, pricing/profitability will not be achieved on a vast majority of product offerings in this current market, and it is going to take too long to retool the product line to compete with current rivals. A big contributing factor to cost is the expense of labor that has been driven up significantly over the years by the UAW.

The UAW is currently arguing that they have made plenty of concessions and that they are no longer going to concede anything else to the Big 3. They feel that they have lowered starting salaries of new employees more in line with the competition as well as agreed to incur health care benefits after GM pays their required $25 Billion. All one can say is WOW-W-W-W and they said they have done enough. The fact remains is that UAW is a major contributor to the death of the American Auto Manufacturing Industry, but they are not the sole problem. How can we justify paying a assembly-line working $60-80K a year for screwing in a bolt or putting in a seat? Many say that if we cut corners or lower salaries these workers won't care any more and will put out a less than quality product... Wait doesn't that already happen? Now don't get me wrong I feel that they should be compensated accordingly, but what happened to pay for performance? What happened to profit sharing if and when the company meets and exceeds their numbers? It seems like these are oxymorons in this industry.

Another issue as hinted to earlier, the product lines are not competing effectively with that of our competitors. Our competitors are changing their vehicle offerings often while maintain a margin that is achievable. Take the Crown Victoria for example; I believe I read something a few years ago that said this was the most profitable vehicle in the American Auto Industry because it is basically built on the same chasis as the original model that was first introduced with a few minor cosmetic changes. That is ridiculious in my opinion; and this is why. Lexus {a Toyota company} has a car now that can parallel park itself...pretty much Nissan's full line is now keyless start; and here we are with a car that can't do any of that and will Ford change it so that it is more technologically advanced? NOPE!!!! It's time to get back to innovation and quality, but it appears the CEOs of these firms don't want that right now.

I am glad the Senate postponed the vote until the Auto Industry can decide whether or not they want to really move forward.

Check the next post about my proposed plan for these 3