Friday, December 12, 2008

Should the U.S. Auto Industry Be Bailed Out?



No. But ultimately yes.

The U.S. Auto Industry, the "Big 3" has been working an inefficient system while attempting to stay in contention with "foreign" automobile manufacturers and now want money to bail them out? It would be ridiculous were it not so sad. Yes, I am aware that the Big 3 employs over 200,000 employees. However, it is simply the nature of the market.

The Big 3 has been hesitant to change in more than one form. They have been holding to the ideal that during a time when consumers have less money than ever, they will want to let alone be able to buy gas guzzlers like the GMC Yukon or the Ford Excursion, not to mention the ridiculous amount of wasteful trucks. There is a reason why Toyota and Honda are so successful. It is that their primary focus is on the car and the mid size SUV with a mini van mixed in, to provide the needs while giving flexibility in terms of fuel and features. Furthermore, even Al Gore noted that it was unfortunate that the Big 3 had essentially give Toyota a strong foothold in the last 7-8 years by allowing the Toyota Prius to corner the market. Hell, even in today's economic crisis, where some GM dealers are offering buy one get one car sales, the price for the Prius has been marked up by dealers.

Furthermore, the labor union and management should be blamed for the current situation as well. The Big 3 fail to realize that they need to restructure benefits packages such as virtually every other industry has done. One of the sticking points of the latest bailout proposal has been that the Big 3 and the associated labor unions were not willing to accept competitive pay with the U.S. workers for the foreign employers, employ over 110,000 Americans, but are paid 3-4 dollars less, while still being paid reasonably.

Detroit is having a bad year. The Lions suck. The Pistons gave away their heart and soul and now are sucky. The Indians will suck after Kerry Wood messes up his elbow after a week of spring training. Detroit needs something, and if those financial firms whose actions were just as egregious were given a 700 bil bailout, it seems that the automakers should get one as well.

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