We really need to smack someone in the face if our only rationale for bailing out Detroit is “Hey, we bailed out Wall Street.”
I won’t even try and justify the Wall Street bailout, I was against it then, I’m against it now and shame on McCain and Obama for rolling over and playing ball when the pressure was on.
Regardless, bailing out Ford? GM? Really? Have you driven a Ford lately? Really?! I know the big 3 make some great cars (specifically truck, sports cars and the Pontiac Vibe), but most of them suck and that’s not the worst part, those companies are buried in pensions, unions and unreasonably high salaries and benefits for factory workers. Where is it stated that a factory worker who works on the line for Detroit for 30 years should be able to raise a family of 5, put kids through college and retire comfortably on a cushy pension? That plan didn’t work, move on Detroit, its 2008, really?!
Letting the Big 3 fail would allow them to enter bankruptcy, reorganize, renegotiate debt with their suppliers while being protected under bankruptcy, force union concessions and allow them to re-emerge as a consolidated and more efficient company that can put America at the front of 21st century car manufacturing.
How else are they going to compete with Japan ? (… but its not really Japan we need to worry about it. Its Korea. I’d drive a Hyundai over a Ford any day.)
Straight out of the pages of Atlas Shrugged, huh?
ReplyDeleteBefore someone beats me to it:
ReplyDeleteWall Street Journal - September of 2006, "on average, GM pays $81.18 an hour in wages and benefits to its U.S. hourly
workers."
New hires are making $26 /hr. That's over $55k a year before overtime!, well above the national average, for being a factory worker! Nothing wrong with being a factory worker, but are we comfortable saying working in factory is an above average occupation?
I don't want to debate the numbers here, but the bottom line is that costs Detroit thousands of dollars more to make a car than it needs to primarily because of inflated wages. I'd be happy to further debate that, but regardless their business model, for whatever the reason, is failing and it should be allowed to fail. I don't see Lee Iacocca this time around.
>>Straight out of the pages of Atlas Shrugged, huh?
ReplyDeleteNope. Straight out of Time Magazine:
http://www.time.com/time/business/article/0,8599,1858702,00.html?cnn=yes
And if you read AS you'd know the main character was a factory worker.
I read half of it before I blacked out from an overdose of objectivist onanism and bad writing.
ReplyDeleteIf there's one absolute truth I've learned in life it's to be wary of any recommended book that comes with a post-paid postcard in the middle "For More Information."
Oh ouch! Sounds like typical inability to explain a clear counter argument. Cheap shots on riting skillz, lovely.
ReplyDeletePoorly understood personal convictions... must.. attack... anything... deflect deflect.. change topic quickly before I'm forced to back.. my opinion... up.
Read the news, form an opinion, get back to us. Don't be nasty about it though.
I admit to being biased on this subject. GM helped put my wife through college, and I drive a Pontiac Vibe (which is an awesome car, and a collaboration between Toyota and GM, funny enough).
ReplyDeleteBut, I think we share more common ground on this issue than you think. If a company makes bad business decisions, it needs to live with the consequences of those decisions. It's an excellent way to achieve progress in an industry. I like to think that, out of this mess, will come genuine efforts towards more efficient vehicles, alternative fuel sources, etc.
It's reminds me of Eastman Kodak. It took way too long, and got massively ugly, but they finally got around to adapting to a digital world. Now they make some of the best-rated digital cameras. Granted, all those jobs left Rochester, and that sucks. But I'm looking at the whole chessboard here. There's a term economists use... "Productive destruction" or something like that. To genuinely grow an economy, businesses need to constantly rethink and adapt. If they get too set in their ways, it's all the more painful when change ultimately comes around. And it just about always does.
Bailing them out will just be throwing good money after bad. It will only buy them time until they're in the same situation again.
ReplyDeleteThey need to de-unionize, and they need to increase their quality control and the design of their cars. GM and Ford cars are UGLY and unreliable.
They need to start producing Civics and Camrys. That's the only way to start being competitive.
"It's reminds me of Eastman Kodak. It took way too long, and got massively ugly, but they finally got around to adapting to a digital world. Now they make some of the best-rated digital cameras."
ReplyDeleteHa! So Kodak is a good example of how successful a turnaround can be!? They're doing terrible, and they just sold off their best unit: Health Imaging.
On a related note... isn't funny how in the the 80's it was the Japanese cars that were the small, crappy, ugly cars? Then in the 90's it was the Korean cars that were the small, crappy, ugly cars... then in the 2000's its the US cars that are the big ugly crappy cars?
ReplyDeleteMaybe that is GM's plan...
Ha! So Kodak is a good example of how successful a turnaround can be!? They're doing terrible, and they just sold off their best unit: Health Imaging.
ReplyDeleteI didn't say successful. I said they finally figured out the new landscape, though it took them way too long.
Kodak (and for that matter Xerox) are great examples of companies that will never return to their previous dominance because, as Jimmy pointed out, it took them way too long to figure it out. Where was their bailout? Can we throw Rochester a bone? Really? Where was that bailout money when the Fast Ferry went under? Dozens of jobs were lost and the effect on the greater Rochester tooks several days to recover from… at least a week, it was devestating.
ReplyDelete"Change" means mo bailouts mo bailouts mo bailouts.
ReplyDelete