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Posts Tagged ‘Chrysler’

When it comes to American cars, the American people have already voted – they don’t like them, which is why the vast majority of cars you see on the road are either Japanese, Korean, or German. The U.S. auto industry would like us to believe that they are in a jam now because of the credit crisis, but all the credit crisis has really done is accelerate the demise of the industry.  Now we are told that if the U.S. auto industry vaporizes then millions of American jobs will be lost. It would certainly lead to disruption, and in the short term, many people might well lose their jobs; however, in the long term the loss of the American car companies would probably lead to an expansion of the foreign brand manufacturing industry in America. This is just the out sourcing of jobs from Japan, Korea, and Germany to America. There are already plenty of car manufacturing plants in the South making Toyotas, Hyundais, and BMWs. Inevitably there would be more, and the out-of-work people in Michigan would probably have to move south to get these jobs.  This is the same sort of relocation for a job that millions of Americans go through all the time. So what is the issue here? Isn’t this just capitalism at work?  What is so special about the U.S. automobile industry that it must be saved?  The simple fact is that there is nothing special about it and just like we no longer have airplanes made by Douglas, Curtiss-Wright, or McDonnell, we may soon find we no longer have cars made by Ford, GM, or Chrysler. Yet, just like in aviation, other, more competitive companies will be found to meet our needs.

The Big Three are an example of everything that is wrong with American industry. The companies are not meritocracies with the best and the brightest rising to the top to lead. Instead we have mediocre men who lack the vision and foresight to guide their companies in the face of stiff competition. Yet they still manage to take care of themselves very well, with enormous salaries and benefits – such as the use of expensive corporate jets – and in doing so they help bleed the companies of the funds needed to operate at a profit. These inept leaders have stood by and watched while their companies have lost market share year after year. Yet, they have never been able to come up with a way to effectively compete, and so they have now reached the inevitable end of the process. They would have us believe that all of America depends on their industry and that America will suffer greatly if they are allowed to fail. Sounds a lot like Treasury Secretary Paulson talking about his buddies in the banking industry doesn’t it? Yet, when Paulson gave the banks millions the banks just sat on the money rather than lending it. It’s almost like we never gave them any money at all, and yet no catastrophe has happened – the banks just made out like bandits, that’s all. And, of course, Paulson is now sitting back and doing nothing.  Now the auto industry is trying to play the same game with us.

If the auto industry was serious about competing one would think they would come up with some bold, creative ideas to win back market share.  How about offering 200,000 mile, bumper to bumper warranties? That should get some attention, but wait –  maybe they’re afraid their cars won’t last that long. Too bad, most of the Toyota owners I know fully expect their cars to last 200,000 miles, maybe even 300,000 miles.  How about offering some really creative financing, like no payments, no interest for the first year and then, after that, a fixed interest rate of 3% or less?  How about a guaranteed customer satisfaction program or they will take the car back after one month and the customer won’t pay a dime? What? Are they afraid too many people will bring their cars back?  How about asking the potential customers, via their websites, what features they want in a car and then building them like that?  How about asking people why they don’t buy American cars anymore and then taking corrective action?  It could be done you know, but not by these guys who run the companies. They don’t know how to do these things, and they don’t care, and that’s why things are the way they are.

So what do we do now? Congress wants a plan from the car companies – no plan, no money they say. But how tough will Congress be? Will Congress eventually cave in, out of fear of a total collapse of the economy and give them the $25 billion of our money that they want? Probably.  Congress doesn’t want to be blamed for the collapse of the economy. So my guess is that they’ll get their $25 billion and burn through it in a year or two. Then they’ll be right back where they are now, asking for another $25 billion.  It’s really entirely up to Congress now.  They have to hang tough. They need to make these guys come up with a real plan, not just some hand waving fake plan that is only intended to get the money. The problem is that the Congress doesn’t have a great track record when push comes to shove.

Here’s an idea!  Maybe Congress should just give the $25 billion to Toyota and Hyundai and BMW! It could be an incentive to build some more plants in the U.S. that will hire all the laid off U.S. autoworkers! Then we just let Ford, GM, and Chrysler join the ranks of Hudson, Packard, Studebaker, and Kaiser’s Henry J.

It would probably work out better for all concerned, except of course, for the guys with the corporate jets.

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