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Dec
04
2008

Detroit 3 reduced to beggars

Thursday, 04 December 2008 07:58
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Road Trip! I have been on some crazy road trips. I have gone back and forth to Florida several times, to NYC for day trips or overnight, to Niagara Falls and back in an afternoon because we were bored. I even drove from Reno to Albany in a '75 Bronco pulling a 24' U-haul with my brother. But today the heads of the big 3 automakers took a road trip to Washington D.C. begging congress for a $34 billion bailout. I can't even fathom the magnitude of $34 billion, but these guys are there to make their case that with the money they will emerge as strong, growing, profitable companies.

That's a hell of a request, and a hell of a Christmas present for our kid's and grandkid's generations. Merry Christmas, here is a huge debt that will probably never be repaid, and only postponed the inevitable.

Don't get me wrong, I don't think the domestic automakers couldn't survive. but this crisis is not new, and none of the ideas that I have heard from them are going to get them through it. In my completely non-expert under-informed opinion they need complete restructuring, and streamlining. No amount of cash is going to turn them around without major changes. Just look at the auto market over the past 10 years. Ford, GM and Chrysler continue to lose market share, layoff employees in the US, move more and more manufacturing out of the US, and close plants all while Honda, Toyota, and even Hyundai are gaining market share, building plants in the US and hiring Americans to build these "foreign cars" in American plants. So if they can manage to make a profit building and selling cars in America, so could GM, Ford and Chrysler.

And again in my completely non-expert under-informed opinion, even if one or all of the American auto manufactures were to disappear (and I neither hope nor believe that this will happen), Americans will still be buying cars. So either an existing manufacturers, or new ones would have to pick up the slack to manufacture all the cars that used to be bought from the Detroit 3, and those existing manufacturers, or new ones would need additional workforce to meet those needs. Ultimately there will be fewer people working in the auto manufacturing industry, but with the Detroit 3 continuing on their current path, there will be anyway.

Lets let the free market decide what the automotive sector should look like. Lets not let congress throw good money after bad just because these companies have been around forever. They can survive, it's going to be up to them to make it happen... with or without the bailout. With the bailout they may survive a year or 2 longer without major changes, but without those changes the end result will be the same... in my non-expert opinion.

Scott Pollacek - About Me

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