Adapt or Go Under
I(N.) should warn you I’m in a ranty mood. I’m tired of the bailout and whiny billion dollar making executives and spa retreats and demands for government handouts. I’m sure all of you feel the same way, if not I admire your patience :).
There were three (well four but I’ll blog about the fourth tomorrow) articles that caught my attention in the newspaper today. The cover story was “Automakers say if they go, millions of jobs will vanish” and inside the paper immediately beneath the another spin on that topic entitled “Plans form for $25 billion in aid to automakers” was a large picture of the 2010 Mustang and this article “Ford to trot out its pumped-up new Mustang.”
So you tell me why I should give my taxpayer dollars to the tune of $25 billion to automakers that are putting money into the development, production, and marketing of a car that has an optional V-8 engine, 315 horsepower, and a throatier exhaust. The gas mileage hasn’t been released (shocking, right?) but the 2008 version gets 15/23 and the new version wasn’t designed for better fuel economy. No “It’s Ford’s image. It’s the essence of Ford.”
If your image is a gas guzzling sports car and oversized pickup trucks in an economic climate where fuel efficiency is king don’t you think you should maybe consider retooling your image? And it’s not even like they can say people still want these cars since sales are down 30% and the Focus outsold the Mustang 2-to-1. Ford isn’t the only one focusing on exactly the wrong kind of product. Chysler has already rolled out the new Challenger and the latest edition of the Camaro is expected in March.
Personally, I’m glad that instead of handing over the cash our government is stopping to ask itself how bad would it really be for the economy if we let these guys fail. You see the automobile industry wants you to think that we either hand them a blank check or millions will get laid off but please stop a minute and think of the airlines. Have they had significant financial problems, do they employ in various forms and fashions a large employee base, have we ever handed them $25 billion, are they still operating today? The middle ground between implosion of the automobile industry and government handouts is bankruptcy. This gives the automobile industry the freedom to restructure and renegotiate to reduce their size and overhead. They could reemerge from this leaner and more efficient without wasting billions of our money. We need to send the message that the government isn’t in the business of easy handouts. If we don’t one industry after another is going to go knocking on Washington’s door and we will be bleeding more money than any of us can fathom.
It sounds good so you may wonder why the automakers are opposed, well they probably aren’t all that oppposed but the United Autoworkers Association certainly is, they refuse to make ANY concessions in their demands despite the financial crisis. They don’t ask, they demand that the government pay up. See part of the renegotiating the auto industry would be able to do under bankruptcy is to renegotiate all their labor contracts and that puts the union in a bad position. I feel for the workers that are collecting pensions, and the workers still toiling away everyday but we are all losing benefits or paying more for benefits and I don’t think I should lose more to protect a union that is completely unwilling to compromise. It’s unrealistic in today’s economy to expect to get away with it but they do! They do because of the AIG bailout and the not one but TWO “spa getaways” we all funded for their executives. The auto industry and the union see the sweet deal that the banking industry got and they want a piece of that pie. They want it despite the fact that they have already been given $25 billion in September to create more fuel efficient cars, they it want to despite there being alternatives, and they want it despite the fact that they put themselves in the position they are in by continuing to pour money into product lines (like trucks and sports car) that aren’t selling.
I say if we want to give them something then give then part of the $350 billion Paulson still hasn’t touched. After all that money is to “stabilize the market” as needed, don’t you think stabilizing the auto industry would help stabilize the market. And oh by the way he has already abandoned the centerpiece of the “rescue program,” the purchase of troubled mortgage backed securities from banks. Instead the government is buying bank stocks which is like handing them a wad of cash and telling them to have fun because I don’t see any mortgage holders or everyday people getting any relief from this solution.