It is Time to let GM Fail!
by Tex Norman(121)
I don’t like what I am about to write, but I have come to the place where I think it is time to let the car makers go out of business. Initially I supported the bailout of the automakers for the following reasons:
1. the security of our nation depends on having a production structure in place that could be re-tooled quickly to make tanks, and other vehicles that might be needed in times of war.
But my support of the auto-industry had one assumption that may have been a false assumption. I thought GM and Chrysler were in trouble, but not floundering to the point of bankruptcy. Needing a temporary loan to get back on your feet is one thing, but if you have a business that is just not working period, then any help is wasted help.
· Why support a business that makes a product without sufficient demand? If we were paying to keep a company making cars and there was a demand for the cars that would be one thing, but if we pour money into a company that makes something it can’t sell, well, that would be stupid.
· The more I look the more I see that GM and Chrysler have mismanaged their companies, squandered their resources, and bet on cars of the future that are not wanted or needed by current and future car owners. The whole world has known that we were running out of oil since the 1970, and scientists and people in the industry have known we have a limited amount of oil almost since the industry was born. Detroit continued to build gas guzzling cars and invested nothing in developing products for our certain future.
· Obviously the industry has suffered from an American Energy Policy that was uncertain at best, and stupid at worst. Actually, the US and the World have functioned without an energy business plan, with no plan B, just winging it, and hoping the bad that is certain won’t actually happen, at least not in our life time.
· The financial meltdown obviously has had an impact on all business. If people fear losing their jobs, or have lost their jobs, and are losing their homes, well, what money they have they want to hold on to as long as possible. You just don’t buy a car if you don’t have to, when you are worried about paying your rent, or feeding your kids.
· The car industry suffers from what is called Legacy Costs. The industry made labor agreements that included a sort of retirement welfare system for the workers. These Legacy Costs made working in the auto-industry a great job, and much of my life I have envied the auto-workers and the sweet-heart deal that the auto workers had negotiated.
· The industry has suffered from poor quality products. Even as the product quality improved the auto-industry could not put to rest the old lemon grievances that spread through the buying public.
Obviously, all the car companies of the world are suffering in this current economic down turn, but the big difference is that companies like Toyota have not had the same pattern of mismanagement, and bad choices that now plague GM, Chrysler, and (to a lesser extent) Ford.
It is perhaps helpful to remember that there have been failed car companies in our past. Before GM, Chrysler, and Ford there were hundreds of car companies in America . In fact, there was a time when there was a car company making cars in almost every big city in this country. Consider a few defunct auto makers:
- The Chicago Motor Corporation built motorcycles 1895
- Brush Auto
- Moon Auto
- Buffalo ’s Pierce Arrow.
- DuPont, the car of choice for film star Douglas Fairbanks, boxer Jack Dempsey and other celebrities.
- The Cord Company offered the first front wheel drive cars offered in the US ..
- The Tucker
- Studebaker
- Packard
- Ramblers (later named American Motors)
It is sad when a company fails, and the suffering that follows is real and not to be ignored. The point is, however, that it would be better to take the money given to GM and instead just give it to programs that will help displaced workers, retrain people, offer small business loans to workers, and provide help as they attempt to get back on their feet.
There is a second thing to remember: when a business goes under it creates a vacuum and as people rush to fill the void they often innovate and create new, better, more effective companies. When I was a kid there were no computers. When I was in college people used slide rules not calculators. Just 10 years ago there were few cell phones and no iPods. If a company can’t make it, then giving them money is as effective as piling the money up and setting it on fire.
Article submitted Friday, March 06, 2009 & read 631 times.
Leave Your Comments:
» left by Sandra E. Graham from Paragould, Ar USA (1 year 183 days ago.)
Bravo, Tex! No one could have put it better and more to the point than you have. You are absolutely right--'piling the money up and setting it on fire!' Thanks for telling it like it is. Sandra
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» left by Linda DeWitt from Oregon (1 year 183 days ago.)
Thanks for the article. I too think it is time to stop pouring money into a black hole. As you stated innovative people is how our great country has always moved forward.
LInda D
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» left by robert melaccio sr. (1 year 182 days ago.)
Ken, I agree but it was time before we gave them our billions as it was for them all. They could have re-emerged minus the debt and ready to go and they will do that now anyway. Good job, Best wishes.
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» left by Christopher from Calgary, Alberta (1 year 162 days ago.)
Right on! 'When a business goes under it creates a vacuum and as people rush into fill the void they often innovate and create new, better, more effective companies.' Preaching to the choir, brother!Respond to this comment
» left by robert melaccio sr (1 year 126 days ago.)
Tex billions later and now they fail. Yes just in time for their bonus money. Have you read about the AIG numbers? lets get off parties and onto truth. best Wishes,
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