Will giving the Big 3 automakers in Detroit (Ford, GM and Chrysler) $25 billion dollars help turn around the downward spiral they have been in for the past 25 years? Should the government be in the business of bailing them out at all?
To tell you the truth, I haven’t made up my mind about this issue. I was, and remain, against the $700 billion bailout of our financial industry, but the auto industry is so rooted in a specific area of the country. Markets can correct themselves, towns and families cannot.
On the other hand, it is clear that their current business model is inefficient and just doesn’t work. Why is that? Is it because of poor management at the executive level of the companies? Is it because of the UAW (United Auto Workers) union and their policies, including the pensions and health benefits for retirees? Or is it as simple as saying the products coming out of Detroit are inferior?
The answer is it’s all of the above. To make matters worse, it’s a snowball that has been rolling for way too long.
Maybe bankruptcy is the answer? The airline industry has seen many of it’s companies come out better after filing. But bankruptcy could terminate all of the union contracts, specifically the pension and health benefits for retirees. This is mostly the fault of the executive at the Big 3. They gave in to union demands. The union was only doing their job.
So what do you think the government should dol? Should they give them the money or make them go into bankruptcy? Any other solutions?
photo credit: mandj98