An Elephant in Donkey Land

November 24, 2008

Big Three denied bailout. . . for time being

Filed under: Economy — conservativelawstudent @ 10:27 pm
Tags: , ,

As far as I’m concerned, having worked in the auto industry for the better part of a decade, the Big Three can just be allowed to fail. And they will. Even with a “bailout,” their management schemes and processes are so backwards and horribly executed, that a bailout will only delay the inevitable. Not to mention the union effect, which makes vehicles built in non-union shops upwards of $3,000 less for Joe Public to purchase.

Let’s take a better look at some of the arguments I have been hearing lately:

Argument 1
“They wouldn’t be in this situation if they made a quality product.”
This is not true. They have been making quality products, at times, in certain vehicles, and they still do not sell. Why not? Because you can get a comparable product, with the same quality, for less money built in a non-union shop. Why? Because you are not paying for the newspaper reader on the line making $90,000 a year. You are not paying for literally millions of unbelievably great pensions out there for these guys that worked on the line. You are not paying for the best of the best health care for these guys working 8-5, punching the clock on the way in, going out of their way to not go out of their way to help anyone else, and you are not paying for companies paying for workers who are not working.
From the management side, well, those of us on the ground floor have seen this coming for a long, long time. We have tried to make decisions based on what would be best for the long term, only to be shot down because some cell in some spreadsheet would all of the sudden not be green. And some manager in charge of that cell in that spreadsheet, who was not going to be the manager of that cell past another six months did not want to have to explain why, even though that cell is no longer green, it was good for the company long term.

Argument 2
“If they can just get through this, they’ll be all right.”
This is just wrong on so many levels. For the reasons stated above, nothing would change. The companies would take the money, continue business as usual, and we would be in the exact same position 3 years down the road, if it even took that long.

Argument 3
“They bailed out Wall Street because it is so integral to the economy, so is the auto industry.”
False. Wall Street is the backbone of all industry. Without the ability to borrow money, no industry can survive. The entire chain of product and process breaks down, no work gets done, nothing gets built and nothing gets purchased. The auto industry is a cog in the machine of US economy, but so was the railroad at one point. Not to say that we have reached a point where cars are obsolete, but just because a certain industry is a large part of the economy, most certainly does not mean that the economy cannot go on without it. It will fail, and it will be rebuilt, from the ground up.

What needs to happen

If they decide to go ahead with another crap sandwich for the auto industry, it needs to be with serious conditions. The first is to either dump or re-negotiate with the UAW. I would say dump it, scrap it, let them strike and be proud to say nasty things to people going into plants, making decent money and building quality product. UAW Ron Gettelfinger already has stated that his union workers will not negotiate pay or benefit cuts, so send them out. The next is to take the management of all three companies and fire them. One by one, all at once, whatever. Go find some smart managers from outside the auto industry, from companies that have succeeded, that know how to succeed, and install them in place. Then watch the fun as OEM/supplier relationships are restored, costs of doing everything go down as decisions are made with long term success in mind, rather than just looking good tomorrow, and parts are built better and more efficiently, driving up quality in the end product as well. I would rather my tax money did not go to these idiots, because this kind of good thinking would go unheralded, and we will be talking about this again in the near future, but it is a necessary step if the Big Three are to survive.

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