I don't like to talk politics here on the blog... but as these thoughts are running through my head, and the blog is mine I've gotta take some liberty here and subject everyone to more talk about the auto bailouts. However, I can assure you that my thoughts are rational (even if you don't agree with them), that they are not influenced by lobbyist dollars or advertising dollars, and that they will be fairly brief.
Allow me to rank the top ten problems with the Big Three in order of severity and the influence of their role in this problem:
1-6) Bad Management
7) Credit Crunch
8) Bad Product
9) UAW (United Auto Workers) Union
10) Bad PR
Unlike most people looking at the situation, I don't see the UAW as the main problem here. They're the easiest ones to villify, because you can easily see the difference between the ~$75/hour figure UAW workers make and Toyota's $48/hour figure, figures that have been thrown around too much in recent days. Note, however, that the $75/hour rate is not their hourly pay, but pay + benefits + all former retiree benefit costs divided by the number of current employees... and remember that someone in the big three agreed to those contracts and has known of the pension problem for decades.
As for the products, I don't know what the design process at the "big three" is, but for the most part, it's broken. 50% of their cars should never have been made - Dodge: Avenger, Caliber, Journey, Dakota, Nitro. Jeep: Trash 'em all except the wrangler and Grand Cherokee. Pontiac: Too late, but pretty. Chrysler: Don't even get me started. Ford and Chevy have done a decent job at limiting the metal waste, but have obviously focused attention on refining SUV's and Trucks above sedans and compact cars. Oh, and I have to admit (as I've referenced in the past) that I am an 80 year old trapped in a 27 year old body, because I love Buicks... forgive me.
So, don't tell me it's all the dirty UAW and for goodness sake (Ben Stein, Rush, et al.) don't tell me that American car companies are still putting out great product, but that it's that dern credit crunch that's the real problem here. I've rented or taken a ride in plenty of recent American cars and they're lacking (though trucks/SUVs are generally nice). Not only are they poorly designed and often unreliable, but they're priced above their better designed and more reliable competitors... who still manage to turn a profit on that lower price. How can a bailout fix that?
The common link between all of these items is #1, bad management... they agreed to the UAW contract, approved the shoddy cars, and ignored changing circumstances (gas prices and impending economic woes alike). As long as these people are running the companies, and as long as the corporate structure remains intact, the problems will continue. A corporate bailout will not solve their problems.
I'm all for helping the auto workers and workers in related fields, but don't show me a donkey and tell me that with enough money someone can transform it into a Clydesdale. The facts just don't point to being able to turn a poor performer into a profitable car company simply by throwing money at the problem and creating a car czar. Radical change (structured bankruptcy, maybe?) is necessary.
Posted by Jordan at December 14, 2008 5:05 PM | TrackBack
