After they’ve had their fill of teabagging at their tea parties, and have verily shot their collective load, what’s next? Salad tossing parties?
- Would you care for dressing?
I’m not going to deny that I find the increasing talk about bailing out the Big Three Detroit automakers more than a little worrisome. Frankly, as someone else said, the car buyers should be bailed out before any this lot.
Immediately jumping to the defense of giving government welfare money to this bunch of managers are those who raise the specter of a potential domino effect that would result were they allowed to fail. They point out that a large chunk of Americans will loose their jobs as the effect ripples through the industry. Well to that, I add my voice to Bernie Sanders and everyone else who says that any company that is “too big to fail is too be to exist.”
Let’s be honest, whether or not the $25 to $50 billion is given to these automakers, their sales are not going to pick up for a couple of very compelling reasons: (1) the potential pool of buyers has shrunk and (2) their product is less attractive than that offered by other automakers with plants in the US (Toyota and Honda, primarily). So this “emergency” bailout would be little more than a means to increase the US national debt by $25 to $50 billion while delaying the inevitable restructuring or death of these poorly managed companies.
What really burns me up about this whole situation with the Big Three is that over the years all the signs pointing to the industry’s changing direction were seemingly ignored by their respective leaders. They ignored the call for higher quality vehicles. They ignored the call for more fuel efficient vehicles, fighting any regulatory increase in standards tooth and nail the whole way. They ignored the increasing US sales of their Japanese and Korean competitors, completely discounting any need to effectively compete in their own home market.
When they were generating revenue, how well did they reinvest proceeds? Not very, to say the least. It’s not until we are in the midst of a full blown crisis that this lot seem to realize that the brown stuff on the fan has been there so long that its dry and that’s why it doesn’t smell as bad as it use to. The fvck? And now they want $50 billion from the US taxpayer to help them stave off their imminent demise? How do they propose to pay that back? Are they going to put up equity as collateral? Short answers: they don’t propose to repay any debt (because they won’t be able to) and any equity used as collateral will become worthless once they slip into that lasting sleep. At most, the US taxpayer assumes ownership of and responsibility for Detroit’s auto manufacturing facilities. Not Good.
For companies in their position and condition, the best alternative I can see for them going forward is one characterized by a radical restructuring. It starts with replacing top management, but will require a considerable about of time, capital, leadership, viable products and consumer demand. Looking at my score card, I see gaps in leadership, viable products and consumer demand. Now is not the time to invest $25 – $50 billion, and not with these leaders.