The time has come. We’ve heard all of the whining and complaining from Detroit’s Big 3 CEOs. We’ve heard them ask for $25 billion, now $34 billion, and who knows how much will be next.
Now it’s time to tell them what they should do: shape up or ship out.
For years, the Big 3 have lived off of excess spending and government protection. They have been dominated by unions and have kept artificially increasing the cost of production and operation.
Back in the 1970s, instead of becoming competitive, the Big 3 lobbied to have import restrictions of Japanese-made cars (i.e. Toyota and Nissan). The Japanese auto producers opted to increase the value of their cars to sustain revenue growth since car exports were limited in the United States.
This had the effect of pushing Japanese automobiles into larger and more expensive segments, and artificially sustaining the lives of the Big 3.
Since then, aided by cheaper gasoline and a bustling U.S. economy, the Big 3 eventually made their comeback. To accomplish this, they bet on gas guzzling SUVs and heavy-duty trucks.
As we all know, that’s not working out so well these days. The irony of the whole situation is that the Big 3 automakers were making gas-guzzling cars back in the 1970s and needed government intervention then. They're finding themselves in a similar predicament now.
What I want to know is, what happened to a little thing that we call innovation?
I remember in the late 1980s, GM had developed a solar-powered car called the SunRaycer. Then, in the 1990s it created the GM Insight and the EV-1, both electric cars.
Do you know who scrapped the EV-1 program from GM?
That’s right, Rick Wagoner, the same CEO who is begging Congress for billions of dollars of taxpayer money because GM has failed to innovate and keep up with the market economy for automobiles.
Ford has over the years scrapped similar programs such as the Ford Sunchaser and the Ford Think. Back in the 1990s, Chrysler created the Chrysler TEVan, an electric-powered vehicle.
What may be wrong with the Big 3 is that it has been in Detroit for all of these years.
Many who are within the top ranks at Chrysler, Ford, GM, and the United Auto Workers (UAW) union have been there not just for their whole lives but have a legacy with those organizations as many as five generations deep.
Maybe a change of scenery and a change of personnel might be a good change for the Big 3.
What happens when a company can no longer sustain itself? Usually it goes bankrupt and has to start all over again.
In my estimation, that’s what the Big 3 need. They need to start over again.
The answer to the problem of the Big 3 is not extending to them $25 billion in government handouts, nor the $34 billion that they are now asking for.
The answer is to build new factories with the latest and greatest in technological advances, bring in new executives and scientists who will bring fresh ideas and innovative approaches to building quality automobiles, and create a newfound focus on being marke-competitive in the United States and the global economy.
If you look at the other car companies who have setup new factories in the United States using the latest in sophisticated technology, you will find companies like Honda and Toyota who build cars in places like Alabama and the Carolinas.
If the entrenched interests in Detroit run too deep, why can't we move the auto industry somewhere else?
From what I understand, Toyota factory workers in the United States are not picketing outside their plants because of poor wages, inadequate healthcare, and unfair working conditions.
Rather, they are everyday Americans who work hard and make a decent wage to feed their families.
Nothing wrong with that.
As far as the existing factories go, we can find ways to adapt those factories to fit the needs of other industries.
And with the $34 billion that the Big 3 are asking for, we can use the money for job retraining and assistance programs while former workers receive new education and find new jobs. This would certainly be a better use of the money than throwing it into a bottomless pit that is the current Big 3.
If we want companies to fill in and take the factories that will be vacated, the government should offer tax incentives but not a handout. When taxes are low, entrepreneurs have the incentive to operate and run their businesses.
Same goes for new factories and new setups in other parts of the United States. Provide tax incentives and businesses will find motivation to succeed, thrive, and most importantly, create new jobs.
For the auto industry to revive itself, it must face tough decisions, and make sacrifices. Otherwise, the Big 3, as we know it, will cease to exist.
However, we must remember to avoid tariffs and other trade barriers; automobiles will always be made in the United States.
The question is who will be making them: Chrysler, GM, and Ford, or everybody else?
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