U.S. Automakers, the Economy, and Aid

The Big 3 U.S. automakers are in trouble and are asking the government for help. They are asking for aid during a time when the public was against the rescue plan for the financial sector. They are asking for aid during a time when the public scowls in dismay at the total compensation upper executives receive; even when their companies have a negative return. To politicize matters, Speaker Pelosi’s proclamation for help was not done in a bipartisan manner (but that’s a story in itself).

Thirty years ago the public faced rising prices at the gas pump. As more Americans switched from a U.S. brand to vehicles made by a foreign company, Americans discovered not only were foreign cars more fuel efficient, they were more reliable. Fortunately, the Reagan administration brokered a deal to get foreign automakers to build assembly plants in the United States.

Thirty years later, the foreign automakers still have the most reliable cars and have expanded their offerings into moderate and luxury sedans. Toyota, Honda, and Hyundai have assembly plants employing U.S. workers. Meanwhile, during the same time frame the U.S. automakers moved from gas-guzzling sedans to the gas-guzzling SUV and truck market. Now that’s progress!

The Big 3 not only missed the boat thirty years ago, they continued to give the fuel-efficient, reliable auto market to the foreign companies. Look at the numbers! The foreign automakers continue to have a more efficient business operation. As Honda takes 10 days to convert a plant to produce a different model, the Big 3 seek government aid for retooling.

Although their failure during the past thirty years is obvious, the auto industry was a big part of the industrial backbone of the United States during the 20th century. Although the industrial age is over, the auto industry is still an important component in the 21st century. Today, they are in trouble; in trouble during a difficult economic time: a time when unemployment is already of 14%; in trouble because of a lack of vision, lack of response, and profound arrogance of both executives and the UAW.

Ladies and gentlemen, this aid is not about the Big 3, it’s about we the people. If allowed to go under or tremendously downsized, many Americans would be out of a job. Their spending, the decreased demand on goods and services would ripple across our economy. With less income because fewer people working, local government will either cut services and/or employment to be within a budget. As a matter of fact, that’s already happening. States too are already affected.

For every auto assembly line worker there are 7.5 workers in the supply chain. A collapse or downsizing by the Big 3 would have a strong domino effect to other companies, workers, and communities.

Saying our country’s economy is in “difficult times” may be an understatement. It’s not President Bush’s fault, but his decisions helped. It’s not Congress’s fault, but their legislation helped. All of Washington has played a role in some way over the past thirty years. It’s not the union’s fault, but they played a role. It’s not the fault of corporate greed or desiring lower costs, but poor executive decisions have played a bigger role than they would admit.

I keep wondering why anyone would want to be president with the economy in such a mess; let along all the other important challenges on the current plate. Seems the winner has reason to ask for a recount. By the way, partisan Republicans, get a grip- the economic situation is not President-elect Obama’s fault!

The situation is what it is – serious! President-elect Obama and the new Congress have no choice but to attack our economic situation; and that includes propping up an industry that has failed to meet consumer demands: let alone funding employment -related issues as rebuilding infrastructure and developing alternative energies. All of this is for us – Americans worker and our households – and at the expense of an ever growing deficit. Ouch!