U.S. Automaker Crisis

One of the biggest concerns in Washington today and for the country nationwide is the purported collapse of the U.S. auto industry that is on the horizon. Reading some of the various press releases, there are some members of Congress who have the view on these companies absolutely correct. These industries haven't changed the way they do business so why should we help out companies that focus on horsepower and more ways to put emissions into the air instead of enviornmentally friendly and gas/money saving vehicles?

The answer is we shouldn't support these companies. Bankruptcy and new management would do wonders for U.S. automakers who have fallen behind the Japanese auto companies. Japanese companies focused on making fuel efficient vehicles that lasted while also offering the oversized, overpriced SUVs and trucks that Americans crave. Japanese companies were prepared to handle this kind of collapse. American automakers continued business as usual.

Granted, GM started offering the Chevy Cobalt and Aveo to take a stab a making fuel efficient vehicles but they were way behind. Has anyone ever taken a drive or ride in either of these vehicles? They sacrificed space, size, and efficiency for a rocky, cramped, and unpleasant experience. Chrysler offers the PT Cruiser but the vehicle's unique design and appeal from when it was first released has faded and the MPG could be better. Ford, surprisingly, has started offering Hybrids on a lot of its vehicles, most intriguingly, the Ford Escape. But the company forgot something that made it popular many years ago, a vehicle that was extremely fuel efficient and built to last...the Ford Escort. By the time the vehicle's production ceased, it wasn't nearly as popular. However, in the 80s and 90s, the vehicle was largely in demand in wake of all the truck and SUV commercials. Ford had the right idea and let it slip from their fingers. It wouldn't surprise me if Toyota and Honda noticed the popularity of these vehicles and capitalized.

I will give Ford credit where credit is due. They restructed their Volvo operation and sold off Jaguar and Land Rover brands for billions. This saved the company billions by restructuring and updating its cost efficiency. After all, how in demand are Land Rovers and Jaguars? GM could take notice and sell off its Hummer and Corvette divisions, saving them just as much money while restructuring to the demands of today's buyers.

Still, this all may be too little, too late. The heads of the Detroit Big 3 first arrived in Congress in private jets, costing the company hundreds of thousands had they simply been ridden coach or even a first class commercial flight. Today they arrived in vehicles. While the moves saved money, it proves they think they are still too good to associate with the common American. First class or coach? Who do you all think we are?

A couple of words come to mind. Ignorant, inefficient, slow, unadaptable, no accountability. What does the head of the company do that deserves millions in pay?

I know Democrats don't want an industry collapse to fall in their lap and possibly affect their political futures for decades. It's a precarious situation to be in for their party. They know the right thing to do is to let them go bankrupt and restructure accordingly. But they don't want millions and unemployed Americans to associate them with losing their jobs for the rest of their lives.

Of course, George Bush won't help the situation any either. Congress approved the $25 billion to come out of the $700 billion designated for the financial industry bailout but he won't approve those funds, designating them strictly for the financial industry. I'm not really sure what $700 billion buys that $675 billion won't but he must know something the rest of us don't (which is what his whole presidency is predicated on).

The worst thing about all of this is the auto industry pours millions into the pockets of both parties to get this kind of support. They help fund elections and consequently, it shouldn't be any surprise that the people in Washington who received a lot of those funds support this cause.

If anything, Chris Dodd should not be heading the committee to oversee these hearings. He's already decided he won't run for re-election in 2010 for the Senate (he's been there since 1980) so he'll pretty much do whatever he wants from here on out. However, this same guy thought Fannie Mae and Freddie Mac were doing just fine before Congress bailed them out (guess who got the most funding from those two companies for re-elections and the like? Chris Dodd. He also got favorable mortgages from companies associated with these two also). Not exactly who needs to be judging whether or not someone is in trouble.

His own state (Connecticut) disapproves of his job performance more than they support it (48% disapprove-42% approve). He's been on the job a little too long.

The only viable solution is to let these companies face the music and deal with it themselves. It's a scary solution, mainly because the people in charge of these companies will be just fine if these companies collapse. If the government were to intervene it should only be to fire the board of the directors and CEOs of all these companies and replace them with people who give a shit. Business as usual has become too common of a term and problem for industries that are having financial trouble. The financial industry could be labeled the same way, I mean, really...how bad do you really have to be at your job to let your entire company collapse? Every company has losses at some point...but a complete collapse?

I wish there were a better solution and that giving these companies money would be the best solution. At some point you have to wonder if a move to socialism might be a real solution to these problems because, ultimately, all this corruption is killing the American economy and doesn't look like that will change anytime soon.