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Bail out Detroit? Why?

Lee Walton

So now it’s the big three automakers pleading for taxpayers to fork over $25 billion dollars to keep them afloat until the new Obama Administration can take the tiller of a very leaky ship-of-state. The latest hand ringing from Detroit is just the next in a long line of mismanaged industries queuing up for financial handouts from Washington politicians. Why on earth would they now rush to bailout an industry that will just continue to waste limited natural resources and energy to produce a product that U.S. consumers neither want nor can afford to own and operate?

Given all the recent election cycle hype about energy conservation, energy independence, and the promised greening of America, why would this nation’s leaders blindly allow the same outdated business plans and technologies to continue to squander our finite resources? It makes absolutely no sense to keep making automobiles that will simply pile up at the end of assembly lines; that kind of logic got us in this mess in the first place.

Anyone who has driven by local automobile dealerships would be blind not to notice the hundreds of unsold 2008 and 2009 models gathering dust on the sales lots? If anyone in Charleston has any doubts about the nails being driven into the coffin of the American automobile industry, they need look no further than the Auto Mile on Savannah Highway. With consumers still reeling from $4 plus per gallon fuel just a few months ago and the prospects of a severe, long-term recession becoming more of a reality each day, wage earners are “hunkering down” to weather the rising storm of financial uncertainty now looming on the horizon. The last thing a jittery consumer would consider now is the purchase of a gas guzzling Detroit behemoth with absolutely no resale value.

There was much national news this past weekend about the possibility of GM and others of the Big Three having to declare Chapter 11 bankruptcy to hopefully reorganize as smaller, more efficient companies. Arguably, as unpalatable to stockholders and UAW union members as this alternative would be, it didn’t kill the airline industry; it allowed them to evolve and survive in today’s more competitive environment. Forced reorganization may be the only option that would stop the current financial bleed and allow new competent management to step forward, reorganize the pieces, renegotiate labor contracts, and even seek foreign automotive partners with smaller, higher quality, and more energy efficient products that the American consumer would purchase.

One thing is certain; the out dated Detroit philosophy of “build it and the suckers will buy it” is no longer working. A tipping point has been crossed in the way American consumers look at Detroit and its out-of-date, often shoddy products. If the Big Three automakers want to survive this decade, they had better find ways to make what consumers want and can afford to own. One thing’s for certain, European and Far East auto manufacturers have figured out what Americans want to drive. GM, Ford, and Chrysler better jump on board, or they’ll be left at the station with the politicians that bailed them out with our tax dollars.

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