Friday, December 5, 2008
BAILING OUT DETROIT IS A BAD IDEA
Those of the liberal persuasion are fond of saying that our Big Three automakers are in trouble because they're making cars that Americans don't want to buy. Uh, excuse me, but I don't think so. They certainly made enough of those big gax-guzzing SUVs and there were an awful lot of them on our higways -- until gas hit four bucks per gallon earlier this year -- so it looks like lots of folks were buying them. Everyone except liberals, that is, who vastly prefer their Mercedes-Benz's, BMWs, and Volvos, with the bicycle racks on top and the Obama or Kerry bumper stickers on the rear. The libs are in love with anything and everything European, including their socialized society, but that's another story altogether, for another entry.
The Big Three have always, and still do, make cars in accordance with the demands of the American public's tastes, and our tastes have traditionally gravitated toward bigger vehicles, whether for the sake of families, for work, or for whatever the need. Of course, when the gas crunch smacked us down, they couldn't give the guzzlers away, so they took a soaking, as people sought smaller, more fuel-efficient vehicles. They found what they were looking for, primarily from the Japanese and other Asian automakers. Major trouble.
But the truth is, our Detroit automakers were already in trouble well before OPEC decided to stick it to us again. Now they've all got their hands out, looking for a handout from Uncle Sam. The Democrats are coming, with all their free goodies, and everyone wants a share of the pie, it seems. Sorry, Detroit, but I'd give a firm "no" to your request for financial aid. If it were up to me, you could all go file that Chapter Eleven right now. Because that would allow all of you to reorganize and oh, brother, do you ever need to do that!
Detroit's problem was that it was relying too heavily on the bigger SUVs and full-size pickup trucks that sold like hotcakes for years on end; they didn't offer nearly as many smaller, more fuel-efficient vehicles in their model line-ups. So, when OPEC and the oil speculators stuck it to us earlier this year, they were caught with their panties all the way down. Gas prices went to nearly five bucks a gallon in some locations and all of the sudden, the Big Three couldn't give their big, gas-guzzling products away. The demand for guzzlers disappeared overnight and Detroit had few alternatives to offer. The Asian manufacturers, who were always known for their smaller, fuel-stingier models, had a field day. The Big Three couldn't compete; it takes time to redesign and retool the plants and it costs money. They weren't making much money right then and then there was that union, the UAW.
Increasingly exhorbitant union demands had been draining Detroit's corporate wallets for years. The average Detroit autoworker makes about $75,000 per year in combined wages and union-guaranteed benefits; the average worker at a non-union Japanese-owned firm makes about $38,000 per year. A large percentage of the domestic worker's yearly take is in those benefits, which have grown unbelievably and unrealistically lavish in recent times. How many employers out there pay their laid-off employees 90% (yes, that's ninety percent) of their salaries up to four years after they're laid off? How many other employers offer fully-paid healthcare plans for their retired employees for the rest of their lives? Those are but two of the lavish benefits that the UAW has secured for their union workers. Is it any wonder our automakers are on the verge of bankruptcy? Is it a little more understandable now why some American companies, like Wal-Mart, have refused to let their employees unionize? That sort of thing would bankrupt any company, in time.
Every government bailout plan I've seen for the Big Three has tied into it somewhere one or both of two things. First, Congress wants to buy shares of their stocks in return for the money they loan them; secondly, there's some mandate to produce "greener" cars and trucks. Therein lies the greatest risk associated with any bailout. I can read between the lines here, can't you? In the first instance, it's a poorly disguised effort to buy out our automakers and exert government control over their operations. The second instance ties right in with that -- the government wants the ability to dictate what kinds of cars are manufactured and thus what kinds of cars we're allowed to own and drive. My dear readers, this is spelled "S-O-C-I-A-L-I-S-M," plain and simple. Greater government control over our lives and lifestyles. And this is just the tip of the iceberg, when it comes to what we're going to see over the next four years, if we don't stop these politicians who now have the power that they've craved for so long.
So, no -- no bailout for Detroit. Let them file for bankruptcy reorganization and allow them to reorganize. The minute they file, the union contracts become null and void, so maybe it will get them out from under the burden of the UAW. Many companies have gone under Chapter Eleven protection and come out of it stronger than ever. Why can't the Big Three do likewise? Get rid of all the deadwood in their operation. Correct the mistakes of the past and strengthen the management of the companies. If they get bailed out all the time, they'll never learn and they'll make the same blunders over and over again in the future. And don't believe the nonsense about losing seven more jobs for every one autoworker's job that's lost. That's crap. If the carmakers close up shop for a reorganization, do you actually believe that they're going to stop making auto tires? Or brake components? Or headlamps? Or engine parts? I don't. There's too many cars out there that need those parts -- about 300 million or so of them.
Detroit can remake itself and our auto industry can become strong once again. But a bailout is not the way it should be done.