Temple of the Green Apron: Who gets a bailout?
I’ve been reading about a proposed bail-out of the big 3 US auto makers who I think are GM, Chrysler and Ford. I wouldn’t really know since I’ve never owned a car made in the US. Unless you count the Chevy Chevette I had when I was 16 or the Toyota Tercel that I bought right after I graduated from college and was probably final assembled somewhere in Texas.
Where does it end, I ask? Part of having a free market economy is riding out the tough times- especially the tough times- without government intervention. If our government continually sets up bail-out options for large corporation then a) we’re not much of a free market economy and b) it seems that we are more vulnerable to corruption. Who decides that it’s ok to bail out GM, Chrysler and Ford, but not ok (for example) to bail out Circuit City, Philip Morris or Starbucks? People are buying fewer cars, sure and there are implications to those receiving pensions as well as the current workforce in the auto industry. But they’re also buying fewer electronics, fewer cigarettes and (gasp) fewer mocha frappacinos.
And before I get a bunch of sacrilegious slams against the Temple of the Green Apron, according to my limited on-line research, Starbucks employs roughly 170,000 people across the US. When my mom reduces here grande-non-fat-latte from 3 times a week to once a week because times are tough, am I going to see Starbucks CEO, Howard Schultz on TV saying that Starbucks needs a bailout?
According to a Wall Street Journal on line report by Greg Hitt and Matthew Dolan the leaders of GM, Ford and Chrysler along with the head of the United Auto Workers union met before the Senate Banking Committee and suggested that our economy already circling the drain can’t bear the burden of a collapse of one of these companies let alone all three of them. These 3 entities combined employ 239,000 people in the US.
In USA Today, the Auto Dealers took out a full-page ad suggesting that they too were in need of some relief as well.
It seems that any bailout measure to the Big 3 will include specific limits on executive compensation plans; golden parachutes as well as development of high fuel-efficient vehicles which I hope include alternate energy resources in the cars of tomorrow. Candidly, I have less of an opinion on the bailout, pro or con except to say that there is collective benefits that we all enjoy as a result of a free market economy that, my opinion is self corrective in time. I worry about the potential for corruption and allowing our government- how many of them have stock investments in the auto industry- to decide who gets bailout funds and, more importantly, who doesn’t. Still, if this is the “tipping point” that sinks our economy into a deeper decline, I’m not a glutton for punishment and by all means we should do what we can to stabilize this industry.
The US auto industry has been struggling for a long time for a variety of reasons that I’m not interested in delving into in this blog. One thing I know is that we vote with our dollar every time we make a purchase. Best Buy over Circuit City, VW over Ford, Starbucks over Caribou. Over time the companies who continually provide value and innovation are the ones that “make it”. I’m not sure if having our government artificially supports an industry maybe whose time has come to either not exist or exist in a very different way than it does today.
Politically, the bailout was introduced by Democrats; the Republicans seem to be against the bailout- from what I’ve read thus far. I can’t think of anyone in my immediate circle that drives a US car and I’m intentionally not including the mini-van drivers out there who typically drive American mini-vans because foreign auto makers have happily accepted that they don’t want to compete in this space. Republican Dude drives a caddy but again, he comes from Toyota stock so I expect to see him return to his roots at 30,000 miles or so. False Auntie and False Uncle have 3 cars: two Hondas and a Sebring convertible. Even my red-state friends who are all “pro-usa” drive Volvos, Infinitys, and Toyotas.
I’d love to see an emerging market for manufacturing that puts more than 1 million Americans to work on a product that the world either wants or needs to buy.
I’m just not sure that it’s a Chevy.
Some things to read or watch on our request for funds to support our automotive industry:
Bob Nardelli’s Senate/House written testimony at http://blog.chryslerllc.com/blog.do?id=537&p=entry
Mark Phelan’s article, “6 myths about the Detroit 3,” in the Detroit Free Press at http://www.freep.com/apps/pbcs.dll/article?AID=2008811170379
and a Chrysler video “Straight Talk About Assistance” at http://www.youtube.com/watch?v=uPODSNAbkOU
Thanks. Patti Georgevich, Chrysler
I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you down the road!
Thanks Patti – way to be a troll on a thoughtful blog.
In regard to the shameless trolling of the Big 3 on blogs and the like to try and lobby for their free money out of MY pocket for their business failure(s) [as we can see from the first comment here]:
Let’s be clear, the auto industry is not failing.
2 companies, specifically are failing (GM/Ford) – and have been for decades. Chrysler may be the most solvent of the big 3 – but they are still pretty poor business people and join the failure wagon to make it 3 failures in a large, global market we know as the Auto Industry.
Innovative Auto companies like VW, Toyota, Honda – they are flourishing – not just here, but in the world market. In fact, VW is building their first US factory which will employ thousands of US workers. They are not demanding handouts, they are earning their own money and being smart business people – oh, and selling a lot of vehicles.
There is something called Chapter 11 – I suggest the bad business that are failing utilize it. We can either dump a load of $$ into these failing businesses and bring all sectors of our economy down with it in a slow, painful death, or we can let them die their natural, faster death. We take the immediate hit, and move on. The $$ they want dumped into their lost cause (i am sure they will continue to demand handouts in the future) should be used instead for support programs (temporary) to help all of the people the Big 3 screw along the way. I’m way more OK with that than throwing my $$ into the pocket of bad business execs who will only demand more and more.
Bye bye Big 3…you did it to yourselves. I’m not about to pay out of my pocket to your losing causes.
Sorry to double-post, but I just saw this article on the continued pattern of waste and bad business decisions exercised by the Big 3 as they all flew to DC in their corporate jets to beg for handouts from Congress.
http://www.cnn.com/2008/US/11/19/autos.ceo.jets/index.html
Funny, I haven’t seen any posts on the article on CNN by Patti trying to do damage control…yet.