Should the American Taxpayer bail out the Big 3 automakers? Here is our case NOT to.
1. Reporters and journalists can’t be expected to think for themselves (or do their own research) so they are repeating what the Democratic congressmen tell them: That letting the “auto industry” fail will cost 3.5 million jobs. The “auto industry” and the “Big 3” are not synonymous. They are overstating the Big 3’s impact on the market and US economy. (Not to imply that it isn’t still meaningful)
2. 50% (est.) of the new car market is outside the Big 3 (and falling) and while sales for all makes have slowed, the non-union makes can adjust to market conditions more rapidly.
3. 75% (est.) if the cars on the road are over 3 years old so the used car sales and auto repair segment (1,500,000 vehicles and approximately 2,500,000 jobs) is not at risk. Matter of fact, in this economy with loans harder to get, people will keep their cars longer repairing and maintaining them more diligently.
4. GM loses and average of $1,000 per car it makes. They lost 2.5 Billion a month last quarter. Crhysler only loses $400 / vehicle. Toyota makes $700 / vehicle. If we give the Big 3 money, on any terms, they will just burn it and will be back for more in a matter of months. At Ford & GM, each car has a health care burden of $1550 compared to Toyota’s $300 thanks to Union pension commitments as well as current workers.
5. The news is reporting that the Big 3 are building cars Americans don’t want and aren’t building the green cars people do want. To the first point, The Ford Fusion and Chevy Malibu match up very well to the Accord and Camry. To the second point, “most Americans” do not want to pay $4,000 extra for green cars and we still have 4 kids and a boat so we do want our SUV.
6. The average blue collar worker in the US makes $28 / hour including benefits while the non-union auto workers make an average of $45 / hour and the Big 3 auto makers pay an average of $71 / hour. Why should tax payers making an average of $28 / hour bail out workers making $71 / hour?
7. If GM goes into receivership, they lay off people as appropriate to their restructuring plan. Just like any other business. The airlines have used Bankruptcy protection many times to restructure their companies and the Big 3 can too.
8. If you compare two vehicles with 100,000 mile vehicles that originally cost $20,000, one from Toyota or Honda (both build without Unions in America) and one from the Big 3, the resale value is lower on the Big 3 vehicle because they are inferior in quality and reliability.
9. Who is next? The airlines, retailers, other manufacturers such as Intel or GE? If you want to kick-start the economy, it is home builders and remodelers that will make the biggest difference.
10. The UAW gave $80,000,000 to the Democratic party and the Obama campaign in this last election cycle alone. Is there a conflict of interest in the Democratically controlled House, Senate and soon, White House? Is this payback? Will the UAW punish them in the next election cycle if they don’t give in?
What do you think?
