Big 3 Bailout

Today, the Big 3 automakers arrive back in Washington with their hats in one hand, and the other hand outstretched, palm up, for free money. This time they arrived in their own hybrid vehicles, as opposed to their corporate jets. Not a good PR move on their part, that first time.

They arrive to ask for $34 billion dollars, in front of the House Financial Services Committee and the Senate Banking Committee.

I've already indicated that I believe a Big 3 bailout is a very bad idea. And 61% of Americans think so too.

Fiscally speaking -- not politically speaking -- it is a very bad idea. Here's why, via a supporting example:

Sales of Chrysler vehicles are down 50%; GM vehicle sales are down about 40% and FoMoCo vehicle sales are down 30%. Capitalism and the free market say that Americans want "foreign" products more than "domestic" products (though that's a topic for an entirely separate blog post). The consumers have voted with the feet and their checkbooks; they want cars from an automaker invested in a diversity of automobiles, from small and frugal, to mid-sized to large; pickups, SUVs, cars, wagons, crossovers. The vehicles must be reliable, they must be reasonably priced, they must be well styled, they must incorporate the latest technology. And any automaker must be lighter, mobile, ready to re-tool for current and coming trends.

But is it the individual autoworker responsible for the plight of the Big 3, or is it the management of the Big 3? Let's consider, as an example, GM's former vehicle plant near Fremont, Fornicalia:

The General Motors vehicle assembly plant in Warm Springs, which opened in 1962, was that region's largest employer. The plant was shut down due to inefficiency and a host of other problematic issues, not to mention high absenteeism. It was then known as one of the worst assembly plants in the auto industry.

In 1984 that GM plant was sold to Toyota, with the agreement that GM would market Toyota vehicles under a GM badge, and the joint-venture auto assembly plant was called NUMMI. This resulted in the Geo and Chevrolet Prizm (a re-badged Toyota Corolla). As of this month, the NUMMI plant produces the Toyota Corolla compact car, Toyota Tacoma pickup truck, the Toyota Matrix hatchback, and the Pontiac Vibe hatchback.

But here's the kicker: after Toyota took the plant over, they hired back the exact same workers who were employed there under GM; it went from worst to first within 2 years. Now, this same plant is an award-winning facility which ranks, with other Toyota plants, among the most productive manufacturing operations in North America. GM places around 12 managers each year at the plant to learn lean techniques and has improved quality enough across the rest of its operations for it to show through on J.D. Power quality rankings.

The bottom line is this: with the right management, with the right Leadership, with the right vision, any Detroit carmaker could have made it and can make it now. It's NOT the responsibility of the US taxpayer to bail out the Big 3 for inept management and lack of Leadership.

Let the companies that cannot support themselves fail under Chapter 11. Reorganization will occur and bring a leaner, meaner company or companies. Let the chips fall where they may. Capitalism abhors a vacuum -- and any vacuum created by a loss like that will be filled. There shall be pain. But it will be temporary.

On the other hand, be very cognizant of why Washington, at the behest of Pelosi and Reid, want to provide bailout cash to American automakers: so that they decide what the Big 3 companies will produce in terms of "green" vehicles. It doesn't matter if they'll sell or not. It's just a matter of, at this point, e-mo-tions. And, quite frankly, social engineering.

BZ