Friday, May 15, 2009

Runs good, needs work

The automakers are limping along, as they chug & chortle their way to the "finish line" of bankruptcy.
GM is dropping 1,100 dealerships, and Chrysler is closing 789. I don't know exactly how many jobs lost that will equate to, as the true domino effect kicks in to full force. Those workers lose their jobs, so they don't frequent local businesses, causing them to go under, the loss of health insurance, potential foreclosures, stress related extremes.
Some dealers will fight the move, but if they are already experiencing a 40% slow down of sales, and barely keeping afloat, it seems if they won that battle, they would lose the war anyway.
Just like the RV industry faded, it was not a matter of them making a good product ( although one could argue GM tried to make cars on the cheap in order to appease the shareholders profit margin, while ignoring consumer demand & making a product that could parallel the long term quality & reliability of Toyota or Honda).

It's the economy!
As we see gas prices creeping back up, people are paying attention the the MPG on cars. The big three can make whiz bang cars with the best innovative engineering available-- but in a faltering economy-- a depression, those packing it out in foreclosures are not headed to the new car lot. Even if they wanted or needed a new car (if just to be their news residence), jobless people do not get approved for loans.

The perfect storm
Tanking economy. Through the roof gas prices. The competition putting out Hybrids and better MPG & quality cars.
GM was top heavy with SUV's when the fuel prices hit over $4 bucks a gallon.

Squandering the resources
I don't know how GM managed to lose money on what should have been a lucrative war profiteering contract- providing Hummers for the military, 6 years of war in Iraq & 8 in Afghanistan- but they did.
Very few people actually need that kind of vehicle in the US, and the gas mileage would make you cringe.
I don;t know how they lost money in that endeavor, but they did & now the brand is slated to be cut from the line up.
Pontiac, Saturn, Hummer & Saab. Oldsmobile is already gone.

Stop the flow
Basic first aid requires stopping the flow from an arterial bleed. We can make the analogy... GM is hemoraghing money. It spent more than it took in-- including a chunk of change on Lobbying, and launching a lame commercial ad, encouraging us to "put on our rally caps", to pull together & save the corporation. The only thing I can rally about is to tell the Federal Government to not give one more dime in bailout money if GM is inevitably headed fro bankruptcy anyway. $15 billion taxpayers money was enough of an infusion. Let's not pour any more cash - cash we don't have, down that dark hole.
Because in the end, why is this corporation more deserving of a bailout than any other struggling business?
Let's get real about what just happened- Chrysler wrote off the $7.2 billion dollar loan from the federal treasury in their bankruptcy. GM was already given twice that amount. I'm no financial wizard- but it's easy to see the writing on the wall here.
GM already had double the bailout money or "loan", and frankly, we'd better keep the funds to cover all the unemployment claims. Throwing $22.2 billion at the auto industries as a lifesaver did not yield the rescue result we'd hoped for.
Send the patient to bankruptcy surgery. Bandaids will not do in this circumstance.

It is sad to see this happen, and I hope those companies can reorganize & reemerge lean & mean & focused on what people want & need. Quality affordable cars with excellent alternatives to gas.

Chrysler & GM~ start your engines, and buckle up, this is a rough road ahead.


Utah Savage said...

It's going to be a rough road for all of us. Unless we are in the top 1%. Then we may bitch and moan about the loss of those tax havens, but trust that our accountants will find a way to hide the loot. These modern Robber Barons were every bit as good at ruining the economy as their 1930's predecessors. When will we have a national sense of ethics that lasts more than an election cycle?

Fran said...

Hey Utah~ True that.... my husband already lost his job (of 10 years) in the RV industry, so we already crossed the line. We are nowhere near the top 1 %, in fact one of us is in the unemployment line. That employer "shat" on 2,200 workers re healthcare.... shut it down the day the filed for bankruptcy, without bothering to give the workers notice.
A lot of communities have not quite felt the hit of this economy....for a few years the county I live in mostly held it's own, but then the bubble burst & a few major - family wage job employers went out of business & the spin of it started the unraveling.
Hard to watch happen.
Ethics..... almost seems like a relic of the past--- it's been so dog eat dog.