12/06/2008

Why We Need the Big 3


CEOs of the Big 3 returned to Washington this week to make their final plea for financial bailout. And while they are quite short of cash, one thing we don't seem to be short on is opinions. Some quite strong.

For decades, this group has all but locked us into internal combustion engies, squashing new technology and seemingly colluding with the oil industry. At the same time, quality suffered - likely due to an unbalanced focus on cost reduction instead of quality or design or efficiancy. Their actions have been no secret to the public either. Films like 'Who Killed The Electric Car' illustrated how one group in GM was supporting and promoting the EV1, while at the same time there was a group inside working to kill it.

In fact, if you took a poll today, you would likely find that the two most hated industries in this nation are automotive and oil. And they've earned it.

This may help to explain the odd phenominon that has had the Mrs. and I baffled for weeks. Wall Street, big banks, and mortgage lenders come to Washington looking for a handout and get it - with nearly no strings attached. Despite many of them being responsible for the current state of the housing industry! The very issue at the core of our nation's current financial crisis. 300? 400? No, no, lets line up 700 billion dollars (that we don't have) to do.... whatever to get the nation's fat cats fat again. But when Detroit is having issues, and facing bankruptcy, it's nothing but spite and anger. Now we're going to get in a twist about $34B?

I can't say that I supported the bank bailout. But it is done. What I cannot grasp is the line being drawn here.


The other day, a collegue and I were on a road trip for a meeting. He asked me, "Ok, you're in charge. Do you bail them out or not?" I was torn. At the time at least the real issue seemed to be about labor. Bankruptcy would allow management to nullify union contracts - essentially ending their stranglehold on the purse strings. On the other hand, bankruptcy brings a lack of confidence and a lack of control. My answer was to bail them out. Here is why:

Independence from foreign oil.

Yeah, I know I just described these guys as being in bed with big oil. And they probably are - more than we'll ever know. But much like the banking bailout, this can give Washington some control. Now before you say 'socialist', consider this: The incoming administration has the intent of freeing us from foreign oil and has even expressed interest in subsidizing retooling efforts to make the Big 3 more competitive as well as leading us to greener more sustainable energy sources. I can only see this bailout as the opportunity the Obama Administration needs to make energy independence a reality.

We need the Big 3. We need a partner in moving our nation forward, and here, we could get three - and $34 billion might be worth it.

Place your bets: Will Congress bail out Detroit? Will they decide that the airlines and banks are worth , but automotive, not so much?

A lot is riding on a lame duck congres.

1 comments:

Ashley @ Wide Open Wallet said...

I think they will bail them out... but I don't think I would. In my layman's opinion, a bankruptcy and then restructuring of the companies seems like the way to go.

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