Outlook Gets Worse For The Big Three Automakers

I have to admit to be suffering from a little media overload over the current economic crisis, but what is going on in the auto industry is just too important to substitute a cheerier post.

My earlier prediction, that given the current bailout-mania some help for the big three American automakers was likely coming, now looks like a bad bet.

Democrats are in favor of a bailout package, while Republicans say the situation the automakers find themselves in is not caused by the economic downturn but by “the legacy of the uncompetitive structure of its manufacturing and labor force.” The heart of the question, I believe, is whether this money would be poorly spent. Would it just hold off the inevitable failing of one of these enormous companies? Do they have a plan to restructure in a way that would make them sustainable in the future?

Democrats nonetheless are working overtime to prepare some measure of help that will be voted on next week during the lame duck session of Congress. They concede however that there is likely not enough support to pass whatever legislation they come up with.

Help from the president, by way of the Treasury Department is possible, but Bush is not in favor of using the existing $700 billion package for that purpose. Obama takes over in January and Democrats say help can possibly wait until then. The reality is that there is a good chance one or more of the automakers won’t make it that long. If one or more of the American automakers fail one estimate puts the potential loss of jobs at 2.5 million.

What do you think we should do? Bail them out or let them face their fate? Please post a comment.

Comments

[Cathy Resmer]

That's a tough one.

Being from Detroit, I know how truly devastating it will be to the city, and the state of Michigan, if the Big Three fail.

But I've been criticizing them for making gas guzzlers since I was in high school, and they've been laughing at me and flaunting their ridiculous fleet of SUVs. It seems only fair that they suffer the consequences of their own incompetence.

Unfortunately, the big execs won't be the only ones who suffer. Everybody there will be hit, and hard. It's sad to watch this unfold, but not all that surprising.