America’s automobile industry is suffering, along with the rest of our economy. Few of us are shedding tears over it. Those that are crying bailout depend on the auto industry for their livelihood.
Auto sales are at their lowest in 25 years. Chrysler sales are down 35%, General Motors sales are down 45%, Ford posted a loss of $3 billion in its latest report. They are all asking the federal government for a $25 billion bailout. This is in addition to the $25 billion already granted them just last quarter.
Let’s get past the question of whether or not the federal government should bail out all of the hard working middle class Americans who are suffering from the result of corporate greed and mismanagement and take a close look at what caused this problem and what we can do to turn it around.
The auto industry has a long history of sleeping with big oil and believe that since they are considered the manufacturing backbone of our economy that they should receive special benefit of a bailout anytime industry leaders decisions backfire on them.
In a free enterprise system, there are winners and there are losers. Winners keep themselves abreast of the latest technologies and consumer trends and adapt their products to keep up with the market. This is simple economic strategy and every successful business owner knows this rule inside and out. The American auto manufacturers have not followed this rule. They have repeatedly lost sales to far superior foreign products all the while knowing they had the ability to change their methodology to match or exceed their competitors products. They simply did not keep up with the competition. They lobbied the federal government to pass laws so that their products did not have to meet strict emissions standards even while foreign manufacturers were beating those standards. They did not take it upon themselves to make their product financially attractive enough to American consumers.
Why should they be bailed out when their own behavior has put them in this position? They ignored the writing on the wall when people began buying more fuel efficient foreign vehicles and instead of reinvesting in retooling to produce lighter-weight, more fuel-efficient vehicles continued to build the largest ‘land-yachts’ in the world.
Another major problem adding to the auto industry woes is the rising cost of doing business in America. Both the federal government and the union should share the blame for this. Runaway insurance costs, the increasing tax burden, wages and inflation have made it more attractive for many industries to move their operations overseas to healthier financial environments where they realized greater profits due to not having to pay such high overhead.
The American auto industry relied too heavily on the old sentimental loyalty of Americans to “buy American” and it backfired on them.
Now the auto industry is using American jobs as the reason they should be bailed out. They are probably correct in assuming that if this industry goes under the loss of tax revenue generated from automobile sales, the loss of income tax generated by workers and the loss of payments into social security will cripple this economy even further. The America economy will suffer far greater damage than we can imagine.
Some people compare bailing this industry out with bailing out the bankers and Wall Street CEO’s and they don’t want to see it. This industry differs in that it directly affects hundreds of thousands of jobs, each contributing to a tax base that drives this economy.
What can be done to help the economy and the auto industry in the long run depends on the cooperation of the federal government and the auto industry.
Government should rewrite its laws to allow, and force, auto manufacturers to produce competitive products.
Any foreign country that sells a car here should be required to manufacture it here, this will create jobs here and will help keep some of the money here in this country instead of shipping it overseas.
Create an international standard for fuel efficiency, gas emissions, and alternative means of power to help us get away from fossil fuels and force the auto industry to adhere to these standards.
Any car manufacturer that wants to ship vehicles to the U.S. should pay higher tariffs making less attractive for them to do so.
In fact, raising tariffs on everything that comes into this country would help other American industries as well. America has become the dumping ground of cheap products made overseas and this needs to stop. Americans used to feel a certain pride in making quality American products. There is no pride in sending our money overseas for product that should be made here.
Ideally, these changes will entice all industry to bring their manufacturing back to America and re-employ Americans.
Let’s face it, Americans are not loyal to American products, we are loyal to getting the best product for our money. It will always be this way.
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