‘I think they’re grasping at straws’

Car Makers say Bailout a Defense Issue

In an increasingly anxious campaign for a $25 billion government rescue, Detroit’s Big Three car makers and their allies in Washington are warning the demise of the auto industry will damage U.S. national security.

Indirectly, maybe. Big maybe. But the Big Three’s direct impact on military production is minimal.

Some things would certainly have an indirect impact on the military The supply base would shrink if the Big Three go under, for instance, meaning that some parts may be harder to get or become more expensive. There would be a sort of “brain drain” as the workforce shrunk and a lot of good people retired or moved on to other things. The ability to ramp up production in a truly catastrophic scenario would be greatly reduced. All of these things do matter and should not be ignored, but I’m not at all convinced that it’s worth bailing out the auto industry for gazillions of tax dollars so they can go on being bad businesses.

Much of what the Big Three contribute to the military can fairly easily be picked up by Toyota or other international manufacturers with US operations. If the Army needs pick-up trucks, they can be ordered from Toyota and built in the US.

Additionally, if the UIS makers really do go TU, the vultures will swoop in to feast on the remains. Parts of the industry with military contracts or the potential for such will be among the tastier morsels, I would think, and will go on in some fashion. As I said recently, there’s some good meat left on some of those bones.

In short, I think making claims that the US auto industry needs to be bailed out because our national defense depends upon it are exaggerated. However, when making decisions about what to do, the overall picture of US industry cannot be ignored.

More automotive bailout links:

Comments

  1. This is a big moment. We have two possible paths.

    1. The government stays out of matte and lets the free market do its job. The Big 3 go into Chapter 11 and fix themselves. They probably come out much smaller, with some spin-offs and mergers along the way. They dump mortgages of empty factories back on the banks, they dump execs without golden parachutes, and they dump UAW workers and retirees. After all this takes place, then the Feds might help them re-capitalize with loans.

    So lots of people get screwed, but… Lean, competitive, profitable companies emerge out the other end. Some of their assets are bought by other companies and put to good use as well. If GM or Ford had bold leaders interested in long-term value to their shareholders, they would be enthusiastic about going through Chapter 11 and radically restructuring themselves.

    2. The Feds pour vast amounts of money into the Big 3 with political strings attached (green cars, union perks, etc…). Sounds great to liberals but doesn’t work as a business model and the broken, dysfunctional companies limp on. The government ends up continually pouring money into bankrupt companies and assuming more control – like European airlines. It’s a huge drag on the whole economy, and the end of American free-market capitalism. Welcome to New France.

    Let your Senators and Representatives know which road you want to take.

  2. I vote for #1. Pouring new money in a failing business model is about as smart as selling your products at a loss and trying to make it up in volume.

    And the idea that the military depends on the big three is a laugh. Except for fleet sedans, the military buys from a lot of automotive companies but they aren’t the big three. I doubt Oshkosh, Armor Holdings, GDLS, or BAE Systems (some of the biggest producers of military rolling stock) would even notice if the Big 3 fail.

  3. we should give GM drugs instead of money next tome they ask for tax cuts or tax money they barely even pay, then the drug industry will fail and collapse in on itself, freeing up prisons and tax money from criminal instutions,plus what we didn’t give them and the taxes spent on the war on drugs,ROFL

  4. Let the market work. I have no sympathy for the UAW guys. After this last election, I will never buy an American car again.

    I have no problem with people voting, but when a business or organization, such as the UAW, openly declares and supports one side over the other, they risk alienating part of their customer base. Why should I send my hard earned money to a group that is going to turn around and openly campaign against my values?

    I always thought the typical American car buyer was the red-state, NASCAR, conservative type. After all, the lefties love their priuses. I don’t have the exact figures, but I would imagine red voters represent over 50% of the Big 3’s market. If this is the case, the UAW should learn not piss on their customers.

    Let the left wingers buy these vehicles. I won’t anymore.

  5. Honestly, when considering it more seriously, you can’t let the big three fail(Iowa,Michigan and some other midwest state has 3M employees;manufacturing and whole sale only; not counting the repair garages, aftermarket factories tailored to the companies, and service garages;job loss and market collapse is obvious, ahduhhhh) although one (GM; dumbasses) has considerably setup it’s own failure and should go into bankruptcy and rebuild itself little by little, theres no effing money circulating in this country to do that in the current state of the economy, the nations equity built upon home ownership finally bottomed out, no one can borrow money (this only applies too huge corporations and banks, which are the “ones” im talking about)without faulting on that loan(except of course government bailouts I.E. handouts). That Equity you have (corp. only) is gone when the bank goes ARC on your ass,and (obviously) there’s no way in hell you can move on, plus the $25B already exists, and it’s only 25 billion out of 700, the big 3 just have to get off their asses and insure there future market and reconstitute future products DIRECTLY into market prospects, meaning plug in hybrids and all this shit that sits in concept garages (in existence but not produced) are inserted into ACTUAL PRODUCTION, and are not cancelled just because your pissed the government has you bent over in front of them, welcome to the club assholes

  6. 1 good side to the big three failing, Hummer’s production rights go down with GM when they get rid of assets after chapter7, meaning JLTV is forced into a deadline, FUCK YESSS

  7. you cant compare the 80’s economy to ours, this is essentially what you’d have to do to say Reagan would say “fuck no,”. he wouldn’t screw over the lives of the employees that work for or are directly dependent upon the big three, but he would make ridiculous comparison to his admin if he was still alive,RIP

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