I just read an article (available here) that has an American business owner offering a free $1000 to his employees as long as they buy a new American (read Ford, Chrysler and General Motors) car. His logic is that he knows lots of people drawing pensions and other health insurance benefits from the companies so it’s in his best interest to promote purchases in his company.
With the big 3 American car firms being denied their massive government funded bailout, the pressure is on for the big three to survive the next few months. The question is though, would you buy an American car just to protect jobs and possibly the world economy? The job fallout from the loss of these three giants as well as their suppliers and subsidiaries is estimated at 3 million people. Considering that’s one percent of the American population you’re looking at a substantial economic downturn. In the past few months over five-hundred thousand jobs have been lost and there has been a huge knock on effect to the American economy.
The facts about American cars are irrefutable. They can’t go round a corner faster than ten kilometers an hour and the they use a few liters of petrol per kilometer. If you go round a corner faster than the above mentioned speed you’ll most likely end up upside down with flames surrounding you. In short, they generally produce rubbish cars with major defects although they’ll tell you it’s just a “Lemon”.
I’m torn though. Is the thought of protecting millions of jobs, not only in America but with their overseas subsidiaries, worth it? I’m actually struggling to take a stance on this matter, an unusual thing for me. The main problem for the Big 3 is that they spend most of their money on pensions and health insurance for their employees. Their employees are not willing to back down from their desired increases and frankly here is the problem.
So in an effort to solve this problem I will give my only slightly educated opinion on how to make the Big 3 profitable again.
Step one, sort things out with the Unions. For some reason these Unions are exceptionally powerful and the auto manufacturers have no ability to stand up to them. Sure, it’s understandable they want better pensions but there isn’t going to be any pensions if the companies fold. Step two, cut out the bloat. A large problem for these auto manufacturers is that they are propped up by a few successful brands while their other brands flop. If a brand isn’t making a profit then it has to go. Rather loose a couple of thousand jobs on one brand than loose everyone’s job when the companies fold. Step three, build decent cars. The simple fact is that people want smaller cars these days. Companies like Chrysler who continue to build rubbish cars such as the Voyager, a roughly 65000 seater, bus need to catch a wake up call and produce smaller, more fuel efficient cars. The Big 3 haven’t made smaller, more fuel efficient cars as it’s never been regulated by government. Now is the time to make these types of cars even if it’s not required.
So in the answer to my topic question, no I would not buy an American car just to save jobs. I think it’s abysmal that they cannot sort themselves out when they have billions to work with. There’s no denying it will be difficult and painful for the auto makers to save themselves but it is possible with a little bit of common sense and tightening of the purse strings.
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