Government Responsibility…and automobiles

These days you hear a lot about “the Big 3″. They want money to support their business, because the American public has stopped buying their cars. There are lots of industries that influence our economy and many who have seen a shrinking of their profits. Small business makes up 2/3 of our economy. Big business only 1/3. Where is the small business stimulus? Thankfully our Senate has had enough backbone to refuse the auto deal. But when will the political pressure overwhelm common sense? The old adage money talks and bullshit walks means if as a company you are not generating enough business you must adapt to the market and fill people’s needs to bring in the money. It’s that simple and it that hard. If the government is asked to prop up a company that the public no longer supports with its wallet, a few basic questions must be asked and answered before a government pay day is even considered.
Why are these Big 3 companies not doing well?
Everywhere you go you see a car. Some old some new. What’s the problem? It’s not like we all junked our cars and started riding the bus or a bike. Perhaps their business model has been in trouble for a while. Personally I own a rice burner, not because I don’t love the USA or dislike American cars. Mostly because it was cheap, got decent gas mileage and cost little in maintenance and repairs. Most average people look for these ideals in a vehicle. American cars are big and bulky and suck up gas like no other. Why do I keep hearing that Americans won’t buy smaller more efficient cars, but at the same time the automakers can’t keep enough in stock? My ten year old car gets 30 mpg, I am not very excited when I see a current ad for a car that touts its environmentalism and gets the same mileage as my TEN YEAR OLD car. Really, in ten years that the standards haven’t been raised, is that the best they could do? Our choices swing from one end of the spectrum to another, from the smart car that hardly holds two people to giant suburban’s that hold 9 people but rarely land in the middle. Where is the midsized miracle that gets great gas mileage and holds enough people to satisfy the average American family’s needs? People are not going to continue to invest in the same old dirty technology when we see our green future staring us in the face…and it doesn’t look like your average American car, it looks more like your average foreign car. What have US auto makers done to fill the real needs of their customers?
How are they running their businesses?
Every business must balance the costs of their activities, advertising, payroll, and materials with cash flow and profits. These costs of doing business are reported internally at least quarterly, if not monthly, weekly or daily. Executive compensation, costs for lobbyists, advertising and other frivolous costs are sore spots in the budget as executives apportioned considerable sums of money to inefficient and self-serving spending. Who are the Boards financial advisors? The Board of Directors is put in place to manage the business; it would seem they were asleep at the wheel or perhaps unmotivated to be efficient. Maybe if they were more interested in reducing their costs while contributing to our global environment they would have long figured out how to partner creatively with junk yards to reclaim steel, plastics and other valuable materials. Perhaps if they spent some time in R&D to actually improve the efficiency of their cars and trucks they might have more funds on their bottom line. Perhaps if they had been leaders in their industry instead of laggards of technology, they would not be in the position they are in today. It cannot be overlooked that while company financials have signaled serious problems for years, frivolous and irresponsible spending continued.
What are their plans for the future?
Even before the thought of Government money crossed their minds they should have had some plans for the future. The auto industry is estimated to employ 3 million people, a point that many auto bailout supporters cling to. Currently more than 10 million people are collecting unemployment, what is so especially about these particular 3 million. If the Big 3 have no corporate plan for the future, they should go back to business school, where they teach you to always have a business plan with clear goals and strategy. If the Big 3 have failed to plan, they are planning to fail. The US government should not stand in their way.
So where does Government responsibility land in all this private industry mess? The US government should only take a stance in the auto wars in terms of the tax payer’s big picture. Environmental emissions, toxic waste, physical safety and other consumer protections are the beginning and the end of what the government should regulate. If thirty years ago, we passed regulatory laws that required min. 40 mpg Americans and automakers might be in a better position than we are now. But when you look back thirty years ago, the Big 3 were the first to implore to lawmakers that higher mpg was everything from impractical to impossible, not to mention too expensive to implement. The Big 3 are victims of their own success. The annals of history will show that the American people have already paid dearly for the auto industry and its wasteful practices, let’s hope our Government doesn’t increase the burden.
Bankruptcy is not the death of a company. It is a marked change from its past, something of which US automakers are desperately in need. Our government has no right to enter this debate; it is a war being waged on the streets of every town USA. The American people speak quietly but effectively with their wallets. The US government should follow our lead.


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