Big 3 Bailout

The only reason to fear bankruptcy is if you are a member of the union. Bankruptcy allows companies to reorganize despite debt and gives them the opportunity to get out of or repair contracts that make them unprofitable. The biggest financial burden on the big 3 is their labor costs. Bankruptcy would save the companies but break the UAW contracts and force renegotiation under the eyes of the bankruptcy court that would require the companies financial viability be protected.

While US companies outsource to other countries the Japanese are outsourcing to the US.

The big argument is that the Big three are too big to fail. If they go out of business to many people will lose their jobs and US auto manufacturing will cease to exist. These arguments are bunk.

People need transportation and Americans want cars. If the big three fail they will get them elsewhere. The Toyota has a greater claim to the Made In America label than any big 3 auto. While the Big three outsource parts to Mexico and assembly to Canada the Toyota is almost entirely made and assembled in the United States. People say it’s a Japanese company but, Chrysler is German owned. I have a hard time finding a GM car that wasn’t assembled in Canada. As a former trucker I hauled electrical parts to the Mexican border and returned to Detroit and Ohio with electrical assemblies put together in Mexico all for installation in “US” Cars from the Big 3. Japanese companies know they can find skilled labor at reasonable costs in the United States. After the disaster of moving manufacturing to Mexico, VolksWagon realized that Mexican built cars didn’t pass muster in other parts of the world due to defects caused by unskilled workers. They moved their plants back to the US but kept them in the south to avoid the Big Labor problems that drove them to Mexico in the first place.

The congress is currently brokering a bailout deal that provides money in exchange for the production of alternative fuel, hybrid and electric cars. Here’s the problem. Hybrid technology is gaining ground without the congressional mandate. The technology is finally getting to the point where people can drive the luxury and sport utility vehicles they love while getting the fuel saving benefits of hybrid technology and never have to sacrifice the power and security that drove them to larger cars in the first place. Electric cars are a nice idea but the technology isn’t there yet. Their range is to short, their power to low and their size to small to attract American buyers. Given the choice between a government mandated, big three manufactured electric compact hatchback and a Toyota Tundra the average American is going for the big, safe, powerful truck that goes hundreds of miles on a tank of fuel and can be refueled in minutes to go again. Waiting all night to get a battery charge that will run the car for 1-3 hours is to inconvenient.

Alternative fuels are nice. Ethanol is made from corn and can be replaced every harvest season. The fact that it only gets you 3/4 of the distance that the same amount of gas would sho8uldn’t bother anyone. The fact that certain forces in government won’t give up on the idea of taxing it like liquor and driving up the cost to use it is meaningless. When We’re allowed to build stills and make our own fuel without government intervention I’ll endorse it. In the meantime there are a lot of other fuel alternatives. They’re still on the drawing boards and test tracks and none will be ready for mainstream manufacture for years but, lets throw some tax money at it and see what happens.

Bailing out the big 3 is the ultimate bailout for the rich since it bails out companies filled with the rich.

The average UAW worker earns over $75/hr in base pay, benefits and paid time off. US auto workers in Japanese plants make around $46/hour in base pay, benefits and paid time off. Before you say that the workers at Toyota are underpaid consider that the average worker in the US who doesn’t work in the auto industry is paid a little under $25.50/hr in base pay benefits and paid time off. It’s almost enough to make me wish I had accepted my grandfathers offer to get me into the union.

The cost of healthcare coverage alone adds about $1200 to each car from the Big 3 as apposed to $215 per car from Japanese car plants.

For more information check out this article: http://www.heritage.org/Research/Economy/wm2135.cfm