If GM and Ford go out of business, what’s to stop the foreign automakers from closing up their US plants and shifting everything back to their homelands? Nothing. They will have 100% of the US market anyway. We NEED the domestic automakers to survive, and that means gutting the current labor contracts or fast-tracking the agreements made last year that take effect in 2010. Bankruptcy is not a solution, they will never come out of it. Management and the UAW need to sit down and get this done now, forget begging to Washington for a loan/bailout. I’m guessing the UAW membership will go for massive pay cuts right now to save their own hides. UAW leadership, on the other hand, continue to be obstructionist.
We don’t need the domestics to survive. The economy will work itself out just fine.
Toyota, Honda, Nissan will fill the void left by the Detroit 3. The consumer has already decided; that is why the Detroit 3 are in the shape they are in. And why Toyota has hundreds of billions of dollars in reserve to ride this out.
The foreign automakers are building here because that is where their customers are. If the Detroit 3 go out of business, Toyota, Honda, Nissan and VW will expand here in the US. In fact, Toyota and VW are building new plants right now in the midst of this downturn. These other automakers will make more investments here, hire more Americans, and build more cars/trucks here.
Yes, Toyota is based in Japan. But they employee 40-50 thousand direct workers here in the US, and are probably responsible for 300,000 thousand total jobs. (Of course using “detroit 3 math”, it would be times 11, or 550,000 thousand jobs) Toyota stock is also traded on the NYSE, so you can buy up all their shares you want, and be an owner just like with GM.
Let the market work. If GM/Ford/Chry haven’t been able to resolve their problems during the global auto boom of the last 10 years, why do you think they can solve them now?
GM has to reorganize, either through bankruptcy or massive reorganization. I personally think they would have to sell or liquidate half their product lines. They would have to trim a lot of blue and white collar jobs. Fire the deadwood management, and pay top dollars for the best out there.
The bailout is a bandaid on a severed limb. It will only prolong the patients agony.