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What's Your Thought on the Automotive Bailout?

Published Nov 19th 2008, 7:56am by Jody DeVere in Featured Articles

Professionals involved in the automotive industry have been under a barrage of information about the current state of the economy and how it is affecting the car business. Regardless of one's political affiliations, it's a fact that the domestic automotive industry feeds our nation's finances in a multitude of ways. Quite honestly, it doesn't matter whether you're involved in the industry or even drive a car, this situation will affect every single consumer in the United States in very broad ways.

How to give assistance has become a firestorm debate as the financial situation for General Motors Corp., Ford Motor Company, and Chrysler grows more precarious. General Motors, Chrysler, and Tesla Motors Inc. have already applied for loans under the existing $25 billion Energy Department program and according to Yahoo! News, Ford CEO Alan Mulally said the automaker plans to apply on Tuesday. GM, Chrysler and Ford have not disclosed the amount of aid they're seeking or for what purposes.

We've gathered a collection of links here to help give additional insight into the industry, as well as various opinions from automotive experts and websites. Please take a look at the collection, and share your own opinions here.

General MotorsGeneral Motors has created a website at that gives the facts and fictions about the state of affairs in the United States Auto Industry by asking the simple question "What happens if the domestic auto industry collapses"? From plants to parks. From dealerships to driveways. From gas stations to grocery stores. What happens in the automotive industry affects each and every one of us. In fact, the collapse of the U.S.-based auto industry wouldn't just impact the more than 239,000 Americans directly employed by the Big Three. One out of every 10 people in America is employed in a service that is related to the U.S. auto industry. If a plant closes, so does its suppliers, the local stores, the hot dog vendors, and the local restaurants. Stop by this site to find out how devastating this collapse could become, and then use it as a launching board to communicate with your Senators and Representatives.

Erin Kotecki VestErin Kotecki Vest gives her opinion in terms we can all understand in her BlogHer post making a case for the auto industry bailout when she says "My hometown needs jobs. People I know and love need plants to stay open, parts to keep on the shelves, and suppliers to stay in business. When a plant goes down an entire town goes down....It's past time for Detroit to get serious about regaining America's once-proud role as a leader in automotive engineering. Congress must hold the automakers accountable in any bailout to ensure that our clean car 'future' starts now." You don't have to be involved in the industry to understand her concern for the livelihood of her family and friends in Detroit.

AutomobileOn the eve of the first auto show of the season, rumours say several automakers are cutting back in this year's Los Angeles and Detroit Auto Shows; some aren't showing up at all. These shows are the premiere events for showcasing their new vehicles and courting new customers. "Clearly, we're affected," said Andy Fuzesi, general manager and co-owner of the Los Angeles Auto Show. "Everybody is clearly reassessing where they spend their money."

Warren BrownWarren Brown of The Washington Post says "An America without manufacturing becomes a starkly divided society...." He continues, saying "I'm often chided for my passionate support of the domestic automobile industry. But I don't mind the ribbing. My passion is a product of my faith in America, my belief in its ability to compete and excel, to innovate, to lead. There is something else -- gratitude ... and the desire to save an industry that put so many of my people on the road to prosperity." His excellent post supports a very important point, founded on this statement that "The American Three -- General Motors, Ford and Chrysler -- largely have been responsible for the development of a black middle class in this country. Many children of factory workers followed their parents onto automobile assembly lines. But many others went to colleges and universities, medical and technical schools, thanks to good UAW salaries and educational benefits."

Yahoo!newsAccording to Yahoo!News,  "Detroit's Big Three automakers pleaded with a reluctant Congress Tuesday for a $25 billion lifeline to save the once-proud titans of U.S. industry, pointedly warning of a national economic catastrophe should they collapse. Millions of layoffs would follow their demise, they said, as damaging effects rippled across an already-faltering economy."

Yahoo!FinanceEven as the automakers beg, aAccording to Yahoo!Finance, Treasury Secretary Henry Paulson told Congress on Tuesday that the administration remains firmly opposed to dipping into the government's $700 billion financial bailout fund for a $25 billion rescue package for Detroit's Big Three automakers, no matter how badly they need the help.  "There are other ways" to help them, Paulson told the House Financial Services Committee as the bailout bill clung to life support on Capitol Hill." What would you suggest instead?

What's the point?A discussion at  is founded on this statement: "Someone has to lead. Someone has to take bold action. General Motors is falling apart, losing billions, and in jeopardy of going out of business. If we can convince them that there is a viable market for them taking drastic action to convert their cars and trucks to being the most environmentally efficient in the world, they have nothing to lose by unconditionally embracing the green movement." How do you feel about this concept? Then join their discussion and share your opinion.

star tribuneFrom the consumers' perspective: Dee DePass of the Minneapolis Star Tribune asks the $64,000 question: "Will anyone buy a new car?"  "There are lot of uneasy consumers out there, and I am one of them," says consumer Mike Slobodnik. He is just one of many consumers who feel now is not the right time to buy a new car. Before the election, potential consumers were telling anxious car dealers that they might buy a vehicle after the election. Then they said after the first of the year. Now they're saying maybe by spring. Fear about the economy has stalled sales at dealerships across the country. Car inventories are piling up on dealer lots, in some cases rising to four months worth of sales, according to the National Automobile Association.

Detroit NewsOn the other hand: "Weakening economy, automakers' financial woes put strain on retailers as sales plunge," say Robert Snell and Alisa Priddle at The Detroit News as the describe the plight of dealers to bring consumers into the showroom. General Motors dealer Bill Shotwell tried something new last month at the North Carolina State Fair: Just past the vendors selling deep-fried Snickers bars, wedged between the Kiddieland Fun Park and the livestock exhibit, the Raleigh dealer created a mini-showroom with a full line of Saturn models hoping the novel approach might snag some customers. Like many dealers around the country, he's caught in the weakest U.S. auto market since 1983. Detroit's Big Three have taken the brunt of the sales slide all year, and the situation worsened this month after GM and Ford Motor Co. reported dismal third-quarter earnings and GM said it could run out of money early next year, sparking fears of bankruptcy.

wall street journalRobert Hahn and Peter Passell of the Wall Street Journal suggest Government rebates would do less harm than a bailout, by stimulating car buyers instead of car makers. "Should Uncle Sam save General Motors, Ford, and Chrysler from bankruptcy? In normal times, most mainstream economists (and many mainstream legislators) would probably say no. But with financial markets in turmoil and the economy on the cusp of a nasty recession, these are hardly normal times. In any event, Congress and President-elect Barack Obama are committed to spending billions to keep the Big Three afloat. What's not been decided, however, is how that money should be spent. A radical change in perspective could spare the nation a lot of grief down the road. Rather than subsidizing the auto makers directly (and almost certainly sucking Washington into their management), why not give Americans the financial incentive to accelerate purchases of cars and light trucks? The consumer-subsidy approach would be a less wasteful route to the desired end, as well as one that would leave a less toxic legacy of market intervention once the economy has recovered."

Detroit Free PressThe Detroit Free Press has revealed several key conditions of the $25-billion bailout plan for U.S. automakers unveiled Monday, including:
* The Treasury would start lending money as soon as 25 days after the bill is approved.
* Money would come from the $700 billion set aside for the financial industry bailout.
* Top executives' pay would be limited, and so-called golden parachutes banned. As Congress takes a look at whether to help the struggling U.S. automakers, senior writer Chris Isidore tells us what we need to know about what's at stake for the Big Three. Congress is set to begin a heated debate on whether Detroit's Big Three automakers -- General Motors, Ford Motor and Chrysler LLC -- will be next in line for a federal bailout. Democratic leaders in Congress are in favor of some kind of help, as is President-elect Obama. But the Bush administration has balked on proposals to let the automakers tap the $700 billion Wall Street bailout approved in October. Many leading Congressional Republicans have suggested that a better option is bankruptcy, enabling the Big Three to restructure and ultimately emerge as leaner and viable businesses. How this debate plays out could determine whether this important industry survives -- and in what form. This article outlines some quick answers to seven key questions about the crisis.

There's so much information about the crisis in the automotive industry to sort through right now, and it affects us all quite deeply. We want to hear your opinion about the issue!

Jody DeVere, President AskPatty.comJody DeVere
President and CEO

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