History of the Problem with the Automakers

The automobile industry has become more competitive each year; not only with existing big brands names, but new ones trying to break into the business and show off new technology, low prices, or econ friendly vehicles. The automobile industry has a long history of people trying to create the next must have car, based on people’s wants and/or needs. As with any industry it has had/have problems based on not only supply and demand, but the damage the vehicle has had/have on the earth. Each year bring not only more competition but needs, because the industry grows with people and technology.

The first and foremost problem for the automobile industry was the creation of the automobile itself. Many different inventors tried to invent a steam engine vehicle-each getting their own patents in hope to be the first to invent this incredible idea of a machine-but some became limited by laws, and others by there own minds. It wasn’t until 1888 that the first automobile was produced by Karl Benz. The auto industry was born in the 1990’s when automobiles began to be massed produced by France and the United States.

The next two problems the automobile industry faced went hand in hand. The first was the cost of a single car. Most Americans who owned a car were wealthy people who simply seen them as an occasional luxury. It was Henry T Ford who seen this, and decided to design a car affordable for every class.  His design sold very well, which led to the next problem. Automobiles were being demanded faster then they could be produced. Again it was Ford who solved this problem by creating a moving assembly line in which workers could each add their part until a unit was created. It’s this very creation that lets to mass production of automobile in the 1990’s.

Finally one of the biggest problems the automobile industry is facing today is the recession the economy is facing. Americans are losing many jobs, because industries/companies are shipping Americans jobs off to other countries because of the lower costs. With many Americans being jobless, it makes it harder for Americans to have money to buy food and clothes, less alone cars; which leads to the current drop in the stock market for many high brand name industries. In the end we can only hope that this is another problem that can be solved in time like many other problems in the Automobile Industries.

What many people do not realize is that the first automobile has only been around for 20 years, the automobile industry though it grew at fast pace, is still somewhat new. There is not any technology that is perfect, and the automobile industries are just working out the kinks still. In time, when the economy is repaired, when there is less dependence on oil, and more Americans are able to find jobs, the automobile industry will most likely rise along with it.

Analysis of the Problem

The current problems in the automobile industries have derived from industries and many companies shipping jobs off to other countries to save cost; but these are not the only problems the industries now face. Most vehicles are run by oil, which is now becoming scarce, leaving the industries not only making cars that will soon be useless, but also in the need for a renewable source that can fuel an engine. Meanwhile each industry still tries to stay ahead of the other, in hopes of being the best and most well known (brand) automobile industry. 

The current state of the economy is the big reason for the current issues within the auto industries. Some people cannot afford to buy new cars.  Others are buying cheaper new cars, probably made in other countries. Foreign cars are a lot cheaper and can be a lot cheaper to maintain. The cars that we have continued to make in the U.S. are too expensive and cost too much it fuel prices.

Until we can find a solution to our gas prices, we will have a demand for smaller compact cars. Lots of people are sick of paying too much at the pump. At this time, gas prices are not too high, but a lot of Americans know that this is just a short term solution. American needs to find a new energy source and get out of the Middle East affairs.

Oil is another problem the auto industry is now facing, not only has gas prices kept many people from buying one car, less alone two, but oil is now beginning to run out; making many people afraid to buy brand new oil run cars. If people are not buying used cars, they are most likely buying hybrid cars which are economically friendly and do not rely on oil. This puts even more pressure on automobile industries to find another substance to run an engine that is not only environment friendly but one that does not cost too much. A lot of Americans are realizing that the oil is not going to last forever. Instead of giving huge bonuses to company executives these companies need to put some money into researching alternative fuel. The bottom line is that they need to research them, not invest in them. All ideas might not work. It is hard to say weather vehicles should all be run on solar energy or corn or anything else. But it all needs to be researched before putting all of the eggs into any particular basket.

It is a sad time when so many American companies are sending so many jobs overseas. Any job that we can keep in America can help keep the auto industry in business. Many well known industries and corporations have recently taken to shipping many American jobs to other countries in hopes of lowering cost and creating more jobs for other countries; it is no surprised that many automobile industries followed suite and began shipping their jobs to other countries as well. It is this very idea that has hurt the economy of the United States, and ultimately the automobile industry itself; because many Americans became jobless, barely able to find money for the basic necessities less alone cars

If all those problems weren’t enough, the automobile industries have always had one problem each must face, and that is trying to stay ahead of the next. Each brand has their own designs, their own logos, and their own cutting edge technology; still each fights every year to try and be the best brand around the world in hopes of dominated the industry. With all these problems each face, only time will tell who will come on top, and who will not. The automobile industry seems to face new challenges year after year, whether it is just competition or problems for the future of the automobile itself. Only time can tell how everything will turn out. In the end if the automobile industries in America fell, it could lead to dependence on other countries, and ultimately the loss of Americas Independence.

Various Affects on the Different Segments

If the auto industry in America completely fails the general economy would be devastated. Not only would we be losing a lot of jobs directly in the auto industry, we would lose jobs in all fields. The unemployment rate would drop so low that people would lose (more) faith in their government. The union workers on the assembly lines would be out of work. The mid and upper level managers would be looking for another automotive company to go to work for. 3,000,000 jobs affected or lost, school districts and towns bankrupted, the mass exodus of foreign manufacturing plants due to domestic suppliers going out of business, and billions of dollars of tax revenue lost. The suppliers, metal, paint, fabric, plastic, glass, and other industries would have to close their doors as well. If GM goes under, Ford and Chrysler will not be far behind. In November America had hit an unemployment level that was at a 14 year high. “The fact that official unemployment statistics only include those who are actively looking for a job means that the situation is even worse than it initially appears. When those who have stopped trying to find work and those who are currently working part-time until they can find a full-time job are factored into the equation, the overall unemployment rate stands at 11.8 percent” Says theTrumpet.com. At the time that this was said, it was directed at the economy crisis created by the housing markets and the banking industry. If the auto industry goes under those numbers will be going even higher.

To try and imagine the labor market after the auto industry failing in the U.S. is hard. Right now the labor market is already suffering. People are having a hard time getting jobs. The opportunities for even minimum wage jobs are getting very competitive. In some states we are experiencing problems in the labor market because of the use of foreign people being used. There would be an outstanding amount of labor supply but an unexceptional amount of demand for laborers.

Americans are so dependant on the auto industry that we are unsure what else we could be on top of manufacturing. When I looked up “Goods manufactured in the United States” eighty to ninety percent of the list was cars. Of course there are still companies who are manufacturing here in the US (Deere, CAT, Cummins, GE), but there is not enough to support us in the long run.

Before writing this paper I was completely unaware that national defense would be affected by the auto industry going under. The auto industry is responsible for making some of our most important military vehicles. In the case of a war with another country (if Japan takes over all auto making) we could not rely on anyone making our military vehicles. It would be completely unsafe. Above all, what would happen if we went to war with the country that we relied on to manufacture our automobiles? The option to leave the car-making to Japan is absolutely not an option for us.

If the auto industry was to fail, or even one of the 3 giants, the government would be picking up the tab. The government would be paying for promised pensions (or at least a percentage.) That alone would be taking up a lot of money. Another thing to consider is healthcare, unemployment, assisted living, and other government funds that are set up to help protect Americans. The government would have to spend a lot of money to protect those who need it. The money lost from those costs could potentially be greater than the money the auto industry is asking for.

My recommendations

My recommendations are basically that I think the automakers need to get a new plan and they need to get one fast. I think that they should get the money that they are asking for. I do, however, believe that there needs to be a lot of stipulations put in place. Not stipulations that will have the government running the companies, but enough to make sure that the tax payers’ money is really being used wisely.

I do not think bankruptcy is the best option. Neither chapter 7 nor chapter 11 will work out. I think that people could really be reluctant to buy from a company that has filed for bankruptcy. People could be worried about replacement parts, the quality of the vehicles and the problems of over priced – under achiever cars could continue. If any of these companies file for bankruptcy it could have a devastating effect on America. There would be a lot of jobs lost within the companies, meaning even more jobs lost out in the mainstream.

GM and other American automakers alike should stay operating. What seems to be the most obvious solution is to just shut some of the factories down, get rid of some brands, models and probably some dealers. Of course it might not be the most ideal situation, but it may need to be done just to keep the company alive.

The labor union needs to back down on this situation. I have learned that A little oxygen is better than none. With this said, I think that the labor union should realize that the workers would probably be better off making less money than before, than no money at all. The American automakers let the labor union push them too far and that has destroyed the ability to operate in a less costly state. I understand wanting to make a lot of money, but I also understand that I would rather make some money, rather than none. If these companies die, they will not be getting any money. After listening to weeks of “they let the labor unions push them too far” on CNN, all I can think of is A little oxygen is better than none. I do not understand why the labor force hasn’t already come out and admitted this. I think salary reductions are a must have right now. I understand that laborers and executive workers may not find this ideal, but it is important. Maybe, if the company can do well again everyone can start making more money. If anything, this needs to be strongly highlighted in the new plan presented to congress.

I agree with giving bonuses for good work. I do not, however, agree with giving them out too easily. All of the executive workers, chairmen, and CEO’s are making a lot of money and attaching a lot of bonuses to that. I completely disagree with that. I think there needs to be strict guidelines in the new plans about this. It is completely unfair for them to be getting bonuses anytime within the last 5 years. The company is failing, meaning they were not doing a good enough job to get any type of bonus. As I said before, I do agree with bonuses. But in my opinion there needs to be a successful business first, before anyone gets any extra.

I have a hard time understanding the term “golden parachute.” I thought it was used in a small manner. Not a lot of money given away and not all that often. Apparently I was wrong. Big companies decided to use these for all kids of executive workers and they can give a lot of money away. I agree with giving some money to big execs. That’s why they really want to become them, right? To make a lot of money? Well, I think they should get some parting money, but defiantly not anywhere ranging in the millions. Ever.

After revising the new plan presented by the automakers, congress should give the loan to them. Of course I think there should be conditions. As I noted earlier, there needs to be guidelines but the government should not be running the companies. Guidelines that I think should be put in place by the government include: Cutting wages (we can let the experts say to exactly what level), cutting brands and models, and there needs to be a lot more bargain spending. By bargain spending I do not mean taking quality out of the automobiles but to stop pumping money into useless bonuses and other lavish spending.

With all of the things that are happening in the auto industry I do not think that it is anyone’s best interests for Chrysler and General Motors to merge. I do not think that two failing ships can come together and make one useful yacht. This would just create more problems. If neither companies can succeed on their own then there seems to be no hope that they would survive together. When banks fail, the government tacks them to a stronger bank. They would never merge them to another failing (or worse off) bank. The auto industry holds the same principles.

Although we may put guidelines in place both within the companies and from the government in order to get the loans, some things may go wrong. I guess we have seen some of that with the bank bailouts. I guess we can only hope that there will be people put in place to monitor the situations in both the organizations and the government.

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50. "I promise you I will listen to what has been said here, even though I wasn't here." —at the President's Economic Forum in Waco, Texas, Aug. 13, 2002

49. "We spent a lot of time talking about Africa, as we should. Africa is a nation that suffers from incredible disease." —Gothenburg, Sweden, June 14, 2001

48. "You teach a child to read, and he or her will be able to pass a literacy test.'' —Townsend, Tenn., Feb. 21, 2001

47. "We both use Colgate toothpaste." —after a reporter asked what he had in common with British Prime Minister Tony Blair, Camp David, Md., Feb. 23, 2001

46. "Tribal sovereignty means that; it's sovereign. I mean, you're a — you've been given sovereignty, and you're viewed as a sovereign entity. And therefore the relationship between the federal government and tribes is one between sovereign entities." —Washington, D.C., Aug. 6, 2004 (Watch video)

45. "I glance at the headlines just to kind of get a flavor for what's moving. I rarely read the stories, and get briefed by people who are probably read the news themselves." —Washington, D.C., Sept. 21, 2003

44. "I'm the commander — see, I don't need to explain — I do not need to explain why I say things. That's the interesting thing about being president." —as quoted in Bob Woodward's Bush at War

43. "I am here to make an announcement that this Thursday, ticket counters and airplanes will fly out of Ronald Reagan Airport." —Washington, D.C., Oct. 3, 2001

42. "The war on terror involves Saddam Hussein because of the nature of Saddam Hussein, the history of Saddam Hussein, and his willingness to terrorize himself." —Grand Rapids, Mich., Jan. 29, 2003

41. "I saw a poll that said the right track/wrong track in Iraq was better than here in America. It's pretty darn strong. I mean, the people see a better future." —Washington, D.C., Sept. 23, 2004

40. "Oh, no, we're not going to have any casualties." —discussing the Iraq war with Christian Coalition founder Pat Robertson, as quoted by Robertson

39. "I hear there's rumors on the Internets that we're going to have a draft." —presidential debate, St. Louis, Mo., Oct. 8, 2004 (Watch video)

38. "Haven't we already given money to rich people? Why are we going to do it again?" —to economic advisers discussing a second round of tax cuts, as quoted by former Treasury Secretary Paul O'Neil, Washington, D.C., Nov. 26, 2002

37. "We need an energy bill that encourages consumption." —Trenton, N.J., Sept. 23, 2002

36. "After standing on the stage, after the debates, I made it very plain, we will not have an all-volunteer army. And yet, this week — we will have an all-volunteer army!" —Daytona Beach, Fla., Oct. 16, 2004 (Watch video)

35. "Do you have blacks, too?" —to Brazilian President Fernando Cardoso, Washington, D.C., Nov. 8, 2001

34. "This foreign policy stuff is a little frustrating." —as quoted by the New York Daily News, April 23, 2002

33. "I got to know Ken Lay when he was head of the — what they call the Governor's Business Council in Texas. He was a supporter of Ann Richards in my run in 1994. And she had named him the head of the Governor's Business Council. And I decided to leave him in place, just for the sake of continuity. And that's when I first got to know Ken and worked with Ken." —attempting to distance himself from his biggest political patron, Enron Chairman Ken Lay, whom he nicknamed "Kenny Boy," Washington, D.C., Jan. 10, 2002

32. "It is white." —after being asked by a child in Britain what the White House was like, July 19, 2001

31. "I couldn't imagine somebody like Osama bin Laden understanding the joy of Hanukkah." —at a White House menorah lighting ceremony, Washington, D.C., Dec. 10, 2001

30. "For every fatal shooting, there were roughly three non-fatal shootings. And, folks, this is unacceptable in America. It's just unacceptable. And we're going to do something about it." —Philadelphia, Penn., May 14, 2001

29. "I don't know why you're talking about Sweden. They're the neutral one. They don't have an army." —during a Dec. 2002 Oval Office meeting with Rep. Tom Lantos, as reported by the New York Times

28. "You forgot Poland." —to Sen. John Kerry during the first presidential debate, after Kerry failed to mention Poland's contributions to the Iraq war coalition, Miami, Fla., Sept. 30, 2004

27. "I'm the master of low expectations." —aboard Air Force One, June 4, 2003

26. "I'm also not very analytical. You know I don't spend a lot of time thinking about myself, about why I do things." —aboard Air Force One, June 4, 2003   

25. "I know what I believe. I will continue to articulate what I believe and what I believe — I believe what I believe is right." —Rome, Italy, July 22, 2001

24. "We need to counter the shockwave of the evildoer by having individual rate cuts accelerated and by thinking about tax rebates." —Washington, D.C. Oct. 4, 2001

23. "People say, how can I help on this war against terror? How can I fight evil? You can do so by mentoring a child; by going into a shut-in's house and say I love you." —Washington, D.C., Sept. 19, 2002

22. "I wish you'd have given me this written question ahead of time so I could plan for it…I'm sure something will pop into my head here in the midst of this press conference, with all the pressure of trying to come up with answer, but it hadn't yet….I don't want to sound like I have made no mistakes. I'm confident I have. I just haven't — you just put me under the spot here, and maybe I'm not as quick on my feet as I should be in coming up with one." —President George W. Bush, after being asked to name the biggest mistake he had made, Washington, D.C., April 3, 2004

21. "The really rich people figure out how to dodge taxes anyway." —explaining why high taxes on the rich are a failed strategy, Annandale, Va., Aug. 9, 2004

20. "My plan reduces the national debt, and fast. So fast, in fact, that economists worry that we're going to run out of debt to retire." —radio address, Feb. 24, 2001

19. "You know, when I was one time campaigning in Chicago, a reporter said, 'Would you ever have a deficit?' I said, 'I can't imagine it, but there would be one if we had a war, or a national emergency, or a recession.' Never did I dream we'd get the trifecta." —Houston, Texas, June 14, 2002 (There is no evidence Bush ever made any such statement, despite recounting the trifecta line repeatedly in 2002. A search by the Washington Post revealed that the three caveats were brought up before the 2000 campaign — by Al Gore.)

18. "See, free nations are peaceful nations. Free nations don't attack each other. Free nations don't develop weapons of mass destruction." —Milwaukee, Wis., Oct. 3, 2003

17. "The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa." —State of the Union Address, Jan. 28, 2003, making a claim that administration officials knew at the time to be false

16. "In Iraq, no doubt about it, it's tough. It's hard work. It's incredibly hard." —repeating the phrases "hard work," "working hard," "hard choices," and other "hard"-based verbiage 22 times in his first debate with Sen. John Kerry

15. "The most important thing is for us to find Osama bin Laden. It is our number one priority and we will not rest until we find him." —Washington, D.C., Sept. 13, 2001

14. "I don't know where bin Laden is. I have no idea and really don't care. It's not that important. It's not our priority." —Washington, D.C., March 13, 2002

13. "But all in all, it's been a fabulous year for Laura and me." —summing up his first year in office, three months after the 9/11 attacks, Washington, D.C., Dec. 20, 2001

12. "I try to go for longer runs, but it's tough around here at the White House on the outdoor track. It's sad that I can't run longer. It's one of the saddest things about the presidency." —interview with "Runners World," Aug. 2002

11. "Can we win? I don't think you can win it." —after being asked whether the war on terror was winnable, "Today" show interview, Aug. 30, 2004

10. "I just want you to know that, when we talk about war, we're really talking about peace." —Washington, D.C. June 18, 2002

9. "I trust God speaks through me. Without that, I couldn't do my job." —to a group of Amish he met with privately, July 9, 2004

8. "Major combat operations in Iraq have ended. In the battle of Iraq, the United States and our allies have prevailed." —speaking underneath a "Mission Accomplished" banner aboard the USS Abraham Lincoln, May 1, 2003

7. “We found the weapons of mass destruction. We found biological laboratories … And we'll find more weapons as time goes on. But for those who say we haven't found the banned manufacturing devices or banned weapons, they're wrong, we found them." —Washington, D.C., May 30, 2003

6. "Those weapons of mass destruction have got to be somewhere!" —President George W. Bush, joking about his administration's failure to find WMDs in Iraq as he narrated a comic slideshow during the Radio & TV Correspondents' Association dinner, Washington, D.C., March 24, 2004

5. "If this were a dictatorship, it'd be a heck of a lot easier, just so long as I'm the dictator." —Washington, D.C., Dec. 19, 2000

4. "There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again." —Nashville, Tenn., Sept. 17, 2002 (Watch video)

3. "Too many good docs are getting out of the business. Too many OB-GYNs aren't able to practice their love with women all across this country." —Poplar Bluff, Mo., Sept. 6, 2004 (Watch video)

2. "Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we." —Washington, D.C., Aug. 5, 2004 (Watch video)

1. "My answer is bring them on." —on Iraqi insurgents attacking U.S. forces, Washington, D.C., July 3, 2003

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