The American Auto Bailout

This is going to be one of the big stories of the year, three huge companies that employ hundreds of thousands of people are on the brink of bankruptcy. The big question is why are they on the brink and why aren't other companies asking for the same thing. I haven't heard of Honda and Toyota looking to the Japanese government for a bailout and yet they are no doubt having similar issues with sales. So what is the real problem with the American Automakers?

Some people will go on about the huge SUV's that were built instead of focusing on smaller more fuel efficient cars. Reliability issues have plagued American cars over the years as well. So are these the only issues and are they really issues anymore? First off General Motors now has some of the most fuel efficient vehicles in at least three market segments and for the last 8 years the reliability issues from what I have read are gone. I personally own a Full Size GM pickup truck, it is the most fuel efficient full size truck on the planet and after 60,000 miles I have had no issues at all with it. I am not here to tell you how great General Motors is, I am not brand loyal and as soon as someone makes a better pickup truck that is more fuel efficient and has better features than the GM I will buy that one. My point is many of these comments just aren't true.

The fact is General Motors sells more cars than every auto maker on the planet except Toyota, so the sales are pretty darn good. Selling cars in this economy as I said before is bad for everyone, the largest Lamborghini dealership on the world which happens to be in California closed its doors last month and filed for bankruptcy. The reality is people aren't buying expensive cars right now.

So if every car maker is feeling the pinch and people are still proportionally buying American cars why are these three huge auto makers on the brink of bankruptcy?

The answer is complicated but there is one area that is so clearly obvious as the main culprit. In both Canada and the United States where a large amount of American cars are built the people that work in these factories on both sides of the border are a part of unions. These unions are incredibly powerful and over the years have made it so that some of these workers are earning $90,000 a year to work on an assembly line. On top of this both the Canadian and American auto unions have managed to get their members unbelievable pension packages. These pensions allow most workers to take retirement at the age of 55 and they are paid huge percentages of their income for the rest of their lives.

This to me is one of the biggest reasons the presidents of these three companies are begging for bailout money and why you don't hear the Japanese or German car companies doing the same? Just this morning the big three went to the unions to ask if they would reduce their pay in order to make the bailout happen, their response was 'never'! Just imagine how sick these people are that they would refuse a pay cut and if they don't accept one they'll most likely be out of jobs.

The requirement for a bailout has less to do with big ugly gas guzzling and unreliable SUV's and more to do with greedy unions that don't look at the big picture!

Seed Newsvine

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