When to pull the trigger


In response to talk of bankruptcy as a better solution than a bailout, jgoods says you don’t shoot the horse you are riding.

He and I agree on the bottom line: the auto industry needs a complete overhaul. We both want to see the U.S. companies become competitive, and even lead, in the world of automotive innovation.

We agree that they’ve simply followed the easy money when Americans were in love with city dwelling monster trucks. In fact, I wrote a blog about that here. It’s true that the American public simply got what they were demanding and probably should accept some guilt.

However, it’s the responsibility of a corporation to plan for the possibility of future scenarios, rather than just hope a lot that things stay the same forever. That’s where the Detroit 3 have failed miserably.

The UAW hasn’t helped. The union has bogged down the industry with high labor costs and forced the Big 3 into paying unfathomable sums of money for health care and retirement benefits. While being good for the employees, it came at the cost of stagnant innovation and sub-par quality. That’s not good business.

It’s time to accept that the U.S. auto industry isn’t confined anymore to the United States. Those foreign transplants, Toyota, Honda and all the others, will have a significant impact on the shape of the industry here. We have to think bigger than our borders and accept the fact that organized unions can’t control everyone.

The U.S. automakers do need our support. And now that they’re being humbled and forced to play on the same field as the rest of the world, they’ll probably earn it. But that doesn’t mean all 3 companies have to survive by being bailed out.

Remember that horse? If he’s got broken a leg and won’t take you where you want to go, it’s time to shoot him. Even if you can’t imagine traveling without him.

Do you think all three U.S. auto companies can be succesful in the future?


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