Bail the "Big 3"?

As many of you already know, last month the CEO's from the largest three automakers in America, Ford, GM, and Chrysler, went to Congress amidst our current financial crisis asking for 25 billion dollars collectively in bailout money (see article "To bail or not to bail, that is the question" from November 24th). The CEO's claimed that each of their respective companies were lying on their death beds, and said if they went down that over 3 million American jobs would go down with them. Congress told the "Big 3" to go back to Detroit, whip up some business plans that indicate how they will use the tax payer money to turn around and save their companies, and to come back to Washington to present their plans on December 4th and 5th.



Losing the auto-industry in America, expecially during the economic recession we are in, would have profound impacts on unemployment and would be absolutely devastating to our economy. Not only would jobs be flushed down the drain, but employers who worked their entire lives for these auto corporations would also see their benefits dissapear. For example, CNN recently wrote an article about the Emery family. The parents of this family worked for GM for over 30 years, the mother as a welder and the father as a company electrician and supervisor. Today this couple is retired because they are too old to work. They live off of GM's retirement package which gives them a monthly income to live on, as well as some benefits such as health insurance for the immediate family. The Emery couple worked over 30 years to earn their benefits, but they could all be stripped away from them if GM goes under.



GM, along with Ford and Chrysler, have already started throwing away many of the companies benefits. For example, all three used to offer dependent scholarship programs under which dependent children of the employees received scholarships to help them pay tuition. These programs are being thrown away in an effor to cut costs for the companies.

Ford has recently sold 5 of their corporate aircrafts in other efforts to cut costs. Last month the "Big 3" CEO's received criticism from Congress for each flying in on their own private jet asking for 25 billion dollars, drawing comparisons to "the guy in high hat and tuxedo that showed up to the soup kitchen". This week the CEO's from Ford and GM drove in company cars from Detroit to Washington in efforts to show Congress, as well as the general public, that they understand the changes that need to be made within their companies. The CEO's of GM and Ford have also said that if Congress gives them a bridge loan that they will each work for $1 for a single year.

The "big 3" have come to realize that, even with budget cuts, they will realistically need much more than 25 billion dollars from Congress. GM alone has raised their $12 billion figure from a month ago to $18 billion, Ford from $8 billion to $13 billion, and Chrysler maintains that they will need about $8 billion to save their respective companies.

The automakers are also making some changes to their business strategies. For example, GM is planning on reducing their dealers from 6,450 to 4,700, and is cutting their workforce by at least 30,000 employees. GM has also stated that 22 of their 24 new vehicle launches that will come out over the next couple years will be fuel-efficient cars. Ford has promised to build a "family" of hybrids, plug-ins, and battery electric vehicles.

These are all some steps in the right direction for the "big 3", but is it enough to save their dying companies? On Thursday and Friday Congress will be faced with making the tough decision of if they should give over 25 billion dollars to the three automakers. Although the consequences of not bailing them out are devestating, Congress must ask themselves if 25 billion dollars is enough money to take these companies off life support and make them competitive with companies like Honda and Toyota, because nobody wants to see more of our tax dollars flushed down the toilet.