Should we allow the U.S. automakers to go bankrupt?
Topic: Should we allow the U.S. automakers to go bankrupt?
June 25, 2019 / By Dindraine Question:
I am disturbed by the bail out plan of the automobile industry under consideration. In the past, Washington had supported and granted billions of dollars to the auto industry. Today, there is little hope in the near future for the auto industry to recover. Car manufacturers from both China and India will only exacerbate the problem as those country ramps up their capabilities, making a crowded and competitive markets space worse. With all likelihood, the automakers will be back for another handout in a few years.
There is no seriousness or commitment by the automakers to change. They had approached Washington the first time without any real plan to turn things around. Obama had said he was disappointed at the automakers for approaching Washington without a turnaround plan. This is their second time back and now they come back with a cocktail napkin plan, but it is doubtful that any of the those plans will ever be put into action.
The automakers had many chances to improve and set a course for the future. Environmentalist in the United States had pushed for greener cars for years, but the auto industry had resisted and sabotaged their efforts. U.S. automakers problems are their own product. If U.S. automakers had accepted the environmentalist challenge and led the charge, the Japanese green autos would not the better selling green autos. They have no one to blame but themselves.
Some people argue that we are compelled to save the auto industry, regardless of how distasteful. If we don’t act to save the auto industry, massive layoffs will result and that will only worsen the unemployment and the economic recession. Some also argue that we’ve bailed out banks, why shouldn’t automakers be bailed out as well. I believe the key difference is whether the automakers in their current form are sustainable. For bank bailout, we don’t expect the banks to come back year after year for more money. However, everyone believes that this will be likely case for the automakers. If the automakers are unsustainable then layoffs are inevitable and rise in unemployment are inevitable. We’re simply prolonging the agony.
For national security reasons, it is unwise to allow all of the automakers to go bankrupt. However, we should let the field shrink and support the strongest left standing. It should be noted that by allowing the antiquated automaker to pass; it is possible that a new, better suited companies may rise to take their place. For instance, Tesla motors (www.teslamotors.com) which makes green autos may have better opportunity to enter the market. In effect, we may be damaging the long-term health of the U.S. auto industry by further supporting the Big 3 automakers by preventing more innovative young upstart companies from taking their place.
Please join me by writing a paragraph to your congressman telling them that you do not support the auto bailout. Please click on the link below and choose your state to send an electronic message. It doesn't matter if you old enough to vote or if you're not an active voter. It is an IMPORTANT issue and you should let Washington know how you feel!! Thank you.
Also, let me know if you agree or disagree with my remarks.
Best Answers: Should we allow the U.S. automakers to go bankrupt?
Carine | 2 days ago
Under bankruptcy protection the business is forced to reorganize itself into a profitable enterprise.
People do not lose their jobs.
The auto plants keep running.
The airlines went bankrupt. They did not go out of business. People did not lose their jobs.
The airlines merely reorganized the business so that they could run profitably.
If we bail out the auto companies they will not reorganize into profitable entities.
The automakers will merely continue to lose money. When the bailout money is spent, then the automakers will be back to ask for more.
A bailout merely postpones the inevitable. At some point the automakers will have to go bankrupt.
That will happen when the taxpayers get tired of bailing out the automobile industry and all of the other unprofitable dinosaur companies that we have here in The United States of America.
At some point the taxpayers will get tired of haveing their hard earned tax money flushed down the toilet by all of these old broken down industries that are asking for bailout money.
If the government really wanted to help the automotive industry they should make the purchase of a new (not used), American (not foreign) car tax deductible for everyone who purchases an American made car.
Instead of using billions of dollars of taxpayers money to bailout these companies, just make the purchase of a new American made car tax deductible.
If you let the automakers go bankrupt and then make the purchase of new American made cars tax deductible, that will solve the problem.
👍 152 | 👎 2
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Originally Answered: Who supports american automakers getting a bailout?
I do ....but conditionally. First, the Unions have to go....and the people who are getting big fat union retirement pay are going to have to take a major, major cut in what they get. Second, fire all the bosses and get some new quality business managers in to run the business. Third, make the money a loan only with the companies being put up as collateral for the loan.
Basically, I think they need to shut everything down for thirty days until they can come up with a plan to build it from the ground up. If they can't come up with a way to be competitive in the market, then they deserve to go under eventually....but I don't think the country can afford to have another couple of million people on unemployment either. That would cost more than the bail out. At least this way, the workers would have a chance to keep a job (even with substantially lower pay and benefits) than to be out on the street...and will have the chance to try to find other employment if the companies can't make it. Just for the sake of the rest of the economy, I don't think we can just let them fail. That could cause a real snow ball effect.
I don't think that we should let the auto manufacturers fail. This economy is a perfect storm that is unlike anything that has happened in the past, and their failure can be attributed, in large part, to the economy and the credit crisis. Perhaps they aren't as competitive as they should be, but I think they can thrive if they are aided in weathering this storm. To not bail them out seems like an easy answer, but the impact is going to be enormous. It will mean record unemployment levels and everything that comes with it.
In the end, the cost to the American tax payer would probably be greater if the big three are allowed to fail. I know there are people who are opposed to any kind of welfare, but without it, and with the economy being the way it is, these people will receive very little (if any) charity, won't be able to find work, and could end up dying. It's best to just bail out the big 3, and if they still fail, it would likely happen one at a time -- not all 3 at once. That's too much for our fragile economy to handle. That being said, I think the UAW needs to also make some major concessions or be abolished altogether.
👍 60 | 👎 -5
I agree. I think the auto industry should go bankrupt. If they would give the people that money, we could maybe buy one of their high priced cars. The government doesn't bail out the common man. Why are the rich people always getting a break and the poor or common man doesn't?? I call that discrimination. Don't you? They said on the news this money that they are getting will just last until March.
👍 59 | 👎 -12
I'd first like to say that I agree with and totally appreciated your question. There is bound to be someone who will answer on here that we are a bunch of idiots.
Everyone's lined up in Washington with their hands out. They were irresponsible with spending, the CEO's have million dollar homes and tons of cars, how is it our fault that they are in debt?
Something that should be restated is that the auto industry is NOT in danger. Hyundai, Honda, and Toyota are reporting all time profits. Toyota is actually building a facility in Ontario, Canada. The only companies that are in trouble are the ones who produce a crap car. Americans realize that Honda, Toyota, etc just make a better product. This year is the first year that me, my Mom, and my grandmother all bought new cars, and they are not GM or Ford. I am in an economic crunch but I know how to be responsible and how to make an educated decision based on which car will last the longest, will go without causing problems, etc.
I owe credit card debt - will the government bail me out too?
If we do bail the 3 US based auto manufacturers, how will they do well afterwards? If they are hemorraging money and cannot turn a profit, how will paying their debts help us again???
I heard one of the CEO's of the doomed companies on TV saying he paid himself a $1 salary this year. Why would anyone in their right mind fight to keep a business that isn't making money??? That is the point of business - to MAKE money, not keep a tradition. I hope the Obama administration says no to car manufacturers and yes to the people. Who cares about Ford, GM, or Chrystler. They are crap.
👍 58 | 👎 -19
I am a British citizen so I am not really qualified to speak on this issue, but we do have similar predicaments in the U.K, so for what it's worth.....
I believe that instead of just giving the companies the money those that need rescuing should instead sell equity to the government. If the government ends up being the majority shareholder then so be it. At least that way the business` are kept running, and in the long term the taxpayer stands to get their money back. Regards...Spider.U.K.
👍 57 | 👎 -26
Originally Answered: I don't understand how this "loan" is going to solve the automakers problems?
I'm a car dealer and I can tell you a loan alone isn't going to save the auto industry. It will only drag the dying longer. They need to change the whole industry. That means from the top down. The cars themselves need to be revamped meaning hybrids need to be increased, better mileage cars need to be increased in production. Our deals with the unions need to be revamped, considering the deals are outdated and killing the manufacturing with costs. But also the bonuses and benefits for management need to be overhauled and inline with profits. That means bonuses for people the company that is going broke needs to be stopped. Labor costs are out of line when compared to foreign companies. We need to either slow down the imports or tax the imports the way they tax us in their countries.