I don't think people have a clue as to the impact of the loss of the auto industry as we know it. It's been said there are six people working in the U.S. for every one in the auto industry; steel, rubber, glass, electrical and wire, carpet, fabric, nuts, bolts and screws, etc. Just read an article in the Tampa Tribune where they are against the bailout. They don't realize that the auto business could drive them out of business. No jobs, no money, no travel, no tourism, no ads in their paper for motels, hotels, lodging and meals. No ads for airfares or cruises. The general public just has no idea.
ChrisC said:
I think the GM retiree who posted in this thread is right that the public is clueless as to the exact ramifications of a bankruptcy filing and the ensuing liquidation of a major player like GM. But once they get the clue, I bet there will be phobia and a further erosion of consumer confidence which will prolong the recession.
With all due respect, before you say
'we don't have a clue' and
"the general public just has no idea," are you sure?
I have heard the
'as goes GM, so goes the country' but I think that was coined about 40-50 years ago when GM had 50% market share, the D3 (actually more than 3) had almost 100% of the domestic market, and the US was overwhelmingly a manufacturing economy - none of those are remotely true anymore. Just Google the phrase for updated views.
I have heard the
'1 in 6/7/10 jobs in the US is tied to the D3' most of my life. Might have been true 40-50 years ago, who knows, but still? No question suppliers, dealers and the towns with large factories will be impacted, but I'd challenge you to show the ratio is still that high if it ever was. Far as I can tell there are about 150 million jobs in the US. You are saying 25 million people are employed directly or indirectly by the automakers, I find that hard to believe. GM and Ford employ 252K and 246K
worldwide (verifiable), I don't know how many in the US. I'm told dealers employ the most between manufacturers, suppliers and deales. There are supposedly 6,500 GM dealers (verifiable), say 50 employees (estimate I heard) at each, that's 325K - double it to (generously) account for Ford & Chrysler and you have 750K. It's very hard to find exact numbers, the above is simply my best estimate. Say there are as many supplier employees as D3 workers - altogether that's 1.7 million employees. Where are the other 23 million? Maybe we should verify what the UAW and Michigan politicians want you to believe instead of assuming it's a fact before deciding your views on a bailout.
When Lehman failed they were larger than GM is today, but they were allowed to fail. The $130B market cap of Toyota today is far, far larger than than $2B GM, $7B Ford & $0.5B Chrysler (estimated since they are private) put together. BMW's $14B market cap is bigger than the D3 today at least!
And finally, I still don't get why the liquidation bankruptcy of one, say GM, leads
inevitably to the failure of all three - that's unprecedented in industry as far as I know (give me an example if you have even one - not including industries that have failed because their product became obsolete). Prospective GM buyers would then buy something else, some a Chrysler or a Ford in some cases, so their revenues and financial health would improve. GM plants would close, GM dealers would close and some suppliers with a heavy reliance on GM would close, but Ford & Chrysler and their dealers, suppliers and towns would benefit to some extent (yes, some of the business would go to foreign carmakers, but not all). Some displaced GM employees might even find work at Ford or Chrysler. Who knows, if GM's volume was split between Chrysler and Ford, they might even get into the black without massive restructuring - short term as least.
It's not that the rest of us don't care about the auto industry or auto workers. But you can't ask the rest of us to subsidize them for wages and benefits that the rest of us lost long ago or never had, especially after decades of poor quality (yes, I know they're better now but it may be too late) and inferior products. And I never realized it until this year, but I'll say it directly, the Jobs Bank is an outrage - that has not helped the automakers cause. Everyone could see this problem coming, it's been written about forever, just Google and read. The economic downturn didn't cause it, it highlighted what everyone has known, but failed to act on for decades. You can blame management, the UAW, politicians and short sighted consumers - all will have to take the medicine to avoid collapse.
End of rant.
