Chevrolet Corvette Stingray C7 Forum - View Single Post

Inspector 17 · 12-06-2008, 08:17 PM

Why do we (on this site, in the media, in the US) keep trying to find ONE thing that caused this situation? After nearly 80 years, all the brilliant economic minds in the world still can't figure out what really caused the Great Depression. Yet we are trying to find a single cause for the situation the US automakers are in right now.

Here are just a few of the reasons why GM and the other US manufacturers are where they are:
* The credit crunch and the inability of many people to obtain credit.
* The fact that we are a credit hungry society and most Americans are living outside their means.
* The residual affects of years of poor decisions by the US automakers allowing the foreign makers to leapfrog them.
* The structure of the US makers not allowing them to be agile enough to adapt to the changing environment (not just this year, but over the past decades).
* The unions and the financial impact they have had on the cost basis of the US automakers (they are still carrying the burden of decades of workers).
* The lack of US buyers to overcome the sting of the poor quality automobiles produced in the past by the US automakers.
* The globalization of production in general and the fact that the US is no longer a low-cost producer.
* The drive by American buyers for cheaper automobilies.
* The fact that people in the US, for the most part, feel that executives are overpaid and don't care about the general public.
* The fact that people in the US, for the most part, don't care if GM or any other company goes out of business.
* The animosity of the general US public for the banking industry and the $700B bailout package.
* The US media.
* The fact that most Americans don't understand the macro and micro-economic environment right now.

You could probably add a ton of other issues. They have all come together to create "the perfect storm" for the automakers. They are going to get some money to help them weather this storm in the near term. Mostly because the economy can't take the impact of them going out of business right now. However, they have about a month or so of loans to keep them afloat, at least until the new administration comes into office. They need to very quickly get themselves into a position to be cash-flow positive in this type of environment.

In the end, if they can't get themselves straightened out they are going to go out of business. The general public is not going to stand for billions and billions of more money flowing to US businesses. If any of the makers go out of business (or if all of them do) it is going to be painful for many, but the US will go on just as it did after the collapse of the US steel industry, the textile industry, the agricultural industry and just about every other industry that has left the US for lower-cost manufacturing countries. If we don't like that, then the US public needs to start making some real decisions about what is important to them and driving our industries and legislators to position themselves to support that.

12-06-2008, 08:17 PM	#14
Inspector 17 I love crepes Drives: 2017 ZL1 NGM A10 Join Date: Oct 2008 Location: Maryland Posts: 4,955 View My Garage	Why do we (on this site, in the media, in the US) keep trying to find ONE thing that caused this situation? After nearly 80 years, all the brilliant economic minds in the world still can't figure out what really caused the Great Depression. Yet we are trying to find a single cause for the situation the US automakers are in right now. Here are just a few of the reasons why GM and the other US manufacturers are where they are: * The credit crunch and the inability of many people to obtain credit. * The fact that we are a credit hungry society and most Americans are living outside their means. * The residual affects of years of poor decisions by the US automakers allowing the foreign makers to leapfrog them. * The structure of the US makers not allowing them to be agile enough to adapt to the changing environment (not just this year, but over the past decades). * The unions and the financial impact they have had on the cost basis of the US automakers (they are still carrying the burden of decades of workers). * The lack of US buyers to overcome the sting of the poor quality automobiles produced in the past by the US automakers. * The globalization of production in general and the fact that the US is no longer a low-cost producer. * The drive by American buyers for cheaper automobilies. * The fact that people in the US, for the most part, feel that executives are overpaid and don't care about the general public. * The fact that people in the US, for the most part, don't care if GM or any other company goes out of business. * The animosity of the general US public for the banking industry and the $700B bailout package. * The US media. * The fact that most Americans don't understand the macro and micro-economic environment right now. You could probably add a ton of other issues. They have all come together to create "the perfect storm" for the automakers. They are going to get some money to help them weather this storm in the near term. Mostly because the economy can't take the impact of them going out of business right now. However, they have about a month or so of loans to keep them afloat, at least until the new administration comes into office. They need to very quickly get themselves into a position to be cash-flow positive in this type of environment. In the end, if they can't get themselves straightened out they are going to go out of business. The general public is not going to stand for billions and billions of more money flowing to US businesses. If any of the makers go out of business (or if all of them do) it is going to be painful for many, but the US will go on just as it did after the collapse of the US steel industry, the textile industry, the agricultural industry and just about every other industry that has left the US for lower-cost manufacturing countries. If we don't like that, then the US public needs to start making some real decisions about what is important to them and driving our industries and legislators to position themselves to support that.