U.S. Big 3 automakers prepare for the worst
A lot has been reported in the general media about the American ‘Big 3’ automakers asking for U.S. government loans to help them survive the current economic crisis, considering the companies were in bad shape to begin with. While almost everyone expected them to get the loan, politicians blocked the money in the end just yesterday.
Basically, the American government has already agreed to hand over $700 billion in ‘bailout’ money to incompetent financial institutions such as Citibank and others to cover their massive losses. These stupidly-managed institutions have made world stock markets collapse, which is why people can’t get car loans or home mortgages even in this part of the world right now, as all banks cut down on spending.
Due to this, the ‘Big 3,’ namely General Motors, Ford and Chrysler, asked for a total of $34 billion from the government to continue their restructuring plans, currently being hindered by the crisis. However, unlike the dimwitted banks, the Big 3 had to suffer various sessions of public questioning to beg for the money. Having passed through various levels of politicians, the amount eventually came down to $14 billion, and now to zero.
Reports also suggest that the UAW — a powerful and greedy auto-workers union that forces the Big 3 to pay high salaries and benefits to blue-collar factory workers — have refused to take further pay cuts that would make their salaries similar to that paid to workers in American factories for foreign automakers.
Chrysler and GM have already hired bankruptcy lawyers, while Ford says they can hold on a little longer. For decades, the American car companies made awful products and managed their costs poorly. Now they are paying the price, just when they finally are building class-leading products. Analysts say the Big 3 going bankrupt will worsen the recession, which means the world will continue to go down with the Americans.
Whether you love or hate American cars, everyone will be affected. We assume at least some of the popular brands will survive after bankruptcy, including Jeep, Chevrolet and of course Ford. Car prices overall are coming down right now in the GCC, since demand has fallen and few can get bank loans. But imagine the prices other car companies will ask for, once a huge chunk of their competition is gone in the near future. Here’s hoping for the best.