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Bail Out of Environmentally Challenged Auto Industry

By Robert Cowin
November 12, 2008
File under: Auto Industry

US Tax Payer Bail out Auto Industry

The realization that the “Big Three” automakers need an emergency 25 billion dollar loan from the Federal Government to stay afloat strikes me as very unfortunate. I can remember back in the summer of 2000 when gas prices first started to rise precipitously and global warming awareness began to gain traction. Companies like Honda and Toyota came out with the Insight and the Prius; the first hybrid vehicles sold to the public. The go-cartesq Insight boasted 70 miles to the gallon while the larger Prius got 50 miles to the gallon. I remember thinking; these are the cars of the future. They drive great and who wouldn’t want to save money on gas? Almost nine years later gas prices have risen to all time highs but the US automakers have yet to produce a fuel efficient vehicle that comes close to the success of their Japanese counterparts.Why is this you may ask? The answer is poor leadership. While companies like Toyota and Honda were busy making the cars of the future, companies like Ford, and GM were busy making the Hummer and the Expedition. When gas prices kept rising and their sales started falling, they even resorted to marketing these vehicles as “fuel efficient” instead of addressing the problem head on by giving the US consumer exactly what it wanted; a car that didn’t cost a fortune to fill at the pump. US auto manufactures chose to continue manufacturing vehicles with poor gas mileage because it was cheaper and they weren’t thinking long-term. And indeed, part of good leadership is one’s ability to provide a strong vision for the future of the company. In this respect, the leadership of the Big Three automakers failed, and now the US tax payer is forced to shoulder the burden of their mistakes.Obama has said that the American auto industry is the backbone of the US manufacturing base and a key to our independence from foreign oil. He has made clear his intention to provide financial assistance to the US auto industry. While I agree with the President-Elect that the US auto industry is too important to our economy and our energy policy to let fail, I cannot help but be angered by the fact that while the CEO of the Big Three were busy running their companies into the ground and collecting hefty paychecks to do it, not to mention laying off workers and slashing benefits, precious funds that are needed for an untold amount of things will now have to be diverted to bail out a business sector which has been operating without common sense for a long time now.The message over the last few months has been made perfectly clear to me. The key is … get so big that you can’t fail and then the tax payer will be forced to keep you in business regardless of whether or not you make good business decisions.

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