Well, it finally happened.  Automakers finally got their bailout, excuse me … loan.  After sitting on the fence for far longer than they should have, the Bush Administration took action late last week to stave off bankruptcy for two of the nation’s leading automotive manufactures by appropriating $17.4 billion to GM and Chrysler.  The plan would provide the two companies with $13.4 billion immediately, but would require that they show proof of fiscal viability by the end of March; something many experts believe will be near impossible to do.  This money will not be new funding, but rather will be appropriated from the first $350 billion of the $700 billion passed by Congress a few months ago to aid the financial industry.  GM would have access to an additional $4 billion, assuming they prove they can be a viable company, out of the next allocation of $350 billion.

As much as I hate bailing out bad businesses, this loan was absolutely necessary.  Failure to help Detroit would have created a domino affect, causing the loss of millions of jobs, not just in the manufacturing sector, but throughout the private sector.  Dealerships, parts suppliers, tire companies, etc. would all have been adversely affected; so much so, that the president reluctantly took action.

But not everyone is happy with the bail-out package.  Representatives from the United Autoworkers Union believe the deal is unbalanced in favor of the companies themselves, and mandates unfair concessions from the blue collar worker.  They intend to try and renegotiate the package when the new administration takes office, but at the moment, they are simply happy to be keeping their jobs.

One of the biggest misconceptions about the failures of the auto industry is that it’s all the fault of the unions.  Those greedy unions!  Have there been some union excesses which have made it harder for manufacturers to keep costs down?  Absolutely!  Is that the main source of the problem?  Absolutely not!  Despite what you might here from conservatives, the average auto worker is not getting rich on the backs of the company itself.  Theses are, for the most part, working class salaries, and while the worker in Detroit makes more than the worker in Alabama due to the unions, the truth is that the US automotive industry is in financial trouble because of the poor decisions of corporate leadership.  I for one think GM’s board should have been let go a long time ago, but instead of putting the onus on the decision makers (you know, the ones making millions of dollars because they have a great deal of responsibility), conservatives have singled out the worker as the source of the problem.  While higher salaries are part of the problem, they are not the main problem.

The main problem is that the guys at the top have not correctly anticipated market demands and have instead produced cars people don’t want to buy.  But digging out of the hole the industry is in will require sacrifice on the part of all.  That means the unions, the corporate leadership, as well as the creditors holding their debt.  The unions aren’t happy and republican leadership isn’t happy, so all in all, my hunch is that this bailout package is probably a fair one.  The glaring omission of an “auto czar” has got to please the guys at the top.  Let’s just hope they don’t make us regret it.