Detroit Bailout Loans



We cannot allow the Detroit automakers to fail. The ripple effect down the line would be disastrous.

There are many suppliers that rely on manufacturing automotive parts and all their jobs would be eliminated. When the industry was in its infancy in the ’30s the American automakers didn’t have competition from across the pond, so they made sweetheart deals with the UAW and just passed the increase in labor cost on to the customer.

Then along comes Japan with high quality small cars at a reasonable price. They got their foot in the door here and never looked back. Detroit saw that there was still a high demand for large vehicles so they chose to build the high profit large vehicles and let Japan produce the low cost, low profit vehicles. Until the increase in oil prices there was still a high demand for large pickup trucks and SUVs and Detroit was glad to oblige. Build me a Hummer, the bigger the better, I love the prestige. Look around you. The majority of the vehicles you see are SUVs and large pickup trucks with big gas guzzling V8s. They have four doors, four-wheel drive and dualies. Don’t blame Detroit for these vehicles.

You wanted them and you bought them. The demand for these large vehicles is so great that even all the foreign manufacturers are building SUVs. Even Honda, Nissan and Toyota quit building their small pickups and are now building large trucks with big V8 engines for the American market.

Detroit can survive this mess that they are in. For starters they need to renegotiate their contract with the UAW. Which is better, a lower paying job or no job at all?

It’s time to wake up to reality. Automotive assemblers make much more money than aerospace airframe and engine mechanics and aerospace mechanics require much more training and skill. They need to reorganize from the top down. Get rid of some of the fat at the top.

Congress needs to mandate standards that will meet the needs of the 21st century, including investing in R&D to design automobiles that don’t rely heavily on fossil fuels. If Detroit is put to the task, they can accomplish whatever it takes to keep them afloat.

In the ’80s, Congress mandated the CAFÉ standards on the auto industry. They had a deadline to meet the fuel efficiency standards set by Congress. Engineers and scientists went to work and they looked outside the box.

They scrapped the carburetor and installed electronic fuel injection and electronic ignition. They were able to meet the standards and increase gas mileage and performance and reliability. The industry was not in favor of making those changes because of the cost, but we are all better off because of it today.

The automotive industry holds the key to energy independence. No amount of drilling for oil will get the job done, it’s like pouring gasoline on a fire. Only conservation and innovation will get us there. High oil prices forced us to conserve and the immediate result was a huge reduction in oil prices. Oil prices dropped over $100 a barrel in a matter of months.

Wayne Donnay


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