Recently the big three US automakers were panhandling in washington.
Troubled U.S. automakers and their allies on Capitol Hill are seeking billions of dollars in aid from the federal government ranging from health coverage for their workers to extra tax write-offs for themselves.They're also asking for one rhetorical favor: Please don't call the requests a bailout.
"I don't view it as a bailout," Sen. Carl M. Levin (D-Mich.) said.
"We're not looking for a bailout," agreed William C. Ford Jr., chairman of Ford Motor Co.
What else is it when the Federal government gives money to a company or group of companies who fail to produce quality product, or lose money?
If you wonder why the big 2 1/2 suck so bad, look at this philosophy that they pander to.
GM has focused its most recent launches on cars, including the Pontiac G6 and Buick Lacrosse. But cars tend to be less profitable than trucks, making their sales less important to the bottom line. In addition, the overall car market has been in decline for several years.
While it's true that cars are less profitable than trucks, you should look at them as a loss leader. I drive a Subaru and my wife drives a Honda. If we decide to buy a truck or mini-van, I'll first look at Hondas or Subaru's because of the positive experiences I have with them.
Same is true for Detroit. If they built a good car that attracted car buyers, then when they decided to move up to more expensive and more profitable vehicles, they would have a strong, loyal customer base to draw upon.
It's like the guy who does your taxes year after year. When he expands into financial planning, more than likely the people who he does taxes for will line up for him to do their planning.
Another problem with them is their relationship with the labor unions. Where in a American located Honda plant for example it is perfectly acceptable for an assembly line worker to quickly fix a problem he sees, as simple as a fuse box not wired fully. But in one of the big three, it becomes a union issue and production must be halted to so a union "technician" can fix that problem. Often times they don't bother and let the product go out of the plant defective.
Posted by psugrad98 at December 14, 2005 09:06 AM | TrackBack
