Still Falling Down

Still Falling Down

December, 2008

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Apropos of Nothing, my $0.02 on Detroit

The “big 3” automakers are no longer the real US auto production base. Honda, Nissan, Toyota (and their “hidden” brands) make cars for the US market here, and their sales are a significant part of domestic auto production.

The big 3 probably make more US-sold cars in Mexico and Canada then the Japanese make in the US.

And yes, I know that “make” doesn’t mean anything when parts and intermediate assemblies criss-cross the world several times before final assembly.

The UAW is terrified of the manufacturers seeking bankruptcy protection because it’s the closest the mfrs will ever get to rewriting work rules, pay scales and no-show job requirements. And all of those factors have one underlying concept: dues collection (and that cash doesn’t go to retiree health benefits, either).

If Ford, Chrysler, GM “go away”, then their brands, intellectual property (think of the hundreds of thousands of patents they hold), usable production capacity, and employable, productive people (minus their union contracts) will be snapped up at auction by the hedge funds that still have cash (yup there are a few, and I bet you could raise 4 billion in about 20 minutes to go shopping at a Detroit fire sale) or other capital-flush enterprises. Christ, if someone can invest $37million in a blog (Huffington Post), there must be capital for an automaker.

Isn’t a hedge fund or Japanese manufacturer-led bailout at $0.25 on the dollar better than a runaway train government bailout at $5 on the dollar (how much actually has to be collected from us for each dollar paid out in a bailout)? Which will result in more “real” production of US autos and a better workforce and supply chain?

Yes, hedge funds are corrupt and leaky, just like a Federal agency, but they are much more efficient at it, and they didn’t point a gun at anyone’s head to get the money.

Finally, cars made by Detroit suck. Bottom line, they fall apart, they burn gas like there’s a royalty arrangement involved, they lack features, and they’re just not as much fun to drive. If a non-Detroit car sucks, it’s likely that the suck factors will be addressed in the near future, OR, it’s OK, because you still got value for money.

Which products should the market encourage?
Bzzt. Sorry. Too late. The market spoke long ago.

Thanks for listening. When I try to talk to my cats about this, they just get up and walk away.

Come on! Let’s hear how utterly, completely, and thoroughly wrong I am! Speak up!

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