So many factors have gotten us to this point, that no one, especially a Business School Professor or Nobel Laureate understands the solution to the problem or what it will take to correct the imbalance, in the real world, to create a sustainable automotive industry.

It’s easy to push a few numbers around in a spreadsheet and theorize how to solve the problem, it’s vastly different to make it happen. Just ask Steve Miller, the CEO of Delphi.

Lastly, Honda and Toyota are scared. They know this is a very competitive industry and that they are not immune to the problems facing GM, Ford and Chrysler.

“DITTOS, William and Jeffe! Nailed it!”

“We have met the enemy and it is us”
Walt Kelly

Ford and GM were caught with their pants down – once again – by the fuel price shock of last year. No one saw that coming. Up to that point, the American vehicles most Americans aspired to own were Cadillac Escalades, Chevy Tahoes and Suburbans, Ford Explorers and F-250’s. Ford and GM built small cars, but buyers in my part of the country – the Great Flyover – overwhelmingly preferred the 6,000-pound tanks, many of which were built right here in Janesville, WI.

It is time that people remember that Toyota (a company that up to now, has never posted a loss) was caught with their pants down, too. Toyota sells EIGHT – count ‘em – EIGHT lines of SUV’s and trucks in this country. And they are just as big and fuel-thirsty as their American-make competition. Indeed, only a few years ago, Toyota invested in a new plant in Texas for building nothing but large pick-ups. The local Toyota dealer here in Madison, WI has unsold large trucks and SUV’s stacked twenty deep.

The real “800-pound Gorilla in the Room” is not Detroit’s poor product vision. It is the fact – which no one talks about – that Detroit alone among the world’s automakers, is burdened with the costs of employee pensions and employee health care. America alone among so-called “advanced” industrial nations refuses to acknowledge that in an advanced country that wants to call itself civilized, access to decent health care is a right, not a privilege for the rich or for those lucky enough to have a government or a union job.

Health care has gotten too expensive for those of middle class means, to say nothing of the poor. So we have to buy insurance, which also is too expensive for most people. So traditionally, our employers have paid for it, either in whole or in part. As costs have climbed, large employers like GM, still with employees represented by strong unions, have been under strong pressure to keep up. The rest of us (46 million of us and climbing) are just doing without as our employers – one after another – drop their health care benefits, partly because they are feeling the pinch of global competition, partly just because they can.

These spiraling costs are breaking the backs of American industry, especially the Detroit Big Two-and-a-Half. No other automaker bears these onerous costs. In the rest of the G-8 nations, health care costs are spread out more evenly and more fairly – paid for by everyone through their taxes. Instead of America’s byzantine labyrinth of over 3,500 different health insurance providers, each with its own bureaucracy, there is only ONE insurance company – the government – hence the term single-payer insurance. Contrary to popular U.S. opinion, it is not the medicine which is “socialized,” it is just the insurance. The government, as the insurer, has much more power to negotiate with health care providers and big pharmaceutical companies for lower pricing.

I know this is true. In 2001 I was hospitalized in Western Europe and I had to actually pay the entire bill, since as an American, I was not covered by their universal insurance. The bill came to $98. This money covered a night’s hospital stay, emergency room care, an EEG, medication delivered by I.V., food, and a 60-kilometer ambulance ride! This was Western Europe, not some backwater Third World hovel. The level of care was fully up to the best available anywhere. For comparison, earlier that same year, I was injured here in Madison, WI and had to be transported by ambulance a whole TWO MILES. The ambulance ride alone was over $700. My overnight hospital stay plus emergency room care came to over $2,000. This is simply INSANITY!

Until American politicians quit being hung up on ideological (and incorrect) conversation-stoppers like “socialized medicine,” and put into place some form of single-payer universal health insurance, American industry will continue to decline until it collapses under the weight of the added costs that destroy its ability to compete. We will become like Brazil or Mexico – with no manufacturing base of our own – merely a colony of foreign multi-nationals, with wealth continuing to transfer upward, concentrating into fewer and fewer hands, with growing hordes of desperately poor, and effectively NO middle class left at all. America will become a Third World nation in all but name, and democracy will disappear, because political freedom means nothing if economic freedom and opportunity are gone.

The unions and car companies have been bilking consumers for years with their inflated wages and benefits. The GM retiree benefits alone have brought GM down to it’s needs.

Now President Obama can go in and try to clean up the mess. Instead of firing Mr. Wagoner, he should have gone in and fired the heads of the unions. How can Wagoner afford to invest in R&D, new plants and systems if his corporation is being bilked by unions? Give us a break!

http://tinyurl.com/hopelessobama

Consider also the impact of many, if not all, of the parts suppliers tanking at the same time, potentially crippling the “trans-plants” and foreign-owned manufacturers, too. Remember, the Japanese and others are masters of “just-in-time” supply chains. No parts, no cars, no deliveries to dealers and no jobs. And, when it comes time to replace a water pump, O2 sensor, alternator, belt tensioner, brake caliper or any of the myriad of other parts that make up your 2002 Honda or 1998 Buick, what the hell are you going to do for parts if the aftermarket is dead? Slog through the junkyard?

Finally, the problem with the carmakers today, like every other aspect of the casino mentality-caused financial crisis, can be laid at the doorstep of the banks and Wall Street “masters of the universe,” although a longer word with the root “master” comes to mind. The miscreants in the global financial system are the ones whose gambles, and performance bonuses, tanked the economy, threatened systemic collape through fantasy instruments like credit default swaps sold by the most shameless company in the world, and wiped out the values of individual investors the world over. They have cost millions of jobs of people with no financial blood on their hands. They are now killing industries that built this country and that broadly gave us the middle class standard of living, through wages and work rules won by unions and precipitated throughout the economy (like paid vacations and living wages), that we take for granted. And yet, TARP largesse is doled out in fabulous sums with few, if any, questions asked and the auto companies are forced to grovel for loans roughly equivalent to the bonuses the banksters and other world wreckers would make off with if given half a chance.

It won’t make a difference. Thanks to the banks, we are going to lose these companies and the jobs and subordinated industries that they support. And then we will reap the consequences, and the whirlwind, we deserve.

I hope people see the double standards that is promoted between the blue collar jobs and white collar jobs.

The % discount on fuel efficient cars is MUCH lower.

Is it me or are your guest leaving out a crucial point?
Global crisis! I don’t think cars are being sold oversea’s as much as they were!

If we bail out our Auto companies, it will zero-sum to taxpayers. The amount of money will be coming from (additional) fees on imported oil.
We will check national polls…if the public wants their car companies be rescued, they should be willing to pay for it. In return, the auto companies should will be accountable to the public by producing better and more efficient vehicles; or else…

In other words the Nation will make the decisions and Government and our kids (the ultimate payors) will be out of the equation.

One stone, three birds!!!