v'ܩ Where is the Outrage from Foreign Auto Makers?
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Where is the Outrage from Foreign Auto Makers?

December 13th, 2008

From what I can tell foreign auto makers, who do a substantial amount of their business in the U.S., have remained silent on this bailout for their American counterparts. The confusing part here is that I would expect the foreign auto makers to be up in arms. They certainly provide enough jobs in the U.S. that their voices will be heard just as loudly as the Failed Three. So why aren’t they complaining about the bailout and salivating at the chance to significantly reduce the competition?

The Fallout

Apparently foreign automakers are primarily concerned about a ‘supplier shock‘. This is essentially the same concern that Ford noted when they claimed that they could go on without an infusion of money but if Chrysler and GM went under they would also go under. These companies believe that suppliers will be unable to sustain themselves due to the reduced demand and the amount of debt owed to them that would be negotiated away as a result of a Chapter 11 bankruptcy. Bloggers, such as Jake Taylor at SeekingAlpha, and these companies are missing a key point, or maybe I’m the one missing something.

It’s OK to let them fail.

If there are 1,000,000 new cars built and sold every year it should not matter to the suppliers in question whether their orders come from 5 companies each building 200 cars or 2 companies each building 500 cars. The market isn’t suddenly going to dry up so we are going to have very nearly the same number of new car purchasers in the market regardless of who is making the cars. Many job’s will be recovered as the remaining automakers have to retool factories and hire workers to ramp up their production to meet the demand that they had previously only provided 20% towards. Will there be downtime where some people are out of jobs? Absolutely. Will it be worth it? Yes.

If we let this go we will flourish 5 -10 years out. The foreign automakers will be creating more new jobs than they had already planned. These manufacturing jobs will have returned. There will suddenly be openings for new U.S. car makers to enter the industry and pump new life into it. The remaining auto companies will be profitable, something that no one believes about the Big Three even after giving them money (If they did then investors would be lining up).

Or I could be way off base here. Only a fool doesn’t admit they might be wrong.

Author: T.J. Seabrooks Categories: General Politics Tags: ,
  1. December 13th, 2008 at 22:08 | #1

    My gods, and I thought I was the only one who saw things this way!
    I mean, if GM goes under, wouldn’t it’s competitors buy out it’s assets, at a discount, and that would include potentially some manufacturing plants? etc etc?

  2. December 13th, 2008 at 22:57 | #2

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