A proposal for the auto industry

Over the last few weeks, it has become apparent that the Big Three in Detroit âÄî Ford, General Motors and Chrysler âÄî the very image of American industrial might, are burning through their remaining cash reserves and on the brink of bankruptcy. Apparently, they are all incapable of turning a profit, given their heavy investment over the last 20 years in large, inefficient vehicles that lost much of their appeal during the period of high oil prices of most of the last 18 months. With the recent revelation of their financial woes has come the discussion of whether they should be given the same government assistance that the big players in the financial services industry were treated to, recently. A bunch of ideas have been thrown around as to why the Big Three should receive taxpayer funds to keep their doors open, but the only one to really stick has been the claim that if they go under, thousands of associated jobs in parts manufacturing and other supporting industries will be lost, as well. When Wachovia and Washington Mutual were on the brink of bankruptcy, federal regulators quickly arranged for the sale of their assets to other banking giants. So, my proposal is this: Why not arrange for the sale of Ford, General Motors and Chrysler to more successful automakers, such as Honda or Toyota, at similar discounts? These companies produce the vehicles most frequently purchased in North America (after the Ford F-150) and in the past they have demonstrated clear willingness to lead in the development of new, more efficient technologies. I do not know if they would be interested in or have a need for the additional manufacturing capacity, but I feel that, at the right price, they may go for it. Additionally, existing state-side manufacturing capacity would enable them to sell similar numbers of vehicles without having to pay for shipping or other importation expenses. If they used the Big ThreeâÄôs assets, most âÄî if not all âÄî of the jobs relying on the continued existence of those companies would be preserved; the name on the paychecks might change, but thatâÄôs about it. I can already think of a few retorts to my suggestion, most notably a deflated sense of pride once the cars were no longer made by âÄúAmericanâÄù companies. But I also have two responses to that. First, this is the free market âÄî only the profitable survive. Second, itâÄôs a non-issue. To start with, Honda and Toyota already operate several plants in the United States. I drove by a new, massive Toyota plant in Alabama last year, and Honda has been building cars here since 1982. Surely the jobs created by those plants have been beneficial for their respective regions. Even the vaunted Big Three are not entirely domestic. These âÄúAll-AmericanâÄù companies also have plants in Mexico and Canada. Honda and Toyota may be based in Japan, but they have thousands of employees right here. It seems to me that most objections to this idea are pride-related. Ford, General Motors and Chrysler are venerable institutions that have stood for almost 100 years. Many would view their âÄúlossâÄù to foreign automakers as tragic and a tremendous blow to the American image. However, these companies operate within a free market, where corporations live and die by their ability to turn a profit. If they canâÄôt handle the rigors of competing in a global economy, perhaps the time has come to let them fade. In that case, transferring their jobs and assets to other companies through sale would be the only way to prevent the economic catastrophe that is projected to occur if they go bankrupt. Jacob Osborne University graduate student