An auto industry bail-out will only offer a temporary solution to the problem, and there is no guarantee that the three car companies would not eventually go bankrupt. Infact, the government had bailed out Chrysler in 1979, and its back to square one. So there is no guarantee that this will not happen again in 30 years.
In a global economy, the competition for Ford, Chrysler and GM comes not from within the U.S. but from outside. So if the three car-makers merge, it may be better positioned to compete against foreign car companies like Toyota and Hyundai. This model worked favorably for Boeing, and it may work for the Detroit 3.
5 comments:
I don't know I think putting three bad apples together doesn't really mean you would end up with an good apple. Because there are so much inefficiency already in each one of the three companies, putting them together might be problematic and there might be culture clashes between the big three if combined to one.
I agree with KT. The main problem is the inefficient ways all three companies are making cars. Combining them will just be one huge inefficient company. The whole production system needs redesigned.
I doubt that the "Detroit three" will turn into the "Detroit one" based on the same reasons KT gave, even though before the bailout was proposed GM was considering a merger with Chrysler, I just don't think it will ever happen though.
The biggest problem is the employees themselves. I heard that the employees of these three get paid alot compared to other Japnaese car companies, and they don't want to cut their wages to the efficient level. Before asking for anything from the government, they have to reform themselves.
rukawa1004-
The problem is the union. The United Auto Workers is very large and powerful. The employees are basically powerless, but they have organized and now have specific demands. I guess since they still want a lot they are willing to sacrifice their jobs so be stubborn. I don't really know about unions in Japan, but my guess is that it has a minimal presence, if any, in the auto industry.
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