Saturday, November 01, 2008

Big Decisions


I've already voted. Thankfully Travis County does a great job of setting up polling places. One was by my office and I voted earlier in the week. Fast, efficient and convienent. Voting should always be this easy and acessable. I think the election is decided for President, the big show will be how big the Democrats lead in Congress will be.

What do we do about the American automobile industry?

Chrysler maybe a goner. Yes you can still buy one, in fact you can order one. But before we have another Congressional election, you won't be able to get a new one. Ford is doing ok, and will weather the storm with the surplus of cash on hand. But what do we do with GM?

GM has more then sales problems. It has cash problems. Two years ago Ford mortgaged everything. Credit markets were open, it was easy for them to get cash. GM sold half of GMAC (their finance arm) to raise cash. Now they can't lend you money to buy a car, but Ford still can. Ford held on to Ford Motor Credit.

GM is not an industrial icon to my generation. However to my parents generation it is. GM was everywhere on television, they owned half the new vehicle market in the United States and were at times eyed by the justice department to be broken up for anti-trust reasons. Today, GM has about 24 percent of the market and is on the verge of running out of cash. When you burn through a billion dollars a month from your bank account, well sometime in 2009 GM won't be able to pay their bills. They no longer pay them in 30 days as it stands today.

Do we save GM? Arguments are being made by governors across the country to lend money to help them out. We did help out Chrysler in the 80's and the treasury made $400 million in profit for doing so. Do we want to try the same for GM? You keep hearing GM is going to buy Chrysler, but don't be fooled. Chrysler is a goner, you're financing saving GM not Chrysler which will be closed. Period. There will be massive job losses regardless.

I work in the auto industry. The company I work for will be effected. Part of the problem with GM and Chrysler going under is that the suppliers who supply them will go under too. Those suppliers also supply the rest of our auto industry in the US and will face massive restructuring (layoffs). Oh, and the retirees who will be flooding the government funded pension guarantee system. Don't forget about them.

We've said good-bye to making textiles. We've said good-bye to making electronics. We've said good-bye to most of our manufacturing industry. But are we ready to say goodbye to General Motors?

Baseball, Apple Pie and Chevrolet. A fate that will be decided after Election Day.

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