It’s been an ominous week for the U.S. auto industry, but a resolution to the Big Three bailout came Wednesday in $14 billion of bridge loans. This amount will provide General Motors Corp. and Chrysler LLC with enough to reinvent their struggling companies so they can survive in the future market.
Americans are certainly attached to their vehicles, especially in Southern California. Though the epicenter of this headache lies in Detroit, the result hits closer to home than drivers may acknowledge.
General Motors puts some of America’s best-known cars on the road: Chevrolet, Pontiac, Buick, Cadillac and Hummer, to name a few. Chrysler also makes brands like Dodge and Jeep. Ford, the third American car manufacturer, is not yet requesting funding.
The bailout, similar to the $700 billion Wall Street bailout, ensures that taxpayers would be reimbursed before shareholders, according to the Associated Press. Concerns are still in place, though, partially due to recent incidents of poorly spent bailout plans to other failing industries.
The bailout, initially supported largely by Congressional Democrats, was passed by a vote of 237 to 170. The plan will be coupled with a “car czar” to be appointed by President Bush, to ensure that certain criteria is met. Though at this time, according to CNN, the specific duties and the projected effectiveness of the “czar” are debated.
One vital change desired of the auto industries is the production of fuel-efficient cars. If the bailout passes, money would come from an existing loan program implemented to aid in the finances and production of greener cars. Environmentalists may see this as a red flag to the bailout; however, the bailout may incorporate the influence of the Environmental Protection Agency.
Though the American car industry is in hot water right now, people are overlooking the dismal future for the whole market. Bob Lutz, GM vice chairman of global product development, said Tuesday in an interview on CNN’s American Morning that the Japanese car markets are down 30 to 40 percent.
Furthermore, 533,000 jobs were lost in America this November, according to the Associated Press. Even after the passing of the bailout, the failure of the domestic auto manufacturers is not guaranteed. The demise could prove as a hefty contributor to the unemployment number, since companies like GM rely on suppliers to obtain anything from radios to dashboards.
Other industries local to the area will lose business if cars no longer need to be transported and distributed across the country. So, despite the need for the adaptation of industries into modern times, is a recession the best time to let one of our country’s driving industries (pun intended) disappear from the radar?
The future of the domestic automotive industry no doubt impacts the economy and the structure of our country. But the future of American-bought car owners is not necessarily going to crash and burn. Even if the country is no longer dominated by the Big Three, owners will probably see no great changes in regards to their cars unless they are still under warranty with their car brand. In all likeliness, aftermarket parts will still be available since it is a matter of time before another company buys the GM and Chrysler tooling.
Even if GM and Chrysler are unable to reign as before, perhaps many of their popular brands will be purchased by other companies, or other viable car makers will emerge. The market economy will respond.
There are many possibilities in the future for the automotive industry and its economic and social impact. In the meantime, as car purchasers and as Americans, we can hope that the Big Three can somehow produce quality, efficient cars from the taxpayer bailout funding.