The student news site of Guilford College

The Guilfordian

The student news site of Guilford College

The Guilfordian

The student news site of Guilford College

The Guilfordian

Detroit’s “Big Three” under fire

With a failing economy and a lack of demand for fuel-inefficient sport utility vehicles, Detroit’s Big Three automakers, General Motors, Ford, and Chrysler, have taken a hit – a hit so big that it has only left the legendary American automakers two choices: a federal bailout plan or bankruptcy.For the last 10 years, before skyrocketing gas prices, the Big Three netted a combined profit of over $16 billion. Most of their sales came from gas-guzzling trucks and SUVs, the latter of which had just begun to boom in popularity.

Failing to invest in a wider array of new vehicles, the companies assumed Americans would never stop buying these vehicles, leaving them in a muddy rut once the gas crisis hit—one that not even the beefiest of Michigan-built four-wheel drives could pull them out of.

“I had to get rid of my Jeep Cherokee for a little while when gas got ridiculous,” said junior Hannah Thresher. “During that time I drove an old ’80’s Honda Civic. It’s funny that a Japanese car made 20 years ago seemed to be more practical than my 2001 Jeep.”

The prospect of losing our nation’s three automakers is a grim one. The most adversely affected region would certainly be the “rust belt,” an area in the northern Midwest in which most of the automotive factories are located. With the factories shut down, nearly three million jobs would be lost in an area where they are desperately needed.

Beyond the loss of jobs, the demise of our nation’s automakers would have a devastating ripple effect upon the economy. Sales of GM, Ford, and Chrysler vehicles comprise over 10 percent of the nation’s retail sales. With the economy struggling enough as it is, the Big Three is a keystone industry.

For some, the end of Detroit’s “Golden Era” means more than just an economic setback.

“It’s sad the way American cars are going these days,” said AutoZone employee Ed Dupree, Jr., a 53-year-old man who has watched Detroit’s automotive presence slowly diminish. “Chevys, Fords, Dodges – they used to be number one. Cars were a big part of life back then, you know? They had personality; people actually gave a crap about their cars, and above all they were good machines. If you knew a guy who drove a Japanese car, everyone would give him hell. Now, with the exception of the trucks, American cars are the bad ones. It’s a sad state of affairs.”

So far, Congress has not been impressed by the Big Three CEO’s request for a federal bailout. Requiring upwards of $25 billion to sustain their companies, the future of the Big Three simply does not seem promising enough. Combine that with a track record of irresponsible spending, and you have an unconvincing plea.

“When the automakers are getting paid far more than their counterparts at Toyota, or at Honda, and yet they’re losing money a lot faster than Japanese automakers are, that tells me that they’re not seeing what’s going on out there,” said president-elect Barack Obama in a recent interview with Barbara Walters. “One of the things I hope my presidency helps to usher in is a, a return to an ethic of responsibility. That if you’re placed in a position of power, then you’ve got responsibilities to your workers.”

If Congress does not approve the bailout plan, filing for Chapter 11 is still an option. After 9/11, many airlines went bankrupt and were able to pick themselves up afterwards – a feat that the Big Three hopes they will be able to mimic.

Congress gave the auto manufacturers until Dec. 2 to come up with a proposed plan on how a bailout program would revive their businesses.

At print, the proposals are still under review. However, CEOs from each of the Big Three have agreed to reduce their annual salaries to $1 million (as opposed to around $2 million each) if federal money is allotted.

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