Post about "auto finance"

Auto Crisis – A Union Buster?

The Big Three automakers in the U.S need a minimum of $25 billion to bail them out of their current economic woes. In Canada/Ontario, the bailout is set at around $5 billion. The federal and Ontario finance ministers are meeting with the U.S automakers this week to get a better idea of what the industry needs to survive. According to statistics, one in seven Canadians directly or indirectly relies on the auto industry. As we all know, the demise of the auto industry will have an economic ripple effect for years to come.Shouldn’t we be past the finger pointing by this stage of the crisis? Does it really matter who did, or didn’t, do what? Well, yes it does matter. However, there are many players in this economic theatre. Everyone from auto consumers, labourers, and most of all, management has played a role. The industry would argue that they were building vehicles based on consumer demand. Consumers apparently wanted SUVs, CUVs, and high performance cars. Gas, at that time, was reasonably priced so the desire to own one of these vehicles was strong. So, right or wrong, the auto industry built these vehicles to meet the consumer demand.While plants were pumping out these vehicles labour wanted a better, and more secure, piece of the pie for their membership. Wage increases, improved benefits, and job security. A get the goods while they can mentality. Again, this is not necessarily right or wrong. It was, and is human nature.Automakers saw an opportunity to capitalize on this demand by building the more profitable truck sector of their industry. Canadians may recall the retail differences between U.S and Canadian prices when the Loonie was at, or above, par with the American Greenback. One could accuse the automakers of raking in profits at the expense of the Canadian consumer. In short, everyone wanted a piece of the good times pie. Enter the greatest economic downturn since the Great Depression.Automakers, with both hands held straight out, are insisting on a government/taxpayer bailout in the billions of dollars. If a bailout is not forthcoming, what happens? Well, the Big Three file for bankruptcy; plants close and jobs are lost in all sectors of the automotive industry; millions in taxes evaporates; retail, hospitality and tourism sectors suffer; governments have less to spend on social programs; and, unions get busted…some might say, finally. The power the auto union once held has diminished over the years. It would be the final nail in their coffin. It isn’t a pretty picture regardless who’s at fault.Does the auto industry need to be trimmed? Yes! Does the industry need to be more responsible and accountable to investors (I include taxpayers whose investments are at risk)? Yes! Do they need to be bailed out? Reluctantly, I say yes. A bailout will create a leaner more efficient auto industry, so jobs will be lost. Accountability needs to be built into any bailout agreement. Repayment is expected.What if we choose not to bail them out? Have you ever studied or read about the Great Depression? That could happen, again.