Unemployment Obama Loss 60,000 jobs Private Industry Saved 16,000 jobs
By bobmnu
@bobmnu (8157)
United States
June 8, 2009 11:12am CST
President Obama's efforts to save the Auto Giant GM has resulted in the first round of unemployment figures of 60,000 jobs being lost. However we do get a look at what might happen have happened if GM had not gotten the bail out and gone right to bankruptcy. Penske Automotive Group is trying to buy the Saturn Division of GM which was one of the lines to be dropped. This means that the 16,000 workers at the Saturn plants will not lose their jobs. It also means that the dealers will not close down saving may thousand more jobs. This is how the free market works, those with a good business model will be successful and those who are not efficient will fall by the wayside.
There have been several news stories over the years on how a company is going under and the employees get together and by the company and restart after making changes or going smaller to serve a specific market. Many are successful. GM was not always the big company that it is now. before the last depression there were several small car companies that just could not make it through the depression and were bout up b General Motors and others. Buick, Desoto, Packard, Nash, Rambler, Willis, Hudson, Cadillac were all independent Auto Makers who were bought out by the bigger companies. In a few years we may all be looking at the Penske line of cars. All the government money and GM still has to file for Bankruptcy.
1 person likes this
4 responses
@peavey (16936)
• United States
8 Jun 09
In a truly free market, manufacturers and producers would have to respond to the market. If their product was not selling, they would have to a)repackage the sales b)redesign the product c)create a new product d) find a new market e)lower the cost of production f)lower the cost of the finished product to sell better.
When any business fails to do one or as many of those things as it takes, they lose. GM and others thought they were above that. Too big to fail? Maybe they're too big to succeed.
1 person likes this
@bobmnu (8157)
• United States
8 Jun 09
Part of the problem is the government putting on regulations. Better gas mileage today, and add weight yesterday to make the cars safer. Some estimate that 20% of the cost of a car is due to government regulations. To achieve the fuel standards companies have to sell small cars, that people are not buying, at below cost to meet the fleet average. If people want to buy a gas guzzler let them, they will pay for the gas and the gas tax.
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@4ftfingers (1310)
•
9 Jun 09
But surely it can't all be down to government regulation. My guess is that if it was just that, it would have been recognised and lifted in time to save GM.
For a company so large it must be near impossible to react appropriately and in time, when suddenly everyone becomes so frugal with their money, as they do in a time of recession.
Recession is not something anyone likes to think about, but in history it has proved inevitable. Is it really possible to recession-proof a company as large as GM, dealing with such high turnover? And can the company be relied on to do that it's self?
@Destiny007 (5805)
• United States
8 Jun 09
The government is about to find out that it is also subject to the markets and the laws of supply and demand.
1 person likes this
@technoobs (406)
• Philippines
9 Jun 09
And may be its the down turn of the past that was not been seen to affect the whole world about that change.
@heathcliff (1415)
• United States
9 Jun 09
There are also hundreds of examples where the "market" has failed us. Monopolies, poor working conditions and poor wages: all of which the government had to step in and correct. Now we have a new problem: companies that are making stupid decisions and taking advantage of billions of dollars in "corporate welfare" over the last 30 years! Shortsighted "trickle-down" politics have left us in a position to have to bail out big business or suffer a real "trickle-down": Failure of a major company will lead to failure of its suppliers and employees which leads to failure of all the people and businesses they would buy from and eventually failure of the government that depends on all of the above for taxes.
@heathcliff (1415)
• United States
9 Jun 09
Not great examples. The loss of Studebaker was nothing compared to what we are looking at here. AMC's falling apart is still fresh in some older politician's thoughts and the lessons learned by that comparatively minor failure are that America cannot wait for the auto industry to self-correct. By the time the American auto industry recovered from the simultaneous loss of GM AND Chrysler (if it ever recovered) MILLIONS of people, even many from seemingly unrelated jobs, would have fallen in financial ruin. Every step the Federal government has made has been in an attempt to lessen the future impact of this tough time.
Noone really can argue that the Auto industry wouldn't be better off, with stronger companies down the road, if things played out without interference. The problem is these companies do not exist in a bubble and would drag the US economy to dangerous lows in the meantime: We just can't afford to sit and watch!
What we do need to do is hold the idiots at the top of GM and Chrysler accountable and that's going to mean more government intervention, not less.
@bobmnu (8157)
• United States
9 Jun 09
What about the idiots that are forcing the most profitable line out and forcing the companies to produce cars that people do not want. Even during last years $4.00 gal for gas did not seethe small cars fly off the lot. SUV sales were still there because people in parts of the country need that size car.
What the bail out did war reward the poorly run companies and hurt the car companies that were working to produce affordable cars. Ford Motors got themselves back in shape. Less than a year ago their stock was trading for about $1.00 a share now it is over $6.00 a share. The message is too bad Ford you were
doing the right thing and we are going to reward you by increasing your competition and subsidizing poor management. The government is forcing mediocracy on industry. Make a bad decision and we will bail you out. By the way bond holders if you invest in a company and it goes bad too bad because we are going to give the company to the workers.
The next time you have to borrow money remember that the interest will be higher because the risk is now greater that the lender will not get his money back.
1 person likes this
@TheRepublicMenu (290)
• United States
9 Jun 09
Instead of the government taking over companies, why not just penalize them. Government control of anything seems to not work due to massive bureaucracy.
@AngryKittyMSV (4317)
• United States
8 Jun 09
This is what I said months ago, but nobody listened. We could have save hundreds of billions of dollars and likely had a better outcome than the government run motors we'll have now. Russia's government once was in the car business, similar to how our government is now, people can look it up to see how well THAT went.
