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Big Three Bailout - What Do You Think?

By Liz Opsitnik
Tuesday, Nov 25 2008 17:16

The auto industry bailout is big news. It’s even big enough that late night talk show hosts and Saturday Night Live are making fun of it.

We wanted to know what people think of the bailout, and whether or not the Detroit Big Three should get the loan or go into bankruptcy. So we hit the streets here in Fort Lauderdale, Fla. and asked people what they think of this whole auto industry bailout.
Alicia Slocum, a customer service coordinator at the South Florida Sun-Sentinel (the area’s major newspaper), said that she is against the Big Three going bankrupt.
“I wouldn’t be okay with Chrysler, Ford or GM going bankrupt for a multitude of reasons,” Alicia said. “For one, we wouldn’t have any American-made cars in our market any longer. Also, this would put millions of people out of work. With our unemployment at an all-time high, and increasing day by day, it will further strain the economy. This would create a domino effect in declining business for not only the Big Three but for every subsidiary. As an example, from a publishing standpoint, we would lose millions in advertisement revenues if these companies went under.”
Alicia said that she wouldn’t feel comfortable buying a car from an automaker that may go bankrupt or already is in bankruptcy.
“I wouldn’t feel secure in my purchase or the quality of the product,” she said. “I definitely would feel that the warranty wouldn’t be worth anything. There have been too many ‘bait and switch’ advertising that the warranties aren’t affected, but when you attempt to use the warranty, they are no longer valid. There always seem to be loopholes that aren’t in the consumers’ favor.”
“Even if the dealer was around to service my car, they are probably working on a skeleton crew that is being overworked and underpaid. When it comes to a purchase of such a high value (my car), I wouldn’t want to sacrifice the quality of service that I may be receiving.”
Detroit skyline
GM's headquarters is a prominent sight in the Detroit skyline.
Dave Siegel, an Internet marketing specialist, said that the Big Three had ample warning and did nothing to make themselves a competitor in the marketplace.
“They’ve been getting notification from the government for years to make fuel efficient cars and make fewer gas guzzlers,” Dave said. “It takes a lot of money to retool the factories. They had warnings that their sales would suffer and that they would be in this situation.”
“It (bankruptcy) will hurt us considerably; however, it’s a learning curve. The expenses of the Big Three are being squandered. The average Big Three factory worker makes about $73 an hour, while a Toyota factory worker makes about $34 to $35 an hour. What’s wrong with that picture?”
Dave said that he was an American car buyer for a long time, but has been buying Toyota cars for the past six years.
“I buy imports,” Dave said. “The quality of workmanship and craftsmanship and their longevity is better.”
“The Detroit Big Three have had a wake-up call now. They better have a feasible plan of action how they’re going to cut corners and be competitive in the automobile industry. They have a lot of work ahead of them. The end result of a chapter 11 bankruptcy would be an increase in the unemployment rate to about 9%. It would have a trickle-down effect that would leave two million people unemployed.”
Lisa Smith, senior loan processor at Liberty Unsecured Inc., said that bankruptcy would be bad because it would affect so many people.
“I’m not okay with bankruptcy as an option because of the amount of jobs it would affect in the U.S.,” Lisa said. “I don’t think it sends a good message to Americans. It will make people feel insecure if they’re in bankruptcy. The idea with a bailout is to build consumer confidence so people will spend money to boost the economy.”
Lisa said that she probably wouldn’t buy a car from a bankrupt automaker because she fears the warranty may not be worth anything.
“Daewoo came to the U.S., filed bankruptcy and the cars became worthless,” she said. “There were dealerships that wouldn’t finance Daewoo’s or take them in as a trade-in for another vehicle.”
If the government is bailing out AIG and other companies, they should consider bailing out the automakers, Lisa said.
“If the Detroit Big Three can come up with a plan showing they are willing to make sacrifices and cutbacks, they should get help. This way, the government isn’t handing money out that won’t be put to good use.”
Lisa said that without a bailout, entire towns could go under if the automakers’ factories close and companies related to the industry go out of business.

Photo via gm-volt.com.

Copyright 2008 AutoLoanDaily.com. All rights reserved. This material may not be published, rewritten or redistributed without permission.


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