Thoughts from the Inside

Ok, so I know there’s been lots of speculation swirling around regarding the auto industry and a potential bailout for them.  I have read various news articles about the situation and I’ve also heard from my own management.  So I thought I’d share my thoughts from the inside.

I am really saddened by what I am hearing from people around the country on this issue.  Here are just a few things I’ve heard:

1. It is the American Auto Industry’s own fault they are in the situation they are in, they sell cars people don’t want.
2. It is the American Auto Industry’s own fault they are in the situation they are in, they have terrible management who is sucking the company dry with their million dollar bonuses.
3. Why should the taxpayers have to pay for a company’s bad management.
4. We should just let them go bankrupt, the economy in my area of the country is doing just fine.
5. Since the American Auto Industry has been sending jobs overseas, why don’t they go ask the Japan for a bailout.

Let me address each one of these.  I will write from my own company’s perspective since I do not know the numbers for the other two.  (I work for one of the big 3 American auto companies.)

1. The reason my company is so close to bankruptcy is not because of the cars we sell, it is because of two things that happened that were entirely out of our control.  First, was gas prices.  NO ONE had any idea that gas prices would shoot up the way they have.  And despite having several hybrid vehicles in production, this greatly impacted my company’s profits this year.  Every automaker (even Toyota and Honda) makes big profits on trucks.  So when people stopped buying trucks and started buying cars, profits decreased for every automaker)As a response to the high gas prices, my company put forth a HUGE effort to cut 15 Billion dollars from our budget to compensate so we could stay afloat.  This would have worked just fine if something else catastrophic would not have happened which leads me to the second thing.  The financial market/industry totally imploded and loans are now extremely hard to come by.  So what does the average person need a loan for?  A house and/or a car.  So basically auto sales declined in October by45% for my company!  So basically, less people want to buy a new car because of the crappy economy and even the people who want to buy a car, can’t because they can’t get a loan.  This is effecting every automaker, not just American ones.  So because mortgage companies and financial institutions wanted to give mortgages to people who couldn’t afford them, the auto industry has to go under?  (And by the way, the ones who screwed screwed up in the first place DID get a bailout from the government)
2. The management of my company, while not perfect, is not the reason we are about to go under.  They announced MONTHS ago that there would be no bonuses next year for anyone…including executives.   We need to keep our management because they have done a tremendous job keeping us afloat this far.  I know they can continue doing it if given the chance. 
3. The American taxpayer should not have to pay for this, however, this problem is not our fault as I specified in  #1.  That being said, my company is not asking for free money…it is asking for a LOAN.  A loan to help us get through this time (right after the market implosion) so that once the market starts to recover we will be profitable again and will be able to pay it back.  And we WILL be profitable again.  In the midst of this crisis, we have learned how to operate at a much lower cost and we are majorly downsizing the company to compensate for lower sales.  Once sales pick back up, we will be in a great position to start making money quickly, will be able to pay back the loan and even probably hiring back a lot of people.  
4. I don’t think people understand how much the American Auto Industry contributes to the U.S. economy.  If this industry goes under, it will have catastrophic effects on EVERYONE.  Did you know that 1 in 10 jobs in this entire country is dependant on this industry?  So it’s not just the people that work at my company that will get laid off, all the companies that supply us will get laid off, all the people that work at dealership and service centers will get laid off, all the people we pay for advertising and R & D will get laid off, etc.  In addition, none of those people who got laid off will have health care so they will stop going to the doctor, so the health care industry is going to take huge hit.  The government is going to have to fork over money for unemployment and medicaid for those millions of people who get laid off.  Trust me…I don’t care what part of the country you live in…you WILL be affected.
5. I hate it when a company expands globally that people automatically assume that we are sending jobs overseas.  Yes, my company has expanded it’s operations overseas and is a truly global company.  However, we don’t just manufacture cars overseas and ship them here, hence sending jobs overseas.  We manufacture cars overseas and sell them there!  We are selling cars in other countries to those people that live there and the profit from those sales comes back here to the US!  In fact, the only reason my company has survived some tough times the past two years, is because our sales of vehicles in other countries has been keeping us afloat.  That is the beauty of a global company.  Not all markets are going to do well all at the same time.  It’s sort of like diversifying your investments in the stock market.  You do that so when one stock does bad, hopefully you have other stock that are still doing well.  I don’t understand why people think this is a bad thing?  This is smart business and the fact that we are bringing money from other countries into our own country is awesome.  Think of how many other industries are not like that.  We buy all of our TVs and stereo equipment and electronics from companies like Sony, Samsung, Panasonic, etc.  Guess where all that money we pay for them go…back to Japan or wherever they are made.  So isn’t it cool that we as Americans can actually produce something that other countries want? 

What Really Happens if the Big Three Goes Away

(The above link is not working at the moment.  Probably because too many people are accessing it!)

To close, here is an answer as to why the auto industry needs a bailout:

Why do you think the federal government should help bail ”Company A” out of its current financial crisis?

“Company A” is not alone in this crisis.  The U.S. credit freeze and closed capital markets are resulting in a severe liquidity squeeze, at a time when manufacturers’ cash flow from operations are devastated by plummeting consumer demand.  The U.S. auto industry is a vital part of the economy and many in the U.S. government have acknowledged the important role of the industry in the national economy and our discussions are ongoing.

 No other U.S. industry generates more employment, annual economic output, exports, R&D investment, or retail business than the U.S. auto industry.  Proof points:

• Directly employs nearly a quarter of a million people;
• Supports another 5 million Americans at dealerships, parts suppliers and service providers;
• Has invested nearly a quarter of a trillion dollars in U.S. over last two decades, including $10 billion alone last year;
• Spends $12 billion annually in R&D in U.S., which exceeds aerospace, medical equipment and communications industries;
• Purchased $156 billion in U.S. auto parts supporting jobs in all 50 states and is the largest purchaser of U.S. steel, aluminum, iron, copper, plastics, rubber and electronic and computer chips;
• Provides healthcare benefits to two million Americans and supports nearly 800,000 retirees and spouses with pension benefits.

Just some things to think about…