About the auto bailout....

As my husband has worked in the auto industry for all of his adult life; he grew up in Detroit, and has, as he puts it, “motor oil in his veins,” thanks to a family lineage of auto industry employees, we have a kept a very close eye on the situation with the big three and the proposed “bailout.”

When you read the papers and watch the news, here are some things to think about:

1) Contrary to popular belief, American cars not only compete with, they out-perform Honda and Toyota: GM was the world's #1 auto-maker last year and the Ford F-150 has been the best-selling vehicle for 31 years in a row. Chrysler invented the mini-van in 1984 and has yet to be outsold.


2) American manufacturers actually manufacture AND assemble the cars here, in the US, which means the profits are then poured back into the US economy through taxes and income paid to American workers who then spend money on goods and services.

3) Honda, Toyota and friends manufacture the parts overseas using cheap labor and then ship the parts here to be assembled by American workers. Why is this important?
a. Foreign companies save millions in labor costs by paying workers less overseas to do the heavy manufacturing work.
b. Foreign companies also save millions on corporate taxes and import taxes because their cars are not "American made," but American- assembled.

4) The profits made by Honda, Toyota etc. goes right back to their native countries—not the US economy.

5) Honda, Toyota etc. do not have legacy costs like pensions and retirements that have to be paid to retired union workers regardless of economic conditions.

5) The American auto industry is responsible for approximately 20 million American jobs:

a. Manufacturing (Cars, Parts, Accessories)
b. Parts Supply & Distribution
c. Paint
d. Tires (Goodyear, Firestone etc.)
e. Auto Loan Companies
f. Sales People
g. Technicians
h. Office Personnel
i. Managers, district reps, etc…

7) If we shut down American manufacturing plants, we also shut down our ability to manufacture other things, like military equipment and machinery that may be needed in the future.

8) While people in the banking industry have lost jobs, many live in cities like New York and Chicago, where there are other places to find work. In cities like Detroit and small towns in Ohio and Wisconsin, if a plant shuts down, there is no other work to be found.

9) If the big three go under, not only do 1/10 Americans lose their jobs, but retirements and pensions also go away, including all those unemployment benefits the companies pay. Those folks become just another creditor owed...

10) France, Germany, China, Japan and Korea all subsidize their auto manufacturers with billions, while offering incentives to their citizens to buy cars from their native companies; America does not.

11) Only one American car company has asked for a "bailout" before, it was Chrysler in 1980; they paid it back, with interest.

12) The cost of this loan is 34 billion; the current estimate for unemployment costs if the companies file chapter 11 is around $200 billion.