Automobile Industry Crisis

Topics: Automotive industry, General Motors, Ford Motor Company Pages: 5 (2181 words) Published: April 10, 2013
Habib Alhadai
December 12, 2012
Automobile Industry Crisis
People depend on their cars for everyday life. They need it to go to work, school, and events. What if one day the automotive industry crashes? People across this country rely on this industry to provide them the safest and most affordable cars. But just recently the car companies in Detroit almost came to an end. Just in "Ohio, about one out every eight jobs has ties with the carmakers" (Cohn, 2012). If these industries did actually come to an end then it would have caused so many people to lose jobs in the Metro Detroit area as well as surrounding areas. However, The Big Three Companies such as General Motors, Ford, and Chrysler, almost did crash do to their debt, lack of effort put in their companies, bad business decisions and foreign competitors.   My topic is the automotive industry crisis. Automotive industry crisis is the first key term that I would like to discuss. This can be defined as the time in late 2008 when the Big Three automotive companies where on the verge of going bankrupt, so they came to the government for money. If they didn't receive the money from the government within a certain time frame then they would have to file for bankruptcy and millions of automotive factory workers would have lost their jobs. This was a big issue especially for Detroit, because Detroit is the automotive capital of the world. Another issue that influenced this crisis was foreign competitors. American people started buying cars from foreign companies such as Honda and Toyota. Cohn explains this in his article by saying, "The American automakers were in trouble long before Chrysler and GM came to Washington in late 2008, seeking emergency assistance. Once models of American efficiency and emblems of American industrial power, the companies had struggled to keep up with foreign competitors" (Cohn, 2012). This shows that they weren’t up to scale in their cars because many Americans weren’t buying American made cars. In order to get rid of the crisis, the big three had to get bailed out and that is the next term I will explain. A bail out is "an instance of coming to the rescue, especially financially" ( Without the government bailing these companies out, there wouldn't be any more American made cars. But bailing these companies out caused America to continue accumulating debt and many factory workers still did lose their jobs. Some questions that were frequently asked by people about this topic were when did the government bail out the big three? How much did they give to each of the companies? What exactly did each company do with their money? Did any of the CEOs or big corporate members agree to take pay cuts or not? Did this bailout positively affect the economy or negatively? I believe that we shouldn’t have bailed out the big three because so many people still lost jobs, lots of workers who were retired and promised health insurance, no longer received it, and this was a mess that Ford, GM, and Chrysler got themselves into so why should the American tax payer’s money have to support their mistake. One strong argument that I would make is that why should the government reward these companies for “bad management skills and intransigent labor unions” (Farzad, 2012). For years Toyota and Honda have understood the need for hybrid developing cars in America so they have been investing in making cars for these times, not gas guzzling cars that GM and Ford make. Once people realize that these companies were on the verge of being bankrupt, people automatically assumed that these companies will no longer make good quality cars, so that scared people away from buying American made cars. They looked towards foreign cars like Toyota and Honda, who although were going through hard times, didn’t ask the American or Japanese governments to bail them out. Another good argument that I would make is because of the “Jobs Bank” program found...

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Cohn, J. (2012, October 25). The Auto Industry Rescue May Be The Single Best Way To Understand The Choices Voters Face This Election. | The New Republic. The New Republic. Retrieved December 5, 2012, from
Isidore, C. (2008, October 29). The Big Three bailout debate - Oct. 29, 2008. CNNMoney - Business, financial and personal finance news. Retrieved December 6, 2012, from
Kiley, D., & Farzad, R. (n.d.). Bail Out the Big Three - BusinessWeek. Businessweek - Business News, Stock market & Financial Advice. Retrieved December 6, 2012, from
McCullagh, D. (2009, March 30). Big Three Bailout? Not So Fast - CBS News. Breaking News Headlines: Business, Entertainment & World News - CBS News. Retrieved December 5, 2012, from
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