|
The heads of the Big Three U.S. automakers -- General Motors, Ford and Chrysler -- are said to have flown to Washington D.C. on private jets to appear before a Senate hearing.
Speaking before the Senate Banking Committee, the officials asked for at least US$25 billion in government loans, telling lawmakers that auto companies could otherwise struggle to meet even basic operating expenses. While complaining about severe cash shortages, the heads of the Big Three automakers flew to Washington D.C. on specially chartered flights at exorbitant expense
At the hearing, they passed the blame to other sources, saying they needed loans to overcome the financial crisis sweeping the world -- rather than because of flawed management. At the same time, the chief executives involved claimed that government loans would save the U.S. economy from catastrophe, while bankruptcies in the auto industry could threaten America¡¯s national security. They demanded unconditional support without offering any responsibility for past mistakes.
The premise behind these claims is flawed. The Big Three automakers had been treading a doomed path even before the economic crisis. GM suffered an $18.8 billion deficit during the first half of this year alone with accumulated losses that amount to more than $70 billion since 2004. Its labor costs swelled due to union demands, including medical insurance coverage even for retired workers. GM¡¯s average hourly labor costs last year were $71. At rival Toyota, the figure was $47. There are similar situations at Ford and Chrysler.
Moreover, even during a boom in the automotive market, the Big Three spent more time blocking bills aimed at improving fuel efficiency standards rather than on technology to improve mileages. They became so complacent with the profits generated by their main products -- SUVs and pickups -- that they ignored the major changes in the industry. In the end, their demise can be attributed to inept management purely interested in short-term profiteering and unions only interested in welfare benefits.
Yet the heads of the Big Three automakers blame their downfall on others. It is understandable why opposition is rising, even within the United States, to rescuing the Big Three. Naturally, it will be difficult for the U.S. government to stand by as their leading carmakers collapse. The Obama administration is likely to be more aggressive that the current administration in its efforts to save them. But the U.S. should look objectively at how their main automakers came to this point. In other words, blame should not be passed on to Korean cars -- or the Korea-U.S. free trade agreement.
|
