Sunday, November 23, 2008

A local take on a national issue

Our local paper had a great front page article today, looking at the topic of the auto industry bailout through a local perspective. And we do have one, because after decades of operation in South Bend, the largest employer in the area closed its doors. Studebaker shut down its local operations in late 1963, putting thousands out of work--and right before the holidays. This picture has always made me's the last day at Studebaker, the workers leaving for the last time.

From what I've read in various books about the company, it was a bleak time in South Bend, with many wondering if the city would survive. By that time, there were enough other companies that the city did survive the blow, but many workers were unable to find as good a job as they had with Studebaker, and many were old enough that they weren't able to find other jobs at all. Suicide rates went up. Local and state lawmakers visited Washington to plead for assistance, and they did get some, but not enough to bail out the company completely. Studebaker had always been the recipient of lucrative military contracts, beginning with the Civil War, and this kept them afloat for many years. With the pending shutdown, the federal government gave money, but not to save the company; the money went towards retraining of workers. The success of the retraining was mixed, as some workers had never worked for another company, and had never finished high school in order to go to work at the plant--for some, literacy was a problem.

The current crisis is compounded by the credit crisis, which has a broad effect on all industries and businesses. Also in today's paper was an article about a steelmaker near Gary that is going to have to lay off over 3,000 workers. The Union president is calling for government help for those workers.

This is a horrible dilemma, because while we all want people to keep their jobs, I believe that if a company no longer has a viable business plan, the government cannot continue to fund those plans that just aren't working any longer. The auto makers saw it this past week when Congress said, "This isn't good enough. You have to show us what you are going to do to make this viable again." The auto makers will need to make concessions, such as when the government loaned Chrysler money in 1979, and Lee Iacocca took a salary of $1 a year. I believe (and this is merely my opinion) that the auto makers really need to rethink how they make their cars, and part of that is stricter fuel efficiency. They should have done that years ago, but they took the easy way out and maintained the status quo, for the most part.

I am not against the American auto industry. I've never owned anything but a Ford Mustang, and I've always been satisfied with Ford's service. I think they're a fine company, and I'm happy to buy their products. But they, along with GM and Chrysler, haven't been really competitive for some time now, and they need--here comes one of those phrases that we all love to hate--a complete paradigm shift of how they operate. I believe they can still be viable companies, and I think it's time that the CEO's pony up like Iacocca did. If they truly believe in their companies, they will be willing to do so, they will work harder to turn the companies around, and they will care enough about their employees, their shareholders, and about the economy in general to do whatever it takes to reverse their companies' fortunes.

Based on some numbers that Ken is running, the federal assistance to the auto makers makes sense. Not to help the CEO's maintain their million-dollar salaries and lavish perks, but to save these great American companies and save the people who build the cars. To not do so will cost taxpayers more in the long run. The thought of Ford going under makes me want to cry. They can turn things around, but there have to be conditions, and there will have to be a lot of hard work.

I hope they're up to the task.

Source: South Bend Tribune, November 23, 2008


  1. Funny how we each decided to do an entry today on the bailout. Glad you could get a Slick picture in :o) Nice entry!

  2. Our economic crisis boils down to one word: GREED. People spending more than they can afford to, businesses charging too much for goods and services, employees demanding salaries that are high enough for them to afford the cost of living which went up due to GREED. It's a vicious cycle. The question then becomes how much government involvement we want in business. And if the government runs business like it's run the government... aren't we just asking for trouble? And if we help one industry but not another, aren't we setting up an unfair advantage? I didn't study economics... but that's just my observation.

    Off to read Ken's post...

  3. I agree with you totally! The picture is definitely a sad one. I love the photo of you and your car!

  4. do you like or hate Michael Moore? he was on Larry King and they showed the CEO's telling congress why they deserved the bailout $$ and Moore went off the deep end. We have a local truck maker, Navistar, formally International Harvester, that was the GOOD job here and employed half the city and now barely employs 500. I was raised with that plant on strike and middle class out in the open panhandling. The one thing that most big companies do in Ohio is to pay for re training and it DOES work....because there is a huge bias on age you wrote about. I know dozens of men who are 60+ working as a WM door greeter that once made $30 an hour building trucks and now have lost their retirement, 401K and health benefits. Obama HAS to do something.

  5. Went to Ken's then to yours. I mentione Lee, and that is a figure sorely lacking in this mess. Who is going to step up and take the point on this? The Freep here in Detroit suggested Rick Wagoner, but I don't 'feel' him, but still, he is up at bat. Maybe he will get a hit.

    When I think of countries become unraveled with their main industry going south, I think of third world, 'bananna republics' ripe for gov't instability and manchinations of the puppet masters ... is the US strings attatched to China?

    Dag ... I still think we should bail them out, and that is where I will hope for the best, AND EXPECT THE BEST TOO!

  6. What is it with hot chicks driving Mustangs?!?

    The smokin' physical therapist across the alley from me drives a bluish one, the woman across the street has a green one, and then you: hot Beth, hot car.

    I don't get it.

  7. Paul was just talking about that yesterday. The CEO's arrived in Washington in 40 million dollar private jets, to ask for a bailout. Like Paul said, go home sell your jet and do the right thing. Don't expect someone else to bail out your greed. (Hugs)Indigo

  8. I agree with you completely! This is all so sad and makes me so angry.


  9. its as bad over here beth. im afraid the auto industry is suffering from a backlash from the green lobby.whatever your views on green issues,co2 emissions,global warming,whether santas feeding rudolph too many carrots,its sad to see so many manufacturers going to the wall. great journal beth,take care love mort

  10. Thought provoking post- I think I'll add a thought or 2 on my own blog after I check out Ken's!

  11. It is so scary. The stores are all deserted, and jobs and benefits are disappearing. How did things get this bad This fast.


  13. Hi Beth,
    What a tough issue ... I tend to agree with most of what you said. The U.S. automakers have been operating inefficiently for years and, if you ask me, their products don't really stack-up, either. This morning at Starbucks, I was surprised to see a toddler get all excited and start yelling and pointing "Prius, Prius" as one Prius after another drove by. Couldn't that have been an American car? And now, after failing to innovate year-after-year, they want the American taxpayers to bail them out. I'd probably feel better about it if the auto executives didn't fly to Washington in their corporate jets while asking for the handout. On the other hand, I don't want to see all these people out of work, either. Maybe the solution is to force the automakers to change ("yes, you can have a bailout but we're overhauling your management and that means that you, Mr. CEO, can make that next flight of fancy on your private jet a one-way trip ...").

  14. On to something else. DANG...Talk about a nail biter. The Colts pulled it out but they sure did it the hard way. A win's a win. Congrats.
    Hugs, Joyce

  15. It's Like "Roger and Me" all over the Country now! No matter how people feel about the Director, please check it out. Beth have a box of tissues ready for a couple parts. Beware of the rabbits, just look away at that part if you want. Great entry, and I feel the same way as you about the car companies, and what they need to do! Have a Great day tomorrow!


  16. Beth
    I am very worried abotu all of the people who work in the factories an all of the workers who work for side industries that connect tot he auto companies. I feel strongly that somehow the big group has to be kept in motion so I hope that the three come up with very well thought out plans fast..but will they make those plans understandable to someone int he Congress who has not ever made cars?
    I love the picture of your mustang!
    Have a great Thanksgiving! Will you go to your folks?

  17. I'm so tired of the greed and the little 'guy' paying for the mistakes. Grrrrr

  18. I was 13 in 1979, and I actually remember Iacocca and Chrysler being in the news and my parents discussing it. I've always had respect for the man because he seemed to care more about his company and the workers than he did for himself.

  19. I am happy you are following. I think I just needed to start fresh, for myself. By that I mean the blog not the people who have been so nice such as you. I am happy to have you. Lucy

  20. I agree something should be done to save jobs but I don't think that there will be a happy bail out for the car industry and I think the unions will be keeping things tied up in courts before it is over. however instead of bailing out business I think we should buy up the bad mortgages and help families and get started on health care and education because jobs will be created once money is put into these programs.

  21. One of the interesting things about this is that the American car makers haven't been "viable" for at least 20 years, now Congress (more specifically Nancy Pelosi & her cohorts) expect a plan for viability in 10 days???

    Another issue here is that years ago, in the name of greed, we allowed the foreign carmakers to come in here with virtually no restrictions at all. This is an issue where I don't agree with my fellow conservative which is protectionism. I've always thought protectionism itself isn't good for the economy, but a certain amount of it is needed in the global economy that we've been in for many years now. This goes to taking care of our own first. Maybe a little less for investors in the short term, but we'd be better much better off in the long run. Now these chickens have definitely come home to roost.

    The UAW has to take a lot of responsibility too. Since the 70's, they've been running up wages & benefits way up over the years where the car makers have ended up with more overhead than income. One example: between 15 & 20 years ago, a GM worker in Michigan was laid off. According to the Atlanta Journal/Constitution, he had moved to Duluth, & would receive FULL PAY & BENEFITS for TWO YEARS - without putting in a single day of work for GM. Now how can ANY business keep that up? While I don't object at all for people to make a good, comfortable living & to get ahead rather than the paycheck-to-paycheck routine, a business can't get into huge numbers of bad contracts & expect to remain in business.

    There are a lot of issues on this one, & I don't think the bailout Congress has in mind will fix it in the longterm, just maybe delay things a bit. In the meantime, I really feel for the rank & file workers who are caught in the middle of all this that are threatened with unemployment, especially those that have worked most of their lives there. The older one gets, the harder it is to get hired somewhere else.

    I KNEW there was SOMETHING alright 'bout cha! You're a FORD gal!! LOL '68 Ford Galaxie 500 (graduation present in high school in '76) & a 290,000 mile & still ticking '94 Ford Explorer here!


    P.S. - There's an award waiting for you on my journal!


I'm funny how, I mean funny like I'm a clown, I amuse you?