It appears that a bailout of the Big Three automakers is meeting a surprising amount of resistance. This is good news. As noted before, a bankruptcy filing for an automaker does not mean that its operations would cease — rather, it is a time out, which would allow it the opportunity to reorganize its business: right size, right labor costs, etc. Certainly this would not be without pain, but it addresses the fundamental problem, namely that the U.S. automakers have to be scaled to meet the actual, limited, demand for their vehicles.
I have a theory about the political resistance to a bailout. I think it is coming from the general public, and their reluctance to help Detroit stems from a general sense that the automakers have nobody but themselves to blame. And this belief, in turn, comes from having owned Detroit cars from the 1970s and 1980s. Just to make clear my own prejudices, I came from a family (like many) that believed you should buy American cars. Here’s what it got me, the 4 Big Three cars I have owned in adulthood:
This is a 1970 Chevy Impala. Among my memories of this car was its tendency to stall out while going 60 mph down the highway. At that point braking was not a good option since you lost the power steering; controlling this land yacht at slow speeds became impossible. Nothing like hurtling along while having to shift the car into neutral and trying to restart the ignition.
My 1973 Vega was an impressively underpowered car. Highway on-ramps became “near death” experiences as I struggled to get up to 60 in under 5 minutes of acceleration. I used to keep a case of oil in the trunk because it needed a new quart about every week or two.
The 1976 Olds Omega served pretty well, but mostly because I lived in a neighborhood where this was about the only car that nobody wanted to steal. It was famous for raining through the roof in storms. But the real reason that I avoided driving in the rain was because driving through even the shallowest of puddles tended to kill the engine for about 30 minutes.
The 1984 Dodge Omni was truly memorable. We needed to turn off the air conditioning in order to get enough power to pass another car or go up large hills. This was a spectacularly costly vehicle as it constantly needed repairs. There was something about its design that made a trip to the auto shop wildly expensive (“oh… to get at that part, we’ll have to remove the engine…”). The local garage had an “Omni specialist” — think about that — what kind of car breaks so frequently it has spawned specialists? The most memorable breakdown was when this car died inexplicably on a Saturday night, blocking one of the 2 lanes that went from the New Jersey Turnpike into the Holland Tunnel (exit 14C offramp), tying up traffic for miles.
All of this is not to say that the Big Three don’t make good cars and trucks today… sure they do (I strongly considered buying a Chevy Silverado this year). But American autoworkers also make good cars and trucks for foreign companies. The Big Three will never regain the share they had in the 1950s. They need to adjust to the new realities. A bailout would only prolong that day of reckoning. Many American understand this. If they ever owned a Dodge Omni, they definitely do.