Saturday, December 13, 2008

The truth behind the fall of the Big 3....

First off, for those of us who don't know who the Big 3 are, then here is a quick explanation:

Big 3: The name given to the 3 largest North American carmakers- General Motors, Ford and Chrysler. At first glance it may not be noticeable exactly how big these companies are, but the following list of brands sold under those carmakers will make it clear.

General Motors: Chevrolet, Buick, Pontiac, GMC, Saturn, Hummer, Saab and Cadillac are the brands sold in the US. GM Daewoo, Holden, Opel, Vauxhal and Wuling are brands sold 
outside the U.S. Total= 13 brands.

Ford: Ford, Lincoln, Mercury, Mazda and Volvo. They also own a small portion of Aston Martin in England. Total= 5 brands.

Chrysler: Chrysler, Dodge, Jeep and Mopar (large Auto parts brand). Total= 3 brands

Total Brands= 21. This is also excluding all other ownership that the Big 3 have, including financial institutions and small companies.

Now, looking at the Big 3... they are alot bigger then it seems.

Anyway, the future of the Big 3 seems gloomy. I honestly hope none of the Big 3 fall into bankruptcy, not only because it would worsen our economy, but because every car company I states above represents a small portion of American History. Ford gave us the Mustang and the GT, General Motors gave us the Camaro and Corvette, Chrysler gave us the Charger and Viper. American Icons. You see, these car companies mean a lot more to Americans than just a horribly mismanaged business. 

So why wasn't the Senate been able to come to a deal for rescuing the Big 3?

The United Auto Workers (UAW) is to blame, they are demanding more than what the companies can give. Remember when I posted the article on why the City of Vallejo went bankrupt? (Click Here to go to that Post) I stated that the city went bankrupt because the unions would not loosen their restrictions. The same is happening to the Big 3. The UAW is not willing to lower their compensation. According to an Article in, the average compensation for a worker in the Big 3 is $72.31, but the average for all other companies (excluding KIA, because they pay ridiculously little) is $44.20. The deal between Senate and UAW ended when the UAW refused to lower their compensation to that of other companies. 

Why did the UAW do this? If the Big 3 really goes bankrupt in 2 weeks, like they state, then doesn't the UAW realize that its members wont have jobs anymore? Isn't getting paid $44.20 better than getting paid nothing at all?

The answers all lie in what I stated earlier.  The UAW realizes that the US government (and the White House, specifically) would never allow the Big 3 to go into bankruptcy in a time when the economy is suffering. Beyond that, however, the US would never allow the death of such historic companies. 

I predict that the Big 3 will not fall into bankruptcy, and that the UAW will not lose compensation. The government will save them both.

What do I think the government should do?

I believe the government should stick a Hummer up the a** of the UAW and order their compensation to be lowered to that of other companies. They should save the Big 3 but also put restriction into place that would prevent this from happening again. Compensation should stay below $50.00 and it should only rise with inflation.

Oh, and they should also build more hybrids. :) 

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