Detroit’s woes and the competition

The World

On NBC’s Meet the Press, this Republican lawmaker said he hasn’t seen anything convincing of why the American carmakers should receive a bailout. Obama however said an auto industry collapse would be disastrous. If Detroit’s Big 3 were to collapse, it could mean the loss of a million jobs but if Detroit goes, does that mean the end of car manufacturing in the U.S.? This professor says Toyota and Hyundai are moving a lot of their production to the U.S., but those companies couldn’t pick up all the slack. Foreign companies would probably halt production at U.S. plants in the short run because parts providers wouldn’t stay in business. In the long term however, Toyota and Hyundai would prosper but the U.S. would alos lose white collar jobs in research would have long term effects on the U.S. economy. The professor places a lot of blame on the United Auto Workers Union. Union workers with the Big 3 earn more money and better benefits. The UAW did renegotiate its labor contracts last year but this week Congress may ask the unions to make further concessions but the President of the UAW and many workers are rejecting that idea. This analyst says if Detroit automakers can hold on a little bit longer, next year could be different. But another factor is the Big 3 need to leanr how to make better cars and run their businesses better, and that’s ultimately the bottom line.

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