I’ve always been confused by the auto industry and the Ontario governments bazaar relationship to it. The big 3 sure seem big and in my experience things that big tend to be pretty stupid. That may sound harsh but its certainly been playing itself out lately.
When I was in Engineering school in Ontario during the early 90’s there was plenty of talk about the declining status of the big three – as a 2nd year co-op student I clearly remember thinking that I wasn’t interested in going down on that sinking ship. Over the years I was confused again watching the big 3 churn out crap year after year with impunity. Over nearly 2 decades, whenever I’d get unlucky enough to land myself in a new rental car made buy the big 3 I was confused some more: who would willingly produce this crap? And who’s buying it? Why?
This is nothing new. Its been going on for decades, literally. Over the years our provincial and regional governments have leveraged the economic stability of our industrial sector by making deals with the big 3 to produce more and more of this crap in Ontario. Every plant is seen as some sort of economic win when its really as healthy as a crack house. Its been short term, uninformed thinking that has now created the perfect storm catastrophe we will inevitably witness over the coming decade. Now that the big 3 have gotten themselves in such a mess we’re confronted with this question of a bailout as if its a new problem that’s just been created. That some how the big3 are somehow victim of greedy wall street banks. I can believe that the credit crisis makes it more difficult to operate – but its difficult because the credit is so necessary and its so necessary because the balance sheet is such a mess and the balance sheet is a mess because they don’t sell enough product!
A bail out will fix this? A bail out program filled with loan guarantees and labor strings attached will do nothing more than delay the inevitable and force this market into an even more unnatural place with yet more on its shoulders if it ever would recover. When its well known that car manufactures can make better products for less i ts inevitable and propping up this artifice doesn’t do anyone any good. ($38/hr vs. $70/hr for big 3) Even the Governator gets it.
Talking with a cross section of people on the subject the only reason I hear for supporting a bailout is to prevent the impact to the rest of the economy – its a hostage situation – not something to keep or fix. The fact that our Ontario government has the economy so tuned around a model that’s been broken and in decline for decades is plain irresponsible and bad governance.
It seems plausible to me that significant elements of the big 3 (or all of them) will be gone in the next several years, but automobile manufacturing will still be an economic mainstay. I’m not sure why we feel the corporations of Ford, GM and Chrysler can’t fail – it happens all the time in my industry and its taken as a healthy sign. Out with the old and in with the new. It doesn’t mean the industry/work goes away it just means things change, and that can’t be all bad – especially for these guys.
