US automakers close to collapse

“Back to Detroit” by Wayne Kramer

It’s a hard wind blows through the buildings and empty lots
As the corner of Michigan and 31st waits in ruin
And the echoes of happy shoppers faded long, long, long ago
Back when Chrysler, GM and Ford went mad with greed

Oh, how we hoped it would turn out right
Going back to Detroit

It’s deja vue all over again. Or maybe it’s even worse this time.


This is the moment of reckoning for these companies. I know no one on the Street who thinks GM and Chrysler, or their suppliers, will survive in the form and structure that they currently exist in.

Ford seems to be in even worse shape than GM and Chrysler, and appears so hopeless it barely get mentioned in reports like these.

GM and Ford announce their third quarter losses tomorrow, which are expected to be somewhere between hideous and catastrophic.

Greedy, comatose managements. Cratering car sales. Pension obligations that can not possibly be met. There are so many to blame, but that seems pointless now.

Even if the government does backstop the automakers, there will still be enormous numbers of layoffs and downsizing. This story will not have a happy ending, especially for Detroit and Michigan.


  1. It might be appropriate to reflect on the decision of Detroit in the 90’s to make an end run around fuel efficiency standards for autos by building SUV’s on light truck platforms.
    What seemed so capitalistically opportune has been rendered bankruptcy.
    One more example of the corrupt notion of free market capitalism.
    What is needed is intelligent regulation that is flexible in the face of fluctuating markets.

  2. Except for the fact that more jobs would be lost and retirement money and benefits lost (that may happen anyway) I’d say good riddance. They have had 35 years to get their s**t together and create better vehicles – better gas milage, electric etc. But no – they were looking for the quick buck – all the big gas guzzling bodies they could put on the same deadly truck frame. Now after years of fighting and whining – anything to avoid doing the right thing – they want us to bail them out. They are no better than the Wall Street Criminals. Let them eat those tanks sitting on their lots. In fact – let them walk and instead of golden parachutes – pay them in gas guzzlers.

  3. detroitbeancounter

    Everybody blames the SUV for the downfall of the big 3, but in reality, the higher profit margins generated by the pickup and SUV craze allowed Detroit to survive far longer than they would have if they had never built any. Did the shoe makers in the northeast lose out to cheap Chinese labor because they built shoes with V8’s? What about the textile firms that lost to Asian firms? The South Carolina furniture makers that are now gone?
    Detroit is dying because of wages. We pay health care for retirees, we pay pensions. Take the $1,600 of heath care cost out of each car the Detroit 3 makes and America can be competitive.
    Transplants such as Toyota, Honda, Hyundai are going to survive because they assembly only here, with a lower wage scale, no pension, no retiree health care (note they haven’t been here that long and don’t have multiple thousands of retirees to support). Parts for the transplants are produced overseas and shipped here, the huge development costs for new models are done overseas, where the government pays health care and pensions for the thousands of highly paid engineers needed.
    Don’t place the blame for the downfall of Detroit on SUV’s, remember Toyota just opened a new plant in San Antonio to build full sized pickups because of the better profit margins.
    The Detroit 3 are saddled with costs that simply don’t exist for either transplants assembling here or overseas producers. Don’t think I’m anti-union, my grandfather was doing sit down strikes in the 1930’s, his sacrifice allowed my father and I to have a better life. The problem is that our nation doesn’t value the labor of the working class and because of the union contracts that GM, Chrysler and Ford are saddled with, they are doomed.

  4. The only problem with that argument is that Japanese cars cost more than the equivalent Big 3 vehicle– and people are buying them anyway because they’re more fuel efficient, more reliable, and more consumer focused. Blame health care if you want to (it’s surely a big expense) but without a better design, making Detroit’s cars cheaper won’t help much.

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