Fall of the Big Three


by Pat Maruska

Today the Big Three automakers of the US, namely Ford, General Motors, and Chrysler, went in front of the Senate Banking Committee to plead for more money in the governments bailout plan. Currently they say that they need 38 billion dollars. No, that wasn’t a typo. I said billion. Since all three companies are asking for money that will be supplied by the taxpayer, their requests must be public. General Motors said they would need $8 billion in the next two months just to make it out of 2009 while Ford said that they may need up to $13 billion. Many people, the automakers especially, are predicting dire consequences if the three companies collapse, yet they also admit that their businesses have not been performing well regardless.

Before we hand over these billions of dollars to these companies, though, we have to recognize that American car companies have been being out preformed by foreign car companies. Though Chrysler is private, so we have no idea what their stocks look like right now, we can look at Ford and General Motors and compare them to other companies, like Toyota and Volkswagen. Volkswagen has been steadily growing since 2003, peaking this October at 1080.00 a share, beating out Ford, General Motors, and Toyota put together. To put this in perspective Ford’s stock is currently at 2.61, General Motors’ is 4.08, while Toyota’s is at 58.42. Toyota has been outperforming both General Motors and Ford since May of 1999.
The sad fact is that America’s car companies are failing, and there’s little that can be done to save them. While no one will argue the major impact that these companies had on our economy even fifteen years ago, but they are no longer able to provide services that compare to that of foreign companies. Many people don’t know this, but gas prices in America are some of the lowest in the world, due both to the fact that we have close ties with oil bearing countries as well as the fact that the government keep the prices down. While this makes it easier for the consumer to travel and certainly has helped America’s domestic economy, it means that we haven’t been concerned with making fuel efficient cars. The Hummer is a clear example of this, seeing as it sells almost nowhere else in the world. When oil prices went steadily over 100 dollars a barrel earlier this year, people just gave up trying to buy domestic cars, which are both expensive and inefficient.

While everyone would like to think that it isn’t true, America has fallen behind in the automotive market. There’s little that these companies can do right now that will save them, and it is irresponsible of the government to pour taxpayer money into a doom company. There are dozens of business that could actually be saved by the money that these car companies want, and that is where the money should go. Putting $38 billion dollars into a failing company just because they were once major players in the American marketplace is a plan for disaster. This doesn’t mean that they shouldn’t be given money. They are multi-billion dollar companies which means that they will need quite a bit of money to help them, but if they can not survive at all on their own then the government is just postponing the inevitable. Not to mention how unacceptable it is for 3 companies to receive over 0.5% of the $700 billion set aside to help the entire nation.

It is a pity that we’ve lived to see the fall of the Big Three, but it is time to face the hard truth that we need to cut our losses and get on with our lives. If these companies survive, which I do hope will happen, then they have a chance to regain their former glory, but if they die out in the next few years, then the American people need to accept that. We, as a country, have been living in a bubble for too long and it has finally come back to bite us. It is time to start make decisions based on the long term, and soon, or else this economy will reach a chance it is unable to recover from.