The Automaker Bailout Failed. Who's To Blame?

With story after story coming out pointing fingers about the Senate failure of the Automotive Bailout Bill, it's time to look at who is really responsible for the failure of the bill and the automakers themselves.

UAW (United Auto Workers) is pointing their fingers at Southern Republicans for lobbying against the bill. Automakers are pointing fingers at a slowing economy and Japanese competition. Nobody is pointing fingers at the one group that is really responsible for the failure of two of the American Big Three automakers - the automakers themselves.

The fact is, the Big Three are failing because they could never adapt to the desires of the consumers. While additional financial burdens from the UAW may have some bearing on the failure of these companies, its effect is minor. The Big Three have enough market share to be quite profitable, even in this economy, if they would just build what the people want.

American auto manufacturers have never been particularly adaptable. They started nearly a century ago, building big cars with big engines. Their heyday was during the 1960s muscle car era, when a big-block Ford or Chevy V8 was the thing to have.

Then, we enter into the fuel crisis of the early-mid 1970s. The Big Three were still producing their gas-guzzlers, but people weren't buying them. It was about that time that Toyota, Honda, and Datsun (now Nissan) put themselves on the map in the American market. They were building reliable, fuel-efficient vehicles. The Big Three tried to keep up. What did they offer? Such jokes on wheels as the Escort, the Pinto, the Gremlin, the Chevette. I still hear jokes about the Pintos and their exploding fuel tanks, and that car was discontinued before many of you were born.

During the 1980s and 1990s the Big Three were back in their heyday again, when fuel was cheap, and big cars were again in fashion. They sold hundreds of thousands of cars a year, and many of them came with big V6 and V8 engines.

Then, after 9/11, the world changed. Fuel prices started going up as tensions increased between the OPEC nations and the US. Never again would we see fuel under a dollar a gallon. While most people could still afford the higher fuel prices and continued to buy gas-guzzling American cars, a segment of the population turned towards the more fuel efficient and higher performing Japanese auto market. Fuel prices continued to rise, and large American vehicles were becoming less and less popular. Nobody seemed to want Hummers, Suburbans, or Excursions anymore. More and more people were looking into buying cars with smaller engines, realizing that they could have both fuel efficiency and high performance, all in the same package. Japanese market share went through the roof. The Big Three tried to remain competitive by partnering with smaller Asian automakers - Ford with Mazda (that occurred in the early 1990s) and GM with Daewoo - in order to try and produce smaller cars with higher performance that could remain competitive with the wildly popular Japanese manufacturers. Ford was the only company to experience some success with that strategy, as Mazda was already a known manufacturer, and already had some prestige in the market. Ford's economy and compact cars actually did provide similar styling, performance, and reliability to the Hondas and Toyotas it wanted to compete against. This is why Ford is still staying afloat. GM introduced some top notch cars like the Chevy Aveo, which is built in South Korea by Daewoo, and is roughly equivalent in quality to the often joked about Yugo.

Add to this that the overall quality of American vehicles was falling short of the Japanese quality. As fuel prices rose and the economy slowed down, people wanted to buy a car that would last for a long time and provide high fuel efficiency, but didn't want to give up the comfort of their larger cars. The Japanese manufacturers heard that plea, and gave the consumer exactly what they wanted, particularly in their Lexus, Acura, and Infinity lines, as well as vast improvements of standard equipment in their traditional best sellers. The Big Three didn't.

Now we have them whining about impending collapse and failure. Now they're pissed that the Government didn't hand them the bailout. Sorry guys, you fucked up. You failed. You had plenty of opportunity to improve your products and adapt them to the needs of the consumers. You didn't. You failed. That's nobody's fault but your own. The market has spoken, now either liquidate or improve.

The bailout bill failed because people, even in the government, are starting to realize just how mismanaged the financial bailout package was, and they're also realizing that it's not costing taxpayers only the initial $700 billion as advertised, but nearly $4 trillion, once you figure in all of the extra pork barrel spending, other bailouts not included in the main package, and the ways that large companies are abusing the provisions in the package. The United States has gotten tired of bailouts, and are apparently starting to see the error in their ways, now that it's too late.

The economy is still tanking. Wall Street execs are still getting all of the extras that they don't deserve. Two of the three big American auto manufacturers are about to go bankrupt. Really, it's not rocket science. If the average Joe continually makes bad decisions at work, he gets fired and has to deal with the consequences. The failure of the automakers and Wall Street are no different, except in the terms of amounts of money involved.

I welcome the failure of bad businesses, particularly if they're big ones. Perhaps we might finally be able to hit the reset button that Dr. Ron Paul and several other realists have been talking about for ages. Sure, it'll be tough for everyone, but in the end, it'll lead to a far more solid and stable economy, and plenty of wealth for anyone that cares to work for it.