Sure make a product that is good & resonable for the average buyer. Make a car that will not be recalled in 3 or 4 years after it has been made. Fix the problems before you send it out to the public & stop thinking for $$$$ you put into your pockets first. Stop paying employees who are not working but still on the pay role. Please don't say this doesn't happen, because it does & has been going on for years. To bad the US auto industry has fallen on hard times. But greed from Union & Upper management levels have hurt the industry. It they would only get back to what it use to be, maybe the American producers will make a full come back.
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Running on Empty
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Strip and flip scenario. With GM and Ford's stock so cheap, private investors could snap them up for a song. Then they could break them up and sell parts to the highest bidders. Emerging players in China, India and Korea might relish the prospect of acquiring famous American auto brands like Ford or Chevy. (Remember, Tata Motors of India just bought Jaguar and Land Rover from Ford.). Old Detroit would fight this scenario fiercely, but when your stock is this low, it's hard to hold off the buzzards. The most potent poison pill against this scenario might be Cerberus's rough ride in Detroit.
Misery loves company scenario. There's been some speculation in Detroit that GM could combine with Ford or Cerberus could sell of Chrysler to one of its domestic rivals. The thinking seems to be that taking the best of each company—Chrysler's minivans, say, or GM's Cadillac line—and putting them together under one roof makes for a stronger company. But I couldn't find a single analyst who buys into that. All it would lead to, they say, is massive layoffs and crosstown culture wars. "That's just Detroit buzz," says veteran analyst Maryann Keller, "and it doesn't make one thimble full of sense."
The government bailout scenario. Remember Lee Iacocca and Chrysler? He was back at the company last week being lauded for convincing Congress 28 years ago to give Chrysler a free ride back to prosperity in the form of government loan guarantees. Keller now believes another federal bailout might be the only way to save Detroit. "Where else does the money come from to completely restructure their product line so that they have a future?" she says. The biggest problem with this scenario: Detroit—which fought fuel economy regulations for decades and rode the SUV boom way too long—is seen as a victim of its own arrogance. "Washington does not have any sympathy for what's happening in Detroit," says Casesa.
There is still an argument that can be made that Detroit will ride out this storm and eventually emerge smaller, but healthier. Cars like GM's plug-in hybrid Chevy Volt and Ford's stylish subcompact Fiesta are coming in 2010. And they certainly will be more in step with the times than the high-riding, gas guzzling Harley pickup truck I'm driving this week. The question is: Does Detroit have enough cash in the till to make it until then? Wall Street certainly seems skeptical. If anxious consumers start buying into the bankruptcy talk, Detroit's fate could be sealed. "A frenzy is being created and it's only going to make things worse," says Global Insight auto analyst John Wolkonowicz. "It could become a self-fulfilling prophecy."
If the long-predicted death of Detroit were to happen, that would be the ultimate reversal of fortune. The nation credited with putting the world on wheels would find itself dependent on other countries for its mobility. "Should we look to the rest of the world to provide us with cars?" asks Keller. "Should we be held hostage to the rest of the world for something so basic?" It's a question worth contemplating in Detroit's time of despair and Washington's time of renewal.
© 2008
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