I’ve been wanting to riff on the automotive bailout plea for a while. (To get started, here is a good, balanced post by Eric Karjaluoto to stew on.) As an industrial B2B marketing blogger, I think the subject is appropriate to talk about here.
FYI: My company gets a good portion of its business from automotive suppliers, and some car makers themselves. We make test equipment, which means our sales are supported by innovation efforts in automotive, not by their sales volume. Our sales to the Big Three and Tier 1s has been minimal for years. Instead, we’ve been selling to the German, Japanese, and Korean companies and suppliers as they have established operations here in North America.
Rather than be as lengthy as Eric, I’ll just unload some bullet points of my thinking.
- Part suppliers are at greatest risk. Even if they are supplying 2/3 of the parts to Toyota, a loss of GM’s business (or a bankruptcy claim) could shut them down. Suddenly Toyota can’t get parts and can’t make cars.The domino effect is going to be HUGE!
- The audible discussion of the Big Three’s situation has made them ‘damaged goods’ that have an even bigger hole to dig out of. The financial bailout’s secretive process was designed to protect banks from this effect, which was smart.
- Worse, the congress and president hemming & hawwing about giving up some ‘loans’ has further frozen the marketplace.
- The list of expectations that go with the bailout offers is micromanaging. I can’t imagine that these companies would be able to survive without making serious reforms as proposed by congressmen. Let them figure it out on their own. That being said, I do think that the attempts at micromanaging (and private jet PR fiasco) are good kicks to reduce their arrogance.
- 15, 20, or 35 Billion is a drop in the bucket compared to the fiasco that Iraq has become, or to the financial bailout program, that is also trying to save the economy. And that’s what this is doing, not saving companies, but saving the economy.
Death is ugly
In the end, I see the bailout as a form of life support. These companies will splinter and/or die. (Its scary just hearing that Chrysler is shutting down for a month. Wil they be able to restart?)
When a family member is dying of terminal cancer (from smoking, lets say), you don’t stand around the hospital bed reminding them its their fault. And you certainly don’t just decide to stop caring or feeding them.
A bailout will give the companies and marketplace time to adjust to a new future. It will break the fall, so to speak.
Come on, where’s your heart and smarts?
Lots of folks out there are sounding like Scrooge: “If they would rather die, they’ d better do it and decrease the surplus population.”
Not only heartless, but likely reckless, IMHO.