Detroit’s Automakers: Why They Deserved The Money

Why Detroit Deserved Their Bailout…

(We understand we’re a little late to the party, but we were on hiatus during the whole Auto Bailout mess, and we felt we would be remiss if we didn’t provide our two cents.)

While there is no doubt that the Detroit automakers sowed many of the seeds of their own destruction, these seeds were sown decades ago in the 1950s, 60s, 70s and 80s; and the blame for the current financial health of the Big 3 should not be laid solely at the feet of today’s business and union leadership teams.

Interestingly, American automakers are in this predicament because, over the years, they accomplished their jobs; and they accomplished them with integrity to the mission at hand.

The union employees and their stewards and representatives served the needs of the workers – current and future. The executive leadership served the needs of the companies’ shareholders. This was their job, and it was this strategy that built and maintained an industry in America that was unmatched.

And while we can argue that Chrysler, General Motors and Ford were shortsighted in their planning, research and development – because none of the three introduced the Prius for example; or because they were too dependent on large SUVs and trucks for the bulk of their revenues – anyone doing so would prove that they do not fully understand the American economic system. These companies served the interests of their shareholders and their employees, and that was their job.


To deny that the American automotive industry hasn’t changed – they they haven’t begun producing fuel-efficient vehicles, that they weren’t proactive in reducing dealership ranks, or that they don’t equally serve their communities and their shareholders – would be shortsighted.

Automakers Still More Than $100 Billion Short of AIG

When we compare Detroit to Wall Street, the requested bailout amounts aren’t the only vast differences between the two. While the American auto industry could have done more to lessen the effects of the current recession, it was the leaders of the Wall Street firms that are receiving the greatest bailout amounts that caused the very economic crisis we are faced with today – the same economic crisis that caused the current recession that nudged the American auto industry on the brink of failure in the first place. You can’t blame Detroit’s issues on the Big 3 without including likes of AIG, Lehman and others.

While Detroit’s product and cost woes were primarily caused by business and union leaders long since gone; the Wall Street crisis was the brainchild of the same management teams in charge today. Automakers did not make risky bets with shareholder money or over-leverage their firms to maximize their own bonuses – that was the exclusive domain of Wall Street.

In the end, we are free market thinkers at AskTheManager.com, but we are also fair. Fair is fair, and we cannot use tax dollars to assist those who caused the crisis without also using a few bucks to help those caught up in it.