Not that I'm in favor of rescuing the likes of GM, quite the contrary, but it has to be said, when a car company closes down, not just last century blue collar jobs will be lost. All the highly paid car designers and embedded systems engineers, etc, will lose their jobs as well.
If GM and Chrysler were let go, maybe the world would see a wave of auto startups once again. After all there would be unused car plants as well. And I bet GM engineers are on average less incompetent than GM management. They might have some crazy ideas that would work well in the market and would never have been approved inside GM. Maybe that's just wishful thinking :-)
I don't know the right answer. I do strongly support our President but I do feel a discomfort over owning 75% of GM.
On one hand, we've seen this before with Conrail. Huge success. And even with Chrysler 30 years ago. On the other, if the company can't turn around, when does a politician decide that, despite sunk cost, we need to abandon support and liquidate.
My reason for posting, though, is I think the way you're casting the auto business is way off mark.
A full 10% of our GDP is tied to the auto industry thru the huge amounts of suppliers. If GM and Chrysler were "let go" as you put it, the world wouldn't see anything but a massive depression for a good long period.
Furthermore, nearly every significant supplier (say, over $10MM in annual sales) is supplying at least a couple automakers if not most of them. They've all pushed hard to diversify. And most of them are in peril after 3-5 years of tough times at the "Big 3." If Chrysler and GM are let to fail, huge swaths will go under, and Ford, Toyota, Honda, Nissan, etc, will no longer be able to get the parts they need. That could very well be the economic "stiff breeze" needed to blow over a few of the remaining global automakers that are themselves teetering.
And even after we pull out of that mess, I find it unlikely we'll see any 'startups' in the auto biz. It's just got too many working parts. Product development, manufacturing, marketing, sales and service are all multi-multi-million dollar problems.
Finally, the "last century blue collar jobs" you mention is pretty far off base as well. If you're talking unskilled labor, then you mean simple assembly tasks. But a lot of the simple assembly has been automated. But I'll grant you that by and large, assembly is "last century blue collar." Thing is, most of the workers (by far) aren't doing assembly. And it's not just the "car designers" either, which are really quite a small bunch.
What you're missing is the huge middle. The machinists and fabricators. People programming CNC machines. People fixing those same machines.
And you're missing the huge corporate structures. The AR and AP clerks, the IT staffs, the sales and marketing. The HUGE numbers of engineers designing each hinge, each screw, each spring.
This industry is vital to our nations economy. No question about it. The Midwest would be ground zero, but the depression would spread globally.
I'm not sure why you say I'm off base when I say that "not just last century blue collar jobs will be lost". You go on to essentially support the point I was making only in much more detail.
However, I disagree about the suppliers problem. It's absurd to assume that the world's auto industry would basically cease to exist if GM was liquidated. At the end of the day the strongest manufacturers would survive, maybe by bailing out their own suppliers. Auto makers are not systemically important in the same way that banks are.
It's funny that you mention the 1979 bailout of Chrysler. Is that the success you're hoping for? Bailing out an auto maker only to bail them out again 30 years later? I think that's a very good example showing why no auto maker should ever be bailed out. It just keeps a rotten corporate culture alive.
I do _not_ think that the auto industry or manufacturing in general is obsolete, quite the contrary. There are huge technological challenges coming up, the most important one being energy/fuel efficiency. This is a high tech sector that nobody should want to see fail. There are many related services that are also at stake, which do not fall into the unskilled labour category either.
But bailing out rotten companies is no way to achieve anything. Don't forget that the troubles at GM and Chrysler were not caused by the current financial crisis. They have been ailing for a long time.
I agree that auto startups are unlikely. But a little more creative thinking on the part of the US government wouldn't hurt. Are wholesale bailouts of rotten behemoths really the only way to rebuild the US auto industry? I can't believe that.
Briefly, I disagree that the jobs I listed are "last century blue collar." Many of those people are knowledge workers that just happen to use their hands as well as their minds.
Secondly, in my younger years I worked as a software developer at a Tier 1 automotive supplier. I've got a lot of friends in the business.
I wasn't being an alarmist. Many of these companies are on the brink. On top of that, there aren't many "strong" auto companies to "bail out" the suppliers.
Right now the forecast is a pitiful 9MM autos sold this year. At this rate, we're going to have serious problems, even Toyota may face bankruptcy.
And about Chrysler... they were bailed out, invented the mini-van, and, by acquiring Jeep via AMC,ignited an SUV market.
That's a corporate success story. It's been 30 years, there's been titanic shifts in the global market.
If GM and Chrysler were let go, maybe the world would see a wave of auto startups once again. After all there would be unused car plants as well. And I bet GM engineers are on average less incompetent than GM management. They might have some crazy ideas that would work well in the market and would never have been approved inside GM. Maybe that's just wishful thinking :-)