Chrysler R.I.P.

Well it has happened: a U.S. automaker is likely headed into bankruptcy. The fact that Chrysler or even G.M. for that matter would end up bankrupt is not really all that surprising. The U.S. auto industry has been hurting since the late 70s and has never really managed to forge a lasting turnaround. The reasons are plentiful: failure to adapt to changing customer demands, slow response time, lack of innovation where it matters, poor quality, inefficient manufacturing, failure to adopt new technologies rapidly, competitive issues from U.S. taxes and regulation, poor financial management, poor strategic leadership, and the UAW.

The major culprit here is in fact the UAW. The complexity of union labor rules and sheer cost of all the benefits and concessions mean that the average UAW worker is paid well above the market wage - bleeding the automakers dry. The fact of the matter is that the price American consumers are willing to pay for a new vehicle simply cannot sustain such lavish pay and benefits. If the UAW does not learn this lesson soon G.M. and maybe Ford (though it is in a much better position) will fare the same.

Honestly, I think bankruptcy is probably the only way G.M. or Chrysler will ever survive in the long term (though for Chrysler it will probably not be as an independent company). Only under court protection can they clear off some of the toxic and crushing liabilities they are carrying. Even after bankruptcy the automakers would face a long and difficult road. If they cannot change their culture and persuade the union to be a team player any gains will be short lived.

The thing that really irritates me is that if we were going to let Chrysler and G.M. end up in bankruptcy court anyway couldn't we have let it happen before giving them billions of dollars in taxpayer loans? I mean seriously how did they go from too big to fail a few months back to dead meat today? It seems to me that the current administration doesn't so much have a plan as a motto: "Just throw billions of dollars at the problem and if that doesn't work then walk away and let them fight it out in court, all the while saying 'We told you so'." There is a nice little video showing all the politicians vow not to let the automakers fail on "The Lonely Conservative."

I think part of the problem is that at his fundamental core President Obama is a socialist and he despises capitalism (which, by the way is, what made America great). His goals during this recession seem more about promoting his agenda and lending money to every business enterprise he can find so that later he can gag them when he rams universal health care and tax hikes down our throats (just ask the CEO of BofA, if only he could tell you).

Check out this brief article too.

And as a parting thought think about this - Is America still free and are companies "private" if we all owe the government for our houses, jobs, and cars?