Against the Auto Industry Bailout? But Are You As Smart As A US Senator?

I’ve been watching the Senate Banking Committee talk to grill the top executives from GM, Chrysler and Ford for three hours now, and I’m angry.

Even our Senators are perpetuating myths about the Auto Industry and Detroit.

Mark Phelan at the Detroit Free Press sums it up better than I can with his 6 Myths about the Detroit 3 article:

Myth No. 1

Nobody buys their vehicles.


General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of about 560,000 so far this year. Globally, GM in 2007 remained the world’s largest automaker, selling 9,369,524 vehicles worldwide — about 3,000 more than Toyota.

Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year.

Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.

Myth No. 2

They build unreliable junk.


The creaky, leaky vehicles of the 1980s and ’90s are long gone. Consumer Reports recently found that “Ford’s reliability is now on par with good Japanese automakers.” The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands’ overall quality as high or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.

Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.

The list goes on with 4 other myths including the lie that Detroit doesn’t build hybrids and only makes gas-guzzlers. I know, you’re shocked right- you thought they were only making SUV’s and Light Trucks? You thought they lacked innovation and new tech? Yeah….WRONG(pdf).

One of my favorite Detroit bloggers said it so much better than I ever could today. Sweet Juniper writes,

“I’m no apologist for the Big Three or their ridiculous missteps and lapses of judgment. But I do care about the regular people who work for these companies and played no role in those poor decisions. Consider, too, the charities that receive donations from both corporations and individuals connected to the auto industry and the people those charities help. Some of the moments when I was most proud of my fellow Americans were when people stopped in the wake of natural disasters like Hurricane Katrina or the Asian Tsunami and gave what they could to help fellow human beings who were suffering. Three years after Katrina, New Orleans is starting again to look like New Orleans again.
It hardly looks like Detroit at all anymore…
One thing I like about GM, Ford, and Chrysler is that they are companies that still make something. What do the vast majority of the Fortune 500 companies even do? What does Goldman Sachs do? What do all those companies in Silicon Valley make? They shuffle paper, sure, transmit blips of binary code, attend important meetings, and make “deals.” Maybe brown people somewhere across an ocean will make whatever it is they’re selling or shuffling on paper or e-mailing each other about. But in Detroit, and in plenty of other industrial cities across this country there are still people making things without exploited labor, and believe it or not that still means something.”

But let’s get back to the grilling auto execs got in DC today, with more to come tomorrow. Ford, GM, and Chrysler are asking taxpayers for a 25-million dollar loan and the United Auto Workers union stood next to management.

I have to admit- that alone was a powerful sight. Seeing Ron Gettelfinger, president of the UAW, agree and stand beside management in many of the discussions. It was a powerful reminder to me just how many jobs are at stake.

There was a protester during the hearing holding up a sign reading “No more corporate welfare” and I wondered if she understood just how many of my friends and family would be collecting welfare if the Big 3 stop making cars.

Trading Goddess Stock Blog notes the ripple effect, “Little was I aware this morning that the stock market was going to be held hostage by a Senate hearing on the auto industry this afternoon to discuss a bridge loan to rescue them.”

NADA’s AutoExec magazine has the full economic impact reports, just from the retail side of things.

Let’s just say it can’t be ignored.

Much like the buzz over GM’s viral video on the need for federal help can’t be ignored:

I’m not saying there are any easy answers to an Auto Industry bailout. I know many of you think bankruptcy is a better option. But I am wondering if YOU have all the facts, if even our own Senators didn’t.

How many of those myths did you think were true? And how many of those Senators still won’t know by the end of the day tomorrow, as they possibly decide the fate of my family and friends…

Crossposted at


  1. Based on these six myths, why are Big Three in a big hold then?

  2. There are plenty of people who have commented (and will comment) who are smarter than I am and who know more about economics and the way corporations are run.

    That said, I live in Michigan. My father and grandfather and numerous other relatives worked for GM. None of you understand just exactly how this will impact the already TERRIBLE Michigan economy. And when it hits us, this shitstorm will hit you too.

    My husband works for a plastic recycling company in Flint, which is one of the other cities besides Detroit that has been so heavily impacted by the loss of auto-related jobs. When GM and Ford and Chrysler stop buying the plastic they recycle, they will go out of business.

    We are already on state assistance because he makes very little at his job, and it took him a year of being unemployed to even find a job at all. If people like us, with kids and a fairly small rent payment and no credit card debts at all have to rely on the government to get groceries and health care, what do you think will happen to the entire country when this industry finally collapses?

    What makes everyone so sure that those of us who are already having trouble will be able to scrape by at all? Is anyone thinking about the fact that the money set aside for assistance by the government will run out phenomenally quickly at this rate? Last year our family almost starved because we had to wait over two months for food assistance, and that was because of the immense backlog and the fact that the moneys were very low for doling out already. We applied in July, and even though it was three months until the beginning of the next fiscal year, they were already extremely low on funds.

    Wow, Erin, I should stop now. I think my soapbox is giving way under me. Thanks for posting this, I hope it makes a difference.

  3. As far as Myth #1 goes, I was never under the impression that the big 3 didn’t sell cars, but rather that they have lost significant market share for the past 40 years, which is true. The fact that Toyota is within 3,000 car sales globally is pretty amazing.
    I also don’t think that American cars are poorly built – I own one. The issue is the relative price to quality. You can get a more quality import automobile for the relative dollar.
    Finally, the Hybrid issue with American cars has been a PR move at best. Let’s start with GM – I bought a Saturn Vue Hybrid last year and was told specifically by the dealership that they sell about 1 hybrid to every 10 conventional not because of demand, but because of very low production (sounds familiar….just like the electric Saturn in the 90’s). This is in Oregon, where I swear every 3rd car on the road is a Prius – people love their Hybrids and would be very willing to support any carmaker that made more options for them. GM has not fully invested in producing this car, which had the potential to be the leader in a larger-size functional Hybrid vehicle at a lower price than the Ford Escape.
    The other issue with the GM Hybrid is the engine itself – it’s a simple belt-driven electronic assist. It is no where near the technology level or mpg reduction as the Toyota Hybrid vehicles and severely lacks in power. They have also had multiple problems with the system. I have gotten 3 separate notifications to bring the car in to fix a ‘know’ problem with the electric assist. 3 times in 14 months. When GM goes on about their ‘innovation’ and ‘hybrid technology’ it makes me chuckle. It’s just propaganda, and if there was no such thing as the Toyota Prius, no one would be the wiser. The fact is GM is compared to other car companies now, and people are calling their bs.
    I understand the impact this will have on families…i am from Detroit too. And i fully expect the government to step in and do something. All I really ask is that the Big 3 step up to the plate and take some frickin’ responsibility instead of just spinning the same old bs that has driven the Michigan Economy in the dirt for the past 20 or so years.

  4. I was reading Juniper late last night & thinking of you, Erin. As much as some of his posts bother me, not because of what he says, but because it just hurts to see our hometown like that, it reminds me just how unaware people are. I guess Arsenal of Democracy doesn’t mean anything anymore. I understand that people don’t want to spend their money on an inferior product, but I think that it doesn’t really have anything to do with quality. Somewhere down the line it became more prestige to own a foreign car & people used the long-dispelled notions that domestic = always inferior.

  5. FYI, the link to the PDF (link text = “WRONG”) is broken/munged. It should link to

  6. Queen of Spain says:

    Fixed Shannon, thanks!

  7. Um, I don’t know. I currently am driving an american vehicle and cannot wait until I can go back to a Toyota.

  8. Myth 1

    American cars are built in America with American parts and foreign cars are built overseas with foreign parts.

    My “foreign” car was built in Indiana, thank you very much.

    My friend who always buys “American,” however, has a Suburban assembled in Mexico.

    Who drive the foreign car?

  9. I am so torn over this issue but some things that have come to mind:
    When Chrysler rec’d money in the 80’s it did not save jobs and many people were laid off. The 3 need to look at the excess money they spend – for example the jet that was mentioned in their proxy meeting agenda where it mentions that Mr. Mullaly, his family and guest were allowed to use the jet not only for business reasons but personal. Also, in order to ease the burden of Mr. Mulally moving to Southeast Michigan and away from his family in
    Seattle, Washington, the Compensation Committee clarified that his arrangement covers travel by his wife, children, and guests on Company aircraft for personal reasons without him at Company expense, at his request.
    In addition they pay for Mr. Fields first-class air travel for personal travel to and from his home in Fl. so he doesn’t have to move to Michigan. I do not know many business that allow that. Many ask that you move to the state you will be working in.
    All this just make me wonder and question how much more is wasteful spending on the big three?

  10. In a free and open market, American Auto makers were sleeping at the wheel for the last twenty years. GM made the electric car that was trashed because the auto makers just couldn’t get out of bed with the oil companies. As global warming became an issue the Japanese quickly met the challenge and came out with the Prius. Europeans who were and are paying much more for gas started using clean diesel. Yet here in the USA, car makers were just making bigger uglier gas guzzlers and cars that are so cheap looking especially the interiors that more Americans started buying foreign cars that came with more appointments in the base price. Energy companies e.g., Exxon, Mobil, Shell etc. were just too happy raking in billions at the expense of the environment and the consumer, now we should feel sorry for those scoundrels sitting in front of the Congress playing victim, you must be joking girl. Really get a grip. And of course the Unions sitting next to them, while they hold hands under the table. FTS!

    When you buy an American car just about everything is optional. In the interim, the Unions sat on their hands instead of looking at what was going on and the trends in buyers taste and needs. The people who suffer most are the workers because corporate greed is only interested in their bonuses and parachutes. And though foreign cars are also built here, the quality control and the materials used are assembled with more care. I’ve owned Hondas (4 years), Nissans (8 years) and now a Mazda (3 years) with little or not trouble since I am on top of the maintenance. I have friends who own American cars (Chrysler) and they are in and out of the dealership for repairs every six months. End of story.

  11. Queen of Spain says:

    ugh. too many things up there to comment on. I suggest you read the pdf that’s linked in my post above and the NADA link. actual facts on american cars.

  12. I’m worried that 25 billion dollars is not nearly enough to turn these 3 companies around. I honestly think that this ‘loan’ is a shortsighted response to a problem that goes much deeper.

    What happens in 6 months when the money has been used up and the economy still hasn’t rebounded? Does the government loan them more or do they go bankrupt? Do we chalk it up as a loss? How much money will take?

    No amount of money will make consumers start purchasing automobiles…domestic or otherwise.

  13. The link to the information about the big 3 and the ‘myth-busting’ is from the ATPC – The Auto Trade Policy Council. You can visit them at

    Notice the three members (GM, Chrysler, Ford) of the council and their stated goals and directives. If you search under the names of the officers, you will find that they are lobbyists on behalf of the Big 3. The ‘document’ they put out is nothing more than a sales sheet full of propaganda and I don’t think should be considered purely factual.

    I’m not saying it’s all wrong or false, but there is a definite conflict of interest here with presenting this as a 3rd party assessment of the policies and practices of the Big 3.

    Finally, if US cars are equal in quality, why is their resale value lower that the foreign counterparts across the board?

  14. (Reference your earlier blog “Piss on Detroit”) Why not. The Northeast has been pissing on the South for 180 years. Protectionist legislation for the industrial base artificially raising our cost of living. Union wages supported by manufactured goods we had to purchase before imports. Now a more more direct dip into our pockets to support a lifestyle few around me enjoy. Now you try to tell me how bad things will be for me if I don’t permit ya’ll to keep making $30.00 per hour with full benefits. I hope ya’ll make it through the tough times to come. If you need any lessons we Southerners will be glad to help. We’ve had plenty of practice “getting by”.

  15. I am originally from Flint, Michigan, throughout my life I have worked for various factories and small shops that manufactured, fabricated, and provided parts for the big 3. To have any of these companies go under will not only severely impact the economy in michigan, and the US, the amount of workers from both the big 3 and affiliated businesses, will be a tremendous blow.

    Not to mention the fact that if we are ever in a real war, who will manufacture the wartime vehicles and equpment we would need?

    My mother works for GM and is currently looking to to be laid off, possibly permanently, in mid december. From what she has told me the bailout, if given, will help temporarily. What needs to be done and what sis happening now is that senior employees, that are among the highest paid employess, are being asked to take a buyout to free up extra cashflow.

    There are many factors going into this development, none of which are truly understood at once through all sides, but it is known that if the big 3 go under, we are in a heap of trouble.

  16. Alex sounds like one of those Texas asswipes who told all the rest of us to “go freeze in the dark” back durung the oil crunch of the 70’s.

  17. You should all see the movie “WHO KILLED THE ELECTRIC CAR”. It explains a lot about these huge mega companies and how they think….

  18. No lessons for Dale! That sun of a gun is trying to lynch me! And he called me names….LOL all this after I offered my best wishes and lessons! Does anyone seriously believe in the Wall Street or Main Street bailouts? Isn’t this America, Land of the Free..home of the Brave? What happened to us, When did it happen and When will we end it?

    Whether you think you can, or you think you can’t, you’re right. Henry Ford

  19. I’m from Canada, so I am clearly not as up to date on the American situation as I’d like to be. I’ve read the myths, watched the videos, and clicked the links that are posted on this site and yet I’m still very torn.
    Every Canadian industry has been failing for years. I’ve lived in areas hurt by the auto industry’s decline as well as forestry areas that now have shut down completely due to the US housing crisis. It’s tragic to see that so many hard working people who haven’t run themselves into credit debt are being punished for what I see as the Big 3’s lack of initiative. When the Canadian dollar was high I was shoping for a car in the US. Only a few companies were willing to sell me the car. Unfortunately, none of them were the Big3! It was amazing, however, to watch Toyotas and Hondas flood over the border.
    Living in Windsor, Ontario (right across from Detroit) for years, I’ve been right in the middle of it all. I’m pained to think of all my friends who will be hurt by this, but at the same time I cannot back any bail-out plans. CEO’s should be putting their money into their companies, instead of flying around in private jets to meetings in Washington.
    There is no support to any other industry that is hurting. Farming, forestry, mining, fishing have all been pushed aside for the automotive sector. Why can’t we slow the industrial machine? We still have arms, legs, soil and water. Are these things worth nothing in the face of oil?

    The last thing I’m going to question is the video’s comment on National Security. The war in Iraq is costing Americans billions of dollars. I’m not going to judge the war, however, just simply stating it’s cost! I have never felt what’s it’s like to be an american traveling the world but I just don’t understand how spending SO much money can be OKAY when most countries are at peace and without a large military presence… of course again.. I’m Canadian.. we have some helecopters and 2 submarines (I think.. and one’s in a mall…). I am so lucky to not feel threatened in my country.
    So to my neighbours… I am so sorry for the financial strain you all must be feeling. I am hopeful for change, but that would take a great shift in priorties by all North Americans.
    I would like some more insight to company spending before both of our governments dump billions into a black hole.. 🙁

  20. I always wonder why it is that people from the North are always just Americans (to themselves) but people from the South are SOUTHERNERS.
    (see above a few comments if you wonder WHY I wonder)
    Sorry……I’m medicated……on a tangent.

  21. Gidge,

    Help me out on something.

    Cerebus acquires Chrysler May ’07

    July ’07 John Snow, Chairman of Cerebus, addresses Detroit Economic Club and states:

    “Private investment is no magic elixir. But it is also more than just a flavor of the month. I believe it offers simply the best hope for restoring competitiveness to sectors of the U.S. economy that need it most. And stronger, growing companies are the best way I know of to provide job security, increase employment, raise living standards – and keep America’s economy strong. ”

    Fast forward to today: GM stock opened at $2.53 went to a low of $1.70 and then a high of $4.00 (on news the bailout would be passed) only to close at $2.88. (108 M shares traded)

    Do you think private money is out there to rebuild GM, Ford, Chrysler?

    Could the talk of bailouts be restraining that capital from being employed to ease the big three’s financial woes?

    Thanks in advance for your insight.

    In business, words are words; explanations are explanations, promises are promises, but only performance is reality.

    Harold S. Geneen
    1910-, American Accountant, Industrialist, CEO, ITT

  22. what they should be doing is asking for help restructuring their businesses….go ask the japanese co’s why they don’t need bailouts.

    obviously they need to figure out why they can’t make money even as they sell vehicles….

    Everyone needs to sit down, from union reps to the big corp leaders and figure out what the hell they are doing wrong

  23. Crunchy this might give some a heads up – just on GM alone – they have 8 makes. They are saying they will have 20 models that get 30 mpg or more & 9 hybrid models. Why do they need so many? Look at Honda, Toyota they do not have that many. I think as far as the big 3 go Ford definitely has it going on and have been preparing themselves. They are solvent until 2009 and they are looking at the loan as a back-up effort. I believe the companies need to par their make and models down to a select few and cut some high exec salaries.

  24. Ooh shoot i just wrote a large comment and as soon as i strike reply it came up blank! Please inform me it worked right? I dont want to upload it again if i don’t have to! Either the blog glitced out or i am an idiot, the second option doesnt surprise me lol. thanks for an excellent blog!

  25. That is really dumb, for real. Everybody could just have a seat together, from union reps to the big corp leaders and figure out what in heckfire they are doing wrong.

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