Thursday, November 13, 2008

Big, Bad Bailouts

I just got home from another trip to the Rust Belt. Living in Cincinnati, I don't feel like we're experiencing a true recession. (For sure, the parking lot at the mall is crammed full on Saturdays.) But up in Saginaw, you get the feeling that the recession is firmly entrenched.

My company has several customers in the automotive industry-- Not the Big Three automakers, but their sub-tier suppliers. So in the past few months, I've had the privilege of meeting lots of intelligent, hard-working engineers who work for these companies. These are people who get excited about designing steering columns, seat adjustment mechanisms, and wiring harness connectors. And ultimately, all of their livelihoods are controlled by the "leadership" at GM, because when GM stumbles, every sub-tier supplier also takes a financial hit.

That's the tragedy of the latest bailout debate that is currently being discussed in Congress. In essence, it comes down to this: How many millions of people should lose their jobs because GM's management has been willfully stupid for the past 20+ years?
General Motors could make money only by selling big, gas-guzzling S.U.V.'s and trucks. Therefore, instead of focusing on making money by innovating around fuel efficiency, productivity and design, G.M. threw way too much energy into lobbying and maneuvering to protect its gas guzzlers.

(And here's another reason why I equate SUV's with being willfully stupid.)

I am NOT in favor of bailing out GM. Frankly, I think they probably deserve to go under. But I also believe that if that happens, thousands of hard-working engineers will lose their jobs, and it will be an enormous blow to our (already wounded) economy. I don't know what the right answer is.

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