America’s Auto Industry: Too Big to Fail?

America’s Auto Industry: Too Big to Fail?

  • Submitted By: bdr31693
  • Date Submitted: 03/09/2009 5:14 PM
  • Category: Business
  • Words: 1009
  • Page: 5
  • Views: 689

Before starting this article, I offer empathetic apology to anyone whose parents or relatives are employed by any of the “big three” automakers, automotive parts distributors or any auto-related industry and faces the prospect of career loss. Unemployment, especially in this economic situation, is unfortunate and no one should have to deal with it.

Major media outlets frequently discuss proposed bailouts of General Motors, Chrysler, and Ford. All three American automakers are edging closer to bankruptcy, with GM and Chrysler on the precipice of failure. Stocks and sales from these car companies have significantly dropped from their previous year values. Ford sold shares for over $9 in early 2007, and now stocks struggles to reach $2. Chrysler, owned by Cerberus Capital Management, experienced a 35% sales drop in the last 12 months. General Motors suffers the brunt of financial burden, as stock price plummeted from $42 one year ago to a current price of around $4. Even more disturbing, Ford approached $40 per share as GM reached close to $90 per share just before the 21st century, and both have been in a downward spiral since 2000.

On September 24, 2008, U.S congress stealthily passed a bill authorizing $25 billion in loans to the three American automakers, along with several of their suppliers. This bailout was designed as the first of many federal assistance packages American carmakers will receive. This piece of legislation contained very few, general requirements to retool for production of fuel-efficient technology, which the car industry can easily work around to spend the money in any desired way. Regardless of the methods that our country’s automakers used to spend their first cash installment, Detroit is back again and asking for more.

What happened to the openhanded sum of money already offered to these companies? America’s money pits already managed to spend their loans. General Motors burns through $6.9 billion per quarter...

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