The Big Three automakers, GM, Chrysler and Ford, controlled the U.S. car market for a number of years. With their near monopoly on automobile sales they decided what cars the American public would drive, and how much they would pay for them. Having this sort of economic power also led to a great deal of political power. The Big Three are a big force on Capitol Hill, with their lobbyists pushing for whatever policies will best protect them. It has also been suggested, at the very least, that the Big Three have used their political clout to derail projects such as electric cars, bio fuels, and anything else that might threaten their hold on the American automobile industry.
In 2008, when the recession hit, a lot of that changed. The economic crunch hit the Big Three a lot harder than it did their international competitors. So much so that GM and Chrysler both requested government bailouts for fear of bankruptcy. Some claim that it was the higher cost of wages, benefits and pension plans that created the economic gap between the Big Three and other companies like Nissan, Toyota and Honda. Is that true? Would the Big Three have been just fine if it weren't for the healthcare obligations they had? They may wish to encourage that assessment, but I just can't agree.
It's true that other countries may simply offer less in the way of healthcare benefits, while still others offer nationalized healthcare. But the money for those programs still needs to come from somewhere. If it isn't provided directly by the businesses, it is provided indirectly, through taxes. Taxes on businesses increase their costs per car, just like healthcare costs do, and taxes on individuals reduce their spending power, requiring lower prices for businesses to maintain a profit.
I think it's telling that of the Big Three, Ford did not require a government bailout, though it did take advantage of available loans. What made them different, and gave them the advantage over GM and Chrysler when the economic crunch hit? I believe that Ford had, and still has, a more flexible management strategy, and that is what allowed it to survive that changing times. This article, from MSNBC, talks about all of the changes Ford is making to increase its worldwide appeal, and expand its market:
http://www.msnbc.msn.com/id/43391595/ns/business-autos/t/new-strategy-ford-aims-top/#.T-tA4bX3qo0
Chrysler and GM, like many companies with a long history, were more set in their ways. They weren't able to respond quickly enough to the changing times. In addition, they had put too much focus into growing quickly, building plants that they later had to abandon. I saw the dangers of this firsthand when Starbucks, where I worked for almost a decade, was making the same mistake. Numerous stores were closed, and the company had to reevaluate its operating strategy. Flexibility in times of crisis in a necessity.
One place where I do see a problem for the Big Three that is not faced by their international competitors, is with labor unions. I'm sure there are some places where labor unions provide important aid to their constituents. I have never belonged to a union, so I lack a direct connection to how they work. In fact, most of what I know about labor unions probably came from the movie, The Pajama Game. But one of the problems the Big Three faced was related to agreements they had made with labor unions during a healthier economy, that they were unable to make changes to that reflected the changing times. As I said before, flexibility is essential, and the labor unions prevented the Big Three from making some of the changes that might have helped them. Labor unions are supposed to help the labor force, and if they hold a company to a course that will cause its own destruction, that just leads to all those people losing their jobs.
Of course, it's impossible to say what might have been. Would the companies have survived without bailouts? Would the country have survived if the Big Three did not? It would all be so much easier if there was a magical crystal ball we could look at, that could tell us exactly what would happen given each decision we made. But I guess that would be cheating, I suppose. Certainly impossible, in any case. I can't help but wonder what the biggest threat to capitalism is; labor unions, government, or maybe capitalism itself.
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