Why the Big 3 want the bailout

Posted by on 11/18 at 11:00 AM

Want to know why Detroit’s Big Three automakers are in such trouble?

Part of it is because they are simply too heavy to be effective. All the years of those lucrative union contracts are finally catching up with them.

But part of it has to do with the products they’ve produced (or, more accurately, the products they haven’t produced). While Japanese and other foreign automakers have developed more fuel-efficient cars and have stayed ahead of the curve—and have done it by building American factories that employ American workers and spawning American suppliers that employ American workers—without unions, by the way—the Big Three have continued to stamp out the same old stuff.

Here are the Top 10 worst cars of 2008, as compiled by Cars.com based on sales throughout this year:

10. Pontiac Grand Prix:  8,252 sold
9. Dodge Magnum: 6,833 sold
8. Chrysler Pacifica: 6,227 sold
7. Hummer H-2: 5,488 sold
6. Lincoln Mark LT: 4,038 sold
5. Cadillac Escalade: 3,779 sold
4. Mercury Mariner Hybrid: 2,011 sold
3. Chrysler Crossfire: 1,819 sold
2. Cadillac XLR: 1,091 sold

And the worst-selling car of 2008: The Dodge Viper, which has sold only 959 units this year.

But wait! That’s actually good news for the Viper: That 959 figure represents a 149 percent increase from 2007 sales!

Click here for pictures of the vehicles (you might need visual aids, since you aren’t seeing much of these cars on the roads).

For its part, the Detroit Free Press is trying to come to the aid of its big employers (and advertisers): It’s published a list of “Six Myths about the Detroit 3.“ They are:

1. Nobody buys their vehicles.
2. They build unreliable junk.
3. They build gas-guzzlers.
4. They already got a $25-billion bailout.
5. GM, Ford and Chrysler are idiots for investing in pickups and SUVs.
6. They don’t build hybrids.

Click here for the Free Press’s explanations of the “myths.“

Notice what’s not on the myth list: Anything about how those union contracts have crippled the Big Three.

Keep in mind that union leaders have made it clear that they have no intention of re-opening those contracts for renegotiation in exchange for a bailout that would save the companies that are responsible for fulfilling them.

For what it’s worth, Treasury Secretary Henry Paulson told a congressional committee today that he opposes including the Big Three in the $700 billion not-a-bailout plan passed by Congress several weeks ago. Congress did not anticipate non-financial companies participating in the plan, Paulson said.

But the lobbying continues:

But auto executives, backed by leading Democrats, insist they need another $25 billion in emergency loans to avert a collapse of one or more of their companies before year’s end. That would bring the total federal help for the industry to $50 billion this year.

The executives, along with the head of the United Auto Workers union, were making their case Tuesday at a hearing before the Senate Banking Committee as auto bailout backers hunted the votes necessary to pass the plan in a postelection session. Aides in both parties and lobbyists tracking the plan privately acknowledge they are far short.

And if you can stand one more list, CNNMoney offers this seven-question breakdown of the auto industry bailout issue. Check it out for answers to questions like, how many jobs are we talking about, what are the pros and cons of bankruptcy and what happens if there is no bailout.




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