Today the heads of the Big 3 are again meeting with Congress hoping for an infusion of cash to keep their floundering business afloat and the question that needs to be asked is… do we need all three of the Big 3? Let’s look at each of these companies individually:
Ford is by far the healthiest US auto maker. Their cash position is the best of the Big 3. Both Ford and Lincoln have made great strides in the last couple of years and they have some great products being introduced this year. Mercury is a loser that will be eliminated in the not too distant future. Additionally, according to high-level executives they have had a turn-around plan in place for several years now and they are going to be showing Congress the plan along with the progress they have been making. Word on the street is that Ford can be profitable in 2 years. Of the Big 3 this is the company that deserves tax payer money the most.
GM is the hardest of the Big 3 to figure out. This enormous company sells more cars than any other manufacturer in the world. The problem is their expenses and costs are completely unmanageable. They have some good solid products along with some real dogs. With the proper restructuring this is a company that can be viable. In fact, they can be a world power again, with the right changes. The question is, do they have the plan and how much will it cost? Additionally, if GM were a patient they would be on life support right now. According to GM officials, without a $4 Billion dollar bailout the company will be forced to declare bankruptcy by month’s end. I think GM needs all the benefits of bankruptcy, the flexibility to restructure labor agreements and debt to name only two. In the end, I think Congress will see GM in the same light as Citibank… a company too big to allow it to fail.
Now let’s look at Chrysler, I think this is a company who’s viability is no longer relevant. They are the smallest of the Big 3 by a lot. Financially, they are in the worst situation, sources say they need $8 Billion this month to avoid bankruptcy. And among the Big 3, in my opinion they produce the worst vehicles. I know Chryslers and Jeeps have been around for generations, but I see absolutely no reason to give this company any money because there is no chance for them to be relevant any time soon. So if I were in charge of this Big 3 mess I would decide that possibly as soon as January 2009, there would only be a Big 2… the times they are a changin’!