I agreed with Bryan Kolk’s recent column about how universal healthcare would make U.S. companies (not just auto companies) more competitive (Healing the Big Three, 11/24/2008).
Kolk was correct in saying, “Detroit was ailing long before the recession began.” However, the Detroit Three were on the rise again, with massive turnaround plans that had high initial costs and were viable before the financial and credit markets fell in September. It is important to note that the current economic crisis has impacted all auto companies, with Japanese, German and even the booming Chinese automakers asking their governments for loans.
Second, I agree that Mitt Romney’s plan to allow these companies to go bankrupt would never work for the auto industry because of customers as fickle as we are. According to the National Automobile Dealers Association, 80 percent of car buyers would not buy from a company in Chapter 11 bankruptcy (even though that doesn’t mean the company is dead).
Finally, Kolk claimed that the foreign competitors offer “more efficient, higher quality, and more affordable cars.” In many cases, he is wrong on all three counts — American cars are generally more affordable for the equipment they offer. The Chevrolet Malibu ranked first in initial quality for mid-size cars. The Malibu also generally gets better gas mileage than the Toyota Camry and is cheaper than the Honda Accord.
This exemplifies how the perception of the Detroit Three is lagging behind reality. The cure is to continue closing the quality gap and making desirable products. The alternative to a $34 billion government loan is liquidation, which would be a catastrophe with effects reaching far beyond the auto industry.
People who care about this should contact their representatives in Congress to make sure this loan gets passed.
Eric Sauck
Engineering senior