Tuesday, December 9, 2008

Bailout Plan: How the Big Three should really be restructuring.

Look, I'm all for helping out the Big Three auto companies. A bankruptcy would not be good for an industry that has been an American focal point for so long. However, I don't think that the top executives (and their kin) are in the right mindset when thinking about where to take their companies. Foreign automakers will continue to have a hold on the market regardless of any "innovation based plans" that the Big Three seek to implement.

The Big Three are already years behind, that is after all, why they need a bailout. However, by the time they bring their infrastructure up to date, they will only find themselves in the wake of the leaps and bounds that the foreign autos have gained waiting for them to catch up. The amount of time on top of that it will take to recapture American's desire for their products is also futile. I'm not trying to sound anti-American, but the reality of the world we now live in is that competition drives a global market. The failure of our own American car companies to realize and keep up with that has made more efficient foreign alternatives a better buy. Driving a car today is not about being American like it was for other generations; instead it is about getting smarter about what we drive in a world facing shrinking oil supplies and global warming.

Right now the top executives need to think about a different direction: public transit. Yep, the very sector that GM so gleefully helped dismantle. In his new book, "Hot Flat and Crowded" Thomas Freidman points out that in the next 30 years it is predicted that more than 5 billion people will move to cities with populations of 500,000 or more. This means that crowding, parking, and transit are all going to be major issues for these cities with lacking infrastructures. Since there isn't going to be great stress from more people, let alone cars, the Big Three are in the best position right now to capitalize on solutions in public transit. Who better if not the largest companies handling the way we commute for the past century?

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