Reminder of the Human Cost of Detroit’s Demise

By Brendan Moore

01.13.2009

While working during press days at the Detroit Auto Show this past weekend, I got into a conversation with one of the many young women hired to pitch the various cars during the public attendance days of the show. She was on a break, I was sitting in the same area going over my notes from some previous interviews, and a conversation happened.

The woman, Candice Ross-Upshaw, told me that she had worked on the production line at Chrysler previously, which I found interesting in two ways, since she was now working as a model, and, at the GM stand to boot. Her mother and father are retired line workers from Ford, her brother is a current line worker at Chrysler, her husband works at Chrysler, all her uncles work or had worked at Chrysler or Ford, along with most of her cousins, etc.

Wow, I thought, that is one big extended family that really depends on the auto industry for their comfortable (note: but hardly lavish) economic livelihoods, whether the source is from a paycheck or a pension or healthcare.

It’s not as if I was unaware before this moment that the auto industry is important to Detroit; it is simply a matter of reading numbers and thinking about it in relatively abstract terms as opposed to talking to one of the people that depends on the industry for the well-being of almost everyone they know or are related to.

If the Detroit 3 go down, and stop paying their employees, and default on their pension and healthcare obligations to their retired employees, this woman’s family, and thousands of other families will be plunged into a financial abyss.

There will be plenty of really bad magic happening in the various communities where those families live as the ripple effects of much less money being spent fan out across other businesses.

Of course, it doesn’t end there – suppliers, vendors, service companies, etc that do something for these auto companies will all feel various levels of pain.

But my intent here is not to talk about the dollar figures, but to focus on the human beings affected by Detroit’s meltdown.

Regardless of how you feel about the government supporting GM and Chrysler, and perhaps Ford in the future, we shouldn’t ever lose sight of the human toll that Detroit’s collapse would exact on individuals and families that work at one of the domestic automakers.

Speaking for myself, I’m very unhappy about my tax dollars going to companies that should have been more prepared to navigate the current economic environment. Of course, it’s not the first time I’ve been unhappy about how billions of tax dollars are spent here in the US, but that will keep for another article in a different type of publication.

So, yeah, I’m not a socialist, I don’t like all those dollars going to bailout funds (or, as they like to call it, bridge loans) for the Detroit automakers, and I wish they hadn’t screwed up like they did, but they did. And if I was in charge of how the recent funds were distributed, I probably would have parceled those monies out a lot differently.

So, just like the banks, and the mortgage lenders, and our government, yes, mistakes were made and now we’re going to collectively pay for those mistakes. The Detroit automakers stayed with a strategy of making big trucks and SUVs for too long and it has taken them to the brink of insolvency.

Doing what I do for a living, I talk to a lot of people about automobiles and the auto industry, and I’m sure it’s not a surprise when I tell you that there are many people in the US that say this about the Detroit automaker’s troubles: “Let them go under! They failed at their business, and they should pay the price!”

True enough. But the employees and pensioners are the ones that will pay the price, not the people running those companies. Families just like the extended family of Ms. Candice Ross-Upshaw.

And if you haven’t been reading the news lately, there are already a lot of people out of work in the US.

Lastly, there are a great many opinions about just how salvageable the Detroit automakers are, and many people will tell you that all three are a lost cause, that we’re just throwing good money away by providing the federal loans to them. Others will tell you that only Ford should stick around since they, and only they, are not taking any taxpayer money to survive in the current enviroment.

I don’t agree. I think GM should get the help they need, provided, of course, that they meet certain business reorganization terms built into the loan agreement. If Ford, who is in much better shape financially at this time, needs funding later, I think they should also get what they need and under the same terms.

It pains me to say it, but I think Chrysler should get only enough money to keep operating until they can sell themselves, as soon as possible, either whole or in pieces, to whomever will pay the highest price. There is value there, but not in the current corporate construct. I just don’t see them as a viable concern going forward. My point of view is that a quick sale will at least preserve some jobs in the production lines that the new owner(s) of the various parts of Chrysler end up keeping, and that is much preferable to the whole company disappearing under the waves three, six, or, nine months from now.

I think Ford and GM can be rescued and then subsequently thrive in the future (as smaller companies) without a great deal of additional money and drama, and for the sake of their workers, those workers’ families, and the communities they live in, I think it’s incumbent upon the rest of the US to help them do that. Furthermore, speaking as a meat-eating capitalist, I think it’s a good investment in the collective future of America.

And there’s nothing I like more than an investment that delivers good returns.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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8 Comments

  1. Nicely put. This is a good depiction of the human side of the automakers’ situation; it is easy to tune out such personal details when we just keep hearing all of the facts about billions of dollars spent and politicians debating.

  2. There are only two parts of Chrysler worth keeping, the trucks and the Jeep division. I guess if the trucks go to someone, it will have to be a foreign company because neither GM or Ford will buy the trucks, although maybe one of them might go for Jeep, but they’re both broke. Don’t know, really, but I feel bad for the people that will lost their jobs.

  3. I don’t have a problem loaning money to the auto manufacturers if they can realistically pay it back, but I continue to be skeptical it will ever happen, especially with Chrysler.

    The idea of saving jobs is noble, but the reality is a huge amount of jobs are going to be lost regardless because of years of declining market share.

  4. I have a problem with bailing any company out, no matter what industry they’re in. But we are in desperate straits. NOT quite an encore of The Great Depression, but we’re getting closer every day. I’m not in favor of giving money to companies that are obviously just dead men walking like Chrysler, Bear Stearns, etc. But people are suffering, so temporary loans might be worth doing if there is a good chance the companies can make it.

    Should we just let our economy and society go to hell for years to come in the name of adhering to strict capitalist doctrine?

  5. hey, why don’t we just give money to everyone and every company? We can be like France!

    This one votes no on that. No government aid to any private company!

  6. The problem is, fotofun, plenty of your tax-payer money has been flowing to private companies for decades, without your even suspecting it. Your simplistic exhortation shows that you are blind to what has been going on for years.

  7. Smotri, you are correct. What I’d like to know is why every Milton Friedman-wannabe names France as the touchstone of bolshevism. France? Do these people even know what socialism is? Or capitalism for that matter? But then, fotofun merely excoriates government aid to private companies. Apparently, nationalization is completely acceptable.

  8. It’s true. The bombs are easy to drop when you can’t see the faces of the people on the ground.

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