Opinion | Editorials
Big Three need an urgent bailout
$15b in loans should be provided by Washington - with strings attached.
- Gulf News
- Published: 23:38 December 9, 2008
The White House is expressing concern over a plan to provide $15 billion in loans and possible further long-term help to the struggling Big Three automakers in the US.
The simple fact is that if General Motors, Chrysler and Ford are forced into bankruptcy, it will cost far more to wind up these behemoths.
For years, the three domestic giants have ignored the threat of foreign brands, been slow to adapt to greener technologies, and concentrated on larger models as petrol prices soared. In November 550,000 jobs were culled from the rolls of workers in the US. Letting the Big Three go under would cost a similar amount of job losses immediately, and cost many tens of thousands more as the full extent of the collapse becomes known. Giving a loan guarantee will at least keep the automakers ticking over - for now.
The reality is that the three must concentrate on smaller, fuel-efficient models. And they must take drastic steps to control their labour costs which are 60 per cent higher than Japanese manufacturers.
Not providing the cash would be too painful. And there is every likelihood that at least one of the three will not survive this cash crisis and crash in consumer confidence.
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