President Barack Obama has announced today concerning the much needed restructuring of the General Motors and Chrysler, both epitomes of the American motor industry for many decades. But with the resignation of its top boss and the installation of a new one at its embattled corporate headquarters in Michigan, the auto capital of the America, if not the world over, many auto analysts are buffled by the White House’s action for it to consider the present suggestion rather than face the consequences of bankruptcy.
Of course, both automakers have no other option but to accept what the White House had dictated upon them. In part, Chrysler had made the move to tie up with Fiat, an Italian carmaker, so as to save its sagging sales in the domestic market and spike up its exposure in the European markets. But what really bothers many investors and consumers has nothing to do with the White House brazen decision to bite the positive suggestions, which somehow impinges on the automakers’ inability to make the proper choices.
For weeks now, these automakers were caught in a quandary as to what’s the next move to make. Until their corporate fears have caught up with them as they struggled to keep their corporate image intact, while their workers tried hard to give up some of the privileges they had enjoyed for a long time.
One thing that is clear, perhaps, has something to do with loopholes in implementing proper corporate management system in the work place. I have never believed that both automakers lacked the capabilities to market their finished products in the markets, both domestic and international. Like the rest of their competitors, GM and Chrysler have most often graced the commercial airtime in most television stations and the radio. For commercial spots alone, they could have spent millions and millions of dollars in order to conquer that much-needed exposure in the market. So did the Japanese car makers, which vigorously went out of their way to spike up their marketing programs to beat the American cars in so far as sales are concerned. Another thing that may have caught up with American car makers was their inability to stick to their old habits of keeping their workers and executives’ salaries much higher than their competitors’. Economically, when your production cost is high, the selling price must be high, too. While workers at these American automakers are getting 70 dollars an hour and with their executives receiving windfall of bonuses, workers at Japanese carmakers only get at least 48 dollars and hour.
As manifested by the growing demands for Japanese cars in America, American cars, which are more expensive because of their higher production costs, are put in an awkward position to compete, if only to get back more on their investment returns, which drive off some prospective buyers to buy. In fairness to American automakers, American cars are equally excellent in so far as product design and durability are concerned. On the contrary, many domestic consumers were left without a choice but to feel the pinch of the recent economic crunch, owing to the weakening value of the dollar against stronger international currencies.
Even with President Obama’s two-month deadline for GM and Chrysler to restructure their operational plans, otherwise they won’t have the slightest chance to get the bailout money from the federal government. If not, their only possible alternative is to apply for bankruftcy.