In normal times, this might not be such a big deal.  Chrysler went into bankruptcy a few decades ago and emerged as a better, stronger company.  But, times have changed, and the underlying problem is the same no matter what industry we’re talking about – lenders are remiss to help companies before they get into trouble and even less likely to help those in bankruptcy.  Congress seems to be missing these facts as they continue to grill the Big Three, and while I’m not in support of a bailout, it is time to consider a loan or rescue package that will allow these companies to survive.

Interestingly enough, CNN recently polled 1100 people by telephone only to find that 61% of them oppose a bailout of the auto indusustry.  Their conjecture is that the American consumer is burnt from the Troubled Asset Relief Program and its enormous size, leaving them feeling as though $35 billion just isn’t enough to worry about.  Unfortunately, my belief is that much of the problem Detroit is experiencing today stems from the same set of problems that is troubling Wall Street – lenders aren’t lending.  They’re not lending to each other, they’re not lending to other businesses, and most importantly for Detroit they’ve made it difficult to get loans for consumers wanting to buy new cars.  Add to that the market turmoil, the media’s continued blaring horns claiming how bad the economy is, and increasing layoffs and you’ve got the “perfect storm” for taking out a Big Three player.

Apparently I’m not the only one considering the devastation that this would cause world-wide, and Keith Wendell of Johnson Controls recently pointed out the obvious:

“Should one of the Detroit 3 fail, a significant number of supplier failures would occur and become unmanageable,” he said. These companies also supply parts to foreign automakers that assemble cars in the United States.

From an economist:

Economist Zandi urged Congress to provide the $34 billion. “Without any government help, the Big Three will quickly end up in bankruptcy and be effectively liquidated, resulting in hundreds of thousands of layoffs at just the wrong time for the sliding economy,” he said.

With recent actions it would also seem that the Big Three are willing to do whatever it takes to open their books and even as far as government oversight to save their companies.  Even though they haven’t been the smartest about their efforts, their persistence and similarity of message seems telling to me.  Couple that with a roughly 30% drop in sales compared to a year ago, it’s looking very bleak for these companies.  The only one that seems to be somewhat safe, if you believe Alan Mulally, president and CEO of Ford, is Ford, and even he is going to Washington to secure loans in case of a more serious downturn.

Only time will tell where this ends up, but for the sake of our economy, the jobs of people surrounding the auto industry, and the future of manufacturing in America I hope that the people reviewing these decisions know what they’re doing.  If they don’t, the world will suffer.

Ranter