Tuesday, January 20, 2009

Why bail out the auto giants?

Everyone knows these 3 companies, but do they know what a horrible job they do manafacturing jobs compared to the lean manufacturing techniques of the Japanese automakers (Wikipedia Lean Manufacturing)?

What they don't know that it is run by inefficent union workers who make easily 25$ an hour for a semi-skilled job (the skilled part of assembling is usually handled by the automated robots). No one is saying manual labor is not hard, having done it before, and now in a comfy office shop, I can say without a doubt you feel like you have "earned" your money when you do manual labor. Nonetheless, 25$ an hour is not a market rate for a person with a high school education and no "trades" skill required either (such as electrician, plumber, refrigeration, welder, etc.).

Why would you bail out these companies, when you can easily buy them instead?

GM's current stock is trading near 5$

Since it has a little over 600 million shares, why not simply buy GM off for 3 billion$ ? rather then give them a stimulus package that they will throw away and simply delay bankrupty by a few months?

Lesson learned:

why provide cash to a company with such low market value

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