Automakers’ Future
I had to ask myself about the viability of the US automobile manufacturers. They are not looking good at all right now, but there could be some opportunity to find some real bargains for online stock trading.
Who will survive is the question. Or, what parts of which of the Big Three US automakers will survive?
A smart pick will mean some good returns. A bad pick will mean big losses.
Fortunately, with online stock trading, it is much easier than the last crisis to keep track of investments.
Right now, the government has just guaranteed 25 billion in low cost loans to the Big Three.
First and foremost are the labor costs. The Big Three have labor costs that are much higher than their competitors. Right now, it looks that the higher union wages, plus medical benefits to those employed and retired look like a non-starter for considering further investment; however, this system cannot stay in place forever.
What the automakers may be hoping for is that there is eventually a government health care plan that will take the burden of paying for health care off the books of the manufacturers. This is no doubt a mid-term plan or way of thinking. Even if an administration is elected that favors this type of single payer plan, it will take a while to get it set up. So, those who are looking out maybe five years can consider relief to the automakers in this regard then.
Labor costs are harder. Any ground gained by the unions are not likely to be given back without a fight. In fact, there are those who remember the plight of Eastern Airlines. The airline, in dire straits, asked for concessions from its unions so it could survive. The unions didn’t acquiesce and Eastern Airlines went out of business.
So the US automakers are facing some intractable issues. They may not be a place to put any money or faith in for the short and mid-terms, even though the federal government seems to think otherwise.
The most important factor, probably, is the cars that the Big Three are making. Who wants them, and in how much quantity?
My attention came to their competition. If there are to be two or three automobile manufacturers left globally, no doubt they will be owning all or parts of the US automakers.
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