To Save or Not To Save?

I have been following the bailout news of the Detroit's Big Three for sometime. I couldn't help but notice the desperate situation these once well established firms, with thousands of talented employees and operating in a powerful and innovative country like America have put themselves in.

It is truly a shame and I think they are here today primarily because of lack of innovation, creativity and inability to produce what the American consumer really wanted. They failed to change with time and demand.

While the management of the Big Three sits in front of the congress begging for a bailout, employees and consumers are facing a very uncertain future. As indicated on CNN Money millions of people’s livelihoods are at stake(http://money.cnn.com/2008/11/18/news/companies/detroit_faq/index.htm?postversion=2008111804) .

Decision makers in Congress definitely have a major challenge on their hands and needless to say their actions could very well drop the axe on all those who depend on the automotive industry, directly or indirectly. If not rescued, big three’s failure could have far reaching negative impact, not to mention loss of iconic American brands. But on the other hand after evaluating decades of docile and lackluster work, saving them offers little hope for the future either.

If rescued these giants will need to be exceptionally innovative and show product/ business creativity, for the next 10 to 15 years at least, to barely sustain and compete. And of course if they do get federal help (or more like taxpayers help) there is no guarantee that there won’t be any layoffs either. In fact I believe that to effectively utilize the bailout money of $25 billion or what ever that amount ends being, these firms will have to shutdown plants and cut workforce significantly to cut costs. If rescued these firms will also need to drastically switch their strategy from followers to leaders and innovators. I wonder if the management of these firms is up for this challenge?

What is happening is unfortunate. But bailout or not I hope these firms come out strong (as indicated in the article above, they do have an option to file for chapter 11 and restructure). I hope this as I feel for millions of ordinary people who would end up suffering for the incompetence of few.