Big 3 to collapse? Part II

So, here is another interesting article about the defunct bail out plan that the senate voted "nay" on in the US. I think this is an interesting time about the world auto industry. I had a conversation with Carl S. today in class and we discussed the Swedish automakers (SAAB being owned by GM and Volvo by Ford). Of course, allowing these firms to go into bankruptcy would be ok under "normal" circumstances - and as economic market theory suggest, a good thing. Let the "bad" non functional companies die, while others with a more sound business plan live on.. If I were not for one thing: J-O-B-S.

In the US alone, approximately 2 million people are dependent on the auto companies, 2 million! that is almost 1 % of the grand total of working people in the US.. Can you image, three companies goes bust and your un-employment rate goes up with 1 %! Insane, I dont think that the Swedish economy will face the same staggering numbers, but.. well, if you are sitting with an excel spread sheet and start to calculate.. what if the government would take over, run the companies, slowly but surely downsize the companies at a loss - but with an option to make profit instead of taking the costs of having tens of thousands people in unemployment. It would be like working, for the sake of working. Economically insane, since the two companies, Volvo and SAAB has not had the focus or knowledge to produce products that are slightly wanted by the market (I think i heard that you need somewhere around 150 000 units to be sold in order to sustain a new base plate for a car and the Swedish car makers come in at around 20' a year, i think). I remember when the new SAAB 900 reached the market.. it was a huge thing, I think it was in 1992 and SAAB bought an entire evening in Swedens largest commercial channel (TV4). It was said to be saviour of the company, well.. it didnt.

Anyway, somewhere in my heart.. i strongly believe that these companies should be allowed to go into bankruptcy and that we are seeing a new world order as the US companies slowly dissolve into nothingness. What brought them down? I think it has to do with the fact that Americans slowly woke up and realized that oil is a commodity that can reach staggering prices, and that they themselves has to pay for it. The manufacturers, insane and blind as they were, thought that the dream of everyone was to drive a Hummer. Dont get me wrong, I would like to drive a Range Rover.. but not at any cost, and definitely not at the marginal costs of a Range Rover (which more or less tells everyone about my position). Well, Rick Wagoner et al in Detroit strangely did not understand what cars and manufacturing was about. Getting smoothly from "A" to "B" in a nice comfortable and CHEAP manner and providing this service with products that yield a profit (that rules out SAAB and Volvo as well). I have also thought the Swedish automakers have had a HUGE problem with positioning their products. Why strive for the luxurious and premium segment when you have absolutely nothing to show for this? Both Volvo and SAAB are in a middle segment in the home market (Scandinavia). Just because you ship the product a couple of hundred miles (or thousand) doesnt make it premium. Look at Audi - a brand that took a lot of hits in the end of the 80's, then through hard work and smart marketing making it into the premium segment. Volvo and SAAB has not a chance, through dumb and insane marketing have they managed to erode themselves at the same time as they have lacked the knowledge to back it up: do you honestly think that a Honda Accord is less safe than a Volvo V70. I dont. What is SAABs public position again? See, who knows. I think it has something to do with airplanes, but Im not sure. Just because I dislike the swedish automakers knowledge of how to build wanted products doesnt mean I dont feel sorry for all the very competent workers that suffer from moronic leadership.

.... a parallel, remember the coal mines in the UK and then, well.. the automakers in the UK. Palin '12? Just kidding.

Just in: Goldman Sachs alters their price estimation on crude from approx 80 to 30, and then.. long term barrel price: 45. Last year the same firm shocked the market by providing an estimation of approximately 200 a barrel. Interesting times we live in.