Sad State of Affairs for Detroit's Big Three

With the recent financial woes of the Big Three automakers, the question that bears answering is "how did we get to this point?" How did these companies fall into such financial crisis so quickly? Several thousand recently laid off or bought out blue and white collar workers are asking the same questions. The answers to these questions are simple but politically incorrect. Here is my personal analysis of the downfall of the Big Three --

Poorly Designed Products -- Conservative vehicle designs coupled with lackluster reception by the American public are the main reason that these automakers have stumbled badly. Large gas gulping SUV's and bland mid-size sedans were a Big Three staple during the 2002-2008 time period. Having been privy to research done by these automakers, they knew that these vehicles would fall flat before launch but launched them anyway. Apparently, market researchers failed to convince senior executives of the failings of these products. The product czars at most of the American automakers have very strong personalities and don't like to be told that their products are not on target.

Overpriced Labor -- About a decade too late, the Big Three is rapidly downsizing its' blue collar payroll and hiring new lower priced labor to build its products in the U.S. Due to severe pressure from the domestic automakers, the UAW has complied with their requests for a two-tier wage system to save jobs and protect their older workers. The next battleground will undoubtedly be retiree pension and medical benefits. According to some sources, in the U.S. we have 3 retired UAW members (drawing a pension and getting medical benefits) for every active UAW member. Long term, this current situation is untenable. The fate of white collar workers is even darker. Without the protection of any union, the ranks of white collar employees are quickly dwindling.

Long term, I think Chrysler will find a partner in Hyundai, Renault-Nissan or another major automaker to save what's left of the company. General Motors will likely emerge from this current situation as a much leaner and aggressive organization, with a strong emphasis on new products geared towards the American populace. Surprisingly, Ford seems the most reluctant to change and seems to be stubbornly sticking with its current product lineup and is intent to keeping Mercury alive despite poor sales and a lackluster product lineup.

Here's hoping that they all pull out of the current maelstrom and survive to fight another day.