Should Detroit shut down
Did the big three let us down
Who should lift them up
And here is a song to set the mood…
The topic I have taken on for my paper to, if the Haiku didn’t clue you in, is the collapse of the auto industry in Detroit in 2008. In order to get a better understanding of this large topic I actually had to take a look at a couple of sources to get the ball rolling.
First this video, an interview with Obama, was actually helpful.
The auto crisis of 2008 was the result of poor management and that is what makes it such an awesome topic for paper two and the white paper. The Big 3 US auto makers, GM, Ford and Chrysler had fallen seriously behind in terms of being competitive and responsible within their industry. They made “repeated strategic mistakes” according to Obama and this is absolutely true.
The auto industry is iconic of our country’s growth and the American dream. Ford himself is a legend, we all know the Model T. Does what happened in Detroit reflect a lack of ability to achieve the American dream these days.
So what happened to lead these auto makers to face bankruptcy and need a bailout from the US gov’t?
In my opinion, a great industry got lazy and tried to ride things out. It didn’t work obviously. The industry began to change, a lot of which our generation witnessed, to a more energy efficient and compact market. People wanted smaller and cheaper and these companies missed the boat on those change. Foreign nations, who had their sights set on smaller and better, were the go to choices for car buyers. Trucks had been a great product with a high profit margin, and these companies continued to produce those products, thinking only of their high returns, rather than what the outcome was going to be. Their mismanagement led to failure to adapt to changing times.The ethics behind the decision the managers made need to be evaluated. And also the bailout solution needs to be evaluated as well.
The deontological approaches make most sense to me in evaluating the decisions of these companies. What duties did they have and ultimately fail to uphold? What solutions make sense in the grand scheme of “do unto others?”
Issues stemmed from the companies decisions to offer large healthcare benefits that extended to retired employees. They had a duty to their employees to support them but the line had to be drawn somewhere. The companies didn’t have sustainable practices in place and put off changes. This violated duties to their employees and stakeholders. They risked their jobs and futures based on their poor business practices that bent the industry over backwards when oil prices rose, their cars were out of favor and they weren’t prepared to make changes.
What duty did these companies have to the industry? What about the environment? Their cars directly impact the environment through emissions and yet they continued to produce “gas guzzlers” even when interests shifted towards being green.
Also the solution has ethical questions. The gov’t misused TARP funding to help the companies. In this way it was like poor decisions were being rewarded. However the industry is so large, and so many jobs were going to be lost, that the gov’t may have had a duty to save them. Tax payers money is going to fund the mistakes of CEO’s and managers who made millions.
It may best best to focus on the ethics of the solution rather than the cause for my paper, maybe both.
The topic is great but I have a lot to explore to write a paper 2!
For more on the latest read the following…
- Big Three strong 5 years post bailout (clickondetroit.com)
- Former Detroit mayor braces for long sentence (miamiherald.com)