An Industry in Crisis: The Importance of a Strong Automotive Industry

Abstract

The automotive industry has been a staple of the U.S. economy since the invention of the automobile over 100 years ago. With the financial crisis that has occurred over the last year consumer confidence has been very low and quite volatile affecting all consumer-based industries. With the crisis the auto industry has been hit hard due to people having less money to buy new cars resulting in huge drops in production and the loss of hundreds of thousands of jobs in the auto business alone. A highly controversial decision to bailout financial institutions as well as provide government incentives to the people of the United States included support for the Big Three auto companies, Ford, GM, and Chrysler. GM and Chrysler received a much-needed influx of cash in order to keep their operations going and both subsequently filed for bankruptcy protection. In July and August of 2009 the Car Allowance Rebate System, gave consumers a cash incentive to turn in old cars in return for new models, which resulted in stimulus in sales· as well as the positive effect of these new cars getting much better mileage and producing less carbon emissions in comparisons to those taken off the street. With the auto industry supplying jobs to .so many Americans, there is little doubt as to the importance of keeping them running strong. The debate is over whether it is the government's responsibility to create ways for this to 'occur and fight against the free market society that American capitalism is based on. It is the people who are responsible for paying the price of the government intervention that occurs, somewhere in the future when the debts that are incurred must be repaid. The question .that arises, is whether or not the government is making the right decisions for the future of America, by making decisions now that future generations will have to pay for. There is little doubt that the automotive business is a key part to a confident and strong economy and it is the fact that so many stand to gain so much by the survival of these companies that justifies the decision to· end them support. The jobs that are created by this industry and the wealth that it creates for America is important for there to be a strong and lasting economy down the road as the country moves forward into the future.