Wednesday, January 7, 2009

The Big Three Thought Too Big

In his not-to-be-missed e-newsletter, Rep. John Campbell (R-Newport Beach), who worked in the car business before beginning his political career, says the Big Three's biggest problem is not poor quality compared to foreign manufacturers, the failure to build attractive products, building too many big cars, or even the UAW contracts (expensive though they are because of retirement benefits).
So, what is the problem with the Big 3? They have made some bad management decisions of course. But they have been chasing increased market share for decades as their market share has steadily declined. They have never been able to accept the idea that they could be smaller but more profitable companies and instead have always spent like they were bigger than they actually were. That is an oversimplification of course. But if you spend $100 thinking you can sell $120, but only sell $80 and you keep doing it because you have access to the cash flow and that $120 is right around the corner, you will eventually run out of money. And they have.
His advice? Go buy an American car or truck!

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