Despite what many of the articles on this site may lead you to believe, I do have a heart.  Furthermore I do feel for the countless men and women who will be going into 2009 without a job or risk losing their jobs because of the current economy.  I also understand what bankruptcy would mean for the big 3 automakers, maybe not total anihilation of jobs but enough to magnify the current unemployment rate in the US.  But this is not a reason to start bailing out the big 3 and ignoring the real problem.

No amount of bailout money will help the domestic auto manufacturers, specifically I’m looking at GM, but all suffer the same problems.  Only going back as far as 2007 sales figures we already start seeing a problem not fixed by money alone.  There are serious underlying issues within management, union affiliation, and a handful of other issues that cause the domestic car makers to hemmorage money.  Two months of operating money from the tax payers will not fix these issues.

Based on an article written in November 2007 by the Detroit News, Toyota posted a profit of more than $14.9 billion profit.  Their sales figures for 2007 were projected at this time to be around 8.93 million vehicles sold world wide.

The automaker raised its annual vehicle sales forecast to 8.93 million worldwide, from 8.89 million projected in May.

Another similar article reported on GM’s standing during 2007, which was written in February of 2008 by the International Herald Tribune.  The GM article was written with a radically different view of the automakers sales figures, stating that GM lost $38.7 billion in 2007.  The same article goes on to identify the number of vehicle sales for GM world wide, which was 9.4 million.

Sales grew 3 percent in 2007, to almost 9.4 million, barely enough to retain its title as the world’s largest automaker over its surging Japanese rival Toyota.

So here we have two articles discussing domestic versus foreign auto manufacturers sales figures.  Both companies sell nearly the identical number of vehicles, even GM selling slightly more, yet HUGE differences in their profit margins.  GM wasn’t even hoping to make it into the black come 4th quarter of 07 and 08 hasn’t been any friendlier to the books.

Why The Big 3 Should Not Receive Bailout Money

To summarize, two competing companies, dealing with comparable products, selling comparable amounts of units, post a difference in earnings for the year of $53.6 billion.  Toyota being the company who remained in the black, profiting $14.9 billion, and finally taking over the leader in car sales worldwide in 08.  However, as tax payers we are expected to believe that $50 billion will solve their woes, that even being spread out over the big 3 and not JUST GM.

Also, lets not forget that in September we issued a $25 billion loan to the Big 3, three months later I don’t think you can put a fire out by throwing more wood on top.