It was with some amusement that I read in the news this morning that Chrysler will pull out of Canada completely unless they receive government bailout money, among other concessions.  For a company already in a lot of trouble, this is a very aggressive and arrogant statement to make.  It gives the impression that they are doing Canadians a favour by continuing their presence here.

It is no secret that the entire auto industry is suffering.  Costs are up, and sales are at their lowest point in thirty years.  The big three’s stock has plummeted to nearly worthless levels.  These companies are in serious trouble, on both sides of the border.

Chrysler’s vice-chairman and President, Tom LaSorda, has stated that Chrysler’s Canadian operating costs are approximately $20.00 more per man-hour than their competitors, Toyota or Honda.  He wants relief from taxes as well as 2.7 billion dollars from the provincial and federals governments.  To turn this around, because their costs are so high, they want Joe Taxpayer to subsidize their company?

This is the same company that spent over a hundred thousand dollars three months ago to place an ad in the Wall Street Journal thanking the American public for “investing” in Chrysler.  Wasting money like this is just another shining example of how poorly run the car companies are.  If you are going to spend advertising money, why not spend it to sell cars, not on stupid ads that do not even promote your product?

My personal opinion is to let the car companies fend for themselves.  No government loans, no bailout money.  No wasting taxpayer dollars.  It goes back to the simple law of supply and demand.  People need cars.  If one of the big three die, there will be more demand for the remaining two.  When the industry rebounds, these two companies will be stronger.  If they all die, new companies will spring up.  Chances are these new companies will not have nut fitters making $40.00 an hour.

Now – while I’m in such a generous mood, some simple advice for the “poor” car companies.  Profit is made by manufacturing products at a price that people want to purchase them for and then producing them for less than you are selling them for.  Mark Cuban said it best, “Instead of determining the right cost structure for your company by working backwards from the salaries of hourly employees and how they compare to foreign owned competitors, how about doing what every successful business does  ? Figure out what cars consumers want, and how much they need to sell for.   Once you can establish the right selling point that will actually encourage people to buy cars, THEN work backwards to the cost structure you need in order to sell cars at that price point.”