Bail Out or Bust - BodyShop Business

Bail Out or Bust

For several months now, I’ve been asked to comment on the government assistance package to the Detroit Three automakers. I’ve resisted so far for several reasons. First, I believe it’s important for journalists to remain neutral. Our goal at BodyShop Business is to be the collision repair industry information source, and to that end I’ve felt that this subject was outside of that sphere. Second, I believe that, right or wrong, the greater the separation of politics and business there is, the more quickly an industry will grow and improve.  

Having said all that, I realized recently while talking with an industry insider that, whether I liked it or not, this Detroit Three issue was going to definitely affect collision repairers and that I better weigh in on it – especially considering that I spent 30 years on the inside of one of these aforementioned giants.

On the surface, it should be a simple discussion: Should we bail out private industry with taxpayer monies because it employs so many taxpayers? The answer to that question usually is: We didn’t do that for the other 50 or so major industries that have left our shores in the past three decades, so why should we do it for the automotive sector? Unfortunately, the situation isn’t that simple.

We’re not just talking about three companies and their respective employees. When you look deeper into who might be affected, it reveals a much broader scope of the American landscape. Consider that the majority of parts that make up an automobile today are actually supplied by other suppliers. Those suppliers have employees and benefits, too. They make up lots of smaller communities and towns all around the U.S. Those communities rely on those suppliers for revenues to keep going. Since the automotive industry is so big here, most of those first-tier suppliers have smaller component suppliers, also, and those suppliers have workers, too. Lots of people are involved, even if they don’t work directly for one of the Detroit Three. If these people don’t work, they don’t drive cars and thus don’t get in collisions that create a need for our industry.

Just for argument’s sake, let’s say that the above information is accurate but still not compelling enough to prove that the Detroit Three deserve government assistance. Then consider this: Our automotive supply chain has changed over the years. It used to be that if you made parts for one manufacturer, you didn’t make them for the other. Not so in 2009. Due to global competition and costs, everybody makes parts for everybody. Parts suppliers are so dependent on volume today that losing one major automotive manufacturer could cause the collapse of the overall supplier base. So it’s not just about the Detroit Three but all manufacturers producing cars in the U.S. If component suppliers go away, the number of people affected gets a lot bigger.

What does all this do to the supply of replacement parts that we rely on every day to repair vehicles? Without an adequate supply of parts to build vehicles, the supply of repair parts is directly affected. In this scenario, if you can actually find the parts, what will they cost? If you want to see this live, visit Cuba and see how its parts supply chain operates.

Automotive manufacturing is a large part of the U.S.’s industrial footprint. Whoever the players are in it, we need it to stay here on our shores. Competition is a good thing and forces the players in the space to get better at what they do. The industry needs to be held to task on getting competitive. The help from our government to allow that to happen is critical to our future. We should hold Detroit’s feet to the fire and make them give us a plan and force them to adhere to it. We’ll all be better off in the long run.

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