Detroit's Big Three Obstacles

Factually, all industries have been faced with these difficulties in all aspects. It is not just about auto industry or just about the USA. It is about the whole world. The determining factors for being survived today are competition and take care of customer in the best way. However, most companies still insist on their old approaches to gain profits without paying attention to the marketplace demanding.

Regarding to the Detroit’s Big Tree, it seems they are experiencing the worst situation that they have ever had: Dealing with bunch of workers who were working for a number of years then retired and have been waiting for their pension expenses which is logical from their point of view to gain. However, a huge competition makes their employers unable to pay them. In order to solve this issue, I am thinking to three possible ways:

1)    Applying more robots and machines instead of using human beings in production process would be helpful. Although it will have expense to replace machines instead of human workers, it has two advantages: first, the company can use the most up to dated machineries by leasing them and put the relevant expense on their off balance sheet documents. So, the revenue will be shown in upper level than before and the stock price will go up and company can gain more investors for covering its costs. Second, the company will not have to pay for healthcare expenses anymore. The only cost they need to pay is the lease cost which is completely incomparable to the gained profits from.

2)    Merging is another solution for this issue. In this way these companies will be come together and create a new big and powerful entity which can have the control over the national market as well as international markets.

3)    Producing new and low price generation of autos which do not need to use gas as their basic source of energy will encourage customers to buy domestic products in reasonable price with regards to the gas charge.       

Besides, there are two policies which can be administered by these firms:

1)    Outsourcing is a great way to compete with international entities. In this way, the companies can assemble their products outside the US in target countries with very low expenditures and then sell those autos to them. Therefore, with regards to comparative advantages, these companies would hit two birds with one stone: first, they are not paying healthcare expenses for foreign workers. Second, they find a ready market for their products with the lowest amount of marketing expenses.

2)    Using governmental healthcare program instead of special healthcare program inside the company can be useful if the federal laws allow employer and support them to do it.

Paying attention to these perspectives and putting them in to the practice, improving in the US auto industry would not be out of hand.