Stop Production

Vehicle sales have steadily declined for the Big Three and the "transplant" automakers. The state of our economy has most people worried if they are going to have a job in the coming weeks, add to that the pressures of having a "happy" Christmas (another topic) and there are not too many folks thinking about buying or leasing a car from any auto maker. The bailout will not cure this.

The Big Three are pleading their case for funds to sustain operations. I wonder what shutting down all production in all of their manufacturing facilities would save? This on the surface sounds like a naive question, but let's think about this one for a bit.

Have you ever looked at the size of a Big Three dealerships lot? It is typically two, if not three to four times the size the lot of any other automakers lot. Not to mention the number of vehicles each of the Big Three have sitting somewhere on one of their plant yards or some other remote location in the surrounding town that they have a facility. How many days inventory due they have on hand would be an interesting question. The days inventory should be adjusted for the downturn in sales before anyone should answer that question.

The manufacturing plants shutting down soon for the holidays will bring some over capacity relief, but they really need to think about squeezing back on production all together.

Why produce more of what no one is buying? Save the money, invest in new technologies that will help this nation move away from its dependence on oil.

Now, I probably have millions of people up in arms about stopping production. I realize that this will wreak havoc across the supply chain. Vendors across the nation would suffer, but I ask you this, "Vendors, do you really want the Big Three to continue building product that no one is buying just so you can continue selling them parts?" Or to the carriers, "Just so you can move parts and vehicles around?"

It is not pretty, but it is reality. We are in a situation where there is too much supply for the demand, and unfortunately it is only going to get worse before it improves.

Please read my previous post - Automotive Bailout.

~the pulse beats on