Sunday, May 07, 2006

The futility of government handouts

This story in the Virginian-Pilot was in the local paper about Ford closing down the Norfolk assembly plant in 2008. Of course we have the obligatory actions of the Governor of Virginia jetting up to Dearborn to plead and bribe Ford motor executives to maintain their excess capacity in their state, much like Jennifer Granholm is attempting to have the big three keep their inefficient and unprofitable structure in Michigan.

These governors don't seem to realize that this is only going to get worse. A lot of locals here are upset about it. I tell them they should be lucky that their entire economy isn't dependent on the Big Three like Michigan. Ford needs to shrink considerably. They all have capacity well beyond their market share. For years, the big three thought they could sell their way back into prosperity. They haven't been able to address market needs and perceived quality issues, while firms like Honda, Toyota, and Hyundai keep eating away market share while having a strong financial structure.
In addition to this, there comes a time that people must accept that the U.S. economy is transforming itself from a primarily industrial base to a primarily service/knowledge base. This is as painful as the changes that indsutrialization brough in the 19th and early 20th centuries, and as ineveitable. The state should not be trying to keep antiquated plants and industries on life support with taxpayer monies that could have been invested better in private hands.

No comments: