Andrew Taylor

Well written editorials from a UH student

No more bailouts; let market take control

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General Motors faced tough decisions on how to cut back and comprise with government-approved bankruptcy plans earlier this year. Included in those plans was the decision to pull out of a partnership with Toyota at one of GM’s largest assembly factories.

New United Motor Manufacturing Inc., the largest auto-making factory in California, is scheduled to close at the end of March 2010.

NUMMI, located in Fremont, Calif., employs approximately 4,700 workers. Its closure will be another devastating effect of the recession. This will surely cause unemployment to grow in the Golden State, but it is not enough to call for governmental aid.

According to autoblog.com, more than $24.9 billion has already been given to GM, GMAC, Chrysler and Chrysler Financial. Any more bailouts would be a bad investment. The appropriate measure would be to let the market solve this troubled situation.

GM owned the NUMMI plant–formerly known as GM Fremont–prior to its partnership with Toyota, and this is not the first time the plant has been closed. GM closed it down in 1982 as well. GM Fremont’s closure then too resulted in desperation amongst its former employees.

The situation was powerful enough to shake both the employees’ and auto unions.

When the plant reopened as a joint partnership between GM and Toyota in 1984, skilled autoworkers were so desperate that, according to truthout.com, they “agreed to a union contract outside the national pattern before the lines even started moving.”

If history repeats itself, NUMMI will not perish completely, but will reopen with a different product and purpose. Automakers will have the opportunity to acquire this monstrous facility and the skilled workers who drive it at a bargain price.

Someone will capitalize on this opportunity. It is likely that the plant will find a new purpose and someone to guide it as well.

Even if there are no auto manufacturers in a position to acquire NUMMI, the property will retain great value.

The thought of a governmental bailout or the practice of eminent domain should be a last resort. If the government takes this property and turns it into a railroad, freeway or other public utility, NUMMI’s potential will have been squandered.

This is a problem that markets will likely solve with time.

Andrew Taylor is an economics junior and may be reached at opinion@thedailycougar.com

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Written by aktaylor

October 2, 2009 at 11:18 pm

Posted in Uncategorized

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