Charles Wilson rightly said "What is good for GM is good for the United States". Back then he was president of General Motors. But now, in 2008 I would like to modify the statement and say "What is good for GM, Chrysler & Ford is not only good for the United States but also for the rest of the world". Some may oppose my statement but yes this is the fact of true life. Before proving my point I would like to give a very brief detail of these companies.

General Motors: Founded in 1908, operates in more than 55 different countries and employs about 2, 66,000 people.

Chrysler: Has been producing automobiles since 1925, operates around in little more than 55 different countries and employs about 60,000 people.

Ford: Founded in 1903 operates in more than 50 different countries and employs about 2, 40,000 people.

Now we all know that these global automobile giants are in their worst time ever. Global economic crisis have impacted them in a great way. Chrysler even announced to shut it factories for one full month some days back. Ford and General Motors may follow the trend in coming days.

Reason behind shutting down the plant and factories by these automobile giants is increase in the number of unsold cars and trucks in the show room.

Why the trucks and cars of these global automotive giants are not getting sold???

These automobile majors are not having enough working capital and their cash flows are negative. And they have made huge losses currently. Now the question which springs up is that why this is happening to them? The reason is liquidity problem in the United States. Again one question come in that is how the liquidity problem has raised its head??Liquidity problem caused due to tumbling financial system of the great economy (The U.S.) and because of that spending power in the US is reduced, that means there is credit crunch. And as a matter of fact spending has decreased over the period of time and that lead to fall in demand which in turn left cars and trucks of these global automobile giants left unsold.

GM, Ford and Chrysler have already presented their bailout proposals worth $34 billion to stave off a possible bankruptcy.  And reacting to this recently U.S has passed the package of $ 14 billion for the automobile companies and thus helped those going under water temporarily. 

Now some people have a view that booms are period of risk taking and when time changes some organizations fail and they should be allowed to die. And this must be allowed despite the pain.

If we calculate, the Big three nearly employs 5, 00,000 people world wide (after considering layoffs recently), the livelihoods of some 10 million people in the US alone may be directly or indirectly linked to the auto industry.

As I mentioned these countries are not having operation in only one country but in many countries and YES THEY DO EMPLOY people in that countries too. The number of people which they together employ runs into MILLIONS. And we should note the matter of the fact that these employees might have one or two individuals dependent on them. So the NUMBER OF EFFECTED PEOPLE WILL PROBABLY RUN DOWN TO BILLIONS hampering the economy of the nations which they are operating into.

One may say that the subsidiary of these US based automobile company are doing well and are in better shape. For example we can see that Ford and GM here in India are really doing well but fact is a collapse in the US cannot save the subsidiaries of the automotive giants in other countries. 

These automobile giants not only employ people directly but also indirectly, thanks to the outsourcing of information technology related work and offshore production facility to cut down the costs of the company. So people in the related outsourced IT industry and anti ancillary unit will also get affected.

Impact on India: In 2007, India exported auto components worth $1.2 billion. Despite this small proportion of export to the US, if there is fall of any of the automotive giant in US, it will lead to sharp fall globally and that will dent India's economy considerably.

Automobile sector touch almost every sector of the economy and if GM, Chrysler and Ford collapse then that will dampen US economy to a great extent. And it will have its affect globally thanks to the GLOBALIZATION. (Every coin has two sides). 

Thus major companies like General Motors, Chrysler and Ford should be bailed out, but with adequate pressure to restructure. And, if they are allowed to go down under the water, they will take many with them just as TITANIC did. And the gravity created by them will be so huge that it will have its impact globally. So people who think that these companies should not be bailed out, I have just one question for them.... WANNA GO FOR A RIDE.....UNDER WATER????