The U.S. Car Bug Spreads to U.K

Oh dear! What a mess you've got us in Gordon, and George!

On Monday (8/12.08), Nissan stated it would reduce work at it Sunderland plant from 5 days a week to 4 days a week. Yesterday, managers closed the factory for the rest of the week, sending all works home until further notice. A blunt message for UK citizens to see the real state of Britain's worsening economy.

While 3500 staff sit at home, Nissan's pain is indicative of the wider issue. Sales for Nissan alone are down 40% in November. And another high profile job maker, Woolworths, failed to get a buyer for the bankrupt retailer, sending 850 stores across the UK into a closing down sale. Germany is having problems too. On Wednesday, Volkswagen also applied for government aid in the wake of plummeting sales.

Union leaders for car manufacture workers are calling for bank style liquidity for the companies. This is to allow Nissan and other car makers access to funds from the BANK OF ENGLAND to keep the companies afloat.

Apparently, America is still undecided on its bailout for car maker, despite a ruling earlier this month. Alabama Republican Senator Richard Shelby quoted on Channel Four news saying, "I think it is a travesty, of...the influence of management of GM, Ford and Chrysler. This is the installment of a huge bail out that will come later, but I will oppose this baring a real strong alternative.....I will not support this legislation."

The blame for this lies on two fronts; the governments for allowing the banks to be so reckless in giving loans to those who could afford them in the first place. And the car makers for keeping full steam ahead and failing to know when the market would be saturated. So what came be done?

In the UK, government could do a full scale bail out like the US has done with the banks; though sources say this offer is not on the cards. Tripping down a gear, treasury could allow BoE borrowing for some companies. Or, we put pressure on the banks to lend money. Finally, government could do nothing, forcing a "LEHMAN BROTHERS" style restructuring, putting companies out of business and costing thousands of jobs.

Britain has done a bail out before for car makers. Did it work? NO! In the seventies British Leyland applied for government aid. Within a decade they disappeared. Could we be putting off the inevitable?

Only time will tell, but the want for new cars will always be hanging in the air.