In fact, Diana, exactly what spelled the death knell for the British car industry and the British motorcycle industry before that. Head in the sand, ignoring what the world was doing around them.
I hear what you say about major knock-on effects, bu there are cleverer ways of doing things. In normal times there is a large demand for new vehicles of all types, so if the Big Three were do drop out that vacuum would be filled by others. So restrict Toyota, Honda, BMW, Mercedes and the rest from importing ready-made vehicles and compel them to manufacture in the US. I know a measure of that legislation already exists, but it needs to be ramped up. Close the BIG Three factories on paper only, but in reality transfer them to proven efficient ownership including new labor contracts. There's still the problem of enormous pension liabilities and I can't see any fresh manufacturer rushing to take them on, but so long as the plants are still operating, albeit in a very different way and probably at greatly reduced capacity, it should be possible with state help to find an equitable way of funding these. After all, what would happen to all those current and future pensioners if their milch-cow were to go under totally?
I'm not saying any of this would be easy or could be done quickly, but unless there is a voluntary major rethink on the way these companies operate there will be a much harsher mandatory one a bit later. Current methods are simply untenable, and not even the giant US economy can or should support such appallingly run companies.
If propping up the companies in largely their present state and condition is primarily or exclusively to fund the pensions, then we should recognise that and instead of charging taxpayers for those pensions by the back door, be up-front about it and separate the accrued pension obligation from current operations. THEN these factories should become much more attractive to efficient competitors.
There is now no option to doing something draconian. If we do nothing the companies will collapse (very shortly) and there will be enormous uncontrolled human suffering. If we grasp the nettle right now then it will still be painful, but we will have a chance of directing it to do least damage.