General Motors is running out of cash. Think about that. What was once the company that embodied American strength is running out of cash. Little wonder that Detroit is angling to get its own "rescue package" from Washington. We should do it — with serious strings attached.
Anyone who has lived in the Midwest can attest to the foundational nature of the auto industry to American manufacturing. It's not just the Big Three themselves, but the vast supply chain they have spawned, from steelmakers to precision machine tool companies to providers of all manner of parts. As we bail out a "financial services industry" that increasingly made little more than frauds and swindles, the auto industry, even heavily diminished from its former greatness, makes real products and is an essential prop of the middle class, particularly in the heartland. A hollowed-out economy can stand no more losses.
Yet the American industry is the author of many of its own problems. The decline of GM and its sisters began decades ago in an unholy alliance of complacency, greed and contempt for customers between management and labor leaders. Despite 20 years of plant closings and pledges of new days, the carmakers never really reformed. There's one exception: hundreds of thousands of union workers in the Big Three and parts makers lost their jobs — and communities their livelihood. Contrary to a persistent mythology, the decline since the early 1990s has been almost entirely the fault of management, not the United Auto Workers.
Which brings us to the second and third problems. Like any established, cartelized industry, the Big Three kept playing it "safe," building boring cars that fewer customers wanted and even rental car fleets began to spurn. It did go for the quick profits of SUVs, adding horrendous damage to the environment while stifling research and development that could have produced electric and hybrid vehicles. The latter was left to the Japanese to bring to market, even though GM for decades had the best R&D minds.
So why would we want to give tax dollars to companies that 1) Caused their own problems; 2) Kept building boring vehicles, and 3) Produce products that are among the prime causes of global warming, smog and sprawl?
Therein lie the conditions. If Detroit is to get a bailout, there must be a major commitment to building hybrids and electric vehicles. Not the baby steps that Ford and GM have so far announced. Major steps. It's only through leapfrogging technology that American automakers can hope to even retain their place amid Toyota, Honda and Nissan (which have plants in America, too, and aren't asking for a handout). This new commitment must have real accountability and a quick time to market. It would also be interesting to use the automakers as a demonstration project for universal healthcare…
We need American-based automakers because we actually do need manufacturing in this country. Imagine all the plants that were converted to make tanks and bombers during World War II. In the next big war, we can't count on China to make these things for us. But national security also means economic security for the blue-collar middle class: making products for the new century, not 1965.
Make no mistake: the era of the automobile as we knew it is drawing to an end, both from its horrific effect on the environment and the sheer cost of energy in the future. But we'll still need cars. And Americans will still want them. So use the bailout to force a 21st century conversion in Detroit. At the same time, we need more and more funding for passenger rail and transit. We'll need choices. Nineteen sixty-five is gone
Interesting idea. The question is, what kind of “commitment” would the government extract, even assuming that it is willing to insist on such conditions to begin with? We know from the last eight years (actually, long before that) just how effective “voluntary” conditions are. Give a company an inch of wiggle room and it takes a mile. The government would have to specify output ratios (since standard cars would also continue to be manufactured), R&D budget percentages and durations of investment, product specifications, and so forth; otherwise, the company takes the money and either does what it wants with it, or else creates some trivial program to satisfy the government and uses the bulk of the money as it wishes anyway; or else creates a program designed to fail and quickly calls the whole thing off, using the remainder of the money…well, you get the idea.
So basically, the question is, is the government willing to do this: and is it worth it to GM to accept such terms?
Another question is one of outsourcing and overseas flight. If GM takes the money and runs overseas to build factories there, spouting the usual mantra of “competitiveness”, that won’t do American manufacturing or workers much good.
I suspect that they will rush this through under Bush, so I have little hope of anything positive. But, maybe the Democrats, emboldened by the election results will grow a spine or at least some heels to dig in.
Just like election night – I’m cautiously optomistic but prepared to be disappointed.
Seems to me that the problems in the auto industry started when the “business and finance” types replaced the engineers as leaders of the companies. The emphasis shifted from making cars to making money.
There will have to be a fundamental shift in thinking for the US to once again have an auto industry – – hopefully, it will occur before all the skilled workers have become extinct or speak only Japanese.