MITCH ALBOM
If I had the Floor at the Auto Rescue Talks
BY MITCH ALBOM • FREE PRESS COLUMNIST • November 23, 2008
OK. It's a fantasy. But if I had five minutes in front of Congress last week, here's what I would've said:
Good morning. First of all, before you ask, I flew commercial. Northwest Airlines. Had a bag of peanuts for breakfast. Of course, that's Northwest, which just merged with Delta, a merger you, our government, approved -- and one which, inevitably, will lead to big bonuses for their executives and higher costs for us. You seem to be OK with that kind of business.
Which makes me wonder why you're so against our kind of business? The kind we do in Detroit. The kind that gets your fingernails dirty. The kind where people use hammers and drills, not keystrokes. The kind where you get paid for making something, not moving money around a board and skimming a percentage.
You've already given hundreds of billions to banking and finance companies -- and hardly demanded anything. Yet you balk at the very idea of giving $25 billion to the Detroit Three. Heck, you shoveled that exact amount to Citigroup -- $25 billion -- just weeks ago, and that place is about to crumble anyhow.
Does the word "hypocrisy" ring a bell?
Protecting the home turf?
Sen. Shelby. Yes. You. From Alabama. You've been awfully vocal. You called the Detroit Three's leaders "failures." You said loans to them would be "wasted money." You said they should go bankrupt and "let the market work."
Why weren't you equally vocal when your state handed out hundreds of millions in tax breaks to Mercedes-Benz, Hyundai, Honda and others to open plants there? Why not "let the market work"? Or is it better for Alabama if the Detroit Three fold so that the foreign companies -- in your state -- can produce more?
Way to think of the nation first, senator.
And you, Sen. Kyl of Arizona. You told reporters: "There's no reason to throw money at a problem that's not going to get solved."
That's funny, coming from such an avid supporter of the Iraq war. You've been gung ho on that for years. So how could you just sit there when, according to the New York Times, an Iraqi former chief investigator told Congress that $13 billion in U.S. reconstruction funds "had been lost to fraud, embezzlement, theft and waste" by the Iraqi government?
That's 13 billion, senator. More than half of what the auto industry is asking for. Thirteen billion? Gone? Wasted?
Where was your "throwing money at a problem that's not going to get solved" speech then?
Watching over the bankers?
And the rest of you lawmakers. The ones who insist the auto companies show you a plan before you help them. You've already handed over $150 billion of our tax money to AIG. How come you never demanded a plan from it? How come when AIG blew through its first $85 billion, you quickly gave it more? The car companies may be losing money, but they can explain it: They're paying workers too much and selling cars for too little.
AIG lost hundred of billions in credit default swaps -- which no one can explain and which make nothing, produce nothing, employ no one and are essentially bets on failure.
And you don't demand a paragraph from it?
Look. Nobody is saying the auto business is healthy. Its unions need to adjust more. Its models and dealerships need to shrink. Its top executives have to downsize their own importance.
But this is a business that has been around for more than a century. And some of its problems are because of that, because people get used to certain wages, manufacturers get used to certain business models. It's easy to point to foreign carmakers with tax breaks, no union costs and a cleaner slate -- not to mention help from their home countries -- and say "be more like them."
But if you let us die, you let our national spine collapse. America can't be a country of lawyers and financial analysts. We have to manufacture. We need that infrastructure. We need those jobs. We need that security. Have you forgotten who built equipment during the world wars?
Besides, let's be honest. When it comes to blowing budgets, being grossly inefficient and wallowing in debt, who's better than Congress?
So who are you to lecture anyone on how to run a business?
Ask fair questions. Demand accountability. But knock it off with the holier than thou crap, OK? You got us into this mess with greed, a bad Fed policy and too little regulation. Don't kick our tires to make yourselves look better.
Contact MITCH ALBOM at 313-223-4581 or malbom@freepress.com. Catch "The Mitch Albom Show" 5-7 p.m. weekdays on WJR-AM (760).
Click here if you would like to comment on Mitch Albom's columns.
Sunday, November 30
Wednesday, November 19
How to Bail Out General Motors - Robert Samuelson
How to Bail Out General Motors
Imposing tough conditions would improve the odds of success and discourage many other firms from seeking costly government handouts.
Robert J. Samuelson
NEWSWEEK
From the magazine issue dated Nov 24, 2008
So it's come to this: General Motors, once the world's mightiest industrial enterprise, is now flirting with bankruptcy. Ford and Chrysler may not be far behind. Car and truck sales have collapsed. GM is rapidly exhausting its cash reserves and may soon be unable to pay its bills. Here's the dilemma: GM and other U.S. automakers ought to be rescued to minimize damage to the economy, but the rescue should require tough conditions that neither the Democratic Congress nor the incoming Obama administration seems willing to support.
In a booming economy, a GM bankruptcy might be tolerable and useful. It would remind everyone of the social costs of mediocre management and overpriced unionized labor. But far from booming, the economy is declining at an apparently accelerating rate. Confidence among small businesses has dropped to a 28-year low, according to a survey released last week by the National Federation of Independent Business.
No one knows what further havoc a GM bankruptcy might inflict. A study by the Center for Automotive Research (CAR) estimates that 2.5 million jobs would be lost in the first year. The logic: if any of the "Big Three" went bankrupt, many suppliers would also fail; because car companies share suppliers, all U.S.-based manufacturers would suffer crippling parts shortages. American production would virtually stop until new supplier arrangements emerged. "It takes 6,000 to 14,000 parts to make a vehicle," says Sean McAlinden, CAR's chief economist. "If you don't have one, you can't make it."
This may be too pessimistic. In a Chapter 11 bankruptcy, GM would "reorganize." It would suspend many existing debt payments and continue normal operations. Perhaps. The snag is that even in "reorganization," GM would require new loans and these might not be available. "Historically, when companies go bankrupt, there's 'debtor in possession' financing—investors lend you money, but they get repaid first. That market has evaporated because of the credit crunch," says auto analyst Rod Lache of Deutsche Bank. No loans, no production. Another possible pitfall: worried about warranties and service, customers might shun a bankrupt GM's vehicles.
Why run these risks when the 6.5 percent unemployment rate seems headed toward 8 percent and almost a quarter of the 10 million jobless have been out of work for six months or longer? Just to satisfy a purist "free market" ideal? It doesn't make sense. But neither does it make sense simply to heave taxpayers' money at automakers. The objective is not to rescue the companies or workers; it is to shore up the economy and improve the U.S. industry's competitiveness. A bailout won't succeed unless other things also happen.
First, auto companies' existing creditors need to write down their debts. Even with federal aid, companies will shrink. Economist McAlinden estimates that the country has surplus assembly capacity of about 4 million vehicles, much owned by the Big Three and destined to be shut. GM will need a $25 billion government loan to get through the recession and cover closing costs, says Lache. But GM already has $48 billion of debt. Unless the old debt is sharply written down, GM would be overburdened and its rendezvous with bankruptcy would merely be delayed. Already, shareholders are essentially wiped out.
Second, labor costs need to be cut. By Lache's estimates, GM's hourly compensation—wage plus fringe benefits—totaled $71 in 2007 compared with Toyota's $47. Health benefits for retirees (many in their 50s, having retired after 30 years) are expensive. These costs contributed to GM's massive cash drain, $31 billion since 2005. But the United Auto Workers opposes making concessions. Just the opposite. Government aid, says UAW president Ron Gettelfinger, is needed "so that auto companies can meet their health-care obligations to more than 780,000 retirees and dependents." The bailout should be more than union welfare.
Finally, automakers need a consistent energy policy. Congress demands that companies produce more fuel-efficient vehicles (35 miles per gallon by 2020, up from 25mpg now). But politicians also want low gas prices. These goals are contradictory. To encourage consumers to buy fuel-efficient vehicles, Congress should mandate higher gas prices. Gasoline taxes could be raised gradually (say a penny a month for four years, possibly offset by other tax cuts). Wild swings between low and high fuel prices have crippled the U.S. industry by erratically shifting buyer preferences—to and from SUVs.
In bankruptcy, a judge can modify a firm's labor contracts and debts. GM needs the benefits of bankruptcy without the uncertainties, but the political process—so far—resists that desirable bargain. The conditions that Democrats seem to be discussing are mostly rhetorical gestures against high executive compensation (already limited) and in favor of more fuel efficiency (already legislated). The lame-duck Bush administration hasn't helped the conversation. It rejects additional assistance without saying why; if aid is forthcoming, it doesn't suggest what might be useful conditions.
We are now seeing the first political side effects of the open-ended $700 billion rescue of financial institutions. With so much money going to so many recipients, boundaries and rationales need to be established. When is public intervention justified? Who deserves support and why? Otherwise, political firepower will increasingly rule. The reason for imposing tough conditions on the auto industry is not only to improve the odds of success, but also—by the sacrifices required—to make the process sufficiently unpleasant so that countless other companies and unions won't demand similar handouts. In 1979, when it rescued Chrysler from bankruptcy, the Carter administration insisted on concessions from management, investors and labor. We should do as much or more.
URL: http://www.newsweek.com/id/169162
© 2008
Imposing tough conditions would improve the odds of success and discourage many other firms from seeking costly government handouts.
Robert J. Samuelson
NEWSWEEK
From the magazine issue dated Nov 24, 2008
So it's come to this: General Motors, once the world's mightiest industrial enterprise, is now flirting with bankruptcy. Ford and Chrysler may not be far behind. Car and truck sales have collapsed. GM is rapidly exhausting its cash reserves and may soon be unable to pay its bills. Here's the dilemma: GM and other U.S. automakers ought to be rescued to minimize damage to the economy, but the rescue should require tough conditions that neither the Democratic Congress nor the incoming Obama administration seems willing to support.
In a booming economy, a GM bankruptcy might be tolerable and useful. It would remind everyone of the social costs of mediocre management and overpriced unionized labor. But far from booming, the economy is declining at an apparently accelerating rate. Confidence among small businesses has dropped to a 28-year low, according to a survey released last week by the National Federation of Independent Business.
No one knows what further havoc a GM bankruptcy might inflict. A study by the Center for Automotive Research (CAR) estimates that 2.5 million jobs would be lost in the first year. The logic: if any of the "Big Three" went bankrupt, many suppliers would also fail; because car companies share suppliers, all U.S.-based manufacturers would suffer crippling parts shortages. American production would virtually stop until new supplier arrangements emerged. "It takes 6,000 to 14,000 parts to make a vehicle," says Sean McAlinden, CAR's chief economist. "If you don't have one, you can't make it."
This may be too pessimistic. In a Chapter 11 bankruptcy, GM would "reorganize." It would suspend many existing debt payments and continue normal operations. Perhaps. The snag is that even in "reorganization," GM would require new loans and these might not be available. "Historically, when companies go bankrupt, there's 'debtor in possession' financing—investors lend you money, but they get repaid first. That market has evaporated because of the credit crunch," says auto analyst Rod Lache of Deutsche Bank. No loans, no production. Another possible pitfall: worried about warranties and service, customers might shun a bankrupt GM's vehicles.
Why run these risks when the 6.5 percent unemployment rate seems headed toward 8 percent and almost a quarter of the 10 million jobless have been out of work for six months or longer? Just to satisfy a purist "free market" ideal? It doesn't make sense. But neither does it make sense simply to heave taxpayers' money at automakers. The objective is not to rescue the companies or workers; it is to shore up the economy and improve the U.S. industry's competitiveness. A bailout won't succeed unless other things also happen.
First, auto companies' existing creditors need to write down their debts. Even with federal aid, companies will shrink. Economist McAlinden estimates that the country has surplus assembly capacity of about 4 million vehicles, much owned by the Big Three and destined to be shut. GM will need a $25 billion government loan to get through the recession and cover closing costs, says Lache. But GM already has $48 billion of debt. Unless the old debt is sharply written down, GM would be overburdened and its rendezvous with bankruptcy would merely be delayed. Already, shareholders are essentially wiped out.
Second, labor costs need to be cut. By Lache's estimates, GM's hourly compensation—wage plus fringe benefits—totaled $71 in 2007 compared with Toyota's $47. Health benefits for retirees (many in their 50s, having retired after 30 years) are expensive. These costs contributed to GM's massive cash drain, $31 billion since 2005. But the United Auto Workers opposes making concessions. Just the opposite. Government aid, says UAW president Ron Gettelfinger, is needed "so that auto companies can meet their health-care obligations to more than 780,000 retirees and dependents." The bailout should be more than union welfare.
Finally, automakers need a consistent energy policy. Congress demands that companies produce more fuel-efficient vehicles (35 miles per gallon by 2020, up from 25mpg now). But politicians also want low gas prices. These goals are contradictory. To encourage consumers to buy fuel-efficient vehicles, Congress should mandate higher gas prices. Gasoline taxes could be raised gradually (say a penny a month for four years, possibly offset by other tax cuts). Wild swings between low and high fuel prices have crippled the U.S. industry by erratically shifting buyer preferences—to and from SUVs.
In bankruptcy, a judge can modify a firm's labor contracts and debts. GM needs the benefits of bankruptcy without the uncertainties, but the political process—so far—resists that desirable bargain. The conditions that Democrats seem to be discussing are mostly rhetorical gestures against high executive compensation (already limited) and in favor of more fuel efficiency (already legislated). The lame-duck Bush administration hasn't helped the conversation. It rejects additional assistance without saying why; if aid is forthcoming, it doesn't suggest what might be useful conditions.
We are now seeing the first political side effects of the open-ended $700 billion rescue of financial institutions. With so much money going to so many recipients, boundaries and rationales need to be established. When is public intervention justified? Who deserves support and why? Otherwise, political firepower will increasingly rule. The reason for imposing tough conditions on the auto industry is not only to improve the odds of success, but also—by the sacrifices required—to make the process sufficiently unpleasant so that countless other companies and unions won't demand similar handouts. In 1979, when it rescued Chrysler from bankruptcy, the Carter administration insisted on concessions from management, investors and labor. We should do as much or more.
URL: http://www.newsweek.com/id/169162
© 2008
Tuesday, November 18
Interview with Alan Mullally, Ford CEO, 11/18/2008
Interview with Alan Mullally, Ford Motor CEO, the morning before testifying before Congress on Loan to Automakers 11/18/2008.
http://cosmos.bcst.yahoo.com/up/player/popup/index.php?cl=10725406
http://cosmos.bcst.yahoo.com/up/player/popup/index.php?cl=10725406
Monday, November 17
10 Reasons to Support U.S. Auto Industry Loan
Emil Bandriwsky
November 20, 2008
General Motors, Ford, and Chrysler have made plenty of mistakes, but there are at least 10 good reasons why the American taxpayers should extend an emergency loan to our Big 3 Automakers. This is not about saving a few companies, and a few jobs; it is about saving an entire American industry, making an investment in America’s common future, and preventing a slide into a full economic depression.
1. The American auto industry has been practicing self help on the way toward regaining long term sustainability. General Motors was in the midst of historic cost cutting when events of this year overwhelmed our entire economy. Since 2005, GM has reduced structural costs in North America by over $9 billion. The latest UAW contract, signed in the fall of 2007, should show savings of about $6 billion a year starting in 2010, by reducing legacy costs associated with pensions and retiree health care. Between 2000 and mid-2008 the salaried workforce was reduced from 44,000 to 32,000, and the hourly workforce from 132,000 to 64,000. Other savings methods were implemented including reducing salaried employment costs by 30%, eliminating raises and discretionary bonuses for executives and suspending 401k match for salaried employees. All of this was done while GM and Ford have virtually eliminated the perceived quality gap with Japanese carmakers.
2. The current crisis is not primarily the fault of America’s Big 3. When gasoline prices doubled earlier this year the sales of trucks and SUVs plummeted. American automakers currently rely on this segment because spiraling legacy costs have virtually squeezed any profit out of the small car segment. America’s carmakers will be cost competitive in the small car segment by 2010, when major benefits from the last GM-UAW contract are realized. About 60% of new cars purchased in the US require financing, and GM’s sales in October 2008 were down over 45% compared to a year earlier. In this instance, the American automakers are victims of the financial meltdown of 2008 and the overnight disappearance of banks willing and able to lend money to car buyers.
3. The American auto industry is a national asset, and we all share some ownership. By now we know that America’s Big 3 are not “too big to fail.” They are also too important for us to allow them to fail. Almost 4% of US Gross Domestic product is auto-related and represents 10% of US industrial production by value. One out of every 10 US jobs is auto-related, with auto workers receiving $335 billion annually in compensation. The auto industry purchased $156 billion in US parts, materials and supplies, supporting jobs in all 50 states. The companies provide benefits for 775,000 retirees and surviving spouses, and provide health care benefits for 2 million Americans.
4. It is a good business decision, because it will definitely be cheaper to loan $50 billion to the American car makers, than to suffer with the monumental cost of bankruptcy, including the loss of up to 3 million jobs, and the Federal Government assuming hundreds of billions of dollars in pension and health care liabilities. Bankruptcy by any of the American auto companies would pull the entire industry down, because liquidating the assets of a bankrupt automaker would drive the survivor’s prices, along with suppliers, below the point of maintaining solvency. A bankruptcy by GM or Ford will almost certainly push the US economy into a full depression that will take years to recover from.
5. GM, Ford and Chrysler are the only American car manufacturers. A Honda or Toyota plant in Alabama or Georgia is not an American company. The Japanese and Korean transplants that enjoy millions of dollars in tax breaks, even while importing most of their assembly components, do not “create” any jobs. They merely shift employment from old industrial northern states to non-unionized Southern states. Taking into account the loss of jobs at suppliers, and support businesses, the “creation” of one job at a Hyundai plant in Mississippi, probably eliminates three jobs in Michigan or Ohio. And of course the profits are siphoned out of America.
6. Automobile manufacturing is a vital component of our national defense. Only a few generations ago America was shocked into World War 2 by the Japanese bombing of Pearl Harbor. American automakers responded by turning their industrial might toward the defense of our nation. During World War 2 General Motors was a major supplier of US military hardware, supplies and equipment. Putting these resources in the hands of Japanese, Koreans, or Germans makes the United States extremely vulnerable; both during wartime and during peacetime.
7. The car business is not “just another business”. Cars are deeply embedded in America’s culture and psyche. Our historic “love affair with the automobile” throughout the 20th century is an intertwined evolution of society and technology. The automobile enabled both the growth of America’s suburbs and her middle class. These car companies are called “iconic” for a reason; their products are inspirational. How many American songs, books, and movies have been written about Chevys, Corvettes, Ford Mustangs, T-Birds, Chrysler Hemis and so on? On the other hand, I can’t think of a single song written about a Japanese vehicle. This is not the time to turn our backs on an old friend.
8. Automobile manufacturing is a strategic growth industry internationally, and both Ford and GM are well positioned to exploit that growth. While car demand has leveled off in the mature markets of Western Europe and North America, there is immediate growth potential in the Brazil, India, Russia, and China; all of which have significant American factories. About 60% of the 10 million vehicles that GM sold in 2007 were sold outside of the United States. China is GM’s second largest market, and GM has exported about 10 billion dollars in autos and parts, proudly made in the USA, to China in the past decade. There is no similar benefit to the American economy from Honda or Toyota selling into foreign markets. Frankly speaking, the prosperity of America’s auto companies is good for the country.
9. The automobile manufacturing industry is not the same as the buggy whip industry. It is NOT inevitable that all American car companies will disappear, like the steel, clothing, consumer electronics, or so many other, formerly great, industries. A country that does not produce anything, but only consumes and complains, must eventually decline. We will not remain a great nation by swilling $5 lattes, while shopping at discount stores for cheap Chinese products, and flipping burgers for a living. The whole process of designing, building and selling cars is a very complex undertaking. There are plenty of opportunities for American ingenuity, good engineering, technology, marketing, and efficient management to compete with global carmakers whose chief advantage is primarily cheap labor.
10. The American auto industry is crucial to reducing our dependence on foreign petroleum. We can not allow ourselves to lose the race for alternative propulsion technology, including electric, flex-fuel or fuel cell vehicles. GM currently offers 18 models achieving 30 MPG highway or better, twice their nearest competitor. GM is the top ranked US Company in global R&D spending in 2008 at $8.1 billion. The Chevy Volt, an extended range electric vehicle with zero emissions, would allow most commuters after 2010 to never use a drop of gasoline. America needs to lead this technological revolution.
November 20, 2008
General Motors, Ford, and Chrysler have made plenty of mistakes, but there are at least 10 good reasons why the American taxpayers should extend an emergency loan to our Big 3 Automakers. This is not about saving a few companies, and a few jobs; it is about saving an entire American industry, making an investment in America’s common future, and preventing a slide into a full economic depression.
1. The American auto industry has been practicing self help on the way toward regaining long term sustainability. General Motors was in the midst of historic cost cutting when events of this year overwhelmed our entire economy. Since 2005, GM has reduced structural costs in North America by over $9 billion. The latest UAW contract, signed in the fall of 2007, should show savings of about $6 billion a year starting in 2010, by reducing legacy costs associated with pensions and retiree health care. Between 2000 and mid-2008 the salaried workforce was reduced from 44,000 to 32,000, and the hourly workforce from 132,000 to 64,000. Other savings methods were implemented including reducing salaried employment costs by 30%, eliminating raises and discretionary bonuses for executives and suspending 401k match for salaried employees. All of this was done while GM and Ford have virtually eliminated the perceived quality gap with Japanese carmakers.
2. The current crisis is not primarily the fault of America’s Big 3. When gasoline prices doubled earlier this year the sales of trucks and SUVs plummeted. American automakers currently rely on this segment because spiraling legacy costs have virtually squeezed any profit out of the small car segment. America’s carmakers will be cost competitive in the small car segment by 2010, when major benefits from the last GM-UAW contract are realized. About 60% of new cars purchased in the US require financing, and GM’s sales in October 2008 were down over 45% compared to a year earlier. In this instance, the American automakers are victims of the financial meltdown of 2008 and the overnight disappearance of banks willing and able to lend money to car buyers.
3. The American auto industry is a national asset, and we all share some ownership. By now we know that America’s Big 3 are not “too big to fail.” They are also too important for us to allow them to fail. Almost 4% of US Gross Domestic product is auto-related and represents 10% of US industrial production by value. One out of every 10 US jobs is auto-related, with auto workers receiving $335 billion annually in compensation. The auto industry purchased $156 billion in US parts, materials and supplies, supporting jobs in all 50 states. The companies provide benefits for 775,000 retirees and surviving spouses, and provide health care benefits for 2 million Americans.
4. It is a good business decision, because it will definitely be cheaper to loan $50 billion to the American car makers, than to suffer with the monumental cost of bankruptcy, including the loss of up to 3 million jobs, and the Federal Government assuming hundreds of billions of dollars in pension and health care liabilities. Bankruptcy by any of the American auto companies would pull the entire industry down, because liquidating the assets of a bankrupt automaker would drive the survivor’s prices, along with suppliers, below the point of maintaining solvency. A bankruptcy by GM or Ford will almost certainly push the US economy into a full depression that will take years to recover from.
5. GM, Ford and Chrysler are the only American car manufacturers. A Honda or Toyota plant in Alabama or Georgia is not an American company. The Japanese and Korean transplants that enjoy millions of dollars in tax breaks, even while importing most of their assembly components, do not “create” any jobs. They merely shift employment from old industrial northern states to non-unionized Southern states. Taking into account the loss of jobs at suppliers, and support businesses, the “creation” of one job at a Hyundai plant in Mississippi, probably eliminates three jobs in Michigan or Ohio. And of course the profits are siphoned out of America.
6. Automobile manufacturing is a vital component of our national defense. Only a few generations ago America was shocked into World War 2 by the Japanese bombing of Pearl Harbor. American automakers responded by turning their industrial might toward the defense of our nation. During World War 2 General Motors was a major supplier of US military hardware, supplies and equipment. Putting these resources in the hands of Japanese, Koreans, or Germans makes the United States extremely vulnerable; both during wartime and during peacetime.
7. The car business is not “just another business”. Cars are deeply embedded in America’s culture and psyche. Our historic “love affair with the automobile” throughout the 20th century is an intertwined evolution of society and technology. The automobile enabled both the growth of America’s suburbs and her middle class. These car companies are called “iconic” for a reason; their products are inspirational. How many American songs, books, and movies have been written about Chevys, Corvettes, Ford Mustangs, T-Birds, Chrysler Hemis and so on? On the other hand, I can’t think of a single song written about a Japanese vehicle. This is not the time to turn our backs on an old friend.
8. Automobile manufacturing is a strategic growth industry internationally, and both Ford and GM are well positioned to exploit that growth. While car demand has leveled off in the mature markets of Western Europe and North America, there is immediate growth potential in the Brazil, India, Russia, and China; all of which have significant American factories. About 60% of the 10 million vehicles that GM sold in 2007 were sold outside of the United States. China is GM’s second largest market, and GM has exported about 10 billion dollars in autos and parts, proudly made in the USA, to China in the past decade. There is no similar benefit to the American economy from Honda or Toyota selling into foreign markets. Frankly speaking, the prosperity of America’s auto companies is good for the country.
9. The automobile manufacturing industry is not the same as the buggy whip industry. It is NOT inevitable that all American car companies will disappear, like the steel, clothing, consumer electronics, or so many other, formerly great, industries. A country that does not produce anything, but only consumes and complains, must eventually decline. We will not remain a great nation by swilling $5 lattes, while shopping at discount stores for cheap Chinese products, and flipping burgers for a living. The whole process of designing, building and selling cars is a very complex undertaking. There are plenty of opportunities for American ingenuity, good engineering, technology, marketing, and efficient management to compete with global carmakers whose chief advantage is primarily cheap labor.
10. The American auto industry is crucial to reducing our dependence on foreign petroleum. We can not allow ourselves to lose the race for alternative propulsion technology, including electric, flex-fuel or fuel cell vehicles. GM currently offers 18 models achieving 30 MPG highway or better, twice their nearest competitor. GM is the top ranked US Company in global R&D spending in 2008 at $8.1 billion. The Chevy Volt, an extended range electric vehicle with zero emissions, would allow most commuters after 2010 to never use a drop of gasoline. America needs to lead this technological revolution.
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