We need a healthy automotive industry in the United States. But not in its current form. A pure taxpayer bail-out is not the answer because it doesn't help the automotive manufacturers remedy the historic problems that are putting their existence at risk. It prolongs the status quo at a time when we need to begin writing a new chapter in the story of the American automobile industry.
Too many leaders in Congress, as well as taxpayers, seem to oppose a bail-out on the basis that the Detroit car companies need to be punished. They accuse the car companies of relying too long on profitable pick up trucks and SUVs. This is silly. Car companies focused on these vehicles because we were hell-bent on buying them. As consumers, we couldn't find an SUV that was big enough, powerful enough or blinged enough. We had plenty of opportunities to buy fuel-efficient vehicles from the car companies, American or Japanese, but we didn't.
Even Toyota, a very customer-driven and nimble company, began gorging at the truck trough, building a new plant in San Antonio to manufacture its Tundra. Sure, Toyota has the celebrated Prius. But it also sells far more Land Cruisers, Highlanders, RAV4 and Tacomas.
The reason to oppose a bail-out shouldn't be about punishment, because there is no crime. The reason to oppose a bail-out is to take a step toward deep-rooted structural change.
Chapter 11 is one way. In GM's case, it would give it the opportunity to lower its labor costs and reduce the insane number of dealers it has selling fewer and fewer cars. But the ripple-effect throughout the supply chain and country would be devastating. For those who want to punish GM, do they also want to punish the small company in Ohio that supplies fasteners? Or the company in Southern California that supplies the machines that install air bags? Or punish the trucking company that delivers parts. The automotive ecosystem extends much farther than many realize.
I believe the best strategy is a major taxpayer investment in alternative fuel vehicles. Give Detroit some relief by getting this massive R&D cost off its books (for now) so that, in years to come, our country will reap equally massive benefits, such as cleaner air, lower oil consumption, and higher-paying green-tech jobs. This sounds like a win-win for all.
Wednesday, November 19, 2008
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2 comments:
can we compete? can we make cars that compete on price and quality?
as the country is sooo dependent on the auto industry, isn't it rather a failure of government not to have steered car makers toward competitive/differentiated product offerings through incentives?
We can definitely compete on quality. Price is a different matter do to the difference in wages and benefits and pensions. I'm not sure it is government's role to instruct companies to design better cars. However, I do believe government can play a major role in incentivizing greentech initiatives. Similar to the space program in the 1960s in which government, business and academia worked in concert to develop a major leap in scientific knowledge and new technologies. And, hey, we got Tang out of the deal as well!
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