23
Nov
08

Save the American Car

For a couple of weeks now, I’ve watched the television as politician after politician and pundit after pundit have come on television to pander to the long held meme of the failure of American car companies.

The pundits do it because they’re stupid and think so far inside the box that there’s another box inside of that one. The Democrats do it because they’re spineless and don’t know how to stand up for working people anymore. But the Republicans do it because of their failed ideological framework, which I might mention has brought us to where we currently are.

Here is a typical representation of how they choose to ignore facts in favor of ideological crap. Business Week takes a look at Mitt Romney’s suggestion that we should allow our entire auto industry to go into bankruptcy and potentially fail: 

Romney: If General Motors, Ford and Chrysler get the bailout that their chief executives asked for this week, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

Business Week:

[Romney joins a legion of pundits and kibitzers who are oblivious to two facts: The companies have been dramatically resizing and restructuring. First: Ford, for example, had cut its hourly workforce from 83,000 to 44,000 in five years, and its white collar workforce from 33,000 to 12,000. The numbers at GM and Chrysler are comparable. Second: Retiree burdens? The companies entered into covenants with workers on pensions and retiree healthcare. The big burden is paying healthcare benefits of retirees and their dependents still too young for Medicare—about 400,000. If the U.S. had a healthcare policy like Germany and Japan, just to name two rival auto-making countries, this wouldn’t be an issue. Just what would you do for those families and their healthcare costs Governor Romney? Chuck them onto the heap of the uninsured? How about a more constructive suggestion like compelling the retirees, through arbitration, to pay more for their healthcare benefits as a way of pitching in to the problem. Given the choice between losing all benefits and paying more for them, most families will opt for the latter.]

Now I’m not going to say that there isn’t room for improvement in the American auto industry, but here’s the dirty little secret that they won’t tell you. Auto industries across the globe are suffering from a negative turn in demand due to the credit bubble collapse.

Gleaming new Mercedes cars roll one by one out of a huge container
ship here and onto a pier. Ordinarily the cars would be loaded on
trucks within hours, destined for dealerships around the country. But
these are not ordinary times.

For now, the port itself is the destination. Unwelcome by dealers
and buyers, thousands of cars worth tens of millions of dollars are
being warehoused on increasingly crowded port property.

And for the first time, Mercedes-Benz, Toyota,
and Nissan have each asked to lease space from the port for these
orphan vehicles. They are turning dozens of acres of the nation’s
second-largest container port into a parking lot, creating a vivid
picture of a paralyzed auto business and an economy in peril.

“This is one way to look at the economy,” Art Wong, a spokesman for the port, said of the cars. “And it scares you to death.”

The backlog at the port is just part of a broader rise in the
nation’s inventories, which were up 5.5 percent in September from a
year earlier, according to the Commerce Department. The car industry
has been hurt particularly, with sales down nearly 15 percent this
year. General Motors has said it would run out of operating cash by the end of the year if it does not receive a government bailout.

One in ten jobs comes from the auto industry. So far, I haven’t heard a single person tell me how we’re going to deal with the loss of tax revenue and the addition of unemployment if we allow the auto industry to collapse. No one seems to have thought it out that far.

So here are a couple of rules that I would propose we live by:

  1. Don’t believe most of what you see on TV unless you’re watching reruns of X-Files.

  2. If a politician comes on television and seems too sure of something that they’re saying, be suspicious.
  3. If that politician is a Republican and they suggest that we should give away more American manufacturing capacity because of some stupid ideological ax that they have to grind, call their office and tell them to shut up.

Times are about to get incredibly tough  (I’ll come back to this point in the future) thanks to 8 years of complete mismanagement of the country.

It’s time for solutions, not ideological orthodoxy.


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