Don’t Let the Auto Industry Die

This has an Alice in Wonderland feel to me.

Billions and billions of dollars going to cover “paper” — Wall Street meltdowns, insurance companies like AIG that I don’t even understand (how could you possible give them $150 billion — for what?), banks that aren’t banks, loans that aren’t loans, changing the rules every day and what qualifies for help and what doesn’t.

Meanwhile, we have our No. 1 manufacturing base — the auto industry — about to go under. Mind you, about to decimate our economy more than we can imagine. Here are just some facts that should raise the hair on the back of all our necks:

• 1 in 10 American jobs depend on the auto industry

• If the domestic auto industry goes under, 3 million jobs would be lost in the first year alone

• U.S. personal income would be reduced by $150.7 billion a year

• The tax loss to government would be $156 billion over three years

• 105 U.S. auto plants are in 20 states; they support 14,000 domestic dealers, employing over 740,000 people with a payroll of $35 billion a year

• The U.S. auto industry buys $156 billion in parts and services in every state

• The auto companies provided pensions for 775,000 and health benefits for 2 million people

• Autos account for 20 percent of all retail sales in America each year — $690 billion


OK, fine, so that doesn’t convince you that something has to be done. Let’s talk about the future of auto manufacturing in the world.

Right now, less than 15 percent of the world’s population drives cars. For some of us who are mathematically challenged, that means that exactly 87 percent don’t have a car or truck.

I would have to say, with China building roads faster than any nation in history, India clamoring for more cars and markets opening up all over the world, that one might make the unbelievably strong case that auto manufacturing is a growth industry in the 21st century.

And we want to cede making cars to foreign competitors? We want to shut down our car companies? Crazy.

Bottom line: Will we make anything in America anymore? The future for U.S. manufacturing is the automobile industry. What is it about this that some in Congress don’t understand?

And let me take on directly the notion that the folks in Detroit are a bunch of boobs who have no clue what they are doing. First, no reasonable person would quarrel with the contention that for a period Detroit let down its collective guard, made low-quality cars and thought itself fat and happy. But, really, that was the ’70s and ’80s. Legacy costs such as retirement benefits and long-term healthcare put it at a competitive disadvantage with foreign competitors who have no such costs. In Japan and Europe they take care of their healthcare, thank you.

But if you look at the direction of the U.S. auto companies in the last five years, you will see cars that are of the highest quality, win the best of the best awards and boast 100,000-mile warranties; more cars from GM that get over 30 mpg than any other automaker, the production of the electric plug in Volt that will take 80 percent of Americans to and from work without a drop of gas. The list of cars and trucks that Americans do want to buy is long.

The other truth is that the car companies have slashed their structural costs, addressed the health and benefits issue with the United Auto Workers, eliminated raises, bonuses and 401(k) matches for executives through 2009, and have shifted production to energy-efficient vehicles.

They are reinventing their companies, and they are reinventing the automobile.

Like Apple, they can pull through. Like Apple, they have tremendous talent designing and making their cars to leapfrog the competition. Like Apple, they “get it” that this is about the consumer and the customer.

I have watched them change as I have worked with them over these past three years and I know that the future will be bright if we give them the chance. This is not just about making cars and trucks, this is about making America economically strong again, not with fancy “swaps” or “derivatives” but with the production of something that the world desperately wants and needs: modern transportation for the 21st century.

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