One casualty
of the debacle in Iraq seldom gets much press, but the inevitable
focus on the mess in Iraq too often overshadows other vital
challenges.
The American
automobile industry is hemorrhaging. Today, Ford will announce
that it will offer buyouts to 85% of its salaried workforce.
Ford is looking to layoff a staggering 52,000 employees by
September of 2007. Chrysler has already been merged with the
Germany automaker Daimler-Benz. General Motors is gushing
red ink.
This industry
has been America’s industrial stronghold, since Henry
Ford perfected the assembly line. After World War II, Eisenhower’s
Defense Secretary Charlie Wilson wasn’t far off when
he said “what is good for General Motors is good for
America.” GM was America’s signature company.
Its unionized employees won what became the foundation of
the American Dream – secure jobs that paid a family
wage, with health care, pensions, and paid vacations. The
GM model essentially forged the US middle class, as our social
contract was won by organized workers employed in large corporations.
Now
that social contract is being shredded by the global
marketplace. The foolish, ideological commitment to
mindless trade policies over the last decades has devastated
Detroit. The US automakers must now compete with companies
from Europe and Japan that bear no health care costs.
General
Motors now has about three retirees for every one autoworker;
Ford has two for every active employee. Toyota in this
country has about 100 retirees in total. The health
care and pension costs – promised by the companies
when America was largely a national marketplace that
shipped goods, not jobs, abroad – put the US automakers
at a staggering cost disadvantage – over $1200
a car. If they compete on price, they lose money. If
they don’t compete, they lose market share.
At
the same time, we desperately need the industry to move
to hybrid and alternative fuel cars. Detroit right now
is ready to build cars that use alternative fuels built
from corn or grasses. But the oil industry that controls
the gas stations pumps resists putting in the E85 (85%
ethanol) pumps. That would cut the demand for oil drastically
– and put a crimp in their record profits.
The
Ford layoffs alone will hit Michigan, New Jersey, Georgia,
Missouri and Ohio big-time; and states like Kentucky
will also feel the pain. It won’t stop with the
auto jobs. The auto suppliers, the housing markets,
the hotels, the retail industries that depend on the
demand generated by relatively well-paid auto employees
will be depressed. We saw the pain caused by the steel
industry’s decline. But the steel industry is
a pimple compared to the rash of economic losses that
the decline of Detroit will cause.
Obviously,
this crisis requires urgent, intense, national action.
Considered decision must be made. Are we prepared to
let the auto industry die? If not, what steps can be
taken to relieve the burdens of their health care and
pension costs? What should be expected from the automakers
in return in terms of investment, jobs guarantees, fuel
efficiency and alternative fuel cars? What penalties
or incentives should be provided to the oil industry
to force proliferation of alternative fuel pumps in
gas stations? How does all of this fit into a concerted
drive for energy independence, like that called for
by the Apollo Alliance that surely is our national security
imperative?
Yet
when the CEOs of the auto industry sought to meet with
George Bush before the election, he cancelled two meetings
with them – one when they were all gathered in
DC. When they finally met, an obviously distracted president
gave them all of one hour – and nothing was decided.
This
is catastrophic. Understandably, the president and his
advisors are focused on what may be the worst foreign
policy debacle in our history in Iraq. But the collapse
of Detroit may well be the equivalent defeat in our
economic history. Surely our auto companies’ future
cannot be left to a market in which their competitors
enjoy massive state subsidies and mercantile trade policies.
We need a considered national policy for our industrial
future. Instead officials are focused on the failure
of their war of choice in Iraq.
We
tend to think of Iraq as a crisis that is “over
there.” In fact, it is taking casualties here
at home. Not just the brave men and women who are sacrificing
life and limb, not just the literal trillions that will
be wasted on the war, but in the collapse of America’s
own economy, neglected as our leaders focus on troubles
abroad rather than threats here at home.
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