America's auto industry is ill, and we can argue all day about how it got sick, but we must treat the illness before the patient dies.
There's been a lot wrong with American automakers for decades, starting with being slow to react to the advent of cheaper, more efficient and safer foreign cars, particularly from Asian markets. While the Japanese reinvented the assembly line, U.S. automakers continued with their labor-intensive production of big cars suited to the American ego but ill-suited to the 21st century.
The economic crisis which first hit our mortgage industry and then our financial industry took the bottom out of the auto industry as people now can't find loans to pay for cars, leaving dealer showrooms full of cars. Chrysler LLC estimates that 20 to 25 percent of their volume has been lost due to lack of credit, and November sales dropped 47.1 percent.
CEOs of the Big Three - Chrysler, Ford and General Motors - came to Washington, D.C., and asked for help. Perhaps we didn't take them seriously, as they all flew in their corporate jets and asked for billions but didn't have a plan. The second time they came, they drove themselves and brought a plan. Still, help in the form of $14 billion in loans - they asked for $30 billion - got bogged down in the Senate and lawmakers went home.
But the sick patient hasn't gone away. Chrysler announced it would shutter all 30 of its manufacturing plants for a month starting Friday to lower inventory and conserve cash. Ford and General Motors aren't far behind with extended holiday breaks.
ADVERTISEMENT
Some say we should let the automakers file bankruptcy, but that in essence allows the patient to die. The auto industry is a huge sector of the U.S. economy, with fingers connected to it all across the U.S. in small shops and vendors that work with and supply the auto industry. Not to mention tens of thousands of jobs.
While Congress failed to firm up the sagging mega-industry, the Bush administration still can through the earlier approved $700 billion bailout bill. It must act quickly before bankruptcy becomes a real possibility, taking the whole economy further down the tank toward a deep recession if not a depression.
But while the taxpayers are willing to offer aid, the automakers and their unions must also make concessions. Management pay as well as union pay need adjustment, perhaps even benefit packages, to bring the U.S. industry more in line with competitors. This is also an opportunity for a wake-up call to restructure the U.S. auto industry for the 21st century, working on "green" vehicles that use renewable and alternative fuels, creating a new demand.
Otherwise, all U.S. automakers will go the way of Edsel and Studebaker.
BEMIDJI PIONEER
