America’s traditional car makers have been lobbying hot and heavy this political season at the Denver and St. Paul conventions.
They’re throwing around their political clout (car-heavy Michigan and Ohio have 37 electoral votes) to convince the presidential candidates, not to mention the U.S. Congress, to cough up $50 billion in subsidized loans so they can retool their production facilities. Actually, they might want an additional $50 billion for a cool $100 billion.
The loans would be part of a federally-mandated program to get vehicles up to 35 miles per gallon by 2020. General Motors, Chrysler and especially Ford have been suffering through some of their worst sales ever because they stuck with big, bulky, gas-guzzling SUVs, pickups and sedans. They were all hot sellers in the 1990s but when clear signs of an energy crunch came, they were slow to respond.
Tell me about it. I was on the floor of Ford’s truck plant in Norfolk, Va. back in 2003 just after the firm had put it hundreds of millions to retool the 78-year-old plant so it could churn out more fast-selling F-150 pickups. And a few years before that, I was at a Ford factory in Ohio that made special engines for Tauruses. Demand was so strong that special trains raced the engines from Cleveland to Kansas City overnight so Tauruses could go through final assembly.
Well, Ford shut down Norfolk about a year ago. I’m not sure what happened in Cleveland, but I gather that at least part of its sprawling manufacturing in the area has been shuttered.
So now, after slogging around like the dinosaurs they are, the Big Three want public money to save them from their bad decisons.
Reminds me of another issue: I once was at the U.S. Chamber of Commerce in Washington talking about auto bailouts. An official quietly told me that there’s a little problem with that. Toyota and Honda, which also are Chamber members, employ thousands of U.S. workers in their U.S. plants and don’t need bailouts. Indeed, Asian car makers started outselling the Big Three in the U.S. a few months ago.
Maybe Obama, McCain and Congress should avoid the bailouts. Instead, they should propose some kind of tax credit so that the Big Three officials, starting with their CEOs and C-Suites, can get retrained in anticipating market trends. That and better flexible manufacturing might do the trick.
(Image by Leonard John Matthews, CC 2.0)
