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Detroit Three Deserve Help

By Jerry Flint

WardsAuto.com, Sep 4, 2008 8:42 AM Email a link to this articleEmail a link to this article Printer-friendly version of this articlePrinter-friendly version of this article


Finally, Detroit’s auto makers are asking for help. The good news is Washington is starting to listen – even the presidential candidates. They are talking about everything: loan guaranties, direct loans and grants to help Detroit retool plants and develop advanced technologies.

They also are talking about tax credits for car buyers to help offset the high cost of new fuel-saving technologies.


Is government – meaning taxpayer – help really needed? Yes. Detroit can’t convert from a truck-heavy mix to fuel-efficient cars without help, not the way the losses are piling up. General Motors lost $15 billion just in this year’s second quarter, and Ford lost more than $8 billion. Should the nation bother to save the industry?

Yes. Opponents say Detroit brought the trouble on itself, ignoring decades of warnings about oil and letting foreign auto makers win battles over quality and technology. That’s all true.

Detroit auto makers have made plenty of mistakes, but that doesn’t mean they should not be helped. The Detroit Three provide hundreds of thousands of good-paying jobs, plus millions more at suppliers and related businesses.

Our government is willing to risk hundreds of billions of dollars in taxpayer money to back shaky mortgages and rescue the banks and financial institutions that created the housing and credit crises.

Plus, the government spends billions more to subsidize farmers. Why not save Detroit jobs?

That does not mean dumping a big pile of taxpayer money on Detroit’s doorstep.

It would have to be earmarked for specific purposes or technologies such as lightweight material applications or lithium-ion batteries. I would not want taxpayer dollars to turn into 6-digit payouts to laid-off workers.

And if taxpayers do chip in, the sacrifice should be shared: When Chrysler received its loan guaranties decades ago, Congress demanded auto workers take a pay cut, and they did.

What else can the government do? A 5-year freeze on emissions and safety regulations would help. It would allow more money and manpower to go directly into developing new, higher mileage cars and trucks.

Of course, some of the most important things our government could do is improve U.S. energy supplies. Drilling for oil offshore and in a corner of Alaska, developing more renewable fuels, and removing tariffs on imported ethanol is a start.

Add more conservation, more solar power and more nuclear energy to the list, too.

I suppose I’m old fashioned, but I can’t help thinking that if Toyota, Honda, BMW and every other transplant builds vehicles in the U.S., then home-grown companies also should be able to.

Some states now mostly host the plants of foreign manufacturers, such as South Carolina (BMW); Mississippi (Nissan, Toyota); and Alabama (Honda, Mercedes and Hyundai). Folks in these states might not be eager to see their taxes spent to help Detroit.

But all auto makers, foreign and domestic, still share many of the same suppliers and technologies, from airbags and electronic stability control systems to countless software products.

Even if Detroit auto assembly plants are not in these states, many of their supplier plants are.

Detroit auto makers need help. They are asking for it. That means they won’t go down without a fight.

Jerry Flint is a columnist for, and former senior editor of, Forbes magazine.

Edited by enzl
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unbelievable! Way to dwell yet some more as this being a "bailout" using "taxpayer dollars". He needs to be informed that this is a Gov't loan with interest! And to say "Toyota, Hyundai and Honda can do it so can Detroit" is so far from the truth of things that he should not be able to write another column in his life. Why don't we ever hear about all the breaks, lack of benefits, lack of unions, ect. ect. that allow Toyundai to "not" have this issue?!!!!

Edited by BuddyP
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