As a life-long car guy, the plight of the auto industry is painful to watch. I worked for General Motors for 20 years before leaving to try my luck elsewhere. My father and both of my brothers spent their entire working lives at General Motors. The economy in my area is still highly dependent on good paying jobs at area factories. The demise of GM would completely devastate this region of the country.
Many people have spoken out about the current crisis in the auto industry, including Mitt Romney. In an editorial in the New York Times, Romney argued for letting the Big 3 go through bankruptcy. That editorial will kill any chance he has of carrying Michigan in a future presidential bid. He angered those who know the industry best by not only placing blame in the wrong place, he got much of his argument wrong.
Romney argued that one important change the industry needs is to bring in top executives from outside the auto industry. Apparently, the presence of Alan Mulally at Ford and Robert Nardelli at Chrysler escaped his notice. Mulally came from Boeing and Nardelli from Home Depot. Those aren’t exactly car companies, Mr. Romney.
In the same editorial, Romney advocated major restructuring. This is another area that he apparently overlooked. The auto companies and the unions have already undertaken major changes in the new contracts that will take effect next year. This doesn’t include the many concessions the unions have made over the last twenty years in an effort to keep plants open.
Romney also argued for getting rid of the legacy benefits owed to retires. Just exactly how does he propose to do this? Should retires who worked for forty years for one company be cut loose to sink or swim now that they are in their seventies? That seems to be exactly what he is proposing. This would place a huge burden on public services as well as essentially destroying the quality of life for many of our seniors.
Shifting retiree burdens from the companies to the public sector is already happening. In a little known shift of policy, General Motors is taking away the health care benefits of retired white collar workers over sixty-five. It is replacing those with a $300 benefit. All of those workers will now be shifted to the Medicare system. Guess who’s going to make up the difference – the taxpayers. Now extend that to all hourly employees and you begin to get an idea of what a massive hit our economy would take if the Big 3 went under.
What many people advocating for the demise or complete restructuring of the auto industry fail to understand is that the job losses won’t just be at GM, Ford, and Chrysler. During the last thirty years, the major auto companies have outsourced most of their parts manufacturing. There are far more people employed at their suppliers than ever worked for the Big 3. It is estimated that more than 2.5 million jobs would be lost in the first year alone. Welcome to the next Great Depression.
One thing I keep hearing over and over from critics of the American auto industry is that they can’t build cars people want to buy. This is ridiculous. GM still sells more cars than any other car company in the world. The Big 3 sold 8.5 million cars last year. Someone seems to be buying their products.
In the end, it is a simple matter of throwing millions of Americans out of work and onto the dole or working to save an essential American industry, as General Wesley Clarke so ably argued in his recent op-ed piece. The argument shouldn’t be whether the auto industry “deserves” a bailout, it is whether or not letting them fail will make the current economic crisis worse. In my mind, there is no other choice than making every effort possible to keep them afloat.