Friday, February 03, 2006

Big 3 need Bush's buy-in, not a bailout
Governments in Japan, Germany intervened to reduce risk of failure
by Ron Gettelfinger

Following the painful plant closings and job reductions announced by U.S. automakers, some people ask whether it's time for Uncle Sam to come to the rescue.

According to the Wall Street Journal, President Bush takes a "dim view of a government bailout of the struggling automakers."

"I would hope I wouldn't be asked to make that decision," he said. "Why don't we think about the best, not the worst?"

We agree: Let's think positively about an industry that employs nearly 1 million American manufacturing workers and supports the jobs and income of millions more.

Governments usually help
But President Bush and other federal policymakers must recognize that the foreign auto firms who are gaining market share in the United States did not succeed while their countries let "free markets" run their course. Japan, Germany, South Korea and other countries actively intervene to support their industries. Because they bought in early, there's less chance these governments will be forced to bail out companies later.

Some say it doesn't matter what happens to the traditional Big Three, because America still has plenty of auto jobs. The jobs are just shifting, the story goes, away from Ford, General Motors and DaimlerChrysler and toward Honda, Nissan and Toyota.

In fact, the United States has lost nearly 200,000 auto jobs in the past five years -- and behind these numbers are real people with real families. The Big Three, meanwhile, still employ nine out of 10 American auto workers, manufacture three out of four American-made cars and trucks and buy 80 percent of U.S.-made auto parts.

There's a problem with the claim that all the new investment in the U.S. auto industry comes from non-Big Three companies: It isn't true. Between 1980 and 2002, Ford, GM and what is now DaimlerChrysler provided 85 percent of the new investment in U.S. auto plants. That's $176 billion, compared with $27 billion from Asian and European manufacturers.

This isn't a regional issue because the Big Three employ advertising, design, engineering, manufacturing, sales and service workers all over the country. The failure of any one of these companies would be a disaster. How can we prevent it?

Here are some ideas:

Fix health care: The United States spends $1.9 trillion on health care -- yet 46 million people have no health insurance. Without comprehensive, universal, single-payer national health insurance, we will continue to shortchange our citizens.
And without the effective cost controls that accompany a truly universal system, we're imposing huge health care liabilities on U.S. businesses, impeding their ability to make job-creating new investments. Honda, Nissan, Toyota and BMW don't have this problem -- because most of their employees and retirees are in countries where universal health insurance delivers high quality care at a much lower cost.


Tackle unfair trade: Japan has spent over 460 billion in U.S. dollars to intervene in currency markets since 1998, keeping the yen artificially low against the dollar. This reduces the cost of Japanese exports and the vehicles made by Japanese firms here in the U.S. These companies can collect their U.S. sales in overpriced dollars, while paying much of their expenses in Japan using underpriced yen. The result is an unfair cost advantage of $4,000 to $14,000 per vehicle.
The United States, meanwhile, is the most open automotive market in the world, but U.S. companies face tariffs, regulations and other trade barriers when trying to sell American-made vehicles overseas.


Invest in our environment: Cleaner and greener cars are the future of the auto industry. And contrary to popular belief, GM leads the field in fuel efficiency, with more cars getting over 30 miles per gallon than any other manufacturer. Ford brought the first hybrid SUV to market, and DaimlerChrysler is a leader in clean diesel technology.
But more environmental progress is necessary and possible, as Brazil demonstrates. The government there requires vehicles to run on a blend of sugar cane, alcohol and gas, using its own natural resources, enhancing the environment and protecting local jobs.

Cleaner cars are the future
The United Auto Workers union supports incentives to create a better infrastructure for distribution of ethanol, a technologically feasible alternative fuel. We also back the consumer tax credit for gasoline-electric hybrids -- and we want to strengthen it with a manufacturer's tax credit, so the next generation of advanced engines, powertrains and vehicles will be made in the USA.

To avoid a desperate request from a near-bankrupt automaker hitting his desk, Bush can do more than simply urge companies to make "products that are relevant." He can join Republicans and Democrats in Congress to craft policies that are relevant for American companies, workers and communities.


Ron Gettelfinger is president of the UAW. This article appeared on Feb. 3, 2006, in the Detroit News’ Labor Voices.

running the mail

creating a toxic waste superfund to deal with crisis like Love Canal, which came about because government wasn't involved?

Sure, there m,ay be things where government shouldn't get involved, but no responsible person is going to sit back and say the government should not intervene with our health care mess.

Either fix the pricing, or force lower prices, or permit the use of overseas perscriptions, or take over coverage.

Thing is, our health care system is so completely screwed to hell and back, that regardless as to how you feel about things run by our government, it most certainly won't do any worse than what we have now.

You simply can not have free and open trade when competitors come from countries where they don't spend anything on health care because the government picks up the tab. Somethings going to (not 'have to' or 'might' give, but "will" give). Either we're going to have national health care, or we are going to raise tarriffs, or we're going to obliterate the American worker by taking his health care coverage away or we're going to ship his job overseas where costs are lower.

BTW: we already have a patchwork system of government run care, split between the state and federal level. By standardizing and expanding, the government would tame cost (via the old "Economies of scale" method), and take the burden off business.

We came very close to succeeding back in '93.

Where it fell apart was when republicans set an age and income range that wouldn't be covered (something like 18-65, unless you were below a certain income leve for example) and Hilary refused to compromise and insisted on everyone being covered. You'll notice Bill never let her run a major policy effort ever again.

The Canadian health insurance system not only covers everybody, it does the job for much less money. Health care spending per person in the United States in 2003 was $5,635, while in Canada health care costs were only $3,003, with significantly lower overhead.

Despite their complaints, Canadians have about the same number of doctors per 1,000 people (2.1) as Americans (2.3).

More importantly, Canadians’ vital health statistics are better: Life expectancy is 79.7 years in Canada and 77.2 in the United States.

And in Canada they can vote out the people who mess with their health care.