Oh, Motown

This morning, like many mornings lately, I am thinking about the future of Michigan, particularly Detroit and the people in the auto industry. I am finding some good articles in the Detroit Free Press, which seem to be saying that there are mixed feelings about the potential of federal aid for the automakers. Overall, it sounds like optimists (largely Democrats) are expecting some sort of relief in next week's lame duck session. But opponents (largely Republicans) are quite against any help, saying the industry should use the $25 billion in loans that were approved in September for retooling factories. Problem is, those loans were meant to be spent over 12 years and thus are not readily available - maybe they could be sped up? One Representative (Boehner, R-OH) has argued that no money should be given without "promises to reform the root causes crippling automakers competitiveness around the world."

http://online.wsj.com/article/SB122645159441719325.html

This article is interesting. I have little sympathy for the car companies, since it seems shocking that they continued to produce large trucks and SUVs when it is obvious that low gas prices won't last forever (let alone oil supplies period), and that when this happens a large shift in consumer preferences is likely to occur. There seem to be a lot of comments in the press that fuel-efficient cars simply can't be made cheaply enough, and that consumers don't want them, but want big trucks and SUVs, which still turn a profit...that's infuriating to me, because the companies are saying "What can we do? It's what the consumers want. We have to make money." But it's also true.

I have kind of a visceral reaction to the calls for forcing the industry to use "competitive labor," which would basically mean breaking the UAW. But I am sure concessions will have to be made by the union, and that assumes the industry is still around to negotiate with... But some are calling for a gas-tax or gas price hike to get consumers to consider the real cost of gas when purchasing cars. That would seem to be a reasonable strategy, although I hate to say people should have to spend more for gas when I know people who will be hurt by it. Still, facts are facts, and - as quickly as possible, anyway - we need to be shaping our communities around transportation options that don't require so much fossil fuels, and (imagine this) maybe even less driving. We know our current car culture can't last forever, and our health will be better off if we can research new technologies and put them to market.

Detroit Auto Makers Need More Than a Bailout

This article suggests massive restructuring of the industry, with government oversight and an eye towards re-privatization. There is something to this suggestion too, but I'd like to know how wide a range of options our public officials are considering. I don't favor a bailout (and certainly not one without performance standards for the companies), but don't want to see millions of people wrecked by the industry's collapse. But we have more than 2 or 3 options here, don't we? Could there be a combination of options, like:

- A (gradual) gas price "normalization"
- Aid or incentives for retooling factories (despite consumer preferences, which are unrealistic)
- Cuts in labor costs (but with government aid to help pay for things like pensions and health care). I hate to say it, but it could allow more people to have jobs, even if lower-paying, and may prevent the pains of straight-up outsourcing.
- A government and privately-sponsored research program, which would let people further explore fuel-efficient transportation options. It could be the next great public investment in technology (not unlike the space race), create a pool of publically-owned intellectual property that could be used by any company who wants to try bringing it to market. We know that it's new companies that create the most jobs, and they are more likely to take a risk on new products...and frankly, why not? What do we have to lose, exactly?
- A break-up of the auto industry into smaller parts, likely with new management--this might be accomplished by a request-for-proposals from existing car companies and entrepreneurs, using existing technology and any that comes from the public-private research project above. It might even be reasonable to use existing factories and tools from the Big 3 for these projects, if the old dinosaurs went out of business or had to liquidate their capital.

I think it should be less about the existing companies, and more about how to get more technology, available cheaply, and more new jobs. About people, our environment, and a broader notion of "economy." Can't we be more creative?

What do you think?