Detroit auto makers made plenty of mistakes as they pled their case for a bridge loan from Washington last week. The biggest was underestimating how little Congress and America understand the crucial role vehicle manufacturing plays in the global economy.
Every other industrial power and developing country on the planet is working to either bolster its domestic auto industry or develop one, yet much of the U.S. seems content to see ours disappear.
In the early 1990s, China christened autos as one of five “pillar industries” (along with electronics, housing, petrochemicals and machinery) that would underpin its great leap into modernity.
China’s leaders understood then that producing vehicles creates vast wealth and raises a nation’s standard of living by generating millions of good-paying manufacturing, engineering and related technical and non-technical jobs.
The strategy worked. China is headed to become the world’s largest vehicle market in the not-too-distant future. Now Russia, India, central Europe and countless other countries also are hoping to use auto manufacturing to bolster their emerging economies.
Brazil, the world’s fifth largest automotive market, has used the industry not only to grow economically, but to make itself energy independent. Thanks to flexible-fuel vehicles and ethanol, Brazil’s financial system no longer is whipsawed by volatile oil prices.
Meanwhile, the European Union is rushing to aid its struggling auto makers, that are being battered by the same forces killing GM,and .
Besides understanding the key role auto makers play in their economies, European leaders see the industry as a bridge to a greener, energy-independent future, powered by electricity and alternative fuels.
“I will not leave entire sectors unarmed in the face of the crisis. I am thinking about the automobile sector,” says French President Nicolas Sarkozy in a recent speech.
While Europe takes action, the U.S. Congress dithers over partisan, lame-duck politics as millions of auto-related jobs hang in the balance.
Know-nothing talking heads prattle on about events that happened decades ago as if they were yesterday and explain how bankruptcy would be good for Detroit.
One says Detroit auto makers don’t deserve emergency funding because they fought seatbelt legislation in the 1960s.
An investor-site columnist writes that it would be good for auto workers to lose their jobs because then they could find work with better companies.
An economist with no auto-industry experience says bankruptcy would be good because competently run auto makers then would swoop in and buy up the pieces.
During a speech at the opening of the Los Angeles auto show,- CEO Carlos Ghosn made it clear there is no buying or swooping in Renault or Nissan’s future, nor likely any other auto company’s, because money for such ventures is no longer available from the credit markets.
The Detroit auto chiefs were given a homework assignment to develop a business plan that shows they can survive long-term. That’s fair. GM,and still have baggage that makes no sense to anyone outside Detroit, including the United Auto Workers union jobs bank and a small fleet of private jets.
But Congress needs a homework assignment, too. It needs to learn that Ford and GM still build the two most popular vehicles sold in America: the Ford F-150 and Chevrolet Silverado pickup trucks.
Congress needs to bone up on the fact that Detroit supports thousands of suppliers and that among their many accomplishments, GM, Ford and Chrysler have created a path to middle-class citizenship for millions of Americans, including tens of millions of minorities either through direct employment or by purchasing billions worth of products annually from minority-owned businesses.
Most of all, Congress needs to study the fact that Detroit is America, and if they let it die, a huge part of this country’s future will die with it.