Bush League

Washington's influence on industry eroding, analyst says Automakers may indeed enjoy a "soft landing" in 2001 - because organized labor and environmentalists will cushion their fall.

That's the position of those who have jumped all over George W. Bush for his cabinet choices.

However, Washington's influence on the auto industry is waning, says one leading analyst. This reduces the Bush administration to a benign threat at worst, and a bosom buddy at best.

"Not everything that is important is decided in Washington," says James A. Mateyka, vice president of A.T. Kearney Inc.

The federal government provides seed money for research and development, and establishes standards for emissions, vehicle safety and fuel economy.

"But it's the states, not Washington, that influence where vehicles are built," says Mr. Mateyka. "They use various financial and tax incentives to drive automotive industry decisions on the locations of new plants. The states, not Washington, set and enforce traffic laws, inspect vehicles, and set the legal framework for the sales and servicing of motor vehicles.

"In summary, Washington typically impacts the design and corporate strategy portions of the industry value chain, while states impact the build, sell and use portions."

This, it would seem, plays into the hands of Interior Secretary-designate Gale Norton, who once championed for states' rights. Four years ago in Denver, the former Colorado attorney general compared her cause to the Confederacy's Civil War struggle.

But shifting "regulatory muscle" away from Washington may not be healthy for the industry, Mr. Mateyka warns.

"Emissions standards that vary by state certainly complicate things. But even more disconcerting in the litigious society we live in, is having state courts beginning to order vehicle recalls."

Mr. Mateyka's outlook?

Mr. Bush and Vice President Dick Cheney bring to the White House "an extraordinary amount of insight, experience and connections to the oil and automotive industries," he says. "Look for a standstill or perhaps a rollback of certain government regulations."

Fear of such prospects have prompted outcries from organizations such as Sierra Club. Its executive director, Carl Pope, says Ms. Norton "would be a natural disaster as interior secretary."

At press time, both she and Attorney General-designate John Ashcroft were in the throes of confirmation hearings. There, the latter had to defend himself against criticism not unlike that leveled by UAW President Stephen P. Yokich.

He says the former Missouri senator's positions on workers' rights and other issues are "radically at odds with the laws that he would be entrusted with enforcing."

The 750,000-member union has no such quarrels with Labor Secretary-designate Elaine Chao. To the contrary, the UAW was buoyed by signals sent by the former United Way of America CEO when she telephoned AFL-CIO President John Sweeney before her nomination was announced.

Similarly, Sierra Club describes former Commerce Secretary Norman Mineta as "a sound choice" to head the Department of Transportation.

While the California Democrat is a longtime supporter of mass transit and strict fuel efficiency standards, he has also sought to alleviate the automotive trade imbalance with Japan.

The nominations of New Jersey Gov. Christine Todd Whitman and former Michigan Sen. Spencer Abraham prompt mixed reaction.

Sierra Club says Ms. Whitman, as Environmental Protection Agency administrator, "leads us to wonder."

"Will we have the Gov. Whitman who joined with other Northeastern governors to insist that Midwest utilities clean up their pollution-belching coal-fired power plants; or the Gov. Whitman who cut her own State Department of Environmental Protection's enforcement budget, which resulted in an 80% reduction in fines assessed to polluters?"

Meanwhile, Mr. Abraham, energy secretary-designate, is well-known in the auto industry.

"We think as a result of that he understands the issues," says General Motors Corp. Chief Executive G. Richard Wagoner. "We look forward to working with him."

Had Mr. Abraham been more successful as a senator, Mr. Wagoner would never have had such a chance. Mr. Abraham once endorsed a bill to eliminate the Energy Department.

Overall, the Bush administration's direction troubles some and comforts others.

The UAW fears ergonomic standards will be eroded and that compensatory time off in lieu of overtime will become de rigeur.

But, says Mr. Wagoner: "I had a chance to participate in the economic forum that President-Elect Bush hosted. And I came away from that feeling good about his commitment to a strong economy and a growing economy."

A tax cut "would help," he adds. But with a Bush cabinet, Mr. Wagoner says, "we'll get a fair chance to state our views, which we appreciate."

In the end, however, Mr. Mateyka may be right. What happens in the White House may not matter as much as other factors.

Ford Div. President Jim O'Connor recalls a meeting with West Coast dealers the morning after the Federal Reserve Board's interest rate cut in January.

"How's everybody feeling today?" Mr. O'Connor asked.

They didn't have to answer, he says. Their smiles told the story.