As the Big Three executives return to Washington this week in search of assistance, the conventional wisdom predicts a taxpayer-funded bailout or bankruptcy restructuring - both of which will hurt Main Street America. Perhaps we need to consider other options.
Short term, the Big Three will run out of cash primarily because U.S. vehicle sales have dropped almost 40 percent this year. We therefore should focus on how to generate immediate sales. The more than 1 million high-profit-margin truck and sport utility vehicle inventory represents significant cash potential for Detroit if only those vehicles could be sold. This is where the federal government can play a role.
The federal budget indicates the government spends almost $20 billion for foreign aid each year. Why not use the 2009 foreign aid funds to purchase a major portion of Detroit’s truck and SUV inventory and then ship those vehicles to overseas organizations?
Many of the organizations would benefit from new vehicles, and we could monitor how the vehicles are used more effectively than we monitor some of the cash grants traditionally given. The government’s purchase of this inventory would not represent a total solution to Detroit’s problems, but perhaps it could be combined with other solutions to help avoid a $25 billion bailout and/or bankruptcy.
The auto industry is vital to our national security. To let the automakers fail and the skilled work force they support disseminate would be grossly irresponsible. Their contribution in World War II is legend.
However, in bailing them out, the federal government should impose the following by enacting a “Hydrogen Fuel Conversion Act”:
1. By 2011, all cars sold in the United States using internal combustion engines must be designed to run on both carbon-based fuels and hydrogen fuel. (BMW already produces such an engine.)
2. By 2015, all vehicles sold in the United States must have engines that operate on hydrogen fuel only. Plus, all vehicles must conform to the metric system.
3. By 2021, all vehicles not using hydrogen fuel will be removed from the road. Gas stations as we know them will sell hydrogen fuel only.
This Hydrogen Fuel Conversion Act would define safety standards for production sites, production, storage and transportation of hydrogen fuel. Production would be licensed by or reserved to the state as a source of income for road maintenance and/or construction or mass-transit development. For safety concerns, production of hydrogen fuel by the general public would not be authorized. The act would be modified to other industries that use hydrocarbon fuels.
The auto industry bailout coupled with a Hydrogen Fuel Conversion Act would have the following impact:
1. It would solve our energy-dependence problem.
2. It would have an impact on oil prices.
3. It would eliminate the need for further drilling for oil.
4. It would reduce carbon emissions significantly.
5. Most important for the economy and employment, it would give service-station owners, manufacturers, business owners, public works and services companies, the military, entrepreneurs and general investors the assurance they need to make long-term investments in technology, facilities and equipment.
All costs for the conversion would be tax-deductible. The federal government would make low-interest money available for hydrogen fuel-conversion purposes.
Judging from media reports, it appears most of the general public is just as clueless as our legislators and media when it comes to the real situation of the U.S. automotive industry. Much of the reportage, commentary and congressional questions are either 20 years out of date or seem to be cribbed from the talking points of environmentalist extremist groups’ biased and inaccurate propaganda releases.
Demands to cut pay? Starting autoworkers make 50 percent less under the new 2007 contract than they did before. Concessionary contracts have been a way of life for more than 10 years. General Motors Corp. Chairman and Chief Executive Officer G. Richard Waggoner Jr. took a 50 percent pay cut when he started restructuring, Ford Motor Co. Executive Chairman and Chairman of the Board William Clay Ford Jr. took a 100 percent pay cut, and they have eliminated bonuses not only to executives, but also to salaried and hourly workers.
Restructuring? All three Detroit automakers have eliminated model lines and even whole divisions and have trimmed both white- and blue-collar jobs by more than 50 percent. They have been streamlining their businesses for more than five years, before Washington politicians even realized there was something the car companies did other than give environmentalist extremists a straw-man whipping boy.
New products? GM has the world’s largest fleet of hydrogen-fuel-cell-powered vehicles being field-tested in New York, Los Angeles, and the District, while Chrysler has the second-largest fleet. GM crowded 10 years’ of research and development into five years for its Chevrolet Volt program, and it will have the industry’s first mass-production, fully plug-in electric vehicles for sale in 2010. The Detroit Big Three are far ahead of the Japanese in all areas of advanced research and development despite the fawning (and largely inaccurate) media coverage of the Japanese carmakers and their government subsidies.
Congress blithely gives away (not lends) $700 billion to the financial industry without even a clue as to where it’s going and without any guidelines. The financials account for 0.4 percent of the U.S. gross domestic product. Meanwhile, the Detroit-based automakers, which account for 4 percent of the GDP (and 10 percent of all U.S. jobs) get treated like pariahs for merely asking for (as a loan) less than 3 percent of the total given to the banks (so far). Seems the media and our politicians have a serious problem with perspective, fairly judging each industry by its real impact on the economy and the basic facts of the situation.
S. KACZOR JR.
Sterling Heights, Mich.