An industry well worth saving

Inter Lake editorial

The American auto industry is not just Detroit. It is not even just GM, Ford and Chrysler, although those "Big Three" are certainly the backbone of the industry. But let's be plain about this - economists say that as many as 1 in 10 of all American jobs are linked in some way to the auto industry.

And in small-town America, that is plainly visible on Main Street or the main highway. Whether it's Kalispell or Cut Bank, the presence of a familiar, friendly car dealership is one of the things that makes us a community and feeds our local economies. GM, Ford and Chrysler also reportedly spent $156 billion last year in parts, materials and services in all 50 states.

So when you are talking about whether to support a bailout for the auto industry, keep that in mind. The job you save may be your neighbor's, or even your own.

But that doesn't mean American taxpayers need to just open their wallets unconditionally when asked to support the auto industry either. There is a limited amount of help that we can do for struggling industries in a transitional economy, and we all have to recognize that.

The arguments in favor of doing something for the auto industry are considerable. It is, after all, the last major bastion of manufacturing left in the United States, and unless we want to cede all of our high-paying jobs to overseas manufacturers, we had better think of some way to make our car makers viable.

Nor should you believe that Detroit hasn't gotten the message sent by American consumers over the past 30 years when market share has dramatically shifted to overseas brands such as Toyota and Honda. The fact is that our U.S. companies have been struggling to adapt from the gravy days of the post-WWII era to the greener, leaner needs of the 21st century. The work force for U.S. car manufacturers has been reduced by 52 percent since 2000, and renegotiated contracts have lowered the costs of entry-level labor to a rate that is competitive with foreign rivals.

Nonetheless, there are still massive legacy costs for U.S. manufacturers associated with union-negotiated benefits for health care, retirement and job security which are costing a bundle. Advocates of letting car makers such as GM declare bankruptcy argue that the rules of reorganization would provide an opportunity to discard unviable obligations and start anew.

That's probably true, but the question of whether consumers would put their confidence in a company that had declared bankruptcy can't be answered with certainty, especially a company that sells products worth upwards of $20,000 that carry long-term guarantees.

It's also possible that a reorganized GM, Ford or Chrysler would shed long-term commitments to local car dealers which are just as important to small-town communities as the Big Three are to the national economy.

Probably the best solution would be for government to provide short-term funding for the auto industry with some strings attached. That's actually what President Bush has proposed, but Democrats are apparently against the idea.

Congress had recently approved $25 billion in taxpayer loans to the automakers to pay for retooling to accommodate the green agenda. The White House has offered to make that money available for more general purposes upon presentation of a business plan that shows how the cash infusion would help to make the company more competitive. This, in fact, would be quite useful. It would ensure that taxpayer money would not just go toward business as usual, and would be results-oriented instead of agenda-oriented.

Unfortunately, it appears politics will prevent such a move.