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Schwarzenegger Backs Detroit, Calls for Federal Aid

By       Message Craig Harrington       (Page 1 of 1 pages)     Permalink    (# of views)   No comments

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There is no hiding the fact that the Big Three in Detroit have been battered by the economic downturn and the shrinking U.S. and global auto market.  They have also been substantially weakened by competition from foreign-based automakers both at home and abroad.  Some of the obstacles faced by Detroit were self-imposed, but the federal government also had a helping hand in their destruction and should certainly be doing a lot more to help them succeed. Instead, it is putting arbitrary restrictions and deadlines in place which could lead them to failure.

California Governor Arnold Schwarzenegger expressed much the same sentiment during his keynote speech before the Society Automotive Engineers 2009 World Congress in Detroit on April 19.

"It was not the car manufacturers that created the mess -- it's the government that has screwed up," Schwarzenegger said.

Governor Schwarzenegger has been highly critical of Detroit in the past, but he realizes that allowing a world leading industry to die simply because of a debate about fuel-efficiency is a ridiculous proposal.  The Big Three are too important to the health of the Great Lakes region, and in fact the entire United States, to be allowed to collapse outright.       

He and others have called for new nationwide fuel and emissions standards which will match the high criteria of California and several other states.  The government has allowed individual states to craft their fuel standards in the past, and thus allowed national energy policy regarding oil to erode.

A codified national standard could help restructure this country's addiction to, and dependence on, foreign oil imports and greatly reduce the growing trade deficit.        

Thus far Chrysler and General motors have received roughly $17.4 billion from the government, but restructuring takes time and these companies need government assistance in order to make the transition. 

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General Motors in particular is set to become an industry leader in gas-electric hybrid technology because of the innovative design of the upcoming Chevrolet Volt.  The vehicle does not use a gas-powered drive train like the Toyota Prius, Honda Civic, or other hybrids.  It uses a fully electric drive train which is charged by a small gas-powered generator.        

This allows the vehicle to get even more fuel-economy out of a small amount of gasoline.  GM is hoping to employ this technology in its remake of the worst gas-guzzling offender: the Hummer.

During the artificial market boom of the past decade the run on trucks and SUVs produced skyrocketing demand for the unnecessarily large, military graded, Hummer brand.  The vehicles got notoriously poor mileage and have become a symbol of the opulence which America frittered away.  A new model of the H3 hopes to change that perception, and boasts a gas-electric fuel-efficiency of over 100 miles per gallon.        

Detroit has a long way to go before it gets its affairs in order, but there are a few things the government could and should be doing right now to help them.   

First we need the government on every level to stop subsidizing outsourced manufacturers.  Those that are already here are a sunk cost, and since they do employ American workers they cannot simply be thrown out.  However, Washington should mandate that states no longer give tax incentives and lucrative contracts to overseas manufacturers in the future.  That money and those assembly plants should be going to American industrial titans.      

Second, we need the government to take a firm stance against corporate waste and greed at the Big Three.  Former General Motors CEO Rick Wagoner was the sacrificial lamb in this regard, not so much for personal wrong-doing, but for not expediting the restructuring process.

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Finally, Washington has to adopt new national standards for the auto market and then help GM, Chrysler and Ford achieve those goals.  In the past standards were talked about but not enforced, and those that were enforced were used punitively against Detroit.       

We need to work together on every level to dig out of this crisis, and there is no better place to start than one of this country's most battered economic sectors.

 

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Craig Harrington is pursuing a degree in History and Political Science at The Ohio State University. He is also a journalist for EconomyInCrisis.org.

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