Thursday, July 20, 2006

STANDING UP FOR AMERICAN CARS.

The American auto industry has been under seige for decades.

At first, the attacks seemed insignificant. FDR's radical pro-union policies combined with short-sighted labor practices saddled America's domestic car builders with a labor cost structure isolated from world competition.
Labor negotiatiors, believing the Domestics' hegemony was endless, agreed to back-loaded, expensive fringe benefits during the good times, saddling the Domestics with huge "legacy costs" as workers aged and market-share sank.
Protectionist laws, anti-trust policy and poor business judgment combined to stymie the Domestics from taking full advantage of the investment opportunities in Post-WWII Japan and Germany. These defeated industrial powers became hot-houses for development of Detroit's future competition.
The breakdown of franchise exclusivity created a ready, virtually instant national network of potential, experienced dealers for imported marques.
After a time, however, the attacks became more systematic and sustained.
Inflation, first driven by the 1957 Steel crisis and then later by the Vietnam/Cold War conflict, continued to ratchet up cost pressures on the Domestics.
The liberal troika of consumer, safety and environmental interests worked tirelessly to increase regulatory obstacles and costs for the Domestics while simultaneously belittling any progress as insufficient.
Inflexible labor bosses sought to preserve and expand union jobs and benefits instead of expanding and improving the health of the companies who provided such jobs and benefits.
By 1972, the American automobile was under a full-scale assault from all corners.
Then the Arabs turned off their oil taps.
Since the 1973 Arab Oil Embargo, the Domestics have been skidding toward disaster as imported and transplant-assembled vehicles have garnered larger and larger shares of the American market.
Although fuel efficiency is one component, it's not the most signficant one. Although dramatic foreign cost advantages are a major component, it's probably not as signficant as the psychological factors that have motivated whole generations into abandoning the Domestics.
Now, Toyota and other "transplants" tout their "American" credentials by bragging on a few models assembled or partially styled in the USA, even though eight of every ten auto jobs in the US (excluding sales jobs) are still the result of the Domestics.
Yet for some unknown reason, the Domestics have not really focused the buying public on the impact that buying a predominantly "American" vehicle has on the American economy and society.
It's about time the "real" Americans fought back.
Emerging at a time when the tipping point seems imminent, "Level Field is a grassroots organization founded by retirees of Chrysler, Ford, GM and the companies that supply them."
Obviously, retirees and domestic suppliers have a vested interest in keeping the "Detroit 3" alive in the increasingly competitive world automobile environment.
But so should all Americans.
For example, while Ford Motor Company (tm) hardly commands 25% of the US new vehicle market anymore (for a variety of external and internal reasons), Ford employs 1 out of every 4 autoworkers and a purchase of a domestically-produced Ford vehicle supports three times as many U.S. jobs as purchase of a competiting Toyota product. Moreover, the Center for Automotive Research multiplier suggests that each U.S. autoworker job generates 9.4 other U.S. jobs in the community.
When that money is exported, those multiplier jobs are generated elsewhere.
Level Field's analysis predicts that as many as 2.5 Million U.S. jobs are at risk if the Detroit 3 cannot turn things around by 2011. http://levelfieldinstitute.org/docs/lfi_report_FINAL04.pdf
And these aren't just idiot "burger-flipper" jobs near shuttered auto plants.
What's more, if continued declines in the Domestics force more suppliers into reorganization -- such the bankruptcy of Delphi -- huge unfunded pension and health care liabilities will be forced onto the backs of U.S. taxpayers.
The prospect for increased taxes and reduced domestic economic activity should really take a bite out of whatever advantages one finds in buying a "transplant" or foreign vehicle. Slapping an "American flag decal" on your "Kentucky-assembled" Toyota or rooting for the Waltrips doesn't really stem the damage done, does it?
"Buying American" still does matter when it comes to vehicles. Just ask those whose future depends on it.

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