StarBulletin.com

U.S. automakers must learn how to compete


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POSTED: Sunday, November 16, 2008
               

     

 

 

THE ISSUE

        The Detroit auto manufacturers are asking Congress for a $25 billion bailout to save them from collapse.

Congress authorized $25 billion in low-interest loans to U.S. auto manufacturers two months ago on the condition that they develop technologies to improve fuel efficiency. Apparently unwilling to do so, the companies - General Motors, Ford and Chrysler - are asking for a $25 billion bailout to prevent a huge blow to the economy. Their directors don't seem to understand competition.

Greg Martin, a GM spokesman, talks of “;a pressing need to preserve the domestic auto industry.”; But the Big Three's executives and boards have yet to understand that preservation should be reserved for antiquities. Ironically, the carmakers nearly qualify under that standard.

The Detroit automakers' woes did not stem from the global financial crisis. They began losing billions of dollars during a healthy economy three years ago, continuing to produce gas-guzzling SUVs while Japanese, Korean and German companies built fuel-efficient and hybrid compact cars in North American plants, which now number 16.

“;They are producing high-cost products that consumers don't want to buy,”; Rep. Jeb Hensarling, R-Texas, said of the Detroit companies. “;And so now we have Washington on the verge of giving them a bailout simply because we have all heard of them and they have high-priced lobbyists.”;

Congress is scheduled to convene in a lame-duck session this week to consider the auto-industry bailout at the behest of the companies and the United Auto Workers union. For good reason, Democrats appear to lack the votes in the Senate to pass the legislation.

Senate Republican Leader Mitch McConnell of Kentucky favors expediting the September loans to the auto companies by easing the requirements that they retool their facilities to make fuel-efficient cars, thereby eliminating the need for a bailout. House Speaker Nancy Pelosi has rejected easing the retooling requirements; such changes might be the only way the companies eventually will learn how to compete.