The Loss of Manufacturing Jobs

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The Big Three were recently in Washington DC testifying because all three are in danger of going bankrupt.  It is clear that they are going to have to continue to close plants and retool for a shift from trucks and SUVs to smaller more fuel efficient vehicles, but will the fragile buying public support a long term change away from vanity vehicles?

Some 'experts' say that we do not need a NA auto industry.  This makes little sense.  To get rid of the Big Three would influence the lives of more than 2,500,000 men and women in the Big Three and their supplier chain.  The after shock of this would last for 30 years.  NA needs manufacturing to compete world-wide and the Auto Industry is at the heart of it.  A bankruptcy and restructuring on this scale has never been done and would incur tremendous costs in and of itself and would take years to complete.

So what can be done?  A merger of GM and Chrysler has been discussed.  Where does that leave Ford?   Any combination of two of the three would bode ill for the third.

If US Government money is in the cards for a 'bail-out', it will have strings.  It could be tied to big layoffs and a restructuring of car models to fit world and domestic needs.  Luxury car divisions will no longer offer SUVs and it could be that GM would cut out everything but Cadillac and Chevrolet, with Ford handling light trucks and some form of the Ford that would fit with model offerings of Chevrolet.  Saturn is almost a separate entity and would have to be rolled back into a pseudo Big One to survive.  They have excellent quality and low cost plants. There is big model duplication with present Chevy offerings.

Trucks could be left to Ford.  Where does this leave Chrysler?  It appears that they would supply some engine components and other parts and some of their more modern plants.  They could continue to offer specialty vehicles.  They have a history of military vehicles.

It would be well if the after sale parts market were amalgamated into a single larger entity that would be shared across a new product line.

Now what about the dealers? They are vital and their networks are coveted.  There are 10,000 of them in the US.  They are at the heart of the matter.  Since they are independent business people, they should be offered, where possible models to sell that make geographic sense, so they can concentrate on selling and service of the new high technology offerings that should be coming out along with traditional offerings for family, tradesmen and farm use.

How would Research be handled?  Anyone familiar with Detroit knows that the car companies have large R&D staffs that don't cooperate at all.  These would need to be combined to help leapfrog the industry into new fuel efficient and hybrid vehicles.  Since these organizations are high quality, this could be a plus for the new Big One.

Infrastructure needs to be put in place that would allow battery and propane vehicles to be serviced across the continent.  These would be NA designed, controlled and operated.

Going from a Big Three to a Big One is a very difficult thing to do in a short period of time.  There is a model for this, however.

In WWII the Big Three in essence became the Big One with each of them making certain types of vehicles and airplanes.

This changeover happened very quickly and the plants and workers adapted at an astounding rate. No real passenger cars were made, but the War Effort forced retooling to leap ahead.  It can be done again.

(next column)

13/01/2009 04:23 PM

(continued)

It would take an Auto Czar at a cabinet level position in the US to do this. Kind of a Manhattan Project person. This needs to be sold as a national emergency.  It is not seen as one now.

Impediments are immense.  If this effort could be combined with a green industry to keep workers employed, then it might take the 'heat' off of the transition.  For example, there is no reason that Wind Turbines have to be imported into North America or to allow solar technology to slip away from us.

T. Boone Pickens suggests a massive change to propane quickly because we have great reserves of natural gas. Very few people realize that lots and lots of vehicles run on propane today because it is cheap and efficient. Light and medium trucks can be converted quickly.

Also, the city use of combination gas and electrical vehicles should be given tax cut incentives to lure buyers away from giant SUVs and vanity pick-up trucks.  We can't be the yo-yo at the end of Middle East Oil.

There are other problems.  The pension funds of these companies are in real trouble. Recently they have cut health care for retired folks.

The US also has to have some form of universal health care quickly to amortize costs over 300,000,000 people rather than putting $1500 on each car's costs because of obligations that the companies have assumed.  Since Canada has Universal Health care and a good work force they would again be in demand.  Huge layoffs have taken place here recently due to the dollar shift and the auto downturn.

Finally the auto companies have the world's worst marketing.  They spend fortunes on advertising, but they don't drum into the public the fact that they are producing good vehicles. 

They'd rather present a cheque to a winner of a major Golf Tourney.  Does that sell cars?  Does commercial free sponsorship of the Masters sell cars when GM is paying for it? Their ads are glitz, but no substance.  Why should I buy your offering?  All ads should aim to answer that one question.

The US and Canadian Government have to face the facts.  Free Trade has to be turned into Fair Trade.  This means that we have to restrict vehicles coming into North America from countries that restrict our vehicles. Buy ours and we'll consider yours should be our motto.  Right now it's their motto.

We have to restrict undercutting that is done all the time.  That is, products are priced below cost until the competition is driven out of business or hurt substantially because some nations subsidize their manufacturing firms for manufacturing.  This was done in the memory chip business and Lexus was brought into NA below cost to establish a market.  The German auto industry does not allow this.

The far east has almost ruined our domestic tool and die industry because of undercutting (not quality -- the tool and die folks around Detroit are doing major repair on far east molds and dies before they can go into production)

We also have to put penalties on vehicles manufactured in a way that would not pass our standards for safety in manufacturing and pollution. Why not?  To block free trade is bad, but unfair trade should be protested in the only way possible.

This  Big One will be very difficult to achieve because the financial people are not behind it and don't care about manufacturing.  They call it "rust belt thinking". They tell the people to upgrade to some other form of making a living, but are not specific about it and don't support it we did.  We can't all work in the service industry.

Detroit has a tremendous skilled labour force with tool and die and specialty design skills.  They are slipping away like furniture makers.  To lose this would be to lose our status as a country that makes things.  Anyone who has worked with tool and die people will tell you that they are far brighter than Wall Street people.  They can make things.

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