This video is a must watch for anymore concerned about the current state of the North American auto industry.

 

Well worth the time it took to watch.

Excellent post!

 

After having had 24 hours to digest this and discuss it at work, I have a few more thoughts on the ills discussed in the meeting.

Whether currency manipulation by the Japanese is real or imagined, the government denies that it it exists. Therefore it will do nothing to prevent it so the Big 3 will have to live with it.

As we've discussed ad nauseum on other threads in these forums, pension and health care costs are one of the major burdens Detroit has to bear. It's taken baby steps, largely due to the recalcitrant UAW not wanting to give an inch while the industry loses a mile, but that's a topic for another useless forum. The result is that retirees and employees now have to pony up a little for their share of health costs. A good move, but I fear its too little and too late.

I've been ranting about our out of control tort system in this country for over 20 years. How much do you think insanely huge settlements have contributed to the cost of medical malpractice insurance and the passed on costs to the rest of us? It's a bunch.

In 1986 I had several long conversations with two lawyers from Canada (I'm not an attorney; these guys were friends.) who told me that at that time the maximum settlement that could be awarded under Canadian tort law was 750,000, an amount which when properly invested could could keep a person in reasonable comfort for the rest of his life. I don't know what that figure is today but the fact is that government health care in Canada is significantly less expensive than in the US, a point mentioned in the town hall meeting.

Will we follow suit? Not likely as long as attorneys continue to take tort cases on contingency and then take 30-40%+ in fees after the settlement.

Will the US ever implement a national health care plan? Bush says he wants to do it in six years to provide medical coverage to the 30,000,000 currently not covered. He can say this as a lame duck but when Hillary Clinton tried it a few years it almost killed her in politics.

My take on it is that it sounds good in speeches but will never see implementation. Remember that this is a Democratic controlled Congress which just refused to raise the minimum wage. Spend money on health care? You judge how likely that is.

Which brings us to trade imbalances and a so called level playing field. Foreign manufacturers can import cars into the US but impose a hefty tariff on US built cars shipped there. They can build plants here to build cars but won't permit the US to do the same on their soil. Fair trade? Hardly. They've been doing this for decades and I don't see it changing anytime soon.

A couple more points and I'll shut up. Bear with me.

The panel discussed the perception of quality that the American consumer has about foreign versus domestic cars. That's a battle they'll have to win on their own laurels and I think they're winning this one. But I'm afraid its a Pyrrhic victory if they lose the previously mentioned four points. I hope I'm wrong but I don't think the Big 3 can continue to compete for long unless they make substantial gains in those areas and every time I turn my 8 ball over all I see is "ain't gonna happen".

About a month ago the Big 3 met with President Bush to discuss the state of the auto industry. What do you suppose they talked about? Maybe the same issues discussed at the town hall meeting? And what have we heard from Detroit and the White House since? Nada. A resounding silence. I didn't expect an announcement that the adminstration would wave its collective magic wand and make everything right overnight but I did hope to hear some positive releases from both parties. The silence is deafening.

What I fear happened is that the president acknowledged the problems, sympathized with the CEO's, wrung his hands a little about how powerless he was to do anything, and sent them trudging back to Detroit to do the best they can while he turns his attention back to Iraq and how he can groom his successor for the next election. He's not the first to do nothing and I suspect he won't be the last but he had a chance to do something and I think he chose to do nothing. I sincerely hope I'm wrong, but I don't think so.

Don't misunderstand me. I voted for the man twice, not so much because I liked him or his platform, which I did, but because I thought he was better than his opponents. I still believe that, but I'm afraid that history will judge him as the architect of the overthrow of Saddam Hussein and the resultant US immersion in the quagmire of Iraq and not the man who could have done something to help the ailing US auto industry but failed to tke any meaningful action. After all his years in office I can't think of a single thing he or the administration has done to make a positive influence on our domestic economy. Feel free to enlighten me if I'm wrong.

In short, what I heard in the town meeting was a list of things Detroit needs to compete, let alone survive, none of which will happen in time to keep them above water. The panelists said otherwise-what else could they say?- but I fear for their future and what it could mean to this country. I'm usually optimistic but I left this meeting feeling worse than I ever have about what lies in wait for our automotive industry.

 

It was the Democrats who just passed a bill in the House to raise the minimum wage. Not sure what's happening in the Senate, but last I heard, a rider was attached to also give tax breaks to small businesses. Has something changed there?

I think you may have misunderestimated Bush.

Speaking only as a Canadian - with some distance and perspective - I don't believe history will look kindly upon this president. Frankly, I think he was groomed to appeal to the base, but I don't think he was ever qualified for the job. He's just not a smart guy. Combine that with a propensity for "born again" fundamentalist thought, and a general lack of knowledge about world affairs, and you have a dangerous mix. Then add the people around him, most of whom subscribe to the "Project For A New American Century" school of thought, and the invasion of Iraq really comes as no surprise. Get ready for Iran next... That's a Pandora's box, which if we open, will take 30 to 100 years to close again.

Truth is, the Democrats don't really have a viable presidential candidate right now, either. Hilary Clinton is certainly intelligent, moderate and articulate, but she can't possibly win the presidency. She's much too polarizing a figure, given that she's the wife of Bill Clinton (the "Billary" factor), and she's a woman, and at the end of the day, I'm not sure America is ready yet to elect a female president (which is kinda stupid on its own merits, IMHO).

Perhaps Charles Gibson's question is pertinent here. Do we REALLY need a North American auto industry? Why not just let the foreigners build our cars for us? Seriously. My cousin - who has a PhD in Economics - just retired from being the treasurer of one of America's most prestigious universities, and he tells me that the United States has been steadily moving from being a manufacturing and agrarian economy to a service economy for the past three decades. And still the economy remains strong overall. But at the same time, a class disparity is taking place. A debate about the pros and cons of so much outsourcing is highly complex and beyond the limits of a forum, but what's happening to the auto industry is actually an acid test for what is a systemic problem in America as a whole - if you even believe it to be a problem. Some do...some don't.

And I don't have any answers. But I do agree with your assertions that if all the above issues that were raised in the town hall meeting are not addressed, our auto industry could disappear, though I think it more likely that they will just begin building cars in cheaper places like Mexico. Ironically, the Fusion, which is built in Mexico, just got a better quality rating than any Ford vehicle built in the USA or Canada. So Ford and GM will likely survive, but only by outsourcing labor and pushing into markets like China. I don't believe the UAW labor/manufacturing model can survive indefinitely. It's broken and just doesn't work anymore in this globalized, "free trade" economy.

 

Correcting a point:

The Republican Senate Caucus fillibustered the Minimum wage increase to kill it. Despite the Democrats' majority, a minority fillibuster can still kill bills. They've passed a bill with the wage increase AND small-business tax cuts, which now must be OKed by the House.

 

Ahhhhhh...so THAT'S what happened in the end, huh? I didn't follow the outcome the past few days.

Thanks...

 

No problem.

 

You guys are right and I stand corrected on that point. For some reason I just read about that today.

I loved the comment about misunderestimating Bush! I was simply trying to be kind and gentle.

And sadly, I agree with the idea that to survive the auto industry may have to outsource its production to countries like Mexico et al where costs are significantly less than in the US. It's hard to swallow the thought that Detroit may lose its monicker as the Motor City, and lord knows what economic chaos that could unleash on both the city and the region, but I'm afraid that's where we're headed.

As for me, I'm moving to Poland this summer and if I were a decision maker in the Big 3 I'd be looking at former communist bloc countries as a place to set up factories. Contrary to what you may have heard or thought there are a lot of skilled workers there who produce quality products for what is now a very affordable wage and they're hungry for work. The drawback is that they're EU members and as capital flows into them costs will likely rise. Maybe Mexico is the answer.

But like BC_Shelby said, I don't have any answers, just a lot of hope which may override my skepticism about the future of the Big 3. But I doubt it.