Here we are finally, Election Day 2008. “Crisis”, besides “change”, is the byword: in the auto industry, the Wall Street meltdown, the bursting real estate bubble, higher gas prices et al. This is indeed an important election.
But some pundits believe that this election also marks the end of the American auto industry.
Pundits state that the domestic auto industry — General Motors, Chrysler, and Ford — got themselves in this mess. Sure conditions in the economy and the market place had a major influence. But the execs of the Big Three for some reason didn’t foresee the gas price crunch as something that would cause a major change in the market. They just didn’t see that the price of gas could really turn SUV and truck owners away from their old vehicles and to smaller, fuel efficient cars. They were warned twice — the gas crisis of the mid-1970s and the gas crisis of the 1980s. And then there was always talk since then that it would happen again. The execs of Ford, General Motors and Chrysler just chose to ignore it.
Then there’s CAFE — the standards that set the average fuel economy for an auto maker’s fleet. Every year auto makers scream that they can’t make the CAFE requirements and every year they make them. Moreover, now we are hearing about cars from Ford and General Motors being manufactured in Europe that exceed 40 mpg. The CAFE is less than that. So what are they screaming about? They are selling such cars in Europe but they are not yet selling them here. They are now retooling domestic plants so that those cars can be made and sold here.
These pundits say that it doesn’t matter who wins and becomes our next president. Either one won’t do anything to help the domestic auto industry.
They quote then Senator Barack Obama from a speech he gave in 2007, a year before the election, that Detroit has brought on its own misery.
But having said all of that, we can’t let the domestic auto industry die in the U.S. And the government realizes that. The feds are giving domestic auto makers $25 billion in low interest loans. Surely, the Detroit Three did not expect more than that. They did not expect a pure giveaway.
Now President Elect Obama has also said that he would help the domestic auto industry. Remember that he was in favor of the loan package. He is in favor of programs to assist auto makers to develop new technologies that result in better fuel mileage; money to the auto giants so that they can re-structure their manufacturing plants; and programs that will encourage the production of alternative biofuels and he favors tax incentives to get people to buy electric cars. What more do they want? What more do they deserve to get?
The election that killed Detroit? We beg to differ.