Motives of those unwilling to save GM may not be pure
Richard Shelby, an Alabama Republican, has emerged as the face of Senate opposition to a federal bailout of U.S. auto makers.
When Shelby says, “I do not support the use of U.S. taxpayer dollars to reward the mismanagement of Detroit-based auto manufacturers,” Shelby may sound like nothing more or less than a solid fiscal conservative.
Or maybe Shelby is just a good old boy politician doing what good old boys do best: cater to their constituents. And who would those constituents be? Well, a lot of them would be workers in the Honda, Toyota, Hyundai and Mercedes plants in Alabama.
Making foreign marque cars has become big business in Alabama. There are six assembly plants, two engine plants and nearly 300 supplier plants. Those facilities provided more than 48,000 jobs in Alabama last year. Indirect jobs, defined as those created in the rest of the economy as the result of goods and services purchased by workers and companies in the auto manufacturing industry, were estimated at more than 85,000.
Those are figures assembled by the Alabama Automotive Manufacturers Association, which estimated direct and indirect payroll from auto jobs in the state at $5.2 billion last year. The state ranks sixth in the nation in auto production, but there’s no Detroit iron coming out of Alabama.
What is and isn’t
We’re not saying that there isn’t reason for Congress to discuss the terms of a bailout of U.S. auto makers.
And we’re not saying that foreign car makers aren’t welcome in the United States. Honda has certainly added to Ohio’s economy.
But when an influential senator is adamantly opposed to helping the domestic industry, its worth asking whether he is acting in the interests of the nation or the more parochial interests of Alabama.
To be sure, Shelby should be an advocate for his constituents. But does the Republican Party want to follow the pied piper for Japanese, Korean and German automobile manufacturers on a road that could lead to the ultimate collapse of the American automobile industry?
Democrats in the Senate should call the Republicans bluff. If the Republicans want to join Shelby in protecting the interests of foreign makers to the detriment of Detroit, let them do so.
Our guess is that a party that is reeling after its November defeats will not be eager to tie its future to Shelby’s unique brand of protectionism.
GM, Ford and Chrysler should get no blank checks from the government. Some are arguing that the only thing the government should do is offer to help the “Big Three” after they have filed for bankruptcy.
That would allow the abrogation of contracts with managers, unions and dealers, stock would become worthless and suppliers and retirees would get stiffed. It would undermine the value of the brand everywhere in the world. But it would allow for the kind of radical restructuring that some say is required.
That is too drastic a proposition. At a time when Congress has committed up to $700 billion to bail out banks and brokers, investing $50- or even $100 billion in a well-structured plan to save the U.S. auto industry is not outrageous.
Shelby may be ready to dismiss Detroit as a dinosaur. It would be good for business in Alabama to bury the Big Three, but what’s good for Alabama is not necessarily good for America.