Monday, November 17, 2008
Myths about Detroit get a lot of mileage
This "6 Myths About the Detroit 3" answers some of the biggest stereotypes that are continually trundled out against federal help for GM, Ford and Chrysler. While the article comes from the Detroit Free Press, which is often a booster of the auto industry, it is based on facts, not opinion. The piece could have added a seventh myth -- that Detroit is so burdened by union labor costs it can't compete with international automakers who build and sell vehicles in the U.S. In fact, the new two-tier wage schedule, which goes into effect in 2010, will cut production-line costs for new workers in half. GM has also off-loaded its employee health-care costs to the United Auto Workers -- one big reason it needs a bridge loan to 2010.
Any federal bailout of the Big 3 should have tough conditions that ensure Detroit can't backslide to gas guzzlers, and that it continues to invest in the all-electric vehicle. The conditions should be pointed to the future -- where hundreds of millions of people will become first-time car buyers, helping to raise global auto production by 26% by 2014. For sure, the sellers will include automakers in Europe, Asia and Latin America, providing millions of jobs and bolstering the economies of industrialized countries in those regions . Will the U.S. be the odd country out?