Panic in Detroit

At the meeting of the minds in the White House yesterday, PE (President-Elect) Obama urged P Bush to accept a Democratic-backed automaker bailout plan; Bush siad he would do this if the Dems accept a Free Trade proviso with Colombia. The Dems are not inclined to take this bait, as there are many union-busting activities in the Colombian labor market.

I think most thinking adults agree that the major problems with the American auto industry of late are as follows:

• Uncompetitveness with other carmakers due to health benefits
• Same due to retiree benefits
• Same due to lackluster product

On the first point, clearly this is a national problem, tying health care to employment. I don;t understand why people who want the status quo complain about the premium incurred in the cost of every American car due to health benefits. McCain did strike one correct chord with his health plan, but it would have been a disaster for many Americans to be thrown out to the general market. Unfortunately, some form of national health insurance, unwieldy as it is, seems to be the only cure here to make American companies competitive with foreign competitors whose workers enjoy such benefits.

On the second, this is where the unions have become outdated. This is a real pickle, because Obama did seek and get union support. Maybe the unions will see reason at this point, likely not if they allowed their industry to get so uncompetitive. But PE Obama will not seek to piss of the unions.

On the third point, I am continually amazed at the inroads that foreign car companies have made over the past decade+. Toyota leads the pack, by a long shot, in hybrid cars. GM and Ford have hybrid models, but as add-ons for their behemoths, and the gas savings is not all that great. (The Commonwealth of MA has purchased/leased a whole fleet of Ford Escape Hybrids, which my brother-in-law, an America-only car consumer, called the least fun vehicle he has ever driven.) Maybe the GM Volt will lead the pack someday, I hope so. But right now, where is the excitement?

Here's what I think should happen: bailout money should go to supporting the retirees and current employees. F the companies, for whom a bailout is a mere bandaid covering a bayonet strike. From the ashes of the companies' IP and manufacturing equipment should emerge a host of smaller, nimble companies, not weighed down by unions, etc., that can produce the cleaner technology needed for us to drive in the 21st century. Meanwhile, bailout money would be used to retrain workers and provide VC funds to startups that wish to harness the gains made in clean car tech and produce winning cars for the future, and keep American manufacturing alive and well.