Questions Continue Over Proposed US Auto Industry Bailout


Detroit's big three automakers - General Motors, Ford, and Chrysler - have until December 2 to present a plan to Congress on how they would use $25 billion of emergency loans.  VOA's Barry Wood reports lawmakers and some auto dealers remain skeptical that current management can turn the industry around and restore leadership in innovation, quality, and design.

Successful car dealer Jack Fitzgerald is cross with America's big three automakers. A car salesman for over 40 years, Fitzgerald asks why Japan, and not Detroit, was first to bring hybrid and plug-in electric cars to market.

"You just plug it in," he said. 

The Maryland auto dealer is furious that Detroit squandered its market dominance and allowed its Japanese competitors to seize global leadership.  Fitzgerald says Detroit can get back in the game only if it produces the world's highest quality cars.

He said in disbelief, "Why are we closing up plants when we've got the best production people in the world? And we're closing plants and the rest of the world is coming over here to open them."

Fitzgerald agrees with those lawmakers who believe the current leaders of the car companies may be incapable of halting their industry's decline. Big three CEOs came in for criticism when they asked Congress for help.

"We are a bank and you need to think of us as a bank," said Rep. Jackie Speier,a Democrat from California. "We need some level of security that this loan is going to be paid back."

The Detroit executives were called arrogant, bureaucratic and unresponsive.  And some in Congress called on the automakers to accept bankruptcy as a way to buy time to reorganize their businesses.

The Big Three CEO's rejected this, and car dealers like Fitzgerald agree bankruptcy would be catastrophic.

"Bankruptcy probably would be liquidation, not re-organization," he said.

The auto industry accounts for at least three percent of U.S. employment and economic output. The collapse of even one of the companies would be devastating to the industrial middle west. 

This is why Kent Hughes, an economist at Washington's Woodrow Wilson Center, says  the U.S. auto industry is too important to fail. 

"I can't imagine ignoring an industry that directly accounts for three million jobs. Beyond that, autos are central to our whole manufacturing enterprise," he said. 

Critics worry that Detroit's automakers will get their bailout but will not alter their non-competitive, high-cost ways.  If that happens, says Fitzgerald, the industry's decline will continue and its fate will mirror that of Cadillac, a General Motors brand that was once synonymous with the highest quality.

"Cadillac sales [today] are dwarfed by sales of Lexus, BMW and Mercedes. And once upon a time Cadillac sold more than all of them put together."

Congress is likely to vote on auto industry assistance in early December. 

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