Setting the Record Straight

July 2, 2008

U.S. Automakers’ Enemy: Themselves

Filed under: news,policy,politics — straightrecord @ 9:03 am
Tags: , , , , , , , , , , , ,

Help the U.S. Auto Industry: Vote Against It

          Ask anyone close to the American auto industry who has been its biggest friend in Congress and you will hear a unanimous: Rep. John Dingell, Michigan Democrat.
          Ask us who in Congress has caused the most harm to the U.S. auto industry and we will say: Rep. John Dingell, Michigan Democrat. Why? Because he gave them what they asked for.
         Yes, the auto industry’s biggest enemy is straight out of the late Walt Kelly’s Pogo: “we have met the enemy and he is us.”     
          The U.S. auto industry is reeling and the stock market is expressing shock over the latest sales reports from Detroit. Together, General Motors, Ford and Chrysler suffered an 18.3 decline in sales in June, just the latest month of troubles this year, but also representing the steepest decline since 1993.
          Once again, history has been ignored, as George Santayana warned: “Those who don’t remember the past are condemned to repeat it.” And repeat it we have, in spades.
          Go back to the 1970s and listen to auto industry representatives appearing before the House Commerce Committee, now headed by Dingell, an otherwise liberal Democrat, later to become a millionaire by marrying a woman who is now a General Motors executive. For several years now, he also has been the longest-serving member of Congress.
          In 1972, before the supply of gasoline in the United States became a problem, U.S. automakers fought against auto-safety legislation that centered on bumpers that would reduce the amount of damage at certain speeds. The automakers wailed Americans were in love with their chrome, but crash-inefficient bumpers and would not accept the rubber-based bumpers that would allow the mph low-speed-impact to increase from 2.5 to 5.
          Dingell, already fourth-ranking member on the “powerful” Commerce Committee, and the automakers lost that battle and one result was the infamous (for other reasons) Ford Pinto switched from a bumper that sustained $500 damage in 1972 to one that sustained only $29 damage two years later. Heavy chrome bumpers disappeared and gas mileage increased as an unintended result, but not until after German cars made their first sales inroads with their rubber-based bumpers.
          Even before the Oct. 17, 1973 Organization of Oil Exporting Countries embargo on oil to countries that supported Israel during the Yom Kippur War, the United States was undergoing a crisis in its oil supply, fueled by an ever-expanding level of consumption. Prices were rising as demand outpaced the pace of supply, leading to those now-fabled blocks-long lines of cars waiting to fuel up at service stations, those places that used to pump the gas for you, wipe your windshield and check your oil.
          The government attempted price controls and allocation systems without success and practically gave up when OPEC began its embargo.
          All this time, there were proposals in Congress to increase the mileage cars could get on a gallon of gas. U.S. automakers appeared before Dingell and the Commerce Committee to plead against legislative efforts that led eventually to what became the Corporate Average Fuel Economy (CAFÉ) standards governing car mileage.
          It began as an ambitious effort to require better gas mileage to reduce U.S. gas consumption, already the major reason behind the demand for imported oil. The automakers appeared before the panel to argue against various provisions, such as requiring them to reduce other vehicle weight not already reduced by those soon-to-be defunct chrome bumpers.
          In environment hearings, they also argued against catalytic converters, claiming that requiring them would add nearly 10 percent to the cost of a car and Americans would not stand for that. Congress required them nonetheless and the added cost not only turned out to be minimal, there was almost no buyer resistance.
          U.S. auto industry executives and lobbyists argued against just about every requirement that would later save their industry, and Dingell served was an obedient key ally. These efforts included establishing a national speed limit. The auto industry, of course, fought against it. The commerce committees heard testimony that the optimum efficient speed of a car was 50 miles an hour (Congress ended up setting a 55 mph limit to satisfy pleas of the trucking industry) and ended up establishing the 55 mph limit that has been largely diluted and 75 mph has become widespread once again.
          But it was the auto industry’s fight against the CAFÉ standards and Dingell’s help on their behalf that doomed U.S. automakers.
          Even as foreign automakers were making cars much more fuel-efficient than American-made cars, the U.S. auto industry fought the standards that would require them to average a certain amount of miles per gallon across their entire fleet. The standards would still allow gas-guzzlers, but they would have to be offset by vehicles that achieved an equal fuel efficiency on the other side of the center line.
          “We can’t do it, it would ruin us, we’d have to lay off workers,” U.S. automakers wailed as representatives of the United Auto Workers weeped at their sides. Thus the CAFÉ standards were set so high and with so many vehicle-type exceptions, they became mostly meaningless and Americans guzzled away.
          Within a few years, automakers and their employees were banning foreign cars from their parking lots and foreign cars, particularly those made in Japan, were being vandalized but auto workers in the Detroit area. Why? Japanese cars became popular during the 1970s, a decade capped by another oil crisis in 1979, because they routinely provided a better mpg than American-made cars.
          Today Japanese-owned automakers sell more cars than the American giants (now numbering only two as Chrysler ownership bounces from country to country).
          Despite this history, what did the U.S. automakers do in the 1980s and 1990s? They not only supplied, they encouraged with billions of dollars of advertising, the new fad of gas-guzzling bigger vehicles supposedly demanded by Americans with memories even shorter than those of the auto executives.
          Sure, foreign automakers also began producing gas-guzzlers to compete with the growing fad, but they always maintained massive production lines to continue to produce their old fuel-efficient autos. More importantly, they led the innovations for more fuel-efficient cars, such as hybrids and autos using alternative fuel sources. Detroit, as always, lagged way, way behind.
          Now, the bloom is off the gas-guzzler rose and Detroit is stuck with gas-guzzling trucks and SUVs while foreign competitors find themselves unable to keep up with the American demand for economical substitutes.
          The U.S. auto industry was hoist by its own petard. Ten years from now, if it still exists, will the industry have learned its lesson this time? For clues, watch the next appearances by auto executives before concerned congressional committees.

(from www.straightrecord.com)

===============<>===============

Advertisements

Leave a Comment »

No comments yet.

RSS feed for comments on this post.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: