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Bush Busy with the Big Three

After multiple delays, the heads of the Big Three automakers will meet with the White House today to discuss the factors that they believe give global competitors an unfair advantage — namely health care, currency manipulation and energy. The meeting comes a week after Democrats — some of them backers of the auto industry — gained control of the U.S. House and Senate.



Rick Wagoner of General Motors, Alan Mulally of Ford and Tom LaSorda of Chrysler, a division of Germany’s DaimlerChrysler, are heading to the White House meeting today to discuss the factors that they believe give global competitors an unfair advantage — namely health care, currency manipulation and energy. The Detroit automaker heads have emphasized that they are not seeking any federal bailout but that they want support on health care and trade issues. The Associated Press reports:

The auto leaders and Bush have ruled out a direct bailout or government loan guarantees. So the executives want steps to help the industry compete against imports. They will discuss the spiraling costs manufacturers face on health care, the advantages Japanese automakers have because of a weak yen and their work to develop alternative fuel vehicles.

The meeting comes a week after the Republicans lost control of Congress in midterm elections, putting Democrats — some of them backers of the auto industry — in control of the House and Senate.

The control shift of Congress is likely to give automakers more political clout in today’s get-together. Reflecting that new reality, Washington representatives of GM, Ford and Chrysler Group met yesterday with Representative John Dingell, a Michigan Democrat who is in line to head the House Energy and Commerce Committee next year.

Some pundits and pollsters say this shift from Republicans to Democrats could lead to changes beneficial to the Detroit carmakers. Moreover, some believe Democrats will look more kindly toward the health care reform and trade policy changes the beleaguered Detroit-based carmakers seek to help them compete against the foreign-based automakers that are “eating progressively larger portions of their lunches,” according to New York’s Newsday. Notes AP:

• All three automakers spend more on health care per vehicle than steel, which adds about $1,000 to the cost of a car built by the Big Three.

• The automakers have also sought support on trade, arguing that Japan’s weakened yen makes imported goods from Japan cheaper. Auto industry officials also noted that China is keeping its currency artificially low against the dollar, making Chinese goods cheaper in the U.S.

• Figures compiled for and published by the Detroit Free Press earlier this month show that, when bulk sales to daily rental companies and other fleets are not counted, Toyota has 17.8 percent of the U.S. market this year, only 4.2 percentage points behind GM and growing. Ford has a smaller share than Toyota — 16.1 percent — and it and Chrysler are losing share.

However, others believe it will have the opposite effect by mandating cars that use less fuel. Further, some experts note the Republicans’ long-standing business-friendly philosophy — exemplified by the Bush administration’s resistance to changing those car mileage standards and its recently enacted small increases in light truck standards.

The difficulties facing the Big Three have been decades in the making, and, while GM is showing some signs of financial revival, this year has been another challenge for all three.

The carmakers contend that a more secure fuel supply and more stable prices better enables them to make future product plans — avoiding, for example, events like the sudden unpopularity early this year of previously hot-selling sport utility vehicles because of suddenly-increased gasoline prices.

The encounter between the U.S. president and the Detroit automakers was supposed to take place last spring. Originally set for May, the meeting was delayed several times before the White House decided to wait until after the Nov. 7 elections. Multiple cancellations caused many concerned about the state of Detroit to wonder if the president was giving the industry a grand brush-off. USA Today says automakers “sat by through several postponements as…Bush met with American Idol finalists, hosted a softball game between an Air Force base and a Navy submarine base, and met with small business owners and community bankers.”

Nearly every media report on the topic has offered the stinging reminder of President Bush’s comment during an interview with The Wall Street Journal earlier this year suggesting that Detroit car companies should make “a product that’s relevant” rather than look to Washington for help with their heavy pension obligations.

Forbes offers a pretty good overview of what’s been going on with these automakers.

Earlier: Auto Industry Outlook: Sinking and Soaring

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Comments:
  • JOHN
    November 15, 2006

    More Big Three bitching….”it ain’t our fault”…it’s the health care, it’s the currency, you can’t due anything about the currency, free market sets its value.

    But you idiots signed the union contracts back when the Democrats gave union labor anything it wanted just to get the election votes. Now the short-sightedness is being paid for and we can’t figure out why….must be Bush’s fault, everything else is!

    They want the price of gasoline guaranteed so they can sell the gas guzzlers that are contributing to rising prices, but which of the Big Three wants to guarantee the
    quality and workmanship in their vehicles? They will not face up to the fact that the U.S.-buying public has a poor perception of the design and mechanical quality of the Big Three and agree or not, that perception is reality when dollars are to be spent…don’t believe it… read the numbers.

    The contributions in real fact to the economic health of the U.S. in general is not tied to the Big Three as it once was; that’s a faulty perception, just as faulty as the perception that the economy was tied to the U.S.-owned steel industry or the railroads in their hay day.

    The real contributors to economic growth in the U.S., as it pertains to autos, is in the investment by Honda and Toyota in new plant facilities all over mid-America, plants staffed by hard-working Americans who do not suffer the illusion that they are owed cradle-to-grave welfare due to the fact that they make cars.

    Those same plants support local school corporations, construction companies, police forces and other community needs. The trickle down to other businesses in the areas is supportive of countless other jobs. When is the last time a Big 3 did something in your commumity besides close a plant?

    As to the unsupported complaint that the “profit goes overseas,” take a careful look at the ownership of GM — you don’t have to be a U.S. citizen to buy stock. My guess is that a larger percent of Toyota common stock is owned by U.S. interests and/or interests outside of Japan than the percent of GM stock owned by US.

    The economy is worldwide, and to deny it is to die with the view. An individual or a company that has problems and is unwilling to look first in the mirror for the root cause, but looks for others to blame, will never solve the problem — but will waste energy that could be better spent
    searching for the enemy…

    But they, in reality, have met the enemy…and the enemy is us!


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