Obama Backs Automakers, Fails to Act on Trade Problem

March 27, 2009

http://www.reuters.com/article/politicsNews/idUSN1838682720090326?sp=true

The linked article reports on Obama’s cyber town hall meeting yesterday in which, in response to a question, he promised additional support for U.S. automakers. 

President Barack Obama said on Thursday struggling U.S. auto companies could expect new government aid if they commit to “drastic” restructuring, promising to unveil a rescue plan in coming days.

That’s the good news.  But Obama then went on to chastise the domestic automakers for focusing on “gas-guzzling SUVs.” 

Without elaborating on a bailout price tag or specific restructuring steps for Detroit manufacturers, Obama said he wanted all major players to help overhaul a business model he called unsustainable.

“I know that it is not popular to provide help … to auto companies,” he added. “If they’re not willing to make the changes and the restructurings that are necessary, then I’m not willing to have taxpayer money chase after bad money.”

Obama has long said Detroit should build more fuel-efficient vehicles rather than focus on gas-guzzling sport utility vehicles and less efficient pickups. Sales of both models have plunged and GM, Ford and Chrysler are overhauling their product lines to emphasize efficiency.

Never, ever have I heard even a peep of protest about foreign automakers’ participation in this same segment of the market.  Apparently it’s OK for the imports to build and aggressively market their own competing models of gas-guzzling SUVs, including the following:

  • Acura MDX
  • Acura RDX
  • Audi Q7
  • BMW X3
  • BMW X5
  • BMW X6
  • Honda Pilot
  • Hyundai Santa Fe
  • Hyundai Tucson
  • Hyundai Veracruz
  • Infiniti EX35
  • Infiniti FX50
  • Infiniti QX56
  • Isuzu Ascender
  • Kia Borrego
  • Kia Sorento
  • Land Rover LR2
  • Land Rover LR3
  • Land Rover Range Rover
  • Lexus GX470
  • Lexus LX570
  • Lexus RX350
  • Mazda CX7
  • Mazda CX9
  • Mercedes Benz GLK
  • Mercedes Benz GL-Class
  • Mercedes Benz M-Class
  • Mercedes Benz R-Class
  • Mitsubishi Endeavor
  • Nissan Armada
  • Nissan Mirano
  • Nissan Pathfinder
  • Nissan Xterra
  • Porsche Cayenne
  • Saab 9-7x
  • Subaru Tribeca
  • Suzuki XL7
  • Toyota 4Runner
  • Toyota FJ Cruiser
  • Toyota Highlander
  • Toyota Land Cruiser
  • Toyota Sequoia
  • VW Tiguan
  • VW Touareg
  • Volvo XC60
  • Volvo XC90

So now our domestic automakers will be forced by the government to abandon this segment of the market, awarding it completely to imports.  Obviously, the executives at GM and Chrysler have felt compelled to keep their mouths shut when they see Obama and his auto task force arrive at such a sophomoric analysis of the domestic automakers’ problems.

But worst of all (not reported in this article, but receiving broad coverage in the Detroit area media), were Obama’s statements immediately following the above quotes.  The reason that he sees the domestic automakers’ business model as unsustainable, and I’m paraphrasing here, is that “foreign competition is here to stay.”  He sees no need to do anything about the idiotic trade policies that have destroyed the domestic auto industry and the entire manufacturing sector of our economy.  In his mind (which is to say in the minds of the auto task force, led by free trade advocate Larry Summers), the answer is to more fully engage in the race to the bottom.  That is, cut workers’ pay and benefits.  Eliminate jobs.  Close factories. 

Unfortunately, none of those actions will make one bit of difference in making the domestic auto industry more viable and robust.  Foreign automakers will simply match them cut-for-cut to maintain and even boost their market share.  We keep inviting in more foreign automakers (soon India’s Tata Motors, China’s Chery Automotive, Fiat and Renault will enter the fray) without getting any access to equivalent markets in return.  How the auto task force can be so blind to this issue, allowing our domestic industry to be painted into an ever-tighter corner, is beyond me. 

Thus far, in violation of his promises to the American people, the Obama Administration has done absolutely nothing about unfair, lopsided trade deals.  Even the imposition of tariffs by Mexico on American goods has been met with silence and indifference.  Trade ministers around the world must grab their bellies and roll in the aisle with laughter every time our economic leaders and trade negotiators leave town.  In the global trade community, the U.S. is the village idiot.


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