Like most Americans, I am conflicted over how we ought to deal with the crisis with the three car manufacturers — Ford, General Motors and Chrysler.
This is not an abstract public policy issue for me by any means. After all, the vehicles that our family currently owns are from one of these manufacturers — a Ford Focus, a Saturn Vue and a Jeep Cherokee. We also have owned a Ford Taurus and a Saturn station-wagon. The only “un-American” vehicle we ever had was a Nissan Sentra.
It is not that we were implementing a “Buy American” policy at home. It just so happens that the vehicles we bought met our preferences and budget constraints.
Earlier today, when I took my Saturn Vue to the dealership for the regular oil change, I began to wonder whether the brand will even exist in the future. News reports suggest that General Motors is planning to sell the division, or merge it with another. It’s possible Saturn could be shuttered completely.
On the one hand, the public policy person in me prefers inefficient economic enterprises to fade away without government intervention. I think about Pan Am, which symbolized air travel when I was a kid. It has been almost two decades since Pan Am closed down when it could not survive in a highly competitive global travel industry. It is the law of the jungle that inefficient businesses lose out to efficient ones. In order to pre-empt a Pan Am-like story, the auto manufacturers should have avoided the strategic errors they made, especially during the cash-flush decade from the mid-1990s when sport utility vehicles and minivans delivered billions of profits.
On the other hand, I recognize that government actively intervenes in practically every aspect of our economy. Heck, even my home is partly underwritten by the government, which permits us to write off the interest paid on the mortgage loan. Thus, if many other industries can be subsidized or bailed out, well, why not help out Saturn and its loyal and committed employees?
Even as policymakers try to figure out the current crisis, we might want to understand a few longer-term trends as well. “Planes, Trains and Automobiles” was a holiday season movie two decades ago; these same American manufacturing industries listed in the title also have been in decline. Trains, for all purposes, have been nearly relegated to history. The automobile industry is in a pickle — some might argue that it has been in denial since the energy crisis in the 1970s.
And all is not well in the aviation industry either — both in the manufacturing of planes and in passenger transportation. Boeing was the undisputed champ in its field, perhaps even more powerfully so than the American “Big Three” ever were. Slowly but steadily, Boeing has been losing its market share to other manufacturers. Twenty years ago, Airbus had barely 16 percent of the market; now it is nearly on par with Boeing in terms of the value of aircraft delivered.
Meanwhile, Brazil and Canada have become active in the manufacture of short-haul jets. China is the latest entry into this field; last month, the Commercial Aircraft Corporation of China announced the sale of five of its ARJ21s to General Electric’s aircraft leasing division, with an option for 20 more. The ARJ21 and other larger CACC-manufactured jets are essentially China’s effort to crack the market dominated by Boeing and Airbus.
Over the last few years, we have come to realize that anything we do can be done cheaper in China. This means that, if we don’t watch out, here in the Pacific Northwest we could be worrying about Boeing 20 years from now, just as Americans are worrying about General Motors today.
Therefore, even as we try to mitigate the woes of the auto industry, and even as the manufacturers begin to articulate a long-term survival strategy, I hope we will learn one important lesson.
Global economic competition is real, and it will only get more intense in the future. If we don’t learn that lesson, another bottom line awaits us: History does repeat.
Published in the Register Guard Dec 16, 2008
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