Why save the Detroit auto makers? Or more accurately, why save General Motors and Chrysler? Ford still is hanging in.
This is a fair question. Polls show most Americans don’t want to save the U.S. domestic auto makers. Most other countries, including France, Germany, China, Russia, Sweden and Japan, feel differently. They are running to aid their auto industries. That’s their decision. It doesn’t explain why we should save ours.
Years ago, Great Britain let its auto makers fail after nationalizing them, and it didn’t sink into the sea. Life went on, and it wasn’t the end of manufacturing. True, there no longer are new Austins, Sunbeams or MGs driving around. But the British are getting by. We could get by without Chevrolets or Dodges, too.
Even if GM and Chrysler went down, we still would have an auto industry. Ford is alive, and Toyota, Honda, Nissan, Mercedes, BMW, Mazda, Hyundai, Mitsubishi, Subaru – and soon Kia and Volkswagen – all manufacture in the U.S. Suzuki has a plant in Canada that exports to the U.S., as do the Detroit Three and Toyota and Honda.
The survivors would expand as market conditions improved. After a lengthy rebuilding period, millions of cars and trucks still would be manufactured in the U.S. It would just be in foreign-owned plants.
What’s more, we talk about Detroit auto makers closing, but that might not exactly be correct.
GM’s fullsize pickup truck and SUV businesses, the GMT-900 platform vehicles, still are relatively strong. More than 900,000 units were sold last year. Quite possibly a shrunken GM could survive just making pickups and big SUVS.
The greenies wouldn’t like that. They want GM to make electric cars. But is the government going to outright ban pickups, the most popular vehicles in America? A small but profitable piece of GM might survive solely by building light-duty trucks.
Chrysler might be able to sell its Dodge Ram and minivan operations to other auto makers. Nissan still needs pickups and has contracted Chrysler to build its next generation, although that deal now reportedly is under review. Jeep could be sold.
Italy’s Fiat might be interested in purchasing an old Chrysler plant. Even in the worst-case scenario, Ford could survive, and it’s likely the U.S. still would have a “domestic” auto industry.
But what would the dismantling of GM and Chrysler do to the Midwest economy? It would be a horrific blow to Michigan, Ohio, Indiana, Illinois and Western Pennsylvania. Hundreds of thousands of auto maker, supplier and auto dealer jobs would be lost, followed by more housing foreclosures and personal and business bankruptcies. The U.S. government might have to help with lost pensions.
Canada’s auto-producing province of Ontario, which builds as many or more vehicles as Michigan, would be ravaged as well, with significant cross-border consequences. It would take a decade for auto-producing regions to recover.
States have endured losses of core industries before. The shoe industry left Massachusetts, and textiles left the East. Those states survived and came back, but at a terrible cost to workers and communities, many of which never recovered.
What about war, national security, tanks, the Arsenal of Democracy and all that? Well, we don’t need that much for Afghanistan, and if the U.S. ever does face another major global conflict, Washington could take over any domestic factories it wanted in a true national emergency.
It’s true, the U.S. could go on without GM and Chrysler, just like New Orleans survived Katrina. But proving we can endure devastation is not a worthy goal for America.
GM and Chrysler need to be given a chance to redeem themselves and pay back their loans. The price of getting by without them for the next decade is just too high.
Jerry Flint is a columnist and former editor of Forbes magazine and former Detroit bureau chief of the New York Times.