The Next Big Thing From Detroit

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By Dan Becker
Sunday, January 29, 2006

The next big thing from Detroit won't be innovative technology. It will be a request for a bailout. The Big Three automakers are facing financial collapse. Their bond ratings are in junk status, their suppliers are going bankrupt and their vehicles are sitting unsold on lots -- even when larded with thousands of dollars of incentives. Toyota alone made more profit last year than the Big 3 combined, while leading the industry in putting hybrid vehicles on the road. The industry is telling Washington: Bail us out or we'll fire more workers, cut health coverage and maybe even file for bankruptcy to void our union contracts. Clearly, there is a lot at stake here, including many thousands of jobs. Is it time for a federal bailout?

My organization, the Sierra Club, generally opposes corporate welfare and certainly opposes bailing out the Big Three just so they can go on making the same assortment of polluting gas guzzlers -- i.e. sport-utility vehicles -- that have got them, and us, where we are. On the other hand, perhaps some sort of government rescue effort would be justified if the Big Three were willing to do their part as good corporate citizens by giving the country something important in return. For example, what if a bailout were coupled with substantially increased miles-per-gallon standards that would cut our oil dependence, save consumers money at the pump and reduce the rate of pollution from the effects of global warming?

Automakers have the technology to make all vehicles average 40 miles per gallon within 10 years. Subsidizing the Big Three to meet this goal would not only inject cash into the companies but also put them on their feet to compete against the technologically superior imports that are running away with the market. This would help preserve good jobs, increase industry profits and avert future bailout requests. It would also provide benefits for the American people, who, after all, would be paying the bill.

A 40 mpg U.S. auto fleet would save the average driver $4,000 over the lifetime of a car and eliminate as much of the pollution that causes global warming as Germany releases each year. It would save 4 million barrels of oil daily -- more than the combined amount we import from the entire Persian Gulf and could conceivably take out of the Arctic National Wildlife Refuge.

This isn't the first such proposal environmentalists have made. In 1993 we met with the Clinton administration, urging it to raise the gas-guzzler tax and funnel the money to automakers to make clean, efficient cars. In early 2001 Sierra Club Executive Director Carl Pope and I traveled to Michigan and met with top officials of a Big Three auto company. We urged them to join with us to get the new Bush administration and Congress to provide automakers with financing that would cover the cost of turning a conventional gas-guzzler into a fuel- saving hybrid car. They promised to get back to us. We're still waiting.

Had either effort succeeded, we would now be weaning ourselves from our oil addiction, cutting the pollution that causes global warming and saving consumers billions of dollars at the gas pump -- and the Big Three today would be more competitive and more profitable and have more well-paying jobs. Instead, the auto industry's financial fortunes declined -- from profits of $8.6 billion in 1994 to losses of $4 billion in 2005 -- , and membership in the United Auto Workers fell by almost 100,000.

Automakers may find some support for a business-as-usual bailout that would benefit bondholders and save some jobs -- and also give the Big Three more rope with which to hang themselves. But perhaps they could garner winning support if the deal also cut our oil dependence, saved millions of consumer dollars at the pump and cut pollution.

Having missed no opportunity to miss an opportunity, Detroit should not seek to make its next big thing a plea for cash. It should be a plan that puts the industry back on its feet and into the black with genuine commitment to innovation, better fuel economy and lower emissions.

The writer is director of the Sierra Club's Global Warming Program.


© 2006 The Washington Post Company

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