A Bridge to Detroit's Future
Congress is debating the future of the American automobile industry. With our economy in crisis, this is not a time for ideology; it's a time for pragmatism and common sense. Amid daunting job losses and unprecedented fiscal challenges, the economy cannot sustain a body blow to one of America's most significant industries without giving it a chance to restructure.
The Big Three automakers directly employ nearly 250,000 Americans. Overall, the industry accounts for roughly 5 million jobs. The failure of the U.S. auto industry would have ramifications far beyond Michigan; the impact would be widespread. Every state has a stake in the industry -- suppliers in Ohio, dealerships in Texas and port workers in New Jersey.
The effects of a shutdown would multiply beyond the auto industry and would significantly postpone our nation's economic recovery. If Congress fails to act now, U.S. real gross domestic product could decline by more than 1 percent and the country would be likely to lose more than a million jobs.
We all agree that the auto industry is important -- but we also agree that real changes and tough decisions must be made to ensure that the firms become financially viable. Any funding must come with significant strings attached. In fact, either a company has workable, viable plans -- or it files for bankruptcy. No one is proposing a giveaway.
Congressional leaders have shown a willingness to help the industry build a path to viability. By unlocking funds that had already been allocated for the auto industry, Congress prevents the rescue package for the financial industry from becoming a grab bag of funding for any industry in trouble. If that rescue package were opened to other industries, it would be impossible to stop -- and our financial system simply can't afford to forgo this aid.
Congress has proposed a bridge loan program in a way that demands accountability and responsibility from the industry. If the legislation passes, it will be up to the automakers to deliver on the promises they have made to the American people, and there are strong taxpayer protections in place.
The reality of the business world is that a company that isn't profitable and self-sustaining won't survive. The American people cannot afford to pump out cash to help get the industry from one failed business model to the next. The companies' fundamentals have to change.
Automakers must address challenges from top to bottom. And the actions they take must be decisive and meaningful. Reducing CEO salaries to $1 a year and grounding corporate jets are important and symbolic moves, but they are not enough. The challenges are significant and will require difficult choices from all parties.
A satisfactory plan for viability must address all the factors that drive overall competitiveness, such as labor, management and legacy costs; debt structure; dealer network costs; capacity utilization; fuel efficiency standards; and plans for new and existing products. The road to restructuring will be filled with tough decisions.
This is not just a Detroit problem. This is an American problem. Congress has the opportunity to help the auto industry build a bridge to the future. In turn, the auto industry must show that it is worthy of the American people's trust and investment. It must become leaner, more efficient and capable of competing in our 21st-century economy.
The auto industry is just one of today's challenges, but it is crucial to America's economy. By addressing its problems head-on, we will strengthen our economy, help an important industry rebuild for the future and keep America running.
The writer is U.S. secretary of commerce.