The American public has enjoyed an almost uninterrupted love affair with the automobile for decades. It has become much more than just a means of transportation. Barring message T-shirts, a relatively recent craze, the car still is the best statement of its owner's self-image.
But the role of the car in American life goes much deeper than its value as a tool of expression. At least one in seven jobs held in the United States s somehow related to the automobile industry. When things look bad for the auto business, they look bad for the whole economy.
And, things are looking bad for the auto business. Chrysler Corp.'s troubles have been page-one news for months, with Congress only last week voting to prop up the beleaguered company with $1.5 billion in loan guarantees. Ford Motor Co. has experienced dramatic losses in its North American operations. Overall domestic automobile production and sales are dropping sharply while sales of imports, particularly Japanese models, are increasing dramatically.
All this comes as the Carter administration struggles desparately to contain a worsening inflation and unemployment, and at the same time lessen the impact of a recession that many economists say already has begun. So it should come as no surprise that the government now plans to involve itself more deeply in the automobile industry, and its future.
The size of the part the federal government is planning to play in industry planning is still unclear. But what is clear is that it does plan to have that role. And such plans have caused concern among automakers.
"We are not going to let what happened to the steel industry happen to the automobile industry," said a senior Carter administration official, referring to the decline of the only other industry with an impact on the overall economy that rivals Detroit's.
Since World War II, the U.S. steel industry has gone from world dominance to barely being able to preserve its U.S. interior markets against import competition. Thousands of jobs have been lost, and many facilities have been rendered obsolete. One once-thriving steel town, Youngstown, Ohio, has been all but abandoned by the steel industry, leaving that city in fiscal shock.
Not unlike their more recent activity in the world auto market, both West Germany and Japan captured large shares of world steel markets with the new technologies they adopted when rebuilding after the war.
Responding to all of these warning signs, the Carter administration's Regulatory Council, under orders from President Carter himself, has organized an extraordinary automobile committee, from which it hopes to launch an ambitious and unprecedented effort to look at the future of the automobile.
The committee is made up of top-level representatives of the five federal agencies that in some way regulate the auto industry: the Environmental Protection Agency, Federal Trade Commission and the Departments of Energy, Transporation and Juctice.
It already has met twice and has begun work on the first of two goals, development of a calendar of automobile regulation. That listing will show all pending federal regulations that will affect the industry through 1985. The idea "is to find out what the cumulative impact of government decisions will be on the industry," says one participant. "We want to make sure we are not asking too much from the industry at one time, for example."
Although some regulators view that exercise with apprehension, fearing their programs could be delayed as a result of such an analysis, the industry appears to welcome te calendar concept. "Anything that causes the government to better comprehend their impact on this industry has got to be considered a plus," said Wayne Smithey, Ford's vice president for Washington affairs. "To the extent that regulations are coordinated by the different government units in a coherant way, that is a useful exercise," added a spokesman for the United Auto Workers.
But t is not the calendar that has caused controversy. It is the second aspect of the committee's work that has raised serious questions about what influence the government should have over any industry. The committee is about to embark upon a major study of the role of the automobile industry.
"We want to get a sense of what the current situation is," said David Klaus, an administration regulatory expert who has taken on the task of heading the auto committee. "We are going to look at serious policy issues affecting the industry. Everything from tax questions to the issue of import and export policy will be looked at. We will ask ourselves questions like 'Why aren't the Japanese companies building plants in the U.S.?' and 'What role should the automobile play in reaching energy objectives?'"
"There is surprisingly little basic research in the auto industry today," said another government staffer working on the auto program. "It's not like coal, steel or electronics, where broad new breakthroughs are forthcoming. Since the auto companies do their own research, as opposed to industrywide efforts, most of that research is necessarily aimed at immediate product improvement, which can translate more easily into increased revenues. We will look at whether or not something should be done about that."
In fact, the government already is working on an informal agreement with the industry to foster federally sponsored basic research into the automobile. There have been two conferences in Boston during the past 15 months at which the Transportation Department brought together representatives of the auto industry, other related industries, the academic community and government in an effort to lay the groundwork for cooperative ventures. Out of those conferences grew a government promise to commit more funds to basic research into the combustion engine and alternative long-term possibilities, as well as industry pledges to cooperate in some way with those research efforts.
These agreements came reluctantly, with many industry representatives warning that too much cooperation ultimately would mute research efforts. "Why would we spend a couple of million dollars of our company's money to develop something that everyone can use for free?" asked a top GM official privately. "What do you tell your stockholders? This is a competitive business."
"Research by independent organizations and the government can stimulate innovation within the (auto) industry in several ways," said Joan Claybrook, head of DOT's National Highway Traffic Safety Administration. "First, such work can identify critical problems that should be addressed in the design or construction of automobiles. Second, independent research can develop new concepts or hardware to solve problems."
"They can look at anything they want," said a top official at one of the Big Three automakers. "We just want to make sure that the study is sufficiently comprehensive. Personally, I'll follow closely what kind of outline they develop and the direction of the study."
Several auto industry officials say they are concerned that the new federal initiatives could lead to the government attempting to intervene in industry affairs. "If they decide that we need a certain type of car and we don't think the same way, what is to stop them from trying to force the ideas on us by threatening to toughen certain standards or eliminate certain tax breaks?" one official asked. "This isn't Japan."
Administration sources say former Council of Economic Advisors automobile economist Lawrence White, now a New York University business school projessor, is being sought to head the auto committee's future study and other related activities.
"We are hoping to use the study as a launching point to a series of other activities," said Klaus. "We may, for example, bring in foreign trade experts to speak to us, or set up task forces to deal with specific issues."
But nomatter how the administration puts it, the goal of this effort is clear. The federal government is worried about the direction of the automobile industry, and wants to be able to change that direction if it thinks it needs to.
"The auto industry starts out with a credibility problem," said a senior UAW official. "One of the central problems is that they have cried wolf on too many occasions in the past. Too often it has said something like fule efficiency or emission standards could not be met, only to demonstrate that once the laws wee passed the goals could be reached."
But the real danger "is that the wolf is now really at the door," he added.
"Our feeling is that there is a tremendous change going on within the industry," said the union official. "But it is clear that without government regulations Detroit would have been even further behind in producing fuel-efficient cars."
Now even top automobile officials, including General Motors Corp. President Elliot "Pete" Estes, have stated publicly that the marketplace is demanding cars more fuel-efficient than required by government regulations. GM even hopes to meet the 1985 fleet average minimum standard of 27.5 miles a gallon one year early. This is a far cry from earlier industry attacks on that regulation and others as placing an unfair burden on them.
"The U.S. automobile industry sees itself as the 'mom-and-pop' store of the world," said one senior administration official. "They still cling, for example, to the large-car mentality. The main reason GM is pushing the diesel hard is so they can still make big cars and be relatively fuel-efficient."
He said the biggest chunk of increased costs that has hit the auto industry in recent years has been from "hurry-up retooling for small cars.
"That is a sad commentary on an industry," he added.