EoW January 2009

Transat lant ic Cable

Chrysler had talked with Renault and Nissan about partnerships. “And now,” wrote Mr Bensinger, “Ford Motor Co, GM, and Chrysler – backed by Detroit-area legislators – are lobbying Washington to give them cash, implying that failure to provide a bailout could doom the industry to bankruptcy.” (“The End of the Road for US Car Makers?” 28 th October) Congress in September had approved $25 billion in loan guarantees for auto makers, and rules for those loans were being drafted. But the companies were claiming to need more, right away. Mr Bensinger summarised: “GM, Ford, and Chrysler are burning through cash far more quickly than they’re bringing it in. Sales have fallen off a cliff. And none of them has been able to borrow money in months because of the credit crisis.” Not much has changed since Mr Bensinger filed his story, and his implied suggestion that the Big Three should be permitted to go under has both support and opposition. Critics warn that the failure of just one of the three would send shock waves through the entire manufacturing sector that could devastate suppliers and paralyse the other two car makers. Hundreds of thousands of jobs would be lost. That is unlikely to happen, not least because one Barack Obama is among those strongly in favour of rescue – with caveats. In his first post-election interview, on the CBS ‘60 Minutes’ programme, 16 th November, the president-elect reiterated his support for government involvement in bailing out the troubled automobile industry, but not with ‘a blank check.’ Mr Obama said: “My hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance but making sure that that assistance is conditioned on labour, management, suppliers, lenders, all the stakeholders coming together with a plan – what does a sustainable US auto industry look like?” Also on 16 th November, another distinguished voice was raised in favour of an auto-industry rescue on the Op-Ed page of the New York Times – that of Wesley K Clark, retired Army general and former supreme allied commander of NATO, now a senior fellow at the Burkle Center for International Relations at the University of California at Los Angeles. The title of his contribution, “What’s Good for GM Is Good for the Army,” says it all. But Gen Clark amplified his views: “Some economists question the wisdom of Washington’s intervening to help the Big Three, arguing that the auto makers should pay the price for their own mistakes or that the market will correct itself. But we must act. Aiding the American automobile industry is not only an economic imperative, but also a national security imperative.” General Clark, himself a presidential hopeful in 2004, noted that the Persian Gulf War of 1991 elevated the American-made Humvee (and its civilian version, the Hummer) to stardom. Likewise, the homemade bombs of the insurgency in Iraq have led to the development of innovative armour-protected wheeled vehicles for American forces, as well as improvements in their fleets of Humvees, tanks, armoured fighting vehicles, trucks, and cargo carriers. General Clark credited the efforts of the American automotive industry for saving the lives of soldiers and marines, and making their tasks more achievable. In a little more than a year, he declared, the US Army had procured and fielded in Iraq more than a thousand mine-resistant ambush-protected vehicles. Moreover, as distinct from the World War II experience, America today has not been compelled to divert much civilian capacity to meet these military needs. Without a vigorous automotive sector, said Gen Clark, those needs could not have been quickly met. The general rejected any suggestion of a giveaway to the auto makers. He wrote, “Instead, [we have] an historic opportunity to get it right in Detroit for the good of the country. But Americans must bear in mind that any federal assistance plan would not be just an economic measure. This is, fundamentally, about national security.” The military-industrial complex redux: an army man ties Detroit to Iraq

Dorothy Fabian – USA Editor

28

EuroWire – January 2009