Automakers Face Uphill Battle


Authored by Jon Mercer in Automotive 
Published on 11-26-2008

Detroit’s big three automakers and the United Automobile Union are facing an uphill battle as they travel to Washington to make their case for a bailout from the Federal Government.

Public opinion seems to be against any type of bailout proposal for the big three and the UAW, though the money is desperately needed for their survival.

Support is fading for Detroit’s automakers, despite the fact that they once had very strong backing in Washington. House speaker, Nancy Pelosi and Senate Majority leader, Harry Reid are having a tough time making a case for the bailout because of waves of criticism that are sweeping the country.

The carmakers have fought hard in recent years against two Congressional efforts to raise fuel economy standards. They won that fight, arguing that they did not have the technology to meet a modest increase. But the “win” may have ironically hurt Detroit’s chances for the bailout that they so desperately need now.

Many of Detroit’s strongest critics are fueled by the fact that they have refused to produce hybrid automobiles. G.M. vice chairman, Robert A. Lutz dismissed this as a public relations move. Meanwhile, manufacturers such as Toyota have produced popular models like the Prius that is built only as a hybrid.

Closures of auto plants in Alabama, Georgia, Louisiana, and Delaware has also caused the big three automobile manufacturers to lose some Congressional support. All the while, foreign auto companies have built factories across the South which have gained the support of Senate leaders like Senator Richard Shelby (REP) of Alabama.

The Bush administration has opposed the idea of letting the automakers get a piece of the $700 billion banking bailout. But, President-elect Barack Obama says he is in favor of a bailout for auto industry.

G.M. and Ford are among the nation’s largest spenders on lobbying. So far this year, G.M. has spent $10 million on lobbying. Ford has spent $5.7 million. Still the Detroit automakers and the union have had very little support as they argue for a bailout.

The question of a bailout comes at a time when Americans still have a very bad taste in their mouths over the financial industry fiasco. Few are ready to write Detroit a blank check, even though the inevitable layoffs that are to come will further rock the country’s economy.

Without the support of the U.S. Government, it could spell an even worse fate for the big three automakers and for the city of Detroit.


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