Free Markets Hurt U.S. Automakers

On June 22nd , the frontpage headline of the Janesville Gazette was a quote from Rep.Paul Ryan, “This policy hurts GM” in which Ryan voices his opposition to a congressional plan to increase fleet gas mileage standards.

JG Excerpt:
A part of the bill calls for increasing auto fuel economy to a fleet average of 35 miles per gallon by 2020, a 40 percent increase over current requirements for cars, SUVs, vans and pickup trucks.

Thinking they have a winning combination here to work against the Democrats, the Gazette does a follow-up frontpage story on July 1st titled “It’ll be the demise of the U.S. auto industry” in which they attempt to divide the constituency with quotes from Democratic Local Rep. Mike Sheridan and top GM plant management.

JG Excerpt:
U.S. automakers supported a failed amendment to the Senate bill that would have required 36 mpg for cars by 2022 and 30 mpg for trucks by 2025, a compromise they said would stretch but not break them.

The automakers request would put their fleet average at 33 mpg assuming the car and truck segments are split 50-50 which we know they are not. The democrats are asking for a fleet average of 35 mpg by 2020, a difference of a few years and 2 mpg. Hardly something we can blame for the demise of the U.S. auto industry when we know that the U.S. makers conceded the auto market years ago. Why did the U.S. automakers concede the auto segment to the imports?

JG Excerpt:
Sound Off: Our free market and competition have made America the greatest nation in history. Let the market decide. It has worked very well in the past.

Can you imagine if someone in government proposed workmanship and quality regulations and standards for automobiles back in 1980? The “outrage”, corporatists would say, let the markets dictate. Well, the market did dictate and guess what? U.S. automakers, their workers and customers lost bigtime. They are on track to concede the truck segment just as well, unless something is done. When we begin talking about how great America was, and use what amounts to a loss (manufacturing - auto segment) as a good example to follow, it may be too late already.

On the same day of this article, the Gazette ran a national article on page 4 detailing more bad news about the U.S. auto industry and their soon to be announced poor sales results. In addition, the Gazette posted an article and picture of an electric car on the frontpage. We are in the blame-game now, who’s fault is this?

But the Gazette wasn’t finished here, not by a long-shot. On July 3rd, a Gazette staffer wrote a story about Ryan winning the U.S. Chamber Award that I’ve dubbed the “Business Razzie.” But was the story really about Ryan qualifying for this dubious award or was it just another propaganda piece aimed at splitting the local democratic base once again over the energy/mileage bill? Title says "award," story says "politics."

The Gazette eventually got what it wanted. They stirred up the locals on this issue enough to post six anonymous rants in Thursdays “Sound Off” column about the fuel standards. But this episode is not so much about Ryan as it is about a GOP newspaper eroding Democratic support any way they can do it.

Fortunately there isn’t much the Gazette can do when reality steps in. The latest auto industry report showed GM sales fell 21% in June including sales of full-size trucks and SUV’s while imports posted solid gains.

JG Excerpt:
General Motors Corp. sales tumbled 21.3 percent compared with June of last year, while Ford Motor Co. sales dropped 8.1 percent and Chrysler Group saw a decline of 1.4 percent.
Yet Nissan posted a whopping 22.7 percent increase, Toyota saw a 10.2 percent gain, and Honda sales rose 11.5 percent.

Why are the free markets hurting only U.S. automakers? Why do American consumers continue to favor imports? This is history repeating itself over and over again. The Japanese among others, build gas guzzlers also, why are they still gaining? The U.S. auto industry appears to be on self-destruct. Are they just looking for someone to blame, other than themselves? Or is Ryan just playing politics as usual?

Chicago Tribune Excerpt:
"We build the three biggest gas hogs in the country in my eyes," Van Fossen said. "They were all excited about these vehicles when we started building them two years ago, but I didn't see anything to get excited about. This is not the future."

I think there will always be a market for full-size 7-passenger "stationwagons" on steroids.

But if we believe we can’t do it – we won’t. Ryan and his supporters have been legislating the slow death of the U.S. auto industry through outsourcing and labor busting, and protecting what amounts to low expectations. The imports are now making gains in the truck market without any input from the Democrats. As a Janesville resident, it matters to me. I'm afraid it doesn't matter to anyone else though. History doesn’t lie. How do we stop history from repeating itself?

They have stayed this course too long and it’s time for a change.