US Needs New Industrial Policy

'The fight for American manufacturing is the fight for America's
future," President Barack Obama declared as he pledged billions to help
save and reorganize Chrysler and General Motors. Yet, he also says he
doesn't want to manage the car companies.

"The sooner we can get out of that business, the better off we're
going to be." But that sentiment -- widely praised by editorials across
the country -- contradicts the commitment needed to revive American
manufacturing.

Clearly, the future of an America that makes things will center on
what happens to America's automotive industry. The auto industry still
accounts for one-fourth of U.S. manufacturing output and provides jobs
for about one of every 10 manufacturing workers. It is, in the words of
AFL-CIO economist Ron Blackwell, "the spine of the country's
manufacturing capacity."

The auto companies are battered by massive overcapacity in the
industry across the globe and burdened with pensions and health care
promised to retirees while competitors are free of such costs. Auto
companies in Korea, Japan, France and Germany get significant
government protection and subsidies. The U.S. companies have suffered
without that help.

Obama has boldly pointed to a new American economy, one where
finance is the servant of the real economy, not the master. In this
economy, America builds the future -- making fuel-efficient cars,
windmills and batteries and solar panels vital to the next economy. The
skilled workers and high technology of the Midwest will produce the
products that will dominate the global green markets of the future.

That transition will require planning, an industrial policy and
government commitment. If Obama simply lends money to Chrysler and GM,
forces their bankruptcy and downsizing and then walks away, the result
is likely to be failure. We've seen plans by Chrysler and GM to expand
production abroad while eliminating U.S. plants at home.

We did not provide taxpayer money to save the brand General Motors.
We provided it to save highly skilled U.S. jobs and U.S. manufacturing
capacity.

Last week, I attended a Senate hearing on Chrysler and GM's
bankruptcies. Not once did I hear anybody speak about health insurance,
credit, trade policy or the price of oil and gas or about the need to
link the bank bailout to stemming the tide of home foreclosures and
stimulating jobs and business.

We need an industrial plan that helps forge new industry and new
markets. Public investment in mass transit -- buses, subways, fast rail
-- and subsidies for fuel-efficient cars help generate the market.
Significant investment in research and development for the next
generation of products helps capture the future. Resources to retool
factories and retrain workers are needed to build the new generation of
fuel-efficient cars or renewable energy sources.

We need an industrial policy that bridges the gap between the old
manufacturing sector and the emerging "green economy." Republicans
don't get this. They would let GM and Chrysler go belly up rather than
try to restructure them.

Obama has stepped up to help the companies restructure, but has yet
to detail an industrial policy that will ensure that U.S. workers
benefit. The restructuring has been done almost in a vacuum, as if it
were a commercial deal, with most of the discussion focused on how to
slash work forces, close dealers, shut down plants and cut obligations
to current and retired workers.

No doubt GM and Chrysler have been mismanaged. Reductions in the
work force and dealerships are inevitable. But to revive U.S.
manufacturing, the re- organization must focus on what will be built,
on new markets and new technologies -- not only on what gets cut. And
that requires the commitment and engagement of the federal government.

Crisis creates opportunity. In this crisis, it is time for America
to put aside the failed ideas of the past and step up boldly to ensure
that America once more builds the future.