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.
© 2009 The Chicago Tribune