Automotive News - September 22, 2008 - (Page 12)

12 • SEPTEMBER 22, 2008 opinion Don’t attach too many strings to federal loans There will be strings. It is naive to hope that the federal government would co-sign $25 billion in loans to the auto industry without attaching conditions. Even the bailout of Fannie Mae and Freddie Mac — which sailed through Washington with far less opposition than has been shown to the proposed auto industry loan package — came with substantial strings. Specifically, top management was forced out of both companies. It is not clear what conditions the government will place on automakers and suppliers that wish to tap the low-interest federal loans. But Congress already is Politicians and thinking of tacking on a provision bureaucrats must that is in several energy bills circulating on Capitol Hill. It would reresist the urge quire that every vehicle an automaker produces be capable of running on E85, the gasolineto mandate ethanol mix. An ethanol mandate would be technologies. outrageous. Pushing ethanol, specifically corn ethanol, is a scheme that has made Iowa corn farmers richer and the world’s poorest hungrier. Other provisions seem just as absurd. The law that authorized the loans mandates that they can be used only for a vehicle that beats its competitors by 25 percent in fuel economy. That would be mathematically challenging if every automaker does it. And there ought to be at least some support for technologies that improve fuel economy by 15 or 20 percent, as General Motors CEO Rick Wagoner suggests. Some of the items automakers would be able to fund with the loans are things they’re already financing. In that case, would they be allowed to use some of the cash for other things? Even the emerging loan process seems counterproductive because companies would have to apply for the loans as if they were applying for grants. The unnecessarily complicated process seems a deliberate attempt to set the hurdles so high that no company can clear them and qualify for a loan. It almost appears that Congress wants to look as if it is helping but in fact doesn’t care whether a domestic auto industry survives. It would be shameful and shortsighted not to encourage and support the nation’s manufacturing base with $25 billion in loans while doling out hundreds of billions — even trillions — to bail out Wall Street. At the same time, politicians and bureaucrats must resist the urge to mandate technologies. Choosing winning technologies is not something they do well. And attaching too many strings could strangle the very industry Congress claims to want to help. America cannot afford that. The sky may be falling at Wall Street firms, and the repercussions in the automobile business could be mighty. Many suppliers need credit to finance their work in progress. They need cash to run their businesses. It just got tougher and more expensive for them to borrow money, and they’ll have to raise their prices. Just about every dealer in the nation uses borrowed money to floorplan vehicles. Without a reasonable rate for floorplanning inventory, the factories will sell fewer cars and trucks, and consumers will pay more for vehicles. Consumers lease and buy millions of cars and trucks. They depend on borrowed money. When credit dries up or borrowing becomes more expensive, they will be out of the market. Leasing disappears without a lot of capital from somewhere. And leasing has disappeared for a lot of dealers. DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. Cars run on money and credit, not gas Wall Street does matter. The automobile business runs on credit, and already you hear a bunch of folks singing the blues. It will be interesting to see whether Congress is more or less likely to approve $25 billion in lowinterest loans to the automobile industry. Chances are that the recent financial disasters will make it a lot more difficult for automobile companies, both vehicle manufacturers and suppliers, to get the money. Meanwhile, automakers, suppliers and dealers are scrambling for cash. A lot of credit sources have disappeared. The rest seem to be gun-shy, and well they should be. One of the most important factors in the growth of the auto business was the establishment of large credit companies as subsidiaries of the Detroit 3. The creation of Automakers, suppliers and dealers are scrambling for cash. A lot of credit sources have disappeared. GMAC was a critical part of Alfred Sloan’s plan to expand General Motors back in 1919, making credit available for dealer floorplanning and installment sales to consumers. Ford and Chrysler followed. The credit companies are important profit centers as well as an essential part of marketing. When a new auto company establishes roots in the United States, one of the first things it does is establish a credit subsidiary for its dealers. The auto industry needs the free-flowing availability of credit. Let’s hope that the federal government doesn’t do anything to impede that. THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Free Choice Act must be defeated To the Editor: Arnold E. Perl’s commentary (“Bill puts workplace democracy at risk,” Sept. 1) was a concise and accurate summation of why the American International Automobile Dealers Association is working to prevent the passage of H.R. 800, the Employee Free Choice Act. The bill, co-sponsored by Democratic presidential candidate Barack Obama, threatens dealers, manufacturers and their workers and must be defeated. The speciously named Employee Free Choice Act is a transparent effort by the UAW and other unions to boost their declining membership. The act would circumvent the democratic process. It would strip workers of their right to secret-ballot elections on unionization Keith E. Crain, Publisher and Editor-in-Chief Peter Brown, Associate Publisher and Editorial Director David Sedgwick, Editor Edward Lapham, Executive Editor HOW TO REACH US Web site: www.autonews.com Editorial staff autonews@crain.com Phone: 313-446-0361 Fax: 313-446-0383 Circulation Advertising subs@crain.com rgreer@crain.com Phone: 888-446-1422 Phone: 313-446-6050 Fax: 313-446-6777 Fax: 313-446-8030 Editorial data/research To locate information that has been published in Automotive News, call 313-446-1662. Customer service To start or renew a subscription or to report an address change or a delivery problem, e-mail subs@crain.com or call 888-446-1422 (in the U.S. or Canada) or 313-446-1662 (in all other locations). AUTOMOTIVE NEWS (ISSN 0005-1551) is published weekly at 1155 Gratiot Ave., Detroit, MI 48207-2997. Periodicals postage is paid at Detroit, MI and at additional mailing offices. Postmaster: Send address changes to AUTOMOTIVE NEWS, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement #40012850, GST#136760444. Canadian return address: 2-7496 Bath Road, Mississauga, ON L4T 1L2 Printed in the U.S.A. and replace the elections with the cardcheck system. That system, which allows union organizers to collect signatures in a public forum for union support, lends itself to coercion and intimidation. We at AIADA applaud Perl’s insight and urge all Automotive News readers to educate themselves on this damaging legislation. CODY LUSK President American International Automobile Dealers Association Alexandria, Va. Since when has the workplace ever been a democracy? Do employers conduct secret ballot votes on changing health plans? Do workers have free speech rights to challenge management decisions? The Jeffersonian democracy described by Perl that is threatened by the Employee Free Choice Act exists only in his imagination. If our presidential election this November were conducted the way a National Labor Relations Board election is, we could expect the following: Barack Obama is the only candidate allowed to advertise on TV. McCain supporters are required to use the mail or go door to door. (Unions aren’t allowed in the workplace during a campaign.) Voter eligibility lists are made up at Democratic headquarters. Republicans get to see them in October. (Employers prepare the employee list and get it to the union weeks after the campaign starts.) Staunch McCain backers are warned that their citizenship could be revoked if they don’t quit supporting him. If the Obama campaign is caught doing this, it has to hang a flyer on the wall promising not to break the law again. (That’s the usual punishment for threats during an NLRB campaign.). If Obama wins the election by stuffing ballot boxes, busing in noncitizens to vote and deporting McCain supporters, he takes office until all the protests are litigated and appealed. If McCain wins at the Supreme Court five years later, he gets a re-run election against an incumbent President Obama under the exact same set of rules. An NLRB election is closer to the one that just took place in Zimbabwe, where President Mugabe was “re-elected.” It’s no wonder the NLRB process has come under the scrutiny of Human Rights Watch. DON CROSATTO Area Director East Bay Automotive Machinists, Local 1546 Oakland, Calif. see LETTERS, Page 14 The workplace is a democracy? To the Editor: I was amused by the commentary by management attorney Arnold E. Perl in the Sept. 1 issue. http://www.autonews.com/signup http://www.autonews.com http://www.nxtbook.com/nxtbooks/crain/an1178831609PNBNH/index.php?startid=1 http://www.autonews.com

Table of Contents Feed for the Digital Edition of Automotive News - September 22, 2008

Credit-crunched BMW to cut volume and jobs in U.S. Did dealer pitch have a catch? Henderson will keynote World Congress Suppliers: Chrysler jury a worry Learn how going green can be good for business Hyundai hesitates on i10 Ram launches with incentive Dodge RamBox cost: $1,895 Toyota seeks bids to build A-BAT Volt: A pricey short hauler? A horse of a different, uh, color Delphi work moves to N.Y. from plant in Mexico GM store count down 226 so far this year Bill Heard shuts Arizona dealership Would Mazda2 hurt Mazda3? Chrysler dealers may see Volt fighter GM gets more bucks for its 4-bangers GM's '09 list prices rise 2.7% Suppliers seek piece of loan package Don't attach too many strings to federal loans Cars run on money and credit, not gas The workplace is a democracy? Free Choice Act must be defeated Extreme makeover Logo no go A 4-cylinder Cadillac? Get real A double standard on idle workers? Free Choice Act means no choice Saccucci: Let's hear it for free enterprise Dealers signal support for 35% estate tax rate Dealers Designing for MPG Slippery styling What happened to Volt's racy design? Aerodynamics Belletech will supply Honda in Indiana Practicality will top panache at Paris show Chrysler seeks to build loyalty with service Band buddies Personnel Auction group's new boss sees dip in volumes Wholesale prices of big used trucks rise 8.6% in August Big-truck sales off 22.6% in Aug. August sales in Europe worse than in U.S. Honda will let supplier assemble on-site at Ohio plant Farley: Retool image for era of the small car O'Donnell: No stranger to U.S. Honda to debut camera, airbag American Axle lands contract Ex-Ford dealer prevails in court Dodge plans Web blitz for Ram Federal-Mogul will idle 4,000 Sparks will fly over GM, Toyota plug-ins Negotiations fail; chaos (allegedly) ensues Bo plays defense, helps GM avoid weather woes Critics say the new Volt was jolt Lithium, schmithium-- Will the ladies like it? Small and beautiful-- mutually exclusive? Where Andrea Pininfarina saw design headed Designers think small to make it big Designers can't ignore history Pretty and petite Toyota goes its own way with green designs The elements of style It's difficult to design fuel efficiency into big pickups Specialty-car maker has bright design ideas Form follows fashion Vehicle designers aim to please Chinese Suppliers to the 2009 Dodge Ram Eaton will equip '09 VW Golf IAV to move into new tech center BorgWarner makes Tesla deal Mann plans 4th China plant NovaCast buys into Korean firm Valeo shifts rear-light work Supplier personnel

Automotive News - September 22, 2008

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