So, there has been much noise about what to do about Detroit. It is obvious that the Big Three have failed to satisfy the demands of the North American auto market. Their share has been devoured by foreign competitors, who spite them by making many of their vehicles on what should be Detroit turf - the USA.
The Republicans tell us that they should die for failing the market. Many here feel the same way - especially since that market was going to need fuel-efficient, environmentally friendly passenger cars in an era of expensive oil. Detroit tried to save themselves by moving the market into a location that they had the highest mark-up on: super-sized trucks and sport utility vehicles that allowed suburban mothers and urban cowboys to display their status by flashing the finger to Mother Earth.
Thus, Detroit has sinned against two major political blocks, namely the free-market right and pro-environment left. And yet, even so, we still have to think of the horrible consequences that would befall the community with their failing. How is this problem to be solved?
How is to be solved, indeed? Well, here is my idea: look at the Big Three auto companies not as an organization, but as a collection of workers, managers, suppliers, and assembly plants.
We want the workers to remain employed. After all, they have families to feed, lives to live, and taxes to pay. They worked to keep their companies going, but unfortunately did not supply enough profit with their hours of labor to support the firm. Retraining will be difficult for many, troublesome for most, and expensive for all. Either they or we would have to foot the bill for that one.
We also want suppliers to stay in business. They, like the workers, have mouths to feed and support the communities within which they exist. Many firms are probably more flexible than the Big Three in that some could shift to making parts for the foreign companies on US soil, and I suspect that many have indeed done that. However, the blow that lands upon them would not necessarily be glancing.
Finally, no matter what happens, there will be a lot of infrastructure laying around. A great deal of materials and human effort went into the physical plants themselves, and would be a great shame to waste. Many are probably more up to date than Detroit would have us believe (how many other industries get the government to effectively pay them to upgrade?) and quite useful.
Also keep in mind that there is a fine tradition of protecting industries from foreign competition in a national strategic interest. Some would even defend it as the reason that advanced (and developing) economies nurtured their advancement. So, we shouldn't be entirely opposed to this in principal, not matter how much we would like to spite the CEO class that always preaches free-market idolatry until the day it is their company under the market's vicious talons.
My suggestion is thus this - direct most of the damage at the management and the organization of one of the Big Three. Make the weakest of them (probably GM) the example before the rest, and future policy makers. Extend help to the other two, and watch the third die.
The idea is to auction off the physical plant (and effectively the contracts of the workers that would man it) to a number of entrepreneurs and would-be car builders. Make them the deal of the century - an industrial Homestead Act that gives them access to infrastructure and resources to make their automotive dreams come true. From this group would (may) emerge a new tiger or two that could revolutionize the industry and reclaim our national leadership in a very large and lucrative market.
GM still produces 10 million cars per year. Imagine if that capability were split into ten or twenty new niche companies. There would be a storm of competition, and the survivor would likely have the wiles and smarts to compete on the world stage. It would be an interesting ride for the rest.
So, there it is. Kill the company, but save the people and the equipment under radically new management. This would be government intervention to strengthen a strategically important industry, but without rewarding those that made the bad decisions. Market-based Darwinism would be recharged and given a fresh start in the US auto industry.
Thoughts?