JAcking up Detroit
There is no question that the US auto industry, spinning its wheels to get out of its deepest economic problems in history, could use a short federal push to get back onto the road to recovery. President Carter's proposed "first steps" to aid the industry by and large do not appear to be excessive. In addition to pumping sorely needed assistance to cities impacted by auto industry joblessness, their primary focus is short-term adjustments in safety and environmental regulations that would improve the industry's cash flow while not removing any critical public protection.
However, it is the potential "second steps" that worry us. It would not be in keeping with America's tradition of free enterprise -- nor would it serve the best interests of the industry and the public in the long run -- if the US government slipped more and more deeply into the business of bailing out ailing American industries.
Many Americans will be concerned, and understandably so, by the kind of deep and long-range government involvement in a major industry President Carter seemed to imply in his announcement of a planned close- knit "permanent partnership" between Washington and Detroit. This is not to say that government and industry should not cooperate more than in the past in helping the US automakers find ways to compete more effectively with foreign car manufacturers, whose close government ties give them an edge over American firms. A committee of management, labor, and government representatives to study the industry's complex long-term problems might help. But a "partnership"? It will be important to guard against the development of a too cozy relationship between regulators and industry that could threaten the rights of consumers. For a start, government help should be limited to keeping the industry moving forward just long enough for Detroit's own engine to take hold -- until the automakers' new, more competitive models that are now being manufactured reach dealer showrooms to compete with the flood Japanese and other imports which are taking an ever larger share of US car sales.
Detroit, late in responding to the energy crisis and changed consumer demands for smaller, fuel-efficient cars, is finally beginning to produce the kind of autos the American car-buying public wants. As early as this fall the American answer to the popular Toyotas, Hondas, and other imports that have helped Japan overtake the United States as the world's largest producer of cars will be coming off Detroit assembly lines. But it will take another year or two at least before there will be enough of Chrysler's new "K cars," GM's new "J cars," or Ford's Escorts to put Detroit back in the running. Thus President Carter, for political as well as economic reasons, felt he had no choice but to help ease the impact of disappearing profits, a quarter million Americans auto workers laid off, and dealerships forced to close in bankruptcy. Many thousands of workers in the rubber, auto-parts, and other car-related industries also are feeling the squeeze.
So far, Mr. Carter has wisely stood firm in refusing to limit free-market competition by placing restrictions or quotas on Japanese imports. A presidential task force appointed to study the industry's problems and make recommendations had concluded that holding Japanese imports to last year's levels would restore perhaps 100,000 US jobs -- but cautioned it would also feed inflation by forcing American consumers to pay an additional $1 billion in higher prices for both Japanese and domestic cars. Moreover, new tariffs would violate the long-standing US commitment to free trade and invite retaliation in other trade areas.
In negotiations since March the Japanese have shown they are sensitive to the US auto industry's problems, but thus far they have done little to help the situation. They have indicated a willingness to send more Japanese- made auto parts to the US and to explore opportunities to do more investing in America. Honda has plans for expanding its motorcycle facilities in Ohio to include auto production. Datsun will build small trucks in the US.
Given this situation, Washington might carefully consider the presidential task force's long list of proposals for easing the industry through the difficult retooling period that lies ahead. Among them, very limited tax relief in the form of a one-tim speed-up of depreciation deductions for certain tools and a new program to encourage laid-off auto workers to be retrained in other lines of work.
In the final analysis, however, Detroit must work out its own solutions. The best hope of meeting competition from abroad is to continue to press ahead with the kind of innovative quality-control programs currently being tested at Ford and Chrysler; among other things, assembly line workers are being given new authority to stop a production line if they spot a defective car on it. More intensive inspection of parts made by outside suppliers is also being tried as part of a wider effort to encourage greater worker involvement in upgrading product quality.
With management and labor dedicated and working together to build quality and greater fuel efficiency into the American- made cars of tomorrow, Detroit won't need hastily erected trade barriers or heavy government involvement in corporate decisionmaking to keep the industry rolling. Automakers should keep this in mind as they struggle to ride out their current economic problems.