The right way to save Detroit
There is a right and a wrong way to save the American automobile industry and probably, politics and political pressures being what they are, more of the wrong things will be done before some of the right things will be done.
The right way would be to do all those things which would make the industry modern, efficient, and again competitive just as quickly as possible. The wrong way is to do precisely what the labor unions, much of automobile management, and the politicians from the stricken automobile producing areas think they want.
They are clamoring for barriers against the import of foreign cars, by quota, by tariffs, or by any other means. Above all they want to deprive American citizens of the freedom to buy the kind of cars they are buying, because so long as the citizenry of the US is free to choose it is going to go on choosing the modern and better cars which at present are coming largely from overseas, most of them from Japan and West Germany.
The serious question is how long the time lag will be before the American automobile industry can modernize its plants and begin to turn out in quantity modern cars produced efficiently.
The American industry can turn out modern cars. Chrysler's Omni-Horizon is an Excellent and entirely modern car, selling at a competitive price. So too are the new X cars from General Motors. But a lot of Americans have given up waiting for them. Not enough are yet available. In frustration many people have bought the instantly available old-style cars which glut the market today, and which the new owners will probably regret having bought a year or so from now when the new cars are at last available in quantity.
The longer the time lag in getting these new cars on the market the harder will it be for US manufacturers to reclaim their normal share of home and overseas markets. If they drag their heels and take too long, they might never get that old share back again. Any form of tariff protectionism is likely to cause them to relax and delay instead of getting on with the job and getting up with the times.
Enough protectionism and enough delay could do to the American automobile industry what happened long since to shipbuilding in both the US and in Britain, and what is in part happening to US steel production. Any form of protectionism tends to stretch out the use of obsolete factories, mills and shipyards. A whole industry can become inefficient and disappear.
The US needs an automotive industry. But it can no longer afford a backward and inefficient one. The problem is all the graver because the industry itself has been too slow at discarding old factories and at building new ones which could produce modern cars more efficiently. The transition would be less painful today had the companies modernized their plants and operations in pace with the new assembly lines coming into operation overseas. American industry once took pride in pioneering the future. Right now the US automotive industry is the champion at clinging to the past.
The proper role for government is to encourage by every possible means the transition. Tax rebates for investment in modern plants would be in order. Of highest importance would be the retraining and resetting of automobile industry workers. The constructive, progressive course for government is not to save old jobs in old factories but help in developing new jobs in new industries. The modern motor car factories which will come onto line to replace the old ones will never employ the number of workers the old ones do. If the US automobile industry were fully modernized it would probably be able to turn out all the cars needed with about half the work force which has been needed in the old plants.
The trouble is not with the US economy as a whole. Many segments of American industry are modern, booming, and needing more workers. There is no serious unemployment today in New England which lost its obsolete industries (textiles) to the south long ago, and has since gone over to high technology industries. The real trouble with the US economy today is that too many segments of it, automobiles and steel in particular, have been dozing for about 20 years while their competitors overseas were learning how to build better cars.
President Carter is being forced by domestic political pressures to try to talk the Japanese into sending fewer of their cars into the US market. To his credit, Mr. Carter has so far resisted remarkably well this type of pressure. The more he resists the sooner the US industry will modernize itself and get back into real business again. Protectionism meanwhile penalizes the American customer by making him pay an unreasonable price for an obsolete car which should never have been built.