In 2005, with GM and Ford teetering perilously close to bankruptcy, the Breakthrough Institute created the Healthcare for Hybrids proposal with Senator Barack Obama, Representative Jay Inslee, and the Center for American Progress, a plan which would have linked fuel-economy increases to relieving health care costs for U.S. automakers. Today, with the industry again on the brink of collapse, we invite you to join us is exploring a new question for the new era:
What will it take to reinvent the American auto industry?
We will publish the best responses on our home page, www.thebreakthrough.org. Please submit your op-eds to firstname.lastname@example.org and paste or type your content into the body of the message; please do not send attachments.
“As GM goes, so goes the nation,” went the old saying. Let’s hope not.
The U.S. auto industry is in its last throes. After decades of declining market share, sales have collapsed to 25 year lows, with total sales for October over 30 percent below last year. GM sales have plummeted by 45 percent, and its stock price is down to its lowest level since 1950. According to Deutsche Bank, GM may not be able to fund its operations past December. An op-ed in yesterday’s Detroit News put it this way:
“It’s over, folks… It would be impossible to overstate the historic implications of this -- what it means for the national economy, the city of Detroit, the state of Michigan, the industrial Midwest, GM employees and retirees, suppliers, dealers, non-profits and the United Auto Workers.”
Should the industry be allowed to fail? Obama, Pelosi and Reid don’t think so, and it appears increasingly likely that an additional $25 billion federal package -- on top of the $25 billion in direct loans included in the $700 billion bailout plan -- will be injected to prevent bankruptcy. Obama and the Democratic leadership have indicated that such a deal would be contingent upon automakers’ willingness to transition the industry to produce more fuel-efficient and cleaner vehicles, but no further details are on the table.
Here’s the problem: not even $50 billion is enough to save the automakers. The industry has been trapped in a downward spiral for decades. In the 1970s, domestic automakers sold 90 percent of U.S. vehicles. In 2007 they sold less than 50 percent, and their share is smaller today. Even if a major bailout can hold the industry over until the end of the recession, there’s little indication that Detroit can ever again compete with foreign manufacturers.
Now is the existential moment for an American industrial archetype. Is America ready to cut its losses? Or are we willing to do what it will take to rebuild and transform this industry to become competitive in the 21st century and create the clean, efficient American automobiles of the future?
The choice is ours – and ideas like yours can help determine the path we take. To join this conversation about America’s future, visit our website at www.thebreakthrough.org and submit your ideas in essay format to email@example.com.