I hate nothing more than political bickering which is why I usually stay away from partisan politicking. Today is an exception. I need to highlight a few interesting comments made yesterday during the Presidential Hee Haw Show Tour.
Like most presidential speeches it begins with a bit of forced-humor. Then flows right into the partisan lecturing, then more partisan lecturing. From there something about members of Congress and the Little League (Did I miss a scandal?). No presidential trip to the Midwest can be complete without a piece on the automotive industry. Let’s see what the POTUS had to say about America’s automotive industry.
The President: “Trade deals, you know, trade deals haven’t always been good for America. There have been times where we haven’t gotten a fair deal out of our trade deals. But we’ve put together a package that is going to allow us to start selling some Chevys and some Fords to Korea and so that — you know, we don’t mind having Hyundais and Kias here, but we want some “made in America” stuff in other countries. That’s something that Congress could do right now.”
I agree with the President to a certain degree. Yes, anytime you can export products and establish brands in other counties in the name of hometown profits is a good thing. I caution the average listener not to think that just because Congress passes a Korean-US Free Trade Agreement (KORUS), Ford Fiestas will fill the streets of Seoul. That tiny business element referred to as consumer demand has a place.
If Koreans want American cars, don’t assume they’ll all be wearing “Made with Pride” UAW/Dearborn stickers. Just this past quarter Ford invested heavily in manufacturing facilities in Asia. Their sustainability report outlines over $2.1 billion in investments in the Asia Pacific region to include India, Thailand, and Chongqing, China. While this overall profitability is good for Ford as a corporation, an increase in vehicle sales to Korea doesn’t guarantee more jobs in the U.S. market.
The President: “You know, you will recall, when I came into office, they were talking about the liquidation of G.M. and Chrysler. And a lot of folks said, “You can’t help them, and it’s a waste of the government’s money to try to help them.”
But what I said was, we can’t afford to lose up to a million jobs in this country, particularly in the Midwest, but we also can’t afford to lose leadership in terms of building an auto industry that we used to own. And so we turned around those auto companies. They are now making a profit for the first time in decades. They’re gaining market share for the first time in years.
But what we said was, if we’re going to help you, then you’ve also got to change your ways. You can’t just make money on SUVs and trucks. There’s a place for SUVs and trucks, but as gas prices keep on going up, you’ve got to understand the market. People are going to be trying to save money.”
While I’ve never been a big fan of the government’s hand joining the invisible hand of the market, but this was a valid case of “too big to fail”. We can’t pretend the automotive bailouts didn’t cost the taxpayer money. I’m much less fascinated on the dollar figure spent and more interested in how much will be paid back. Recent estimates for the bailout of General Motors alone put the loss at $14 billion.
Governments should never be in the business of product planning for any company. I guess when the government spends billions of dollars bailing you out of trouble, they feel duty-bound to scold you. Enter the SUVs-are-bad speechifying. Any business person worth his weight will tell you – in the end consumers have needs and automakers have to meet those needs. If people want to buy 4,000lb SUVs automakers are more than willing to build 4,000lb SUVs. Blaming the automakers for people buying SUVs is like blaming the banks for people who purchase a houses twice more than they could afford.
Fortunately the recent iteration of smaller cars are fantastic little vehicles. High-quality materials and lavishly adorned with bells and whistles usually found in bigger premium vehicles, but offered here at a much more affordable price and with higher fuel economy levels. Basically – automakers are building small(er) cars that people actually want to buy. Which is a good thing if you want to reduce vehicle footprint and fuel consumption.
That is all. Happy Motoring readers,
DCAG
