Six Ideas for President Obama to Help the U.S. Auto Industry.

Unless you live under a rock, you know that on Monday President Barack Obama announced the rejection of General Motors and Chrysler’s restructuring plans. In his statement he spoke of the need for government to act as a partner in assisting the auto industry, which seemed to go beyond just billions of dollars in loans.

Because I am sure that President Obama and his staff are a few of ATKs 1.5 million loyal, daily readers, here are a few suggestions for how the U.S. Government can become real partners in job creation and the rejuvenation of the United States auto industry.

Create a trade policy that protects the environment and workers around the world.
Demanding that countries that sell here observe higher standards for employee pay and environmental protection could start to equalize production costs and make the U.S. more competitive. It would start to create world-wide markets for everyone’s products, protect individual rights and raise standards of living. Protecting the planet should not only apply to the United States nor should a lack of environmental protection elsewhere undermine our own environmental policies.

Reduce dealership power.
Do you think the United Autoworkers have too much power over the big-three? The dealerships might be stronger. The domenstic auto industry needs to reduce its number of dealership drastically if it is to imporve profitability. Standing in the way are strong dealership rights in law in each of the 50 states. Case in point, when GM killed off Oldsmobile, it spent over a $1 Billion to dealerships to pay them off. Dealership power is one of the main stumbling blocks to reduce the number of brands. GM can't afford to engineer or market the number of brands it has, nor can each brand be a full line of cars and trucks. If GM wants Pontiac to only be a nitch brand of performance cars, it will have to overcome the whining on the dealerships that results in Pontiac econoboxes and minivans coming to market.



Open markets to U.S. products.
The U.S, has some excellent trading partners. We should support them by buying their products, including cars and trucks. Japan is not one of them. General Motors and Ford are two of the biggest companies in European and Chinese markets, but last year GM sold only 2,000 cars in Japan. Ford is prohibited by Japanese law from buying more than 33% of Mazda. Due to Japanese proetectionism, Japanese companies can subsidize the price of cars and the costs of R&D by increasing prices in their home market. It makes small models sold in both markets more profitable where big-three cars sold only in the U.S. market less profitable. If we cannot sell there, they shouldn't be able to sell here. That's not protectionism, that's sanity.

Replace the Corporate Average Fuel Efficiency (CAFE) standards.
Creating a mileage-boosting plan that doesn’t require car makers to sell small cars at a loss could help us invest in small car efficiency. The American consumer continues to see small cars as a penalty. Until they see them as something more than an economy car, these models will remain unprofitable. CAFE is a failure. It doesn’t help the environment and kills the U.S. auto industry. Raise the gas tax if you seriously want to increase mileage, change consumer behavior, and help the environment. If not, admit it is politically unfeasible and move on.

Standardize safety and emissions requirements with Europe.
Car aficionados in the U.S. often gripe that they cannot buy one of the sweet, tiny diesel cars sold in Europe that get a billion mpg. As it turns out, theses cars don’t meet the United States safety and emission regulations, so they cannot be sold here. Cars in the U.S. have more expensive diesel equipment making diesel options very, very expensive. Cars are bigger and heavier here to comply with our safety standards, which in turn makes our cars less efficient, and also makes them less marketable in Europe.

Create a national health plan that will make the Detroit car maker's health and retirement cost equal to the competition.
Think that only the Big-Three are getting loans from their government? Toyota, Honda and Nissan are set to receive billions from the Japanese government, but their assistance doesn’t end there. The cars built in Japan get an automatic profit advantage because the government is picking up the health care tab and takes care of the Japanese retiree too.
It is time to create a sane national health care policy that will make our companies more profitable. Health care is not just about doctors, it’s about economic development.