No Blank Check for Detroit

In his blog, Let Your Life Speak, Buena Vista resident Dustin Urban writes a poignant letter to Senator Salazar urging him not to hand over a blank check to the big 3.

“I am the proud owner of a Japanese Toyota Prius. I am 24 with a baby on the way, and I am committed to saving our planet and curbing global warming. So I have watched with scorn as GM and others have clung white-knuckled to their SUVs while spending billions on marketing campaigns claiming that these dinosaurs are green.

And now that this plainly myopic business strategy has American automakers scrambling, they want a bailout. As Thomas L. Friedman said recently in an excellent column in the New York Times, “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?”

Thanks for your insights, Dustin. And, hope you are listening, senator.

Photo credit.

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2 responses so far ↓

1 Dustin // Nov 21, 2008 at 12:54 pm

Another interesting development in the auto industry’s attempts to secure federal aid. The big three executives flew to Washington in private jets the other day in search of a bailout: http://www.washingtonpost.com/wp-dyn/content/article/2008/11/19/AR2008111903669.html?nav=hcmoduletmv
2 Dustin // Nov 24, 2008 at 4:05 pm

I just received a response from Ken Salazar. Here it is:
Dear Dustin:

Thank you for contacting me. I appreciate hearing from you.

As you know, the largest American automobile manufacturer, General Motors (GM), has warned that it is quickly running out of cash reserves, and that, absent government intervention, it will likely be unable to continue operations. Ford and Chrysler are also in bad shape, and analysts fear that the collapse of GM would ultimately lead to the collapse of the American auto industry as we know it.

The causes of this predicament are plain to see: the “Big Three” have failed to adapt their business models to an evolving global market that is increasingly demanding smaller, fuel-efficient vehicles; the crisis in our credit markets and our broader economy has sharply depressed auto sales; and the costs of providing health care and pension benefits to their employees have risen at exorbitant rates.

Many raise the valid point that the “Big Three” should be held accountable for their failure to effectively address these problems. On the other hand, many argue that the costs of doing nothing to assist them are too great. The American auto industry supports some 5 million jobs and accounts for approximately twenty percent of our manufacturing Gross Domestic Product. Unemployment rates are already skyrocketing and the toxicity of our financial markets is beginning to seep into other sectors of our national economy. Many argue that if the auto industry were to collapse, it would exacerbate our nation’s economic troubles and sink us further into a recession.

Various proposals are currently circulating in Congress to help our nation’s ailing auto industry. Some of my colleagues have urged the Bush Administration to use a portion of the money authorized to them under the Emergency Economic Stabilization Act which passed earlier this year. Others are calling for separate financial assistance with conditions attached, such as requiring the companies to use the funds they receive to modernize their vehicle fleet and production facilities. As I evaluate these and other proposals, I will be sure to keep your thoughts in mind.

Again, thank you for taking the time to share your views.

Sincerely,

Ken Salazar
United States Senator