David Hoppe

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:: Car crazy

Don't restructure, retool

By David Hoppe

The news last week that General Motors and Chrysler need us to pony up another $39 billion so they can keep making cars and trucks was a little like hearing that your middle-aged son wants his old room back.

It seems impossible to say no, but that doesn't keep you from wondering if there isn't a better way to deal with what's going on.

You will recall that GM and Chrysler got $17.4 billion as a kind of Christmas present from us a couple of months ago. This money, we were told, was absolutely necessary to avert economic disaster. We were reminded of all the jobs - especially in the Midwest - that depend on the auto industry. One industry expert after another told us that if we thought the economy was bad now, well, we wouldn't have to wait long to see how bad it could get if we didn't send money to the automakers.

This was a bitter pill. America has had a love-hate relationship with its homegrown cars since the 1970s, when the Japanese invaded with vehicles that were better designed and more economical. But, at the same time, it seemed perverse to bail out paper shuffling banks when carmakers were in such dire straits. At least, the argument went, carmakers made things people could actually use.

That argument is wearing thin. GM says it plans on cutting 47,000 jobs before the end of this year, or almost one fifth of its total workforce. It will close 14 of its 47 factories by 2012. Chrysler says it will cut 3,000 jobs, while trying to persuade all other hourly workers to take early retirement so that it might avoid having to lay even more people off.

I thought that America's economic recovery depended on job creation - not job elimination. I'm sorry, but the prospect of loaning tens of billions of dollars to companies so they can downsize seems dubious at best - like destroying a village in order to save it.

This is what the management at GM and Chrysler call "restructuring." In addition to eliminating jobs, they will take this opportunity to dump a few of their under-performing models and brands, like the Dodge Durango and, for that matter, almost all of Pontiac.

But these steps seem obvious, if not lazy, less like true restructuring than trimming the fat. We should demand more for our money -- a retooling that could pay off for years to come.

Why not put our automakers to work on a new, national mass transit system?

The day before GM and Chrysler held their corporate hands out for billions more, President Obama was signing the economic recovery bill. The mainstream media was so busy covering the partisan wrangling associated with the bill's process that they missed the fact that the package dedicates $8 billion to the creation of high-speed rail corridors.

To put this in perspective, this is eight times more than the amount budgeted by President Bush. And that's not all. Administration officials have said Obama will ask for an additional billion dollars a year for high-speed rail in each of the next five years.

High-speed rail is being called Obama's "legacy issue." As White House Chief of Staff Rahm Emanuel told Politico , "High-speed rail is the infrastructure bank." He said that Transportation Sec. Ray LaHood has 60 days to present a strategic plan for the funds - a combination of large upfront capital and annual appropriations - and will have authority to assign "priority to projects that support the development of intercity high-speed rail service."

These plans follow on what President Obama told NUVO during his primary campaign in Indiana. At that time he envisioned a regional network connecting cities like Indianapolis, Chicago and St. Louis.

A national commitment to high-speed rail will accomplish a number of things. In the first place, it's a great public works project, on a par with Eisenhower's Interstate Highway boom during the 1950s or Roosevelt's WPA. European nations have also demonstrated that high-speed rail can be a cleaner, more energy efficient form of transportation than automobiles or air travel. It helps kick our dependence on oil and provides benefits to the environment. Finally, it's an economic truism that prosperity follows new and improved forms of transportation. Making it easier to get from here to other cities in our region will create invaluable commercial synergies that can benefit all of us.

And jobs. Did I mention jobs?

In asking for another $39 billion, GM and Chrysler have made plain the choice that's facing us. We can pour tens of billions of tax dollars into trying to prop up a shrinking business model, or we can invest in future growth. At the moment, we're not just rearranging deck chairs on the Titanic, we're throwing many of them overboard. The question we need to ask ourselves is: How committed are we to this brand of pain?