A Way Out for the Auto Industry

It’s not about competition – it’s about our standard of living

Opponents of the government loans to the Big Three Auto companies contend that if American companies cannot compete they should be allowed to go bankrupt. Thus, the Big Three executives received a cold shoulder when they showed up in Washington, D.C., this week, even after giving up their private jets.

But this misstates the problem. The real problem is not figuring out how to “compete” with organized labor’s brothers and sisters in Asia and Europe.

Instead, it is about all workers – here in the United States and around the world – fighting to maintain their basic standard of living in the midst of catastrophic financial crisis.

This crisis is about all workers not just autoworkers.

Big Three Management has failed its social responsibility

The key to defending and improving workers’ standard of living is the availability of good jobs for all producing socially useful products for all.

The current management of the Big Three has failed that basic social responsibility. And the leadership of the United Auto Workers has been unwilling to challenge the Big Three for their failure, choosing instead to “go along in order to get along.”

Instead, the UAW should draw on its finest traditions as more than just a narrow bread and butter labor union – when, for example during the civil rights era, it backed a broader concept of the public good.  

It should argue now for a restructured transportation industry. If the union does not step forward now, bankruptcy and union busting, much like that underway at Delphi, the auto parts supplier, will consume the entire auto industry. 

Time for a new transportation industry

The valuable physical plant and skilled workforce of current workers and recent retirees of the Big Three can be the basis of a new transportation industry that manufactures a wide range of products for both mass and individual transportation that are environmentally responsible. This new industry can be the basis for a revival of economic growth.

But such a solution cannot be entrusted to the titans of Wall Street, of hedge funds and private equity funds. The collapse this year of major investment banks makes clear that Wall Street no longer knows how to manage workers savings responsibly.

From the Big Three to a Public Trust Company

A new public trust company, or PTC, should be established immediately. The PTC will be managed transparently by trustees who will be elected by autoworkers and members of the communities in which the auto plants are located.

The PTC should be provided a government guarantee to issue long-term bonds at low interest rates that would be held by major pension funds and mutual funds. The cash raised should then be used to purchase the assets of the Big Three auto companies that will then be folded into the PTC.

The PTC will create a new national transportation plan that will be part of an effort to revitalize our cities and move to an environmentally and socially responsible economy managed democratically and transparently in the public interest.