THE TENNESSEAN
December 21, 2008
By Harold Ford Jr.
Intel's "strategic objective is tackling big problems and turning them into big businesses," said former Intel Chairman Andy Grove, as he urged the company's current leadership to begin manufacturing advanced batteries for plug-in cars.
Grove believes the future of the U.S. auto industry is in electric cars, and that America's battery production is limited. Thus, Grove contends, Intel should diversify its business by manufacturing advanced batteries for electric cars. Such a venture would create new jobs and increase Intel's profitability. In short, Grove believes Intel should innovate its way to future success.
The Intel model — past and future — is a good one for Detroit and Washington to follow. I watched and listened closely to the auto-bailout debate in Washington earlier this month, and the outcome revealed the stunning lack of creativity and innovation in saving the American automobile industry. Senate Republicans, led by the "Southern resistance" of Sens. Bob Corker, Mitch McConnell and Richard Shelby, implored that bloated and outdated labor agreements between unions and management were the cause of the industry's problems. They argued that, simply by undoing these labor agreements, the car companies could be put back on the path toward profitability again.
The Republican effort to put labor unions out of the car business may serve their political agenda, but it's narrow-minded and certainly no substitute for a long-term growth and innovation strategy to rehabilitate American carmakers. What is missing from the Corker-McConnell-Shelby argument is an equal zeal for incentivizing and rewarding innovation in Detroit.
American carmakers, aided by shortsighted allies in the White House and Congress, over the past two decades have repeatedly resisted making smaller and more fuel-efficient cars, while their Japanese and Korean counterparts manufactured and sold these cars to more and more Americans.
Senate GOP exacerbated market
In addition, the Corker-McConnell-Shelby effort in the Senate caused the auto bailout to fail, adding more stress to an already depressed U.S. job market, with the end result being that thousands of Tennesseans could lose their jobs right after the new year. Tennesseans should be relieved that President Bush defied Corker, McConnell and Shelby to keep the carmakers alive. This is the only way that middle-class Americans will hold on to their jobs while President-elect Barack Obama and the new Congress draft a serious auto restructuring plan.
The new plan will create an auto czar with the authority to rework labor and legacy cost agreements, bring in new management at GM and Chrysler, compel big and continued investments in new battery and hydrogen fuel technologies, and enact a set of tax credits to encourage Americans to buy these newly designed cars. It is true that Detroit's failures must be corrected for them to thrive going forward. But, Washington owes Detroit a more creative option than to destroy the labor unions or allow the carmakers to file Chapter 11.
A collapse of the American automobile industry could also cause great economic upheaval around the world. American carmakers have been very successful in selling cars in Russia, China, India and Brazil. They dominate many of these markets. Any disruption of the American auto industry could cause hundreds of thousands of jobs to be lost in these emerging countries, fueling a worse global recession.
The U.S. car industry's birth was predicated on vision, energy, hard work and innovation. Detroit's success over the decades has created millions of jobs around the country and contributed greatly to our national security. We are too great a country to permit this great industry to become a memory.
The 21st century will rise or fall on the innovation that America and the world can bring to the global marketplace. If the American automobile industry follows the lead of Bill Gates of Microsoft, Steve Jobs of Apple, Fred Smith of FedEx, and, yes, Andy Grove of Intel, it will once again retain its leadership in the manufacturing of cars.
So, Washington and Detroit, get to work. There's not a moment to lose.
Harold Ford Jr. is chairman of the Democratic Leadership Council.
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