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>Four Big US Automaker Lies

>Newsmax gives us four reasons for opposing a bailout for American auto makers. All signs point to a government-backed auto industry bailout, but Newsmax makes a great argument that this crisis is swaddled in myth, spin, and outright lies.

1. Detroit’s wages really aren’t out of sync with those of auto workers in other countries.

It has been well established that total compensation for U.S. auto workers, including pensions and benefits, comes in around $70 per hour. That compares to $45 per hour for Japanese workers.

But some auto industry supporters have distorted the argument. They use the American workers’ hourly wage without benefits – about $30 an hour – and compare that number to the $45 hourly total compensation for Japanese workers. Then they claim that U.S. auto makers are actually more labor efficient than their Japanese counterparts.

2. The auto industry is unique and therefore must be bailed out.

It’s true that auto companies, including suppliers, etc., account for about 3 percent of economic output and employ at least 1 million people. But those numbers aren’t dependent on the financial status of the Big Three.

If the companies go into bankruptcy and come out stronger, the industry will employ about the same amount of people. If not, foreign auto makers will produce more cars in the U.S. and pick up many of these workers.

Plenty other uniquely American industries are taking it on the chin, and no one is calling for a bailout of those sectors. Take newspapers for example. One could argue they are far more important for the functioning of our democracy than the Big Three auto companies.

3. Bankruptcy for the Big Three will mean the end of the U.S. auto industry.

That is simply poppycock. A prepackaged bankruptcy actually could leave the major automakers in better shape than they were prior to the financial crisis. Since the mid-1990s, the Big Three made most of their money on gas guzzling SUVs and trucks. That simply won’t cut it anymore. Bankruptcy will force the auto makers to quicken their shift to smaller cars.

Plenty of companies have emerged stronger from bankruptcy. Nearly all the major airlines have gone through that process and came out stronger than when they entered.
4. A limited aid package now will ensure the industry’s long-term future.

The amount of money being bandied about, $15 billion to $25 billion, is chump change. GM and Chrysler are bleeding $2 billion in cash a month. So the high end of the bailout range keeps them in business for about a year. Then what? Without major changes in their business model, they’ll simply be coming back to Washington with their hands out again.

Newsmax says automakers should follow Chrysler’s 1980s success story: create a viable business plan for the future and get private sources to fund it.

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