BIG 3 Bailout or Green Transportation Fund?

Today December 9, 2008, a congressional hearing, “Energy Independence & Assistance to Automotive” was broadcast on CSPAN. As the chairman of the hearing, Rep. Ed Markey – D-Maryland stated, “This is a historic panel.”

This historic panel consisted of Joan Claybrook, President of Public Citizen; Peter Morici, University of Maryland School of Business; Ruben Munger, Chairman of Bright Automotive; Geoff Wardle, Director of Advanced Mobility Research, Art Center School of Design; Richard Curless of Mag Industrial Automation Systems.

Together this panel with the congressional committee discussed the bailout of the automotive industry that was born in the United States, supplied a large economy that brought mobility to the masses and spurred new industries. The historical significance of this discussion is about the part government will play making business decisions with the Big 3 automakers as congress plans on creating a bailout package to save hundreds of thousands of jobs and manufacturing in the US, or not. This discussion’s other historical projection will probably begin the first National Manufacturing Legislation in the US History or create new bankruptcy laws specialized for an industry.

We may see the creation of a Green Automotive Fund and rather than a Car Czar, a Mobility Czar as other modes of transportation that would benefit from legislature as the government begins to create policies. Geoff Wardle strongly suggested that besides a government oversight program, the government and public would benefit with a government sponsored Green Mobility Think Tank of professionals, scientists, planners, etc. that would research the best means of using infrastructure dollars along with transportation dollars and development of policies.

Geoff Wardle encouraged support in the bailout to also include funding for new automotive companies that are ready for production. Ruben Munger spoke of his expertise in the Green Car industry, but also that if his company Bright Automotive received funding, they would be able to produce 50,000 cars very quickly. A pitfall that the bailout could realize is that while the US becomes less dependent upon foreign oil, we could become dependent upon foreign batteries.

Peter Morici stated that the difference between Rick WagonerRick Wagoner, CEO of GM and Ruben Munger is that no one told Mr. Munger that he can’t do it! This statement represented the mindset of the Big 3 that is resistant to change. Morici doesn’t believe that the leadership of the Big 3 will change as quickly as they would be required and providing them money now will be wasted as they will find reasons to keep coming back with their hands out for many years to come.

As large production for Green Cars is not currently available for the need of millions of vehicles to produce enough jobs required to help through this recession, neither seems to be the credit to by these cars due to the non-restricted bailout of banks and Wall Street that were suppose to open up credit. Ruben Munger elaborated how a Commercial Curve would be required as well as education to consumers of the difference between the new technologies. Example given was how if you purchase an electric vehicle at the expense of $40,000, you would be purchasing 5 years of gasoline up front. Of course if you are financing the cost of the vehicle, then you are paying interest on that gasoline but also you wouldn’t have to worry about the rising costs of gas eating up your budget unexpectedly.

Congresswoman Solis – D-CA stated that the infrastructure was not in place for the new Green Technology and the funding wasn’t available as well. She presented an example of how Toyota was able to spend millions in “Green Collar Training” for building their new technology and targeted low-income areas here in the US. It was important to note that infrastructure and training for these new technologies seem to be important to other countries doing business in the US, however, not to the US manufacturing companies.

Another strong stipulation that should be required in the bailout to the Big 3 was strongly stated by Richard Curless, is that the bailout money used for parts and equipment should only be spent in America by companies that are manufacturing in America.

Peter Morici explained that no congress in the past decade has made any move towards a fair trade agreement with China which is the primary responsibility for our recession and manufacturing problems. We will see if not only this committee but also the finance and trade committees will take heart to his statements on trade and make the required changes.

Fair Trade with China might hurt Wal-Mart and other retailers that profit largely from goods that are in landfills usually within a year of purchase; however, this recession is part of the change that is happening for hopefully the greening in America. Historically this is a very important time and this hearing represented businesses, citizens and legislators that are willing and able to make changes.