EAST BAY CITIZEN. EVERYWHERE SINCE 2009

Tuesday, August 25, 2009

GM was Too Big to Fail, but is NUMMI?

SWEETHEART DEAL TO WORLD'S #1 CAR MAKER NEEDS TO BE EXAMINED
When John Garamendi attached the phrase "too big to fail" withthe rescue of NUMMI, the words conjure not unemployed auto workers by the thousands, but car manufacturers reaping the benefits of their own mismanagement.

The sentiment is now so ubiquitous that it's used to describe every industry in dire financial straits. The thing is, though, if General Motors is a hulking dinosaur of a bygone era of manufacturing in America, then why is saving NUMMI any different, other than this time, it is our backyard and not Flint, Michigan?

This is a difficult question for many in the Bay Area and the state where mismanagement and a virulent strain of a bad economy is crippling California's ability to thrive and compete. Early this year, many urged the Obama Administration to let the rickety-old patient in Detroit die a honorable death. Some concluded propping GM and Chrysler is nothing more than putting a billion dollar band-aid on a terminally-ill patient. Both companies eventually filed for bankruptcy (GM's leading directly to their decision to pull out of the NUMMI partnership with Toyota) and now see a future as a smaller, hopefully innovative auto company.

But, what about other companies and employee that halo around the auto industry? The argument was made in Michigan and adjoining rust belt states where the business of building cars extends far from the assembly plant. Peripheral companies that make leather seats, carburetors and steel companies among others would also fail. Politicians in the East Bay are saying the same thing and both sides are correct. Over 4,700 highly-skilled wage earners and linked businesses will falter greatly, but the difficult question is how long will these companies and worker skills be useful in California's future economy anyway? A vast majority of those painters, middle managers and line workers will not fit the state's creative and high-tech industries without a vast training initiative.

Even when the recession ends and companies actually start hiring, the future of auto companies still look tenuous, at least, without some sort of "Cash for Clunkers" type program. Banks will not be lending as they once were. Interest rates will be high, home equity loans will become scarce and in NUMMI's case, the rush for environmentally-friendly cars does not extend to Corollas and Tacoma trucks. Even with the help of Sacramento, there is a good chance some of these workers will be laid off.

Sacramento's typical response has been to obsess over the future, before eventually giving in to the present quagmire prolonging the state's recovery. The budget passed last month did precisely this by gutting education and health care for those most needy and borrowing billions from already reeling cities and counties. Now, we want to bail out Toyota or as state Sen. Ellen Corbett told the San Francisco Chronicle last Friday, "to let Toyota know that we love them and we want them to stay in Fremont."

Giving the world's largest automaker tax breaks, offsetting losses for up to 15 years and lending up to $30 million to retool the plant is more than love, it's a torrid sex scandal. Thousands of jobs would be lost that may be cut eventually. The economy of California is not geared towards manufacturing any longer. It's difficult to believe such a massive reduction of employment is good, it's not, but it illustrates clearly how the once Golden State has no plans for returning to those halcyon days when we were the envy of the industrialized world and leader in so many areas. Washington couldn't fully face this fact earlier this year with GM and apparently California, too, would like to worry about today rather than tomorrow.

-STEVEN TAVARES

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