Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, March 30, 1991 TAG: 9103300295
SECTION: BUSINESS PAGE: A-12 EDITION: METRO
SOURCE: Los Angeles Times
DATELINE: DETROIT LENGTH: Medium
But industry and political observers see more differences than parallels to 1980, and there seems to be no great groundswell on behalf of major policy initiatives aimed specifically at helping the troubled auto companies and workers.
Even some traditional supporters of government-industry-labor initiatives to improve the nation's competitiveness doubt that Detroit's latest troubles warrant any new intervention by Uncle Sam.
"I don't think there's a compelling rationale for any steps beyond what the government has already done," said Stuart Eizenstadt, domestic policy adviser to President Carter and now a Washington consultant.
The leaders of the domestic auto industry, hard hit by the recession and ongoing competitive inroads by the Japanese, pleaded their case in a meeting last week with President Bush. Participants included General Motors Chairman Robert Stempel, Ford Motor Chairman Harold Poling and Chrysler Chairman Lee Iacocca.
They talked about the burdens of new environmental and proposed fuel-economy regulation, the recession and Japanese cars. White House spokesman Marlin Fitzwater said Bush made no commitments at the unpublicized meeting.
The session was apparently triggered by what Chrysler officials called a sudden funneling of Japanese-built cars to U.S. shores this winter, a result of a weakening auto market in Japan and rising political barriers in Europe.
In a letter to Bush before the meeting, Iacocca portrayed the spurt in imports as "another market-share grab" that would lead to fire-sale prices in the depressed U.S. car market. He proposed a temporary freeze in Japan's U.S. market share, now about 31 percent. Without restraint, their market share will reach 40 percent or more, he said.
"I can tell you, Mr. President, at a Japanese share of 40 percent in a depressed industry, Chrysler is gone and Ford could be mortally wounded," Iacocca wrote.
Eizenstadt rates the chances of establishing a European-style ceiling on Japanese market share at "between zero and nil." Not even Iacocca's peers at GM and Ford advocate it, but they are sympathetic. The U.S. industry is headed for a $3 billion loss this quarter as foreign competition, plummeting sales and excess capacity force manufacturers into rebates averaging $1,100 per car.
However, Detroit's biggest competitive problem is not imported cars but those built in the U.S. auto assembly plants erected by the Japanese during the 1980s. In general, sales of imports have been declining as sales of so-called "transplant" cars have climbed.
Japan's $6 billion-plus U.S. automotive investment has won important political allies from the states - notably Ohio, Illinois, Indiana, Kentucky and Tennessee - where they erected plants and hired workers. Some past auto labor supporters now shy away from efforts to limit imports.
"Normally we see eye to eye with Al Gore, but not on this," says Douglas Fraser, retired president of the United Auto Workers union, referring to the Democratic Tennessee senator, whose constituents include automaker Nissan.
Moreover, the success of the transplants is increasingly seen as a competitive failure by U.S. auto companies and less a result of unfair trade policies or other inequities. Japan's U.S. auto plants went up after the Japanese government was persuaded to limit car shipments here.
"Past efforts indicate that to a large extent, domestic companies simply take advantage of reduced imports to improve profit margins, rather than improve efficiency," said a U.S. Department of Treasury background paper triggered by Iacocca's letter.
The Treasury commentary knocks down many of Iacocca's complaints, suggesting that a lot of the industry's problems are of its own making.
But the Bush administration is already in the auto industry's camp on some key issues raised by the auto bosses, notably its opposition to fuel-economy legislation from Sen. Richard Bryan, D-Nev., requiring a 40 percent gain in fuel efficiency by 2001.
The White House has indicated that it would veto such a bill.
by CNB