Automakers seek major shifts in U.S. policies

Top executives from Ford Motor Co., General Motors, and the Chrysler Group are asking Congressional lawmakers to seek major changes in national policie

Top executives from Ford Motor Co., General Motors, and the Chrysler Group are asking Congressional lawmakers to seek major changes in national policies – from increasing subsidies to spur automotive research to beefing up the fight against foreign currency manipulation programs – to make their businesses more stable and viable in the future.

“For those areas outside our control, we would welcome your support of policies that make sure that the playing field is level with our non-U.S. domiciled competitors,” said GM chairman Rick Wagoner.

“The bottom line is that the domestic auto industry matters a lot, with literally millions of people – 6.5 million to be exact – depending on us,” he added. “Together, GM, Ford and Chrysler provided healthcare to approximately two million Americans at a cost of more than $12 billion last year, along with nearly $11 billion in pension benefits. And the $21 billion we spend annually on research and development – the vast majority of it here in the U.S. – tops any sector in this economy, including pharmaceuticals, aerospace and electronics.”

Alan Mulally, Ford president & CEO, contends that that contribution to the U.S. economy is endangered due to major trade imbalances overseas-- with countries that say they are in favor of free trade yet rarely put it into practice.

“While our industry has supported trade liberalization, we have seen a diminishing focus on manufacturing in U.S. trade policy,” stated Mulally. “In recent years, there seems to have been willingness in trade negotiations to overlook or even trade off manufacturing's interests for those of other sectors that are perceived as either sacred cows or the new frontier,” he said.

“In the current Doha Round negotiations at the World Trade Organization in Geneva, trade in manufactured goods has barely been addressed despite the fact that manufactured goods comprise 70% of total US exports,” Mulally stressed. “Unfortunately, too often, what passes as free trade within the automotive sector, and more broadly in the manufacturing sector, is in fact a one-way street where imports flow into the U.S., but our exports are not accepted.”

Mulally said the strongest evidence of the challenge to U.S.-based manufacturing is seen in the one-way automotive trade statistics. For example, the U.S. currently has an $11 billion deficit in automobile trade with South Korea – 82% of the total trade deficit between the two – while two-thirds of Japan's $85 billion trade surplus with the U.S. is in automotive products.

On top of that, foreign governments are pouring more funds into research support for their automotive industries than in the U.S., pointed out GM’s Wagoner.

“For example, Japan’s trade ministry announced last week that it would spend 209 billion yen - just over $1.7 billion - to help develop that country’s next generation cars and fuels to cut carbon dioxide emissions,” Wagoner said. “This five-year effort will include subsidizing development of batteries and hydrogen fuel cells, as well as technology for producing diesel from natural gas.We would greatly appreciate Congress and the [President’s] administration leading [a similar] effort ... just as is happening in other countries.”

Finally, there’s the issue of currency manipulation. “Currency values must be fairly determined – through an open market – not pre-determined by governments,” said Ford’s Mulally. “While much of the recent focus has been on China in this regard, Japan’s actions have been most troubling to our industry. Japan’s misaligned yen is one of the drivers of a huge deficit in the auto sector with the U.S. Our government must demand that the Japanese government allow the yen to regain its true value.”

“Nearly every major currency other than the yen has appreciated significantly against the dollar, – including gains of 25% percent by the Euro, 30% by the Canadian dollar, and 33% by the Korea won,” pointed out Stephen Collins, president of the Automotive Trade Policy Council (ATPC). “Yet the Japanese yen has sharply weakened against the dollar and other major industrialized currencies. The weak yen is a glaring contradiction in today’s global financial markets.”

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