automobile crisis and public policy

8/3/2019 Automobile Crisis and Public Policy

1/11


2/11

74 Harvard Business Review January-February 1

and establish a new industrial policy to enable ourtradition al, basic industries to grow and prosper.[When asked w hat he considers the specificproblems, Mr. Caldwell listed seven, withou t sug-gesting a p riority: inflation-, productivity-, energy-,employee attitudes-, capital formation, savings, andinnovation-, excessive regulation) and lack of co-herent public policies.]Let's go back to em ployee attitudes. In what w aysdo you Bnd union attitudes changing?In the past few decades, a certain attitude towardwork, especially in government agencies and laborunions, has infiuenced workers' expectations. Thisattitude is often refieeted in the "an nu al improve-ment factor"an ann ual wage increase that is sup-posed to represent the employee's share of produc-tivity gains, even when n o such gains are achieved.W ith the recent economic downturn , this trend maybe fading. N ow I detect more concem with econom-ic growth, productivity, and quality. Without sucha change in attitu de w e're not going to change di-rection.

We have aggressive programs going on right nowin our plants w ith th e full support of the UAWdirected toward our quality improvement program.It was no accident that the local union head inthe assembly p lant w here we built the first Escortdrove tha t car off the line, instead of having some-body like me do it. That w asn't a gimmick. As amatter of fact, if you could see and bear the u nre-hearsed talk tba t he taped for distribution to all ofour dealers in the introduction of our cars, youwould be impressed. That union president said beunderstood the necessity of quality; he articulatedit very well; and he com mitted himself and every-body in the p lant to do something about it.

Now we also want p roductivity to rise with thatnew level of quality. Realistically, you just can't goout and shout "produc tivity" to your employees be-cause too many people think it means speedup. Butif you make it right tbe first tim e, that's good pro-ductivity right tbere. So in employee attitudes, thereis hope.Do you still encounter employee resistance to auto-mation?Well, it might surprise yousomebody must havedecided it w asn't a good thing to pub licize-bu t thiscompany has more programmable robots than anyother autom obile company in the U nited States.Everybody's ou t buying robots no w.


3/11

The autom obile crisis 7

We at Ford have had few problems im plement-ing new processes in technology. We have had someunwillingness at the local level to let achievedeconomies fiow through to the bottom line. But webelieve our employee inv olvement programs beingdeveloped with the UAW will help change thisattitude by letting everyone see the benefits ofproductivity gains.What do you m ean?I can th ink of one case where we did a little groupoperation in the assembly of an instrument panel.Instead of having 12 people, the employees them-selves found they could do it with essentially 10.We said, "Well, we would like to eliminate tbeother two jobs." They said, "Well, no, you ca n't dotha t." But yet the labor contract, our contract, in-dicates that tbis kind of improvement is essentialto the health of the industry. So when I say wehav en't h ad problems, I mean in the sense tha t theydon 't qu estion our changing of processes and m eth-ods on sort of an overall basis. Sometimes, if you tryto go at it in a very localized sense, it is a little com-plicated. We work very hard to try to find other as-signments for the people who are displaced.Perhaps the union is saying employ these peoplesomew here else or retrain them for other jobsdon't lay them off.We're going to put all this to the test here. It makesa difference wh en jobs are hard to get; people doreact differently when they wan t a job, and theymay accept a lot of things that they w ould n't nor-mally. Before the massive layoffs, they sometimeswanted to be pretty picky about things. We havetalked candidly to Doug Fraser about bringing peo-ple back and he u nderstand s the sense of it. He said,"W e've all agreed we're going to have the term s setbefore they come back." Th at's th e time to do it, notlater. It's tough after they're back, you know , and Ican give you an illustration of a specific plant thathad been a problem for 20 years in this company.You mean you still have that plant?Yes. Do you know wha t th e deal was? We got ourstory together and at a meeting called by union of-ficers at the nationa l level, we just said: "Here's thestory. The plan t has too many restrictive work prac-tices to be competitive. We have to have tbe follow-ing to be com petitive or we're going to be forced toclose it. But if you meet these conditions, we w ill

not only keep the plan t open, we'll put more busi-ness into it." There was only one question from thenatio nal union before it went to the local people.The leadership asked, "Do you really mean it?"We said, "Absolutely." The negotiations took twoweeks, but tbe final vote was about 80% to 2o7o toaccept. Such a thing would not have been possibletwo years agojust no t possible. We need to do moreof this k ind of thin g and so does the rest of Ameri-can industry. There has been a problem in attitudebut, as I said, there's hope too.We h ave b een told that the Japanese acceptance ofautom ation has been affected by their understand-ing that the p eople displaced w ill be retrained andkept in the eore of em ployees, w ho are guaranteedlifetime em ploymen t. Is such continuou s em ploy-ment a necessary ingredient to employee coopera-tion in increased productivity and automation?Obviously I think it's imp ortant. I don't knowwb etber it's everything. The coop eration of Japa-nese workers includes tha t, but I think it's a lotmo re. The loyalty of workers to their o rganizationis very deep-seated and involves more than a guaranteed job. The auto companies are like families, in-cluding the ir suppliers. You belong to the Toyotafamily or you belong to the Nissan family, and thatincludes suppliers as well as direct employees. Aris-ing from that are a wbole series of relationships.In this co untry, we tend to put a piece of busi-ness up for grabs by our suppliers and say, "Ok ay,come and bid on it." Sure we have people we cus-tomarily deal w ith, but th ere is no inside track, andyou have to keep winn ing th e race all the time. Butin the Japanese case, I don't thin k tbe Toyota sup-pliers expect anybody from Nissan to get in tou chwith themand they probably would n't respondbecause tha t's not really wbere their loyalties lie.As a result, in Japan there is a much more in-formal relationship in th e administration of trans-actions in the imparting of information. "Here 'sthe problem, here's the car; you do it and you de-liver on the line, and w e're not going to go aroundand check up on you and all tha t kind of stuff."Now I don't have any illusions tha t everything isjust peaches and cream in tha t regard in Japan, butit's a total relationship and includes employee atti-tudes too. You can say it could m ake sense to con-sider a guarantee of some sort if we tboug ht that itcould be the key to a fundamen tally new relation-ship. You know the fight over guaranteed annu alwages and all that. W e should be able to find a bet-ter way to go about it.


4/11

76 Harvard Business Review January-February

But I would have to say, on the other hand , th atwe must have improvement in areas like absentee-ism. Even in the dire situation of high unemploy-ment, when 40% of ou r direct employees were onlayoff, we had higher absenteeism than we shouldhave had. W e still have people getting doctors' ex-cuses and trying to beat the system. So I don't thinkit's the guaranteed job alone. Our layoff system isnot the only cause of our troubles, and lifetime em-ployment is certainly no t the only solution. But weare planning an aggressive program to redesign therelationships within our company between our-selves and our employees.Before we get back to the new national industrialpolicy that you imply we need, could you tell uswhat you think of the regulation problem?The central problem is the contention betweenbusiness and government in the promulgation andadm inistration of regulations. At times, it ap-proaches a legahzed adversarial relationship. Anynew policy that is developed must minimize theadversarial n ature of the process. Let me give you anexample of the kind of regulatory problem I have inmind. Emissions requirem ents for automobiles in-volve engines and how they work and breathe. Anengine performs differently at one altitude than atanother. About 3% of the po pulation ow ning auto-mobiles live at high altitudes, as in Denver. Today,we control emissions at higher altitudes by mak ingadjustm ents on those cars or by offering special kits.As EPA in terprets the law, effective in 1984 everycar sold in this coun try must meet em issionsstandards at any altitudew ithout ad justments oruse of kits. Leaving aside the question of technicalfeasibility, the price of meeting this new require-ment will be a fuel economy penalty at altitudeswhere m ost of us drive most of the time. In simpleterms, this means that 97 0 of the automobiles willbe wasting gasoline in order to meet the revisedhigh-altitude requirement that affects only 3% ofthe people. This approach to problem solving drivesyou up the wall.Could you illustrate wh at you m ean by lack ofcoherent public policies outside of the emissionsregulation controversy?The incoherence of our energy policy has dealt theautomobile indu stry a very severe blow. The pum pprice of gasoline in the United States is still halfof what it is in Europe, and it was even less in 1975.

sumer attitudes, leaving us stranded with the bigcars that consumers had been continuing to prefeThe sudden overwhelming interest in small carsthat caught us short was brought about by an un-expected and dramatic rise in U.S. gasoline pricesfollowing years of low government-controlled priand by governmental misallocation, which produspot shortages and panicked lines at gas stations.It took a mistake to get the public interestedin conservation and therefore in small cars. Maybthat was a master stroke. Maybe somebody had itfigured out that this was the way to convince theAmerican people that conservation just had to coabout. If so, they certainly succeeded.In the automobile industry, we get weary ofquestions like: "W hy are you doing this? Why are

you building the wrong cars? Why are you forcingus to buy these big cars that we don 't want to buyWell, we can't force anyone to buy anything. Thefeeling is widespread tha t we really missed the b oBut the na tion's inability to resolve its policies inthe energy area drives us all crazy. In an industrylike ours, with afive-year ead time on engines antransmissions, for example, and the huge capitalthat goes with it, you just can't turn around thatfast. Our critics say we're in big cars and shouldhave been in small cars. Tha t is exactly right. I'mnot saying it is all the governm ent's fault; I'm saying that erratic and unpredictable government action is one of our problems.But I think it is time to stop this second-guessinand assigning blame for the auto industry's diffi-culties. There is plenty of blame to go around amothe industry, the government, the m edia, and thepublic. We need to decide how we are going to acin the future.

Is Congress organized in such a way that a cohernational policy can be developed?Unfortunately, the legislative branch, with its committee and subcommittee structure, is organizedto serve special interests. The executive branch issimilarly organized and has beenlight from the bginning. One of the things th at we really need tothink about very seriously is how we provide themechanism for rationalizing across special interelines without really establishing an agency thatwould do minate our lives. We need a new, sensibnational industrial policy to provide an effectiveframework for action on all these problems we'vejust been talking about.We have to start by recognizing that m anage-


5/11

The automobile crisis

ng to have to take a broader view and agreeU.S. industry.n't see how we can afford to let one in-

ny U.S. industries are exposed today to difficultd. Au tom obile, steel, textile, footwear, and

ries have in comm on withr? Is the com petitive dilemm a th e same

ost important common characteristic that

U.S. levels. Totalcompensation in mid-1979 for all manufac-$9.09. In Japan thefigurewas $5.62, or 62% of the U.S. rates.The natu re of the com petition is varied. In foot-eign com petition is widely dis-. Automobiles and steel, on the o ther hand,require a relativelycated technological and industrial base.It is certainly true for automobiles and, I believe,e really difficult inter-al com petition comes from Japan. Japan hasvored the development of these two indus-es, as well as electronics, in its national industrialy. The competitive challenge for automobiles,e, is whe ther private U.S. industry can com-Japanese industry, whichconsistently supported by its government's indus-and export policy.In the auto industry, individual U.S. companies

policy has supported the developm ent ofo industry almost since the end of Worldar II. As a priority export industry, it enjoyed pro-om imports through high duties for theved financial support from the Bank of Japan;pport was a signal for support from the rest of

ith export incentives and acceleratede-offs of new facilities. The development oft an adversarialbasis. The Japanese labor move-

Some wo uld argue that the major problem facingthe auto industry and other maturing industries isthat the U nited States has become a high-cost, lowquality manu facturing area. W hat is your responsto such a com ment, and what are the business andpublic policy implications of this idea for the 1980Relative to most areas of the w orld, the U nitedStates is a low-cost producer, even with the highcompensation U.S. workers enjoy in this country.In autos, un it costs in the U nited States are gen-erally better than in Europe and most Third Worldareas. With the decline in the yen after the Iraniancrisis, Japan has been the outstanding exception.As for qu aiity, I know of no reason w hy Am eri-can management and labor should not m ake prod-ucts equal to or better than the quality of productsproduced throughout the worldat least in theautomobile industry. American industry set qualitstandards for years. Th irty years ago the term Japanese was synonym ous w ith poor quality. But Japanhas shown w hat a na tional goal backed up by dedicated labor and management can do to changequality levels.I am convinced that with the same emphasis andedication we in the U nited States are regaining oupreeminence. At Ford we have rededicated ourselvto quality. Volkswagen's experience clearly demonstrates U.S. manufacturing potential in terms ofquality. Their quality from U.S. assembly is equalto or better than their German quality.The implications are clear. First, there's no rea-son why we should write off major segments of ouindustrial base as uncompetitive on a worldwidebasis. Second, as a country, we need to reaffirm ourcomm itment to maintaining a strong industrialbase, and we need sensible public policies that wilpermit and foster this result.This does not mean protecting outdated indus-tries or inept managem ent. And it makes little senfor the U nited States to attemp t to replicate Japa-nese industrial policy. But I do think a new way oflooking at the problem is essential.There are those who may consider the U.S. autoindustry expendable. The few who propound thisnotion, based on what we believe to be faulty an-alysis, are sowing mischief in pub lic policy.We ca n't co ntinue to be a world power and letour steel and auto industries go offshore. W e couldsay, "Let's be a service economy and feed the w orldThis m ight be a good distribution of work, bu t no-body in the world w ill listen to us if the basic sin-ews of our industrial power are, for econom ic and


6/11

78 Harvard Business Review January-February 19

foreign policy is largely silent on economic m atters.I wish we would speak ahout foreign political pol-icy and foreign military policy and foreign econom-ic policy rather than assuming that foreign policyis all politics.In 1979, fapan sold $8 billion worth of its auto-mobiles in the United States. Americans boughthalf of all exported Japanese cars. In con trast, theJapanese bough t Am erican cars worth only $200million. The deficit in autom otive trade with Japanrepresents one-third of the deficit the U nited Statesrecorded in total trade with all countries. W hatshould our govemme nt do about that situation?Let's put the problem in a wider perspective. Theproblem is not solely a question of balance of trade.It involves hundreds of thousands of jobsnot onlyin the automobile industry but in supplier indus-tries as well.The automotive industry em ploys more workersthan any other manufacturing industry in theUn ited S tates; almost i of every 12 manufacturingjobs is somehow related to automotive production.About 3.6 million jobs are related to automotivemanufacturing, sales, and service.The industry generates demand in many other in-dustries. The production of cars, trucks, and partsin the Unite d States has provided a market for 24%of the U.S. steel output, 17% of aluminum, 54% ofiron, and 59% of synthetic rubber.We are an important employer of minorities. Inr978, 217*^ of all employees at the three m ajor do-mestic automotive companies were minorities,compared with 11% for the total U.S. work force.U.S. car and truck production for 1980 will bedown 4.7 million units since 1978the worst since1961. A 4.7 million reduction in production hasmean t 860,000 fewer jobs, including the ripple ef-fect on other industries. For the Big Three alone,unem ployme nt of hourly employees has beenrunning at 30% to 40% this year; even with newmodel introductions, indefinite layoffs total about200,000.The financia l strength of companies like Ford,GM , and Chrysler serves as the basis for many peo-ple's savings and pensions and is also a source ofsubstan tial state and federal tax revenues. As afoundation of our nationai defense capability, weshould be concerned about the strength and com-petitiveness of our domestic automobile industry.At the mom ent, we are in the process of a majorconversion of our prod ucts to supply more fuel-ef-

ing and capital costs of this conversion are enor-mous: investments in new plant and equipment aprojected at $80 billion through 1985. These invesments must be funded through profits, depreciatioand amortization , or borrowingsand by law thesinvestments cannot be deferred even during perioof high interest rates or cyclical declines in volumand profits. Japanese m anufac turers, of course,do not face these investments because their gov-ernment's tax policies, their history, and theirgeography have all stimulated the development ofsmall, fuel-efficient cars.

It is in our n ational interest to find a means ofstrengthening the U.S. auto industry during thisperiod of extraordinary conversion and record


7/11

The au tomobile crisis

Do European countries support their autoindustries?Yes, of course. In W estern Europe, tariffs on autom o-tive produc ts from outside Europe have been sub-stantial, while automotive trade has been largelytariff free within the European Community. TheEuropean Community's effective tariff rate on carsis 14%almost twice its average for all other in-dustrial products. In addition, Creat Britain andFrance have understandings with Japan that restrictvehicle sales to a percentage of the previous year'sdelivery; in France that's 3% or less, in Britainabout 11%. And Italy perm its the import of onlyabout 2,000 Japanese cars per year.What should the U.S. govemment do then?The Congress has already passed concurrent resolu-tions affirming that "the American automobileand truck industry is a strategic national industrythat is essential to the economic stability andnational security of the U nited States."The first thing the government should do is re-solve to take action to strengthen the domesticautomobile industry and to announce that massiveunem ploymen t and dislocation attributable to ex-cessive Japanese imports cannot be tolerated.We think the U.S. government should obtainJapanese governmental restraints that will achievereasonable levels of au to exports to the U nitedStates. A longer-term plan should require tha t allmajor importing companies contribute substantiallyto U.S. value added and to U.S. employmentforexample, by m eeting whatever content rules areapplicable to the domesticffeetfor fuel economypurposes, presently 75% .We are not asking that Japanese imports bebanned. We are seeking some commonsense ac-commodation to prevent irrevocable damage to thenation and its ability to offer jobs rather th an gov-ernment assistance to millions of Americans. Whileth e U.S. auto industry completes its massive $80billion conversion program, it must have high vol-ume to generate profits for both employment andcapital requirements.Some say tha t restrictions are harmful to con-sumer interests by reducing freedom of choice,stimulating higher prices, and co ntributing to in-ffation. I wonder how many know, however, thatfreedom of choice for a few car buyers is beingachieved at the expense of all taxpayers through thedeficit financ ing of $1.6 billion in direct paym ents

workers and by $1.2 billion in lost tax paym entsfrom unemployed workers and profitless companieTaken together, the $2.8 billion is costing societyin general $2,800 for each of th e one million au toimports over 1976 levels. Every element of societyis paying for this subsidyeven our educational ancultural institutions that are receiving reducedcontribxitions from the private sectorto permit thunlimited choice for the few.Several states and many communities are experiencing depression-level unemployment rates, andtheir budgets are being devastated by the twin blowof lost tax revenues and a growing need for socialsupport services. Further local assistance will beneeded as federal benefits expire even if condi-tions do not worsen.

In short, the Un ited States cannot afford tocon tinue to pay for the defense, oil, and unem -ployment benefits for Japanand reduce its ownGNP by about $12 billion an nually while doing soIt's time for the U nited States, as all other majorcoun tries have done, to assert sovereignty over itsown automobile market.As we said in our statemen t to the Internation alTrade Commission, Ford has asked that, beginningin 1981, imports be limited for the next three yearsto 1976 levelswith increases of 5^0 to follow in1984 and 1985. This would mean a restriction of imports in each year from 1981 through 1983 to 1.7 mlion cars and 260,000 light trucks.The relief sought would not impede Europeanimports and only moderate the Japanese surge. Itwould n ot eliminate Japanese imports but wouldrather temporarily reduce them to the more repre-sentative levels that prevailed before the importsurge. The import levels in the years since 1976 arenot representative and should not be used to fashioa remedy. By 1977, the surge of Japanese importswas well under way, but the high dem and for allvehicles in the strong economy un til 1979 maskedthe effects of the injury from increased imports.We have also proposed a system of allocating thoverall quota among individual cou ntries in such way as to avoid penalizing the European manufacturers, who have not taken unfair advantage of thetemporary U.S. problem (some of whom are al-ready committed to major investments in theU nited States). Japanese producers also could pro-duce in this country and thereby escape the quotarestrictions. Ford has requested no change in theduties on cars and truck s; we urge tha t the presenttariff on light trucks continue.


8/11


9/11

The autom obile crisis 8

and will continu e to be affected by govem mentpolicies in a major way.We have two relatively new factors in this equa-tion : (1) the increasing depend ence of all majorindus trial na tions on oil controlled as to priceand availability by an intern ationa l cartel of gov-ernm ents an d (2) the resulting involvem ent of ourgovem men t in the economic affairs of the privatesector. These factors require th at w e establish amore effective working relationship among key seg-ments of our societygovernment, business, labor,finance , the media, and relevant social elements.

Much as we might hope for greater independ encein our affairs, where oil is concerned, realisticallythere will be less. No country recognized thissooner and more successfully than Japan. Inman y ways, today private U.S. companies are reallycompeting with the country of Japan rather thanwith a nother private company.I would propose that such a policy be simple,concise, and direct. Here is a suggestion:"The national industrial policy of the U nitedStates is to support, stimulate, and stren gthen theindus trial base of the natio n. T his policy recognizesthat a strong and growing industry is a cornerstoneof na tional employm ent, high standards of living forall citizens, improved social conditions , effective na-tional security, and the n ation 's ability to provideinternational diplomatic leadership for peace. Thethree major com ponents are:1. Recognition that the most effective means ofachieving industrial vitality are through indepen-dent, profitable enterprises directed as far as pos-sible by the market mechanism.2. Recognition of the important influence of gov-em me nt policy on industrial vitality and that allregulation and administrative action should beevaluated in the light of their individua l and cum u-lative impact on industry.3. Affirmation of industrial v itality as equal inpriority to other primary natio nal goals."How do you suggest getting such a policy adoptedand implemented?First, we have to try to establish a national con-sensus that such a policy will serve our cou ntry'sinterests. Quite a bit has been written on this sub-ject and a num ber of seminars have been held, in-cluding one at the Harvard Business School. But abroader base and more specifics are required. Andit will be essential for the new administration inW ashington to get involved in this debate and de-termine w here it wants to go.

Second, Congress will want to consider the sub-ject and perhaps it m ight pass a resolution express-ing the need for a national industrial policy. Thisresolution should be approved by the executivebran ch. The purpose of the policy would be to pro-vide a framework for evaluating all legislation di-rectly or indirectly affecting our industrial vitality.Third, all new legislation should be weighedagainst the policy by Congress and by such bodiesas the C ouncil of Economic Advisers, the RegulatorCouncil, or some other executive hranch entity.Fourth, the Congress and the executive branchshould systematically review existing legislation toassure that the total body of legislation provides co-herent support for goals of the nation al indus trialpolicy. An initial five-point program of legislativereview could be:1. Restructure tax policies to increase capital fomation. Actions that should be considered inc luderestructuring personal income taxes to stimulatesavings, liberalizing depreciation rates to en couragenew investment and equipment m odernization, providing incentives for increased savings rates, reduc-ing corporate income tax rates to provide increasedprofitability and funds for investment, eliminatingdouble tax ation of dividends to increase capital for-mation and mobility, and considering seriously taxrefundability unde r special conditions.2. Institutionalize government m onetary and fiscpolicies to ensure continued emphasis on control-ling inflation. Revisions that should be consideredinclude establishing controls on government ex-penditures to assure a noninflationary fiscal en-vironm ent and formally charging the Federal Re-serve Board with the responsibility for moderateand stable levels of mon etary growth. The fiscalcontrols might include expenditure limits as apercent of GNP and expenditure growth tied to

an overall budget surplus-deficit position.3. Limit changes in iegalatory burdens to levelsconsistent with stahle economic growth. In mostinstances, regulatory legislation and adm inistrativepolicy should be revised to remove "maxim umfeasible" criteria an d replaced with "cost b enefit"justification.4. Achieve social goals, wherever possible, throthe market m echanism rather than limited-purposregulation. Many cases of legislation and govern-ment policy are affected; areas for initial review in-clude energy policy, regulation of transp ortation ,and regulation of savings.5. Revise legislation and adm inistrative practiceto improve the nation's balance of trade. Revisionshould focus both on increasing the world com peti


10/11

82 Harvard Business Review January-February

tiveness of U.S. industry by removing disincentivesand providing incentives for exports, and on ensur-ing that strong domestic industries are maintainedin key segments of the economy.It is interesting that those countries giving us fitshave already established systems and structures forreconciling industrial policy ohjectives with po-litical and social goals.The Japanese incorporate such considerations intheir consensus process. Furthermore, both the Japa-nese and the Germans know that they must exportto live. Chancellor Helmut Schmidt warned mewhen I went to see him four orfiveyears ago th atwe Americans have never had to trade to live, bu tin Germany, since Germans have no cho ice, ex-port support becomes a major part of their politicallife. We have no m echanism for elevating our pres-ent problem to national attention . We must ar-ticulate some goals. We do that in wartime and itworks very well. I don 't really th ink we have doneit in peacetime in any major way except in one case.We did articulate a national goal with respect tospaceto put a man on th e moon with in a decade.The resources all came from the government, muchas in wartime. In such instances, the governmentassumes control over the resources of the coun tryand applies them to the achievem ent of very spe-cific goalssuch as the production of 100,000 mili-tary aircraft a year in World War II. What wehave never been able to master in this coun try, andperhaps the Japanese have, is the articulation ofgoals in the industrial sector. We announce goalswith respect to social objectives but not for the in-dustrial sector except in terms of safety, industrialhealth, and the like.

There is a big gulf between government officialsand business leaders. In other countries when headsof state go on visits, they have in their retinue rep-resentatives of industry and laboras well as gov-ernm ent. Th at is unheard of when our head of stategoes anyw here. W hen th e president goes abroad, wedo not have the slightest idea of what is going to besaid even when our industry is on the agenda. Be-fore the president went to the economic summit inVenice, I said to [Secretary of Transportation] NeilGoldschmidt, "Doesn't it strike you as odd that noone has ever asked us a thing about w hat w ould beuseful or helpful?" I told h im, as a matter of fact,that although we did not know what was on thepresident's agenda, we could more easily find outwhat was on H elmut Schmidt's or M argaret

If we had some goals and considered using a cosensual rather than an adversarial process, we codetermine what policies are required to achieve tgoals. This w ould lead to an estimate of the re-sources and how they could best be provided andapplied. Given present restrictions of an titrust another government rules, automobile industry leawould be concerned about sitting in the same rooto talk about any of these three steps. We will noget very far un til we are able to discuss what wewant to accomplish, how and when we can accomplish it, and w here we will find the resources necessary to do it.

If, instead of drawing up rules and regulations isolation, government officials would come to Detroitas Neil Goldschmidt did shortly after he toofficewe could get to work on the problem . Wemet him in an engine plant, then under major renovation, where we talked about capital requiremand where they could be found. We were very opwith him about our whole situation; it seemed toget his interest.

But the real point is that you just have to havethat kind of communication, that kind of dialoguthat kind of input, and a respect for each oth er'sopinions. I said to him that time, "Does it strike yas odd, on fuel economy standards, that ours are written into law and you have hundreds and per-haps thousand s of people down there refining ansupervising their application? Did you know wehave verbal agreements with th e governm ents ofthe United Kingdom, France, and Germany and twe're going after fuel economy improv ement in ovehicles in Europe and working on them just ashard as we are here in the Un ited States? And w eusing all the technology we have in the UnitedStates over there and vice versa, and there we donhave any rules at all except the agreement that wdo it."

You might say that's Utopiamaybe it isbut trest of the world seems to know how to do it. Whcan't we do it? We could certainly do better thanwe're doing. Within the framework that has madour industrial system uniquely productive and cosistent with the goals of a democratic society, wemust be able to set up some means by which ourpurposes can be determined and our public policmade consistent with these purposes.We must begin with a formal national commitment to maintaining a strong industrial base. Thwords are necessary, but until we really do it, wenot going to get anyw here .^


11/11

automobile crisis and public policy

Documents