President Obama’s actions bring big change to auto industry

Tuesday, May 19, 2009

Daniel Howes

Commentary: President Obama’s actions bring big change to auto industry

Two years ago this month, not-yet President Barack Obama laid it all out.

Detroit would mass produce fuel-efficient cars, he told the Economic Club, invoking America’s response to the onset of World War II. He was right, because the government-turned-chief-lender now can require it. And it will.

The automakers would be required to meet much tougher emissions requirements, as the president is expected to detail today at the White House. He was right about that, too.

To combat climate change, according to a text of his remarks, a cap-and-trade system would control greenhouse gas emissions "and return America to a position of leadership so that we can secure an effective and equitable global solution to this crisis." That’s in the works.

It’s all happening — and more, so much more, than the former Illinois senator envisioned when he delivered his "tough love" message to a capacity crowd at Cobo Center’s Riverfront Ballroom on May 7, 2007. More than the FDR he lionized that day and more than any president since, Obama is engineering an unprecedented remaking of the Detroit auto industry one crisis at a time.

"The auto industry’s refusal to act for so long has left it mired in a predicament for which there is no easy way out," he said two years ago. "The auto industry is on a path that is unacceptable and unsustainable — for their business, for their workers and for America."

The prescience of it all, read today, is stunning. He didn’t predict the double whammy of $4-a-gallon gas or a global financial crisis that pushed consumer confidence and vehicle sales into free fall. But the overarching assessment of Detroit’s weaknesses and his would-be interventionist remedies?

It’s there. But not all of it.

There is no promise to use federal power to void the automakers’ contracts — with bondholders, with unions and with individual executives. There is no pledge to summarily close 789 Chrysler LLC dealers across the country by June 9, leaving them saddled with inventory, parts and property. Or to bless a similar move against 1,100 General Motors Corp. dealers.

Nowhere is there a prediction that an Obama White House would facilitate the bankruptcies of two-thirds of Detroit Auto, which it has. Or that it would broker the killing of brands, the closing of factories, the apparent reordering of federal bankruptcy law or the importation of new production from Mexico and China instead of metal coming from Canada.

Those and the chance to fast-track stringent new fuel-efficiency rules on the industry were bonuses for an administration with the luck to be in office when Detroit’s string ran out, culminating decades of denial, competitive inertia, shrinking market shares and declining political influence of the industrial Midwest.

Elections, as the adage goes, have consequences. The power of Obama, his Democratic Party allies and their friends in the environmental lobby to recast Detroit is unparalleled in recent times. And the coalition is using the opportunity to force the kind of systemic change this town fought for decades.

Now the change few may have thought they’d ever see is coming in waves. Plants, dealers and jobs are disappearing and local tax revenue is, too. Brands are receiving death sentences while new, unproven models are being pushed by people who don’t know why hybrids sell — and why they don’t.

The president says he doesn’t want to run the auto business. But the undeniable fact is that he and his proxies already are, whatever they say. Which means this: However Detroit’s Great Restructuring ends, this president will own the results.

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