My plan for the US Auto Industry
So the biggest problems facing the US Auto Industry are labor costs and a horrible business strategy... but the horrible business strategy of "More SUVs, More Trucks!" is actually part of the labor problem. The US Auto Industry's labor rates are so high that they can't afford to make low-margin cars unless they can also pad their books by selling trucks and "light trucks". I propose two solutions:
1) The Federal Gov't offers to buy out any UAW member's health benefit by putting them on a pilot program based on Obama's new healthcare plan. This would give the Obama administration a chance to test their program on a very small scale -- mostly in a single region -- so that any macroeconomic downsides would be correctable. The Dep't of Public Health would also provide safety-net emergency coverage via DoD's semi-successful Tricare Prime coverage (i.e. a Union Card is as good as a DoD ID for getting health care in Michigan) during the transition to ensure that the UAW members don't die because they were the first Federal guinea pigs. Using FEHBP is another option here.
2) 50% of Federal vehicle purchases in FY09 shall be hybrid vehicles made in America. 75% of FY10 vehicle purchases, 100% of FY11 purchases. Hire extra temporary Federal workers (or contractors) to administer the mega-purchases, if need be. Break the buys up by cabinet department over the Big Three -- that is, divvy up the pie into three roughly equal pieces, and give the biggest piece to the automaker that has the best proposal. Exceptions for Park Service vehicles intended primarily for austere or rugged environments (Park Police Clown Vics get replaced), or any other vehicle where the batteries are a safety hazard. This purchasing decision may cost slightly more up front, but the money is going to US companies and will reduce Federal gasoline consumption (money which ends up overseas).
This two-part strategy forces the automakers to build a capacity for hybrids, while drastically cutting their labor costs. Boosting capacity will stretch the market for hybrids, cutting the costs for specialty parts and boosting the supply of inexpensive hybrid options. Labor costs drop as well, making other US auto products more affordable.
1) The Federal Gov't offers to buy out any UAW member's health benefit by putting them on a pilot program based on Obama's new healthcare plan. This would give the Obama administration a chance to test their program on a very small scale -- mostly in a single region -- so that any macroeconomic downsides would be correctable. The Dep't of Public Health would also provide safety-net emergency coverage via DoD's semi-successful Tricare Prime coverage (i.e. a Union Card is as good as a DoD ID for getting health care in Michigan) during the transition to ensure that the UAW members don't die because they were the first Federal guinea pigs. Using FEHBP is another option here.
2) 50% of Federal vehicle purchases in FY09 shall be hybrid vehicles made in America. 75% of FY10 vehicle purchases, 100% of FY11 purchases. Hire extra temporary Federal workers (or contractors) to administer the mega-purchases, if need be. Break the buys up by cabinet department over the Big Three -- that is, divvy up the pie into three roughly equal pieces, and give the biggest piece to the automaker that has the best proposal. Exceptions for Park Service vehicles intended primarily for austere or rugged environments (Park Police Clown Vics get replaced), or any other vehicle where the batteries are a safety hazard. This purchasing decision may cost slightly more up front, but the money is going to US companies and will reduce Federal gasoline consumption (money which ends up overseas).
This two-part strategy forces the automakers to build a capacity for hybrids, while drastically cutting their labor costs. Boosting capacity will stretch the market for hybrids, cutting the costs for specialty parts and boosting the supply of inexpensive hybrid options. Labor costs drop as well, making other US auto products more affordable.