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3:01 a.m., Dec. 16, 2008 |
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Crain to Econ Club: Detroit will become center of automotive intelligence
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Crain Communications Inc. Chairman Keith Crain said Detroit will become the world’s center of automotive intelligence, defined less by manufacturing and more by engineering and design, if the region can get through this economic crisis.
“In every developed and developing country, an auto industry is considered a pillar for a successful economy,” he said in a speech delivered to the Detroit Economic Club today.
Crain is also editor of Automotive News, and editor-in-chief of .
“As ugly as the congressional process has been, it’s possible to envision a successful result of this messy deal.”
He said a government-led restructuring at the guidance of a “car czar” to supervise the overhaul of automakers that receive federal aid could provide the types of changes needed to position the companies for success without the dangers of a bankruptcy.
“Ron Gettelfinger will give back still more on behalf of the UAW. Bond holders could forgive large amounts of debt — if the alternative is default. Maybe even car dealers would get serious about merging or selling out to get those bloated Detroit 3 dealer networks to the right size. Then the weak brands could be killed without breaking the automakers,” Crain said.
These measures could make the Detroit 3 cost-competitive with foreign automakers operating in the United States, and combined with recently increased corporate average fuel economy, or CAFE, standards, “you see an exciting, changing marketplace,” Crain said.
Those changes will turn the “Big 3” into the “Detroit 2” and force the automakers to redefine their remaining brands with American consumers, he said.
“But meanwhile, Detroit will have firmly re-established itself as the motor capital of the world,” Crain said. “This is the community where car companies from around the world will have their technical centers.”
In his speech, Crain discussed the history of government regulation of and its involvement in the automotive industry, its consequences and how the automakers found themselves in the position they are in.
He said corporate average fuel economy standards of 27 miles per gallon, first imposed on the auto industry in the 1970s and their lack of updating until the 40 miles per gallon standard imposed last year, enabled automakers to continue producing inefficient cars.
This, in part, set the stage for recent debilitating sales drops when gas spiked to more than $4 per gallon earlier this year.
Crain also discussed the unintended consequences of the Detroit 3 losing market share to Japanese automakers after foreign automakers were challenged by Lee Iacocca and Henry Ford II to build cars in the U.S. if they were going to sell here.
“The importers listened to Iacocca and invested billion in manufacturing plants in America,” he said, noting the move made it impossible to regulate foreign automakers any differently than U.S. automakers.
As foreign automakers grew in the United States, they as American as Ford or General Motors, Crain said, noting that foreign automakers now employ tens of thousands of American workers.
“Is it any wonder why there is so much animosity against helping Detroit?” he said.
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