Mr. Speaker, I first want to thank Chairman Barney Frank and his entire Financial Services team and committee for the outstanding work they have done with this very difficult situation for the last month or so. Thank you, Barney, and for…
Mr. Speaker, I first want to thank Chairman Barney Frank and his entire Financial Services team and committee for the outstanding work they have done with this very difficult situation for the last month or so. Thank you, Barney, and for the full committee. The Michigan delegation in a bipartisan way worked feverishly to make this happen. Thank you very much.
America is at a crossroads, a crossroads on whether America will be a first-rate country as we move through this century. Seventy years ago, my grandfather, as well as hundreds of others, came to this part of the country
from South Carolina to the midwest, to the manufacturing base of America, the base that built the middle-class in this country. Without the manufacturing, there would be no middle-class in America. Do we want to forsake that today? I hope not.
The American automobile industry is the military equipment builders of our country, from World War II and every war thereafter, building the tanks, the ammunition, the body armor and the like. It will be a mistake for us if we don't preserve this industry.
Three million-plus direct jobs with another 10 million from insurance, health care, security. You name it, those are 13.6 million Americans affected by this automobile industry. We must preserve it.
The middle class is dwindling as we speak. With all the problems America has, this is not the time to kill, if you will, the only manufacturing base we have left in our country. We already yielded the electronics industry. We yielded the fabric and the garment industry. Manufacturing is one of the tools that can keep our country alive. I hope you will vote today and save this most vital industry.
I mentioned my grandfather. I am the next generation after that. Because of the manufacturing industry, the automobile industry specifically, we have been able to send generations of young people who are now 40, 50, 60 years old to college, the manufacturing industry.
Vote for this bill. Don't do it wrong. Let's do it right.
Giving thanks to God, who is the power, force and director of my life, I thank the Democratic Leadership and my colleagues in the Michigan delegation for their continued hard work, objective analysis and hard questions for both automobile manufacturers and taxpayers. As an enthusiastic supporter of the automotive industry, I, along with the unanimous agreement of the Michigan delegation, seek a balanced, fair solution for American taxpayers, manufacturers, dealers, and suppliers to the automobile industry. A large part of that solution is this bill, crafted by Chairman Frank and Members of the House Financial Services Committee on which I once served. This bill will provide $15 billion in bridge loans to help struggling automakers survive while they prepare plans to restructure their companies to build more competitive, fuel- efficient, and technologically-advanced vehicles. This assistance will not only help manufacturers, but it will help the workers, the dealers, the suppliers and the 13 million jobs that are directly and indirectly affected by the largest industry in our Nation--the automobile industry.
In addition, this bill, which would amend current law, demands taxpayer protections such as limits to executive compensation, including a ban on so-called ``golden parachute'' payments, a prohibition on dividend payments over the life of the loans, rigorous independent oversight, and provisions for the government taking warrants and allowing the taxpayer to profit in any upside of the restructuring. This is a fair balance for both the manufacturers and American taxpayers. If the Big Three were to collapse, there would be a loss of personal income of close to $400 billion, with a combined loss of tax receipts of $156 billion, over 3 years, according to the Center for Automotive Research. With the interdependence of Mexico, Canada and the United States because of the North American Free Trade Agreement (NAFTA), this vastly underestimates the ultimate impact if the Big Three were to go bankrupt.
With the recent loss of more than half a million jobs in one month, in our Nation, Federal assistance to the automotive industry is needed immediately for our economic, military, and energy security and safety. A government-supported restructuring of the auto industry is urgently needed for our economic, military and energy security. General Wesley Clark recently wrote that ``some economists question the wisdom of Washington's intervening to help the Big Three, arguing that the automakers should pay the price for their own mistakes or that the market will correct itself. But we must act: aiding the American automobile industry is not only an economic imperative, but also a national security imperative.''
This is an opportunity for Congress to do four things. One, it is an opportunity to get our country to energy security or energy independence. Two, it is a chance to ensure that, unlike our textile and electronics industry, to preserve and protect our manufacturing base, the last industry in which America still holds a slight but precarious lead. Three, it can be a way in which we get the manufacturers toward building the vehicles that Congress mandated that they build. Four, we can preserve the jobs and businesses of dealers and suppliers. In all of the discussions of saving the manufacturers, there has been little, if any, discussion to save the thousands of automobile dealers and suppliers to the automotive industry.
Congress has been advocating that our country become either energy independent or have energy security. Indeed, President Richard Nixon challenged that our Nation become independent on foreign oil in the early 1970s. Although the automotive industry is in a crisis, this is truly an opportunity to start a major reorganization and reprogramming of the entire automotive industry. In less than 2 years, General Motors will produce the first practical all-electric motor vehicle. This is a welcome opportunity, and is a development that all Americans should embrace. By being the first to produce a battery that can get hundreds of miles per charge, the United States can be the first in this manufacturing technology. This will create thousands of green jobs, clean up the air, and make us less dependent on foreign sources of fuel. This achievement is right around the corner, as GM is set to bring the Chevy Volt to market in less than 2 years. In less than 10 years, these batteries and fuel cells can be, and should be, built in the United States.
Second, we need to preserve the automotive industry as it is the base of manufacturing in the United States. Second only to the strong faith that Americans have in one another is the strength of our economy. Our modern economy was built by companies like General Motors, Ford, and Chrysler. These are the companies that essentially built this country to victory in World War II and every military conflict we have had ever since. These companies not only built the tanks, the Jeeps, the trucks that support the women and men in our military, they often created the technologies that allow us to have navigational systems in our cars, brakes that last for thousands of miles, and protect our bodies in accidents. We cannot afford to lose this innovative intellectual property.
The auto industry has come to the rescue, once again, for our women and men in the military. The Humvee, the Stryker, and the mine- resistant ambush vehicles, and the like are built primarily in Michigan but entirely in the United States. As General Wesley Clark said, ``the lives of hundreds of soldiers and marines have been saved, and their tasks made more achievable, by the efforts of the American automotive industry. And unlike in World War II, America didn't have to divert much civilian capacity to meet these military needs. Without a vigorous automotive sector, those needs could not have been quickly met.'' Our economy and our troops cannot survive the loss of the automotive industry.
Third, the manufacturers know what is at stake today. It is not only their individual survival, but whether our country suffers a recession or a depression. We cannot afford, at this perilous time in our economy, the shut down of any company. Any form of bankruptcy would tear what little confidence consumers have in the auto industry to shreds by decimating consumer demand and forcing thousands of suppliers who need the cash flow from the auto manufacturers into immediate default. This legislation would allow time and cash for the manufacturers to make the necessary and needed change in their vehicles, again mandated by Congress, for the long-term energy self- sufficiency and environmental protection we seek. This legislation does just that.
One in every 10 jobs in the United States is somehow linked to the automotive industry. After the purchase of a home, the purchase of an automobile is the largest purchase for the overwhelming majority of America's consumers. Michigan, specifically my home city of Detroit, has been the home of the automotive industry for decades. More than 13 million jobs are directly or indirectly rely on the automotive industry. The losses of the automotive industry have been massive. In 2005, General Motors, which is headquartered in my Congressional District, lost more than $5.6 billion on its North America operations alone, with Ford losing $5.5 billion during the same period of time. GM's share of the market, which used to be 36 percent in 1990, had shrunk to 26 percent in 2005. Ford's 1990 share of the market, which was 24 percent, was 17 percent 2 years ago. Production for Ford and GM has dropped 26 percent since 1999.
In the wake of these losses, Michigan and our country have lost a significant number of jobs. Both GM and Ford announced a series of plant closings in North America, with an estimated loss of 60,000 jobs through layoffs and early retirement buy-outs. According to the Bureau of Labor Statistics, in 2005 the automotive industry lost a total of 215,000 jobs, and stated that ``industry employment is headed downward and is not likely to recover for several years.'' This situation does not get any better for those related industries supplying automobile parts, providing insurance for automobiles, or selling vehicles wholesale or retail.
While domestic manufacturers are not entirely blameless for these losses, a significant factor has been the way in which China has
done business with the Big Three. One of the U.S./China Commission's conclusions, to which I testified 2 years ago, was ``the many subsidies provided by the Chinese government to the auto industry will quickly distort the nature of the market. This will be true especially in the United States, where markets are most open. The Chinese challenge to the U.S. auto industry is a significant assault on American manufacturing, and that assault is increasing in magnitude and in pace.'' Are we willing to concede to other countries, perhaps China, our manufacturing base?
Finally, I am worried about the health of automobile dealers and suppliers, specifically ethnic minority automobile dealers and suppliers. It is my understanding from experts in the field that up to 75 percent of ethnic minority new car dealers, if they do not receive financial assistance within 60 days, will fail. In a meeting two weeks ago with the Speaker and the House Democratic leadership, the manufacturers estimated that more than 700 dealers are expected to close their doors before the end of the year. In all of this discussion about helping the manufacturers, it is only fair that some of this help go directly to the ethnic minority dealers and suppliers who are the backbone of their communities and of the automotive industry. Ethnic dealers and suppliers are first generation dealers and suppliers and simply do not have the economy of scale of their majority counterparts. As we move forward with this legislation, it is my hope that we provide immediate assistance to those who most need it--ethnic minority automobile dealers and suppliers.
We face tough times. The automotive industry can succeed, with the help of Congress, once again. The automotive industry has made mistakes, and all of the manufacturers present will tell you that I have worked with them to improve their product, outreach, and business model. Here, in Washington, DC, it is often hard for legislators to truly appreciate how difficult life is for the rest of America. In Michigan, we face record foreclosures, unemployment and job loss from manufacturing. We must save the automobile industry for the future of not only the industry but for the state of Michigan and our country. We must not repeat the mistakes we made in giving away our textile and electronics industry to other countries. We must do all we can to retain this vital segment of America.