Mr. President, I wish to speak a little bit today about a subject near and dear to my heart, and that is our American auto industry. Before the global credit crisis happened, our American auto industry was undertaking ambitious…
Mr. President, I wish to speak a little bit today about a subject near and dear to my heart, and that is our American auto industry.
Before the global credit crisis happened, our American auto industry was undertaking ambitious restructuring plans. I know there are those who haven't been aware of that up until now but in fact it is true.
For the past decade, our American auto industry has been moving toward improved fuel efficiency, improved quality, and advanced technologies. I am very proud of what the men and women in our country do in terms of building our American automobiles. This was clearly shown as the auto industry laid out the plans before Congress last December. The companies and the workers have been making tremendous sacrifices even before they were asked to do so, to level the playing field with foreign competitors. The idea of cutting, restructuring, layoffs, plant closings are not new. They are, unfortunately, a way of life at the moment in Michigan and other manufacturing States where there have had to be major sacrifices, particularly for workers and their families.
By the end of the current 2005 and 2007 contracts for workers, the labor cost gap between domestic and foreign automakers would have been largely eliminated. They also eliminated 50 percent of the companies' liability for retiree health benefits, and that is before any of the current debate. It was also before the global credit crunch happened. The global credit crunch has hit everybody--every business, large and small, every consumer, every family, every homeowner.
Certainly our auto industry has seen the brunt of the inability to get capital, the inability of people to get a car loan, our auto dealers and the challenges they have had, our auto suppliers, as well as the OEMs.
The failure of our auto industry, if we allow them to go down because of a global credit crisis, would mean a loss of over 400,000 supplier jobs and over 450,000 jobs in the service sector, national deficits, and reductions in personal income. It would be a huge catastrophe if we were to allow the global credit crisis to create a situation in which we would no longer have an American auto industry.
It is important for us to understand that this crisis has similarly affected
the foreign automakers, forcing them to request help from China, Canada, Japan, Spain, Great Britain, Brazil, as well as numerous other countries.
We find ourselves in a situation where this credit crisis has profoundly affected the backbone of manufacturing in the United States. We have seen firsthand in Michigan the challenges that GM, Ford, and Chrysler have faced. We now have a White House auto task force that has been set up to work with General Motors and Chrysler, which have asked for assistance from us in this global credit crisis.
Today we had a very important announcement to help the industry as a whole. I thank the White House auto task force for understanding that along with our automakers, it is critically important that our suppliers be able to pay their bills, supply the parts, and continue to be a very important part of this industry as a whole.
I very much appreciate the fact that a very positive action was taken today by the auto task force to help make capital available during this credit crisis for our tier 1 suppliers.
Our American auto industry represents about 4 percent of our gross national product and 10 percent of our industrial production value. Our auto industry provides health care and pensions to over a million retirees and their families who live all over the country, by the way, not just in Michigan, although we certainly would welcome them back. But they live all over the country.
Auto parts suppliers provide hundreds of thousands of jobs. They are the leading U.S. manufacturing employer. That, again, is why the decision that was made today to make capital available for our auto suppliers is so important.
In turn, those direct jobs contribute to 4.5 million--4.5 million-- private industry jobs across the country. That is an additional 5.7 jobs for every single direct supplier job. We are talking in general about an industry that touches every State--not just Michigan, not just Ohio, not just Indiana, but every single State.
The domestic auto industry comprises more than 10 percent of the high yield bond market and is one of the largest sectors in leverage finance for the banks. They spend over $12 billion a year on research and development. Without this funding, our country would become dependent on foreign ideas and foreign technology that would threaten our role not only in innovation and in the global economy but in our national defense as well.
I come today to say that failure is not an option when it comes to the viability and support for our American auto industry. Right now, if one or more of the American auto companies is allowed to fail, then we can expect as many as 3.3 million lost jobs in the next year. When we think about what we are doing in the stimulus package, in the recovery package, and we think about 3.3 million jobs that would be lost in the auto industry alone, it is stunning.
Think about the recovery plan and the fact we are talking about creating or saving 3.5 million jobs--3.5 million jobs lost if one of the companies went down. This is a big deal. This is a huge issue for us. That is why I have fought so hard, along with Senator Levin and other colleagues, to make sure we are doing everything possible to create a level playing field for the American auto industry so we can maintain these jobs and the strong role--the vital role--they play in this economy.
It is not only about workers--direct workers or indirect workers. The fallout, if we were to see a company fail, would hit thousands of businesses that depend on the auto industry, from parts suppliers to dealers to service industries, body shops, consultants, advertisers, janitorial services--all kinds of other jobs, not counting the restaurant across the street from the plant. When the plant closes, the restaurant goes or the shoe store down the street goes. The drugstore goes. These are basic jobs, huge parts of the economy of thousands and thousands of communities across this country.
Also, let me be clear that the foreign automakers would be hurt as well because manufacturers share so many suppliers. Without the business from Detroit, those suppliers would fail. Many dealers own U.S. and non-U.S. dealerships, and they would not be able to keep operating without the American brands in the mix. That is why I am very pleased that the leadership of Toyota met with the auto task force to urge them to support the American auto industry through this global credit crisis because they know better than anyone that they share the same suppliers.
Again, that is why the decision today by the auto task force is so important, to support tier 1 suppliers because this supports the automakers, foreign and domestic, all over America. This is very important. It would have catastrophic effects on several States already suffering from some of the Nation's highest unemployment rates if, in fact, we would see one or more of these companies go down.
Let me show some of the numbers when we talk about what happens in terms of unemployment and the devastation across the country--people are out of work right now--and what would happen if our American automakers were not supported so they can continue. We would see a shutdown that would increase unemployment levels to over 10 percent in Indiana, Ohio, Rhode Island, Kentucky, South Carolina, Tennessee, California, Oregon, North Carolina, Mississippi, Nevada, Alabama, Missouri, Illinois, and Georgia.
My home State of Michigan already suffers from 11.6 percent unemployment. I understand how painful that is for communities. Rhode Island could lose over 9,000 jobs if we were to see one of our American automakers go under--9,000 jobs. Kentucky could lose 75,000 jobs and go to 11.9 percent unemployment. South Carolina could lose over 58,000 jobs and go to an unemployment rate of 11.9 percent.
To continue, Tennessee could lose over 106,000 jobs as a result of one of our three domestic automakers going under, which would bring their unemployment rate to 11.8 percent. California could lose over 300,000 jobs.
My point, whether it is Tennessee, California, Oregon, North Carolina, Mississippi, or other States is clearly what happens in Detroit does not stay in Detroit. That is the point. What happens in Detroit affects automakers and Americans all over the country, families who depend on a paycheck from a direct job in the auto industry or a supplier or some other small business. Others would be forced in a recession to find work that is not there. People are barely making it as it is.
My message overall, again, is that what happens in Detroit doesn't stay in Detroit. It goes all over the country. That is why the work of the White House auto task force is so important and why I appreciate so much their willingness to delve deeply into these issues and look at the facts--not the rhetoric but the facts--and determine what is best for the taxpayers, for American families, and for the economy. We owe it to American families. We owe it to the people of Michigan as well.
Part of what they are looking at is the fact that the failure of the American auto industry would put a disastrous burden on top of job loss, a disastrous burden on the Pension Benefit Guaranty Corporation that already faces massive shortfalls, a burden that could trigger tens of billions of dollars in additional pension obligations.
The reality is, those who say let GM go bankrupt, let Chrysler go bankrupt, the obligation to the American taxpayer from pensions alone would far exceed the relatively small request, certainly compared to AIG or Citigroup or any of the other Wall Street requests, a small request, relatively speaking, to keep over 3.5 million people working in this country in good-paying jobs.
It would have a debilitating ramification for our industrial base which would undermine our military challenges, which I mentioned before. I was at a terrific business on Monday that makes equipment for large trucks, our big long-haul trucks, a great American business called ArvinMeritor. When we look at what they make for those big trucks, the same kinds of brakes, the same kinds of axles, the battery they are developing for a hybrid truck, our largest trucks--all of those are technologies that either are used or will be used by the military, trucks that are being driven in Iraq, military vehicles around the world.
If we lose an American capability to manufacture vehicles, we affect the Department of Defense and we affect
every single man and woman who is serving us today in protecting our country by saying to them: We are going to now rely on foreign companies for our vehicles for the trucks they drive, the cars they drive, the tanks they drive. That doesn't make any sense at all.
We all have a stake in what happens in Detroit. We all have a stake in what happens to our American manufacturers and our American auto industry. We need a 21st century manufacturing strategy that is focused on American manufacturing, advanced manufacturing, as well as national security and energy security. Our automakers are an important part of that, but so are our other suppliers, our other manufacturers.
One of the things I so appreciate about President Obama's vision is that he understands we need to manufacture in this country. The budget he has given us focuses on our ability to create jobs through manufacturing, through manufacturing in the new energy economy, and in the traditional areas of manufacturing. In America, we need a revitalized advanced manufacturing base. That will be a major part of our economic recovery as a country.
Again, none of us can afford for our American automakers to fail. There is not a State represented here that can afford for that to happen. Failure would mean loss of jobs, a loss of capacity for our national defense, and the ability for us to build on an energy independence for the future.
Again, what happens in Detroit doesn't stay in Detroit. It affects every State, every American, and I very much appreciate the commitment of the White House auto task force and President Obama to work with us for a vital and vibrant auto industry for the future.
Mr. President, I yield the floor.