Trade barriers won't help Detroit
Officials of the Ford Motor Company and the United Auto Workers are seeking the wrong kind of federal help for the ailing US auto industry. In hearings before the International Trade Commission, Ford and the UAW have sought to pin the blame for the industry's economic troubles -- admittedly sizable ones -- on Japan's imports. But as ITC staff studies, information gathered by the Japanese Automobile Manufacturers Association, and other testimony before the commission aptly pointed out, it would be more accurate to call the growing bite which imports are taking out of US car sales a result -- not a cause -- of Detroit's current problems.
To get the ITC to recommend that President Carter hike import duties and impose a temporary quota in Japanese cars Detroit must show the industry to have been "substantially injured" by the imports. Actually, a number of factors have contributed to Detroit's dilemma, among them soaring gasoline prices, a national economy in recession, and a sudden shift in consumer demand for smaller, fuel-efficient cars that caught US carmakers unprepared.
Detroit has responded to the crisis by launching a vigorous retooling program expected to cost up to $80 billion before its plants are completely refitted and automated to produce smaller, better built cars more efficiently. The first of the US industry's new generation of small cars began rolling off the assembly lines this fall, and early sales figures are encouraging. The Big Three automakers announced this week that new car sales during the first 10 days of October were 13.6 percent higher than in the same period a year ago. Even if that sales figure turns out to be slightly inflated, as some analysts aver, the American car-buying public seems willing to accept the new line of US compacts.
As a matter of fact, Americans over the years generally have been willing to purchase US-made small cars as well as imports when they were available. The recent shift from larger to smaller cars cut into domestic sales primarily because US companies traditionally have dominated the intermediate and full-sized segments of the car market, the segments where sales have dropped sharply. Japanese automakers note that even with the enormous shift to small cars, imports have not significantly increased their penetration of the US small-car market. As of May, for instance, imports had 41.3 percent of the small-car sales in the US as compared with 58.7 percent for Detroit; in 1970 imports claimed 40.5 percent to Detroit's 59.5 percent of a much smaller market. The point is that it is not the imports per se but the growing demand for small cars that is hurting Detroit.
As Detroit races to retool, what should be of major concern is how best to accommodate the quarter of a million or more laid-off autoworkers -- and those likely to remain out of work -- because of the increasing use of robots and other forms of automation on the assembly lines. The streamlined Detroit of the future will never require the man-hours of work that went into past production lines. Instead of seeking trade barriers and other protectionist measures that would needlessly boost car prices, feed inflation, and invite retaliation from trading partners, Detroit and Washington should be focusing on measures to create new industries and jobs in those Midwestern communities long dependent on auto manufacturing. This is where the "permanent partnership" President Carter has proposed between government and industry could do the most good.