So goes the Nation?

It has been said, as goes General Motors, so goes the nation. But it’s not really that way, is it? One company doesn’t portend the whole of the economy? One company, no, but one industry? Most assuredly, yes.

The automotive industry is one of the most pervasive industries in the world. It is not simply the workers at GM, Ford and Chrysler. They don’t manufacture all of the parts that make up a new vehicle, they are supplied by independent companies that rely on the carmakers to keep their people working. Railroads and trucking companies deliver vehicles to dealers. Every automaker’s dealer network employs thousands, local repair shops even more, and they are supported by auto parts sales, tool manufacturers and distributors. Used cars keep dealers, auction houses and appraisers busy. A whole insurance industry is built around cars, trucks and transportation. And when we get into the oil industry side of the business, there is a whole new hierarchy of people drilling, refining, distributing and selling oil and gasoline. Since millions of people (yes, millions) in some way make their livelihood through the auto industry, we need to pay close attention to the issues and problems there.

So how do we save the economy? Simple, bring the fuel price back in-line. The current drop in price started when Congress said they would allow offshore drilling. Shortly followed by the drop in demand, the price plummeted. I saw prices less than $2 per gallon this weekend in Virginia, a price that I never thought we would see again. Of course, this artificially low price will not last. Demand will increase and as we get into the heating season, the price will slowly rise back to a pre-spike level.

We need the US auto industry to survive. And for that to happen, the government will have to fork over funds to help them out. The gas price spike this summer has hopefully shown Americans that we need to drive smaller, more fuel-efficient vehicles. Driving a full-sized Suburban just because we can will not be the main stream thinking any longer. Ford has even announced that their small car plan for the future will not change, even with lowering fuel prices.

Our new administration will probably look at ways to “encourage” people to drive smaller more fuel-efficient vehicles. It would be great if we could get a tax credit based on the fuel-efficiency of the vehicle being purchased versus the need. So a family of four could get a big credit for buying a new Chevy Volt instead of a Suburban and a larger family that needs passenger space would get a credit for purchasing an efficient Ford Flex over a giant Expedition. A tax credit only costs the government when it is actually used and would encourage spending, hopefully on US made goods.
    
The good news is American companies can build good cars. The Ford Fusion and Chevy Malibu are strong competitors to the vaunted Honda Accord and Toyota Camry. While perceived quality still gives the Japanese makes the upper hand, the US manufacturers have made significant inroads and now have products on-par with the Asians.

So let’s support the US manufacturers, our jobs truly depend on them!