Bailout Watch 197: The Battle Lines Are Drawn Pt. 3

Robert Farago
by Robert Farago
bailout watch 197 the battle lines are drawn pt 3

And now, a few decades and several tens of billions of dollars later, we have southern politicians with automotive manufacturing facilities in their backyards. And, for some reason, they’re not feeling a particularly strong desire to spend federal taxpayers’ money on bailing out Detroit. As The Atlanta Journal Constitution puts it, “For behind the philosophical back-and-forth over government intervention, scheduled to begin Monday in the U.S. Senate, is a cut-throat, economic reality: the South has ambitions of becoming Detroit’s rival. And a federal dollar that artificially props up manufacturing on the northern end of I-75 is a dollar that hinders the creation of new economic models downstream, some Southern politicians maintain.” Par example? “Georgia’s Kia plant is scheduled to open next November, employing as many as 2,500 workers. The site is located within U.S. Rep. Lynn Westmoreland’s 3rd District. Westmoreland, like other House Republicans, voted against the $700 Wall Street bailout. He’ll vote against a Detroit rescue as well – on the grounds that it would create a slanted field of play for the workers he’ll soon represent. ‘One of the things we have constantly said is we can’t compete with some of these foreign businesses because the government has intervened in those businesses, and it makes an unfair advantage,’ Westmoreland said. ‘What we’re doing here with the auto industry is basically the same thing.'” Fine words. And the way the AJC takes him to task is classic…

“As have other states, Georgia laid out a boatload of incentives to land its auto plant, worth an estimated $415 million. But that’s not the same thing, the Georgia congressman said. ‘I don’t think we were doing that because of bad business decisions Kia was making,’ Westmoreland said. ‘We did that to get them in here, to create the jobs, to create the taxes, to put economic development into the area.'” A distinction without a difference? Maybe not. Michigan has been throwing tax breaks at American automakers for lo these many years.

The AJC’s wider point is well taken. No, not the one about laissez-faire capitalism coming back to bite Delta or Lockheed-Martin in the ass. The bit about wages. “Even if you’re a prospective Kia employee, you might not want to see Detroit fall. Wages are lower in Southern auto plants, but they’re still tied to wages hammered out between the United Auto Workers and the Detroit Three, according to [assistant research scientist for the University of Michigan’s Transportation Research Institute Bruce] Belzowski. ‘Those people wouldn’t be making the money they’re making now if not for the UAW.'” And American cars might not be as expensive.

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  • John Horner John Horner on Nov 17, 2008

    "$300 billion in spending to rebuild New Orleans" Which city is mathematically certain to get swamped in another hurricane someday in the future. A city below sea level situated between a massive lake and an ocean with known seasonal hurricane activity is not a sustainable scenario. Oh yeah, and don't forget the receding shoreline. I would be ok with the Feds being the debtor in possession funding source if a real house cleaning restructuring of GM were in the works, but is anyone really talking about that? Also, is this really an industry bailout being talked about ... or a GM bailout with a Chrysler liquidation thrown in? Finally, does anyone believe $25B is the end of it? Speaking of which, how the bleep is AIG consuming over $100B in taxpayer money? What exactly is being done with that massive pile of cash? How many people in the US based auto industry raised a shout when the textile and furniture industries packed up their bags and move offshore, leaving the southern states screwed over? Don't be surprised that those same states which are now enjoying some transplant success don't feel very bad for the midwest. Then again, the furniture industry in the US was mostly based in Michigan before it retreated to the south. However it sorts out, the trend of buying massively more stuff from foreign countries than the US sells to them has run smack into the brick wall of reality. I don't care much how the shareholders are distributed around the globe, but we need to make more of our own stuff in the US of A. I don't think Red Ink Rick agrees with me though.

  • Jackc10 Jackc10 on Nov 17, 2008

    A little accuracy to the posts about the South: Katrina did not just damage NOLA. The French Quarter, which includes Bourbon Street, (it is a street in the Quarter) was not affected much. The Mississippi River did not flood. The beads and tits crowd at Mardi Gras is, in large part, tourists. That includes many from Michigan.

  • Azfelix Caffeine pills (200mg) work well as they are quick and portable. Although caffeine is a diuretic, the pill not being accompanied by a large cup of liquid has its advantages. The US Army released part of a study where it found that 400mg followed by 400mg more 4 hours later can energize a body for eight hours. The downside is the need for a dedicated recovery period immediately afterwards. As I recall other findings were not shared publicly.
  • SCE to AUX Base Price: $99,795 US / $115,133 CANAs Tested: $100,370 US / $115,133 CANBoth versions can't cost the same in CAN $.
  • SCE to AUX @Matt Posky: This may surprise you, but I agree with your criticisms is this story.This vehicle has the look and weight of the Telluride, but without the right chops. A vehicle like this is intended to be a great highway cruiser loaded up with all the stuff one takes on a trip - not a 0-60 racer.My former Sedona (RIP, sniff) had a great blend of space, power, and towing capacity. It was lovely for countless road trips, but it was a ponderous commuter.The EV9 won't make a great road trip car due to its short range, and it is too hulking to make sense as a commuter. They should have fitted a 150 - 200 kWh battery so it could at least go some distance, and that might justify the bulk.No way I'd go in for ~$60k for this vehicle.
  • Jeff S I like the looks of this car and in today's dollars it might not be that bad a buy but my issues with this Genesis would be Hyundai's reliability in recent years has been below average and getting a car like this serviced at a Hyundai dealership. I do like the rear reclining rear seats and the massage settings. Beautiful car but I would take the safer option of a preowned Lexus which gives you better reliability and lower maintenance costs than the South Koreans and the Germans. Genesis is definitely a luxury car with the extras that are standard but it is still a Hyundai. These will depreciate a lot as do the German cars which once they get old a Pandora's box of issues crop up and they become expensive to maintain. Good write up.
  • Tylanner Cinnabon is the holy grail but Starbucks or Dunkin will do. I will only resort gas-station coffee in extraordinary circumstances.