Bailout Watch 200: Debunking the Security Issue

bailout watch 200 debunking the security issue

You’d be hard pressed to find a justification for The Big 2.8 bailout that The Detroit News doesn’t like. But even the hometown paper’s cheerleaders are having a tough time swallowing claims that America’s national security would be jeopardized if GM, Ford and Chrysler aren’t kept afloat. Reporter Gordon Trowbridge provides generous airtime to the Lexington Institute’s Loren Thompson and his unfettered support for the automakers rescue plan. However, Trowbridge seems resigned to allowing a bit of journalistic objectivity to creep in, conceding that “the Big Three do relatively little business with the Pentagon,” adding that “the serious hardware — fighter planes, armored vehicles, ships and missiles — is made by companies with few, if any, direct links to the auto industry.” Furthermore, some of the minor linkage that does exist comes courtesy of Michigan senator Carl Levin, who has exaggerated crafted the Pentagon-Detroit relationship as a mechanism to subsidize The Big 2.8’s civilian alternative fuels programs, such as the fuel cell version of the not-ready-for-combat Chevrolet Equinox sport utility vehicle. As chairman of the Armed Services Committee, Levin spearheaded the diversion of more than over $40 million of the federal budget to Detroit’s alt-fuel projects, experience that makes the good senator eminently qualified to ask for more. A lot more.

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  • Bozoer Rebbe Bozoer Rebbe on Nov 17, 2008

    Nobody is expecting F-22 Raptors to roll off the assembly line at the Dearborn Truck Plant like F-150 pickups but I'd like someone to explain how you can have a dedicated defense industry without a general industrial manufacturing base. “the serious hardware — fighter planes, armored vehicles, ships and missiles — is made by companies with few, if any, direct links to the auto industry.” Few direct links but they share parts of their supply chains. If you don't have machine tools, you can't build fighter planes and I'm not sure that the defense industry by itself is large enough to support a machine tool industry or other supply chain businesses it needs. Remember, Barney Franks wants to cut defense spending by 25%.

  • Arki30 Arki30 on Nov 17, 2008

    "...but I’d like someone to explain how you can have a dedicated defense industry without a general industrial manufacturing base." Doesn't that imply that the Big 2.8 and our general industrial manufacturing base are one in the same? That's certainly not true and I think the manufacturing base will survive the loss of the 2.8, however painful it will be.

  • Bozoer Rebbe Bozoer Rebbe on Nov 17, 2008
    Doesn’t that imply that the Big 2.8 and our general industrial manufacturing base are one in the same? That’s certainly not true and I think the manufacturing base will survive the loss of the 2.8, however painful it will be. No, it means that a good deal of our general industrial manufacturing base is part of the supply chain for the Detroit 3 and heavily dependent on their business. You don't think that Detroit buys a good chunk of, let's say, threaded fasteners, literally nuts and bolts, that are still made in the US? Frankly, we've already let most of our manufacturing base get hollowed out so we can buy cheap dreck at Walmart. I'm not convinced that what remains could withstand the hit. We've already had weapons projects delayed because machine tool companies have either gone out of business or been bought out by Chinese concerns. Few companies are as diversified, in terms of markets and industries served, as DuPont, but the auto industry remains its biggest market and GM is still probably its single biggest customer. Now an implosion of the Detroit 3 won't mean that DuPont will go out of business. Not many 200 year old businesses fail, but there will be layoffs in Wilmington and at other DuPont facilities, you can be sure.

  • Fallout11 Fallout11 on Nov 18, 2008

    That's totally incorrect, Mr. Rebbe. I'm DOD (USAF) and we really do not buy anything that Detroit also uses except perhaps cutters, reamers, and sheet metal. Even the bolts and nuts holding our military aircraft together are made in China (there are several sitting on my desk as I type this). DuPont doesn't even make the fiberglass resin we use to bond composite flight control panels. Granted, some of these companies will be hurt by the loss of business with the Detroit 2.8, but that HAS ALREADY HAPPENED, as the Detroit 2.8 has hemorrhaged market share and sales for decades now. Combined, they now make fewer than 42% of all vehicles sold in North America (see Businessweek 10/28/08). Vehicle sales are down across the board anyway, and many (like Delphi) have already either withered or died. Those that haven't also sell to Toyota/Honda/Kia/Hyundai/Nissan, and hence will simply sell more to them. A bolt is, after all, a bolt, whether it is on an F-150 or a Ridgeline.

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