Republican senators, auto unions clash over rescue plan
WASHINGTON — Seven years after lobbying Hyundai officials to lure a factory to Alabama and two years after winning $3 million in federal funds to unclog the roads near the plant, Sen. Richard Shelby, RAla., helped block the rescue of Hyundai’s American competitors.
Similarly, 23 years after calling a reluctant property owner to persuade the family to sell Toyota the land it needed for its first American factory, Senate Republican Leader Mitch McConnell of Kentucky put a stake through the U. S. auto industry rescue plan, saying it “isn’t nearly tough enough.”
And six months after touring a Honda plant and declaring: “I highly recommend treating yourself to the Honda experience,” Sen. Jim DeMint, R-S. C., fought the U. S. auto rescue with far tougher rhetoric.
“These car companies are in real trouble, and they should have been planning to restructure for a long time,” DeMint said on National Public Radio. “But the political aspect of this is most of this is being done to protect unions. It’s not to protect the workers.”
You might notice a pattern here.
Southern senators like Shelby, McConnell and DeMint have long been supporters of the nonunion auto “transplants” — and in some cases, backers of the government aid, estimated at $3 billion, they received to locate plants in the United States.
And now with the Big Three running on fumes, those senators shut off the gas pump — a $14 billion federal loan — that would have kept them going.
The Bush administration announced Friday that it would come to the rescue of General Motors and Chrysler, which are on the verge of bankruptcy.
But that doesn’t fix a big problem the Big Three — and particularly the United Auto Workers — face on Capitol Hill.
Southern Republicans, thrilled with the success nonunion foreign automakers have had in their states, are less than thrilled with the UAW, which lavished $10.56 million on Democratic congressional candidates in the past decade.
Senate talks on the auto deal broke down as Republicans demanded the UAW agree to cut its wages to equal those at the foreign-owned plants.
“It is delusional to think a company which spends $71 per labor hour could compete with a company in the same industry that spends $49 per labor hour,” McConnell said.
Only $3 of that difference is due to current wages; in fact, much of the disparity comes from the “legacy” costs the Detroit Three pay in pensions and health care to retirees. Nevertheless, Republicans stress that the bottom-line cost remains too high.
“The so-called ‘auto rescue bill’ was akin to rearranging the deck chairs on the Titanic,” said Rep. Thomas M. Reynolds, RClarence, who voted against the bill. “The legislation would have given away billions in taxpayer dollars without setting any hard benchmarks on unions.”
While those unionized American auto companies have been cutting jobs for years, foreign automakers have opened 27 factories in the U. S., including four in Shelby’s home state. But he insisted that is not why he opposed the bailout.
“No, failure is never a good thing for anybody,” he said at a news conference. “We want these companies to be competitive. There’s nothing in this proposal that will make them competitive.”
Not surprisingly, you’ll get a different view from UAW members. Frank Larkin, a General Motors retiree from Newfane, recently called Shelby’s office to complain that the senator was looking out for his home state at the expense of the country.
“It’s a protectionist deal, pure and simple,” said Larkin, 70.
Foreign automakers steered clear of the bailout debate. But auto industry experts like James Rubenstein, a professor at Miami University in Ohio who co-authored a recent book called “Who Really Made Your Car?”, stress that GM’s failure could prompt a cascading collapse of auto parts suppliers that would hurt foreign car companies, too.
“A GM bankruptcy would not be good for the transplants in the short term because of the interlocking of the supplier base,” Rubenstein said.
That being the case, Kevin Donovan, assistant regional director for the UAW in Buffalo, wonders if the GOP is just getting even against a union that has given 11 times more money to Democratic congressional candidates than to Republicans in the last decade.
“They’re retaliating against the UAW,” he said.
Shelby insisted, though, that he was simply philosophically opposed to bailouts — and has votes against the financial system rescue and the 1979 Chrysler bailout to prove it.
That opposition doesn’t extend to state aid to companies building new plants wherever they can get the best package of tax breaks and other incentives.
“Every state in the union is looking for industry, is competing to give tax incentives, inducements for companies to come there,” Shelby said on CNBC earlier this month. “And it seems to be working.”
Indeed it is. The Hyundai plant in Montgomery, Ala., opened in 2005, four years after Shelby lobbied the company. The state offered a $252 million deal to attract the South Korean automaker.
The plant, which now employs 2,500, had such a quick impact that Shelby sought and won $3 million to build a new highway bypass. “With the completion of the Hyundai facility and the announcement of the new Kia plant in West Georgia, truck traffic on I-85 is expected to significantly increase,” he explained in a 2006 news release.
Hyundai followed a path forged by Honda and Toyota, which started building in America years earlier.
McConnell was a key figure in Toyota’s decision to build its first U. S. plant in Kentucky with the aid of $325 million in state incentives. Wire service accounts said McConnell called the family that owned the land Toyota wanted for the plant. He later announced the deal, proclaiming it “great news for Kentucky.”
Despite his fondness for Honda, DeMint said on NPR that he drives Fords.
DeMint represents a state that’s also home to a BMW plant that received $230 million in state aid.
Those handouts to foreign automakers total $3 billion nationwide, said UAW President Ron Gettelfinger at a news conference last month.
“It just seems odd to us that . . . we can offer incentives to our competitors to come here and compete against us but at the same time we are willing to walk away from an industry that is the backbone of our economy,” Gettelfinger said.
Not surprisingly, McConnell sees the plight of the Detroit Three quite differently.
“None of us want to see them go down, but very few of us had anything to do with the dilemma that they’ve created for themselves,” he said as he pronounced the auto bailout bill dead on the Senate floor.
Log into MyBuffalo to post a comment
MyBuffalo is the new social network from Buffalo.com. Your MyBuffalo account lets you comment on and rate stories at buffalonews.com. You can also head over to mybuffalo.com to share your blog posts, stories, photos, and videos with the community. Join now or learn more.
Reader comments