We need a global car czar
China's Geely car company may be buying Volvo. Toyota (TM) and Honda (HMC) have approached the Japanese government for aid. Many of the car companies in the UK and EU have indicated that they need government money. Of course, General Motors (GM) and Chrysler have told Congress and the Administration that they cannot stay out of bankruptcy without more money from the federal government.
Up in Canada, the government may be acting to help GM save jobs. According toThe New York Times, if the Canadian Auto Workers Union and GM can come to an agreement on wages and benefits, the central government is willing to step in. The paper writes that, "The company, which is seeking about $6 billion in assistance from Canada, did not respond to questions about the anticipated size of the savings." The money will keep GM Canada viable.
The news from Canada points out that, because there is no global coordination for bailing out the auto industry, there is not likely to be any long-term solution. Canada may bail out GM in that nation. But what if the US lets the car company go bankrupt here? If Nissan cannot get aid in its home country of Japan and has to slash its workforce and this causes huge layoffs in the US, it simply makes the American recession deeper. The same kind of examples hold true around the world. Troubled global car companies operate in too many countries for aid from local governments to solve what is, without question, an international problem.
If the large countries where the world's biggest car companies are headquartered do not offer one strategic solution to the auto industry's problems, bailouts by nations will just be band-aids.
Douglas A. McIntyre is an editor at 24/7 Wall St.