Cowritten with Leonard Greenhalgh
Chrysler has been forced into bankruptcy and GM is next in line. At the same time, many banks recently failed the "stress test" and, after already receiving tens of billions in bailout funds, will require billions of dollars in additional capital to remain solvent. We are stimulating banks, top-down; but eliminating auto and manufacturing industries, bottom-up.
Each week, new shock waves are being sent through our economic system: Chrysler announced it will shutter 25 percent, or nearly 800 of its dealerships. Some 1100 GM dealers got pink slip letters. That amounts to, as reported in the NY Times, almost 200,000 jobs, more than are employed directly in the U.S. by GM and Chrysler today.
The economic stimulus must stop the hemorrhaging as priority #1: workers are losing their jobs at a rate of 600,000 a month, as "official" unemployment approaches 10%. 2 million families are losing their homes to foreclosures each year. The shut down of industries like auto and steel and related small businesses will exacerbate the crisis.
Clearly, the hemorrhaging is outpacing the stimulus. Liken our economic crisis to a car crash: when the patients -- workers and small businesses -- come to the emergency room, the first order of business is to see if the aorta was cut, and stop the bleeding. Working families and the poor need emergency treatment now and should not be left in the waiting room. Providing a transfusion -- i.e., the stimulus -- may not be enough if we first don't stop further hemorrhaging.
Whole towns and cities are built around these industries and are now in jeopardy. We need a new, comprehensive reindustrial strategy, a bailout plan that is connected directly to reinvesting in and reindustrializing America. The bailout of industries must be linked to reinvesting in America, retention and creation of jobs. We cannot bail out industries, and then have them take the manufacturing and jobs abroad, and leave only the brand at home. Worker and trade policy must be a central part of a new, industrial reconstruction program.
GM got $15.4 billion on loans from taxpayers, with billions more to come. Yet, GM plans to move double the amount of jobs and manufacturing abroad. We didn't bail out GM so it could profit from moving more jobs to low wage markets abroad.
If we force workers to renegotiate labor agreements, we must also renegotiate trade agreements. There is a tremendous imbalance in the formula. We've globalized capital, without globalized rules, without globalizing worker's rights, environmental rights, women and children's rights.
For too long, the US has let multinational companies and banks define our trade policies. So now we import $41.5 billion in cars and light trucks from Japan. But we sell just $534 million in Japan. South Korea sells $7.5 billion in cars and trucks in the US., but the US exports only $373 million worth of cars to those two countries. They sell 700,000 cars in the U.S., we sell just 5000 US cars in Korea.
We want and demand two-way trade, not one-way trade. We want and demand trade that is not just free, but fair, reciprocal and of mutual benefit. We want economic competition where all nations compete on a level, even playing field.
We need more than stimulation for the banks, and elimination for the auto and manufacturing industries. We need a comprehensive industrial policy which projects a plan to stop the hemorrhage; a plan for a new economy for the future.
Wouldn't it make sense for the economic stimulus plan to prioritize retention of existing jobs and avoid losing the jobs NOW, while working to create new "green jobs for the future? Recent studies are alarming: automotive-related industries account for 7.2 million U.S. jobs, 3.5 million in Ohio, Michigan, Indiana, Alabama, Texas and the 11 mid-western and southern states along the bus tour route.
Five thousand auto supplier companies and automobile dealers are at risk; over half of the 631 minority supplier companies may be put out of business. GM has to cut its 6,500 dealerships down to 3,200; Chrysler from 3,200 to 2,000 -- with each dealership employing an average of 60 workers; Minority dealer reduction at GM is projected to be 60% out of 300 and at Chrysler 80% out of 150. It is projected that over 137,000 direct jobs will be lost as a result of this downsizing and projected another 200-300,000 affected indirectly.
And more economic loss is imminent and instantaneous. Consider this: at 12:15PM, Chrysler's bankruptcy was announced; by 3PM Chrysler had closed retail loans, floor plans, and access to working capital. Dealers and suppliers are being left to die: the Treasury Department has removed life support from the businesses that remain breathing.
As we confront the global economic crisis, it's time to challenge short-sighted economic "global sourcing" strategies that have decimated our manufacturing base and sent millions of Americans who had well-paying, middle class jobs, to the unemployment lines. It's time for fresh thinking and a new industrial policy to emerge from the ashes of the current economic crisis.
Every other country is devising policy based on their national interest: we must do the same.
What must be done?
First, the U.S. cannot continue to export jobs, capital and our entire manufacturing industry. Already, two thirds of the value of a modern vehicle is outsourced and manufactured overseas -- utilizing cheap labor in foreign countries, and undercutting U.S. workers at home. That trend must be reversed.
We should learn from Germany and France, who will permit the sale as long as the manufacturing industry clusters remain intact -- in Germany and France.
Secondly, the economic recovery should prioritize job retention -- saving the jobs workers have NOW, along with creating new green jobs for the future. Third, since the crisis is having a disproportionate impact on minority communities and businesses, they require "targeted" support and resources in order to survive the next era. We have to reverse the trend of "last in and first out."
Time is of the essence, and that's why Rainbow PUSH joined with Mayor Bernero of Lansing, MI, unions, religious leaders and others for a mass march and rally on June 1 to Reinvest in America and Save the American Dream. That's why auto and steel workers, employees from plastics and rubber factories, along with local auto dealers, community employers, and elected leaders led in a 11 state, 34 city "Keep it Made in America" bus tour next week. Auto and steel workers are right to protest national policy that says, "Banks are too big too fail, but auto workers and manufacturing industries are too small to matter."
It's time to march. It's time to rally. It's time to bring on the street heat to raise the voices from Main Street and be heard on Wall Street.
The hopes of the nation rest on the success of the administration's economic recovery plan. We need a new national industrial strategy. In industry after industry, we're losing national competitive advantage to overseas competitors. It's time to stem the outflow of jobs, economic opportunities, and whole industries, and think strategically about our futures. We need to save the auto industry and our manufacturing base. We need to save jobs for American workers. And we need to save small businesses, save our cities and states so linked to their survival. It's worth the investment.
Reverend Jesse L. Jackson is one of the world's foremost human rights leaders, and is founder and president of the Rainbow PUSH Coalition.
Leonard Greenhalgh, PhD, is Professor of Management, Director, Programs for Minority- and Women-Owned Businesses at the Tuck School of Business at Dartmouth
Start your workday the right way with the news that matters most. Learn more