AUTO INDUSTRY : KRUGMAN SEES LITTLE HOPE

PLATTEVILLE, Colo.

A farm couple got a huge surprise when they opened their fields to anyone who wanted to pick up free vegetables left over after the harvest -- 40,000 people showed up.

Joe and Chris Miller's fields were picked so clean Saturday that a second day of gleaning -- the ancient practice of picking up leftover food in farm fields -- was canceled Sunday.

"Overwhelmed is putting it mildly," Chris Miller said. "People obviously need food."

She said she expected 5,000 to 10,000 people would show up Saturday to collect free potatoes, carrots and leeks. Instead, an estimated 11,000 vehicles snaked around cornfields and backed up more than two miles. About 30 acres of the 600-acre farm 37 miles north of Denver became a parking lot.

CHICAGO " President-elect Barack Obama announced support Sunday for a short-term government bailout of the nation's carmakers that is tied to industry restructuring. He also accused auto executives of a persistent "head-in-the sand approach" to long-festering problems.

Obama said Congress was doing "the exact right thing" in drafting legislation that "holds the auto industry's feet to the fire" at the same time it tries to prevent its demise.

In an appearance on NBC's "Meet the Press" and later at a news conference, Obama at one point suggested some executives should lose their jobs.

- is there no place for any kind of automotive manufacturing left in the U.S. (and canada ) ?

will mexico still have a "rump" automobile industry to supply cars to the U.S. and canada ?

- is there any place for truck manufacturing left in north-america ?

- if the answer is NO to all three questions , will the millions of people employed in the automobile manufacturing and associated businesses be able to find work in other (established or new) industries or will they essentially become unemployed or live a marginal existence ?
- will north-america's economy go from a recession into an unstoppable downward spiral ?

hamburger wrote:
- is there no place for any kind of automotive manufacturing left in the U.S. (and canada ) ?

Quote:

I'd say there is. Foreign-owned companies have manufacturing plants in the US. Generally they seem to be doing okay -- well enough, anyway, to survive without bailouts for now.

In the past 15 years, Mercedes-Benz, Honda and Hyundai have together received more than $873 million in incentives to locate in the state and expand their operations. Those assembly plants represent a combined investment that tops $3.8 billion and supports an industry that employs more than 134,000 people statewide.

The current Detroit bailout debate has the Washington source-dependent press corps reporting that the Michiganders are seeking favors, but not the Alabama/South Carolina/Tennessee/etc. crowd, ignoring the huge state subsidies to foreign-owned auto plants, the implicit subsidy in federal law that makes union organizing almost impossible and the advantage that new plants have over older ones. I get sooooo frustrated at the awfulness of so much DC coverage.....which could be cured by actually reading the voluminous public record, resulting in less reliance on access to sources.

In 1992 South Carolina ushered in the new wave of investment by foreign carmakers in the South by offering BMW a package that was ultimately worth an estimated $150 million. A decade later, the state put up an additional $80 million in infrastructure aid when BMW decided to expand its operations in the state.


In 1993 officials in Alabama lured a Mercedes-Benz facility, the first foreign auto plant in the state, with a package worth $258 million.


In 1999 Alabama put together a $158 million subsidy deal to land a $400 million, 1.7 million-square-foot Honda plant. In 2002 state and local officials provided an additional package worth $90 million, including $33 million in tax breaks over 20 years, when Honda decided to expand the facility.


In 2000 officials in Mississippi lured a $950 million Nissan plant with a $295 million subsidy deal. While the plant was still under construction, the company announced an expansion of the project that also involved an increase in the subsidy package to $363 million.


When South Korean carmakers Hyundai staged a competition for a $1 billion plant, various states put together bids, but it was Alabama that won the contest in 2002 with a package worth $252 million.


Commentators much made of the fact that when Toyota chose San Antonio, Texas in 2003 as the location for an $800 million assembly plant, the company had not selected the site with the most generous subsidy package. In another example of the fact that subsidies are not the most important factor in investment decisions, Toyota highlighted criteria such as access to the large Texas market for the pickup trucks that would be built at the plant. This is not to say that Toyota passed up all government assistance. The company received a package valued at $133 million, including $47 million in tax phase-ins and waived fees.

Ontario is providing $70 million to support skills training and infrastructure at the new Toyota plant. The government’s auto sector investment strategy has attracted more than $4.5 billion in new automotive investment in just 18 months.

"By supporting our people, by investing in their health, their skills, and their prosperity, we’re making Ontario the place to be," said Premier McGuinty.

"It’s the place for progressive, innovative and successful companies like Toyota " companies that are looking for the best people doing their best work."

Toyota’s state-of-the-art new production facility in Woodstock is the first greenfield plant in Canada in more than a decade.