Carter's Auto Rescue Sortie

First aid for Detroit and a new three-way partnership for the industry

Like a battlefield tactician, Jimmy Carter last week jetted halfway round the world in a two-pronged attack on the problems of the American auto industry. First he summoned auto-company officials to a 7:05-a.m. meeting at Detroit's Metro Airport to announce a $1 billion Government assistance program. Then he hopped back aboard Air Force One and flew off to Tokyo for a memorial service honoring the late Japanese Prime Minister, Masayoshi Ohira. Though autos were not on the agenda of the President's 21-hour stay in Tokyo, his Japanese hosts could hardly overlook the well-publicized stopover in the heart of the U.S. auto industry. The message: Jimmy Carter was attempting to rescue the U.S.'s sickest industry, and he wanted Japanese help.

The action promised by the President at the Detroit airport will do little to ease the immediate pain of an American auto depression that has left nearly 300,000 assembly-line workers and white-collar executives jobless. But Carter held out the prospect of something potentially more far reaching: a new "close-knit, permanent partnership" with automakers and their employees.

Specifics of the Carter program:

Regulation. The Government will rescind some costly federal rules, such as emissions standards for pollution-prone high altitude areas like Denver, relax factory standards for worker exposure to toxic materials, and ease up on certain auto durability test requirements. The Department of Transportation promised that it would not issue any new regulations for the rest of the year.

Tax policy. The Treasury Department is studying ways to permit the auto industry to take faster tax write-offs on the new tools and equipment being installed to build smaller, fuel-efficient cars.

Car-dealer assistance. Up to $400 million in federal money will be made available in guaranteed Small Business Administration loans to auto dealers. So far this year some 700 of them have been forced to close their doors.

Community aid. The Administration will provide $50 million to help rebuild old plants in such cities as Mahwah, N.J., Flint, Mich., and Kokomo, Ind., that have been jarred by auto-plant closings.

Trade policy. The President said he would ask for a faster review of the United Auto Workers' request for restrictions on Japanese-car imports.

The automakers reacted cautiously to the White House package. Detroit numbers men, no doubt using their Japanese-made calculators, found some election-year hyperbole in the $1 billion price tag. Said General Motors President Elliott M. Estes: "We can't quite add all that up yet." Most Detroit officials were disappointed that the President had failed to promise an immediate reduction in Japanese imports, as demanded by the U.A.W., Ford and Chrysler. Groused Chrysler Chairman Lee Iacocca: "It seems almost insane to have 300,000 people on the street here, with the Japanese working Saturdays and Sundays."

Though Japanese cars commanded 22% of the domestic market in June, the Carter Administration continues to oppose import controls. The President's Council of Economic Advisers has calculated that limiting Japanese cars to their 1979 levels, about 17% of American sales, would add only 20,000 U.S. workers to the job force and cost consumers an extra $2 billion in higher auto prices because large American cars are generally more expensive.

General Motors, the only Big Three U.S. carmaker that has opposed import restrictions, demonstrated last week why it may be able to beat back the Japanese challenge. The company unveiled a 1984 two-seat electric commuter car that has a top speed of 50 m.p.h. and a range of 100 miles between rechargings. The firm also declared that the average mileage of its 1985-model car fleet will be 31 m.p.g., well in excess of the 27.5 m.p.g. ordered by the Government.

Ford may have another way of fighting Asian competition. The auto world last week was buzzing with rumors of a possible deal between that company and Toyota, the only major Japanese producer without any current plans to build cars or trucks in the U.S. After Ford President Donald E. Petersen met in June with Toyota officials, the Japanese press reported that a firm agreement had been reached whereby Toyota would build 20,000 cars a month in an idle Ford plant in the U.S. By week's end, though, both Ford and Toyota strongly denied any such accord.

The key development in Carter's trip to Detroit was the agreement on what Administration officials say could be the model of a national industrial policy. After years of animosity, the American auto industry and the U.S. Government now seem to realize that cooperation is in their best interests. In addition to announcing the relief measures laid out last week, the President said he would appoint a committee of Government, company and union officials to tackle the industry's long-term problems. It will probably consist of Transportation Secretary Neil Goldschmidt, Commerce Secretary Philip Klutznick, Labor Secretary Ray Marshall, the heads of the five U.S. auto companies, and U.A.W. officials. By next week each member is to prepare a list of five priorities for action. The Government will draft its own list of emergency steps. Said Goldschmidt: "There is the potential here for a relationship that would reverse a lot of years of auto-industry problems with the U.S. Government and vice versa."

Much of the credit for this remarkable turnabout belongs to Transportation Secretary Goldschmidt. Carter's first Transportation Secretary, Brock Adams, sternly ordered Detroit to "reinvent" the automobile, and last April the President publicly berated industry leaders for stubbornly refusing to make small cars. But Goldschmidt, the former mayor of Portland, Ore., took the automakers' problems seriously and helped swing Administration opinion round. Prompted by the Government's loan guarantee to Chrysler, Goldschmidt embarked on a long-term study that convinced him the Government simply must help an industry that provides one-sixth of the nation's jobs. A Goldschmidt-led task force designed the proposals that Carter made last week.

The cooperation between Government and industry that Carter has suggested would have been anathema to Detroit's leaders only a few years ago. But today, with sales running at 70% of 1978's levels, the industry has changed its views. Says Chrysler's Iacocca: "We are just taking a page out of the Japanese book. We've got to cooperate."

The trouble is that the Japanese book is written for the Japanese. The close business-government relations found in that country may be difficult to adapt to the U.S. Any new liaison among Washington politicians, Detroit carmakers and the auto workers' union could turn into a very bumpy affair.

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