In making their case for a $34 billion government bailout, the Big Three automakers have warned Congress that allowing them to go bankrupt would devastate the nation's economy and lead to millions of layoffs.
Their arguments aren't just economic — Ford, GM and Chrysler say the downfall of the U.S. auto industry would imperil national security. Many defense experts, however, say this claim is dubious.
'Arsenal Of Democracy'
In a Nov. 18 bailout hearing, Chrysler Chairman and CEO Robert Nardelli told a Senate committee that "the crippling of the industry would have severe and debilitating ramifications for the industrial base of the United States, would undermine our nation's ability to respond to military challenges and would threaten our national security."
That sentiment has been echoed in comments by Sen. Carl Levin of Michigan and in a Nov. 21 letter to Big Three executives from House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid. Retired Gen. Wesley Clark recently wrote a New York Times op-ed piece titled, "What's Good for GM Is Good for the Army."
Supporters such as Clark call American manufacturing the "arsenal of democracy" and recall when automobile factories churned out tanks and bombers during World War II. But while the automakers may once have been major players in arms production, they got out of the defense industry long ago when they sold their military manufacturing units. These days, the Army does not buy any major systems from the Big Three, says retired Col. Jim Dwyer, who works in support operations at Army Material Command.
The connection between U.S. automakers and national security is unconvincing, says retired Marine Lt. Col. Dakota Wood, a senior fellow at the Center for Strategic and Budgetary Assessments in Washington. "If there is a linkage or a relationship," he says, "it's extremely indirect."
Wood says the Big Three have no direct involvement in the production of Mine Resistant Ambush Protected Vehicles (MRAPs), tanks, military cargo vehicles, planes, Navy vessels or even Humvees. Instead, production is done by military contractors such as Lockheed Martin, BAE Systems and Oshkosh Corp.
"Defense gear has become so specialized, an entire industry has now specialized in making it," Wood notes. During World War II, "you could take a truck and beef it up," he says, but now the materials and techniques for military manufacturing are too exotic and complex for a standard auto factory.
An Insurance Policy In Times Of War
Even if the U.S. auto industry isn't a major player in defense manufacturing, it's needed as an insurance policy in case the nation needs to quickly ramp up its military for a major global conflict, says Dr. Loren Thompson, a defense analyst at the Lexington Institute think tank, which specializes in military matters.
"We don't have a big enough defense industry," Thompson says. "If there was an emergency and we had to surge production of military vehicles, we would have to turn to Detroit to do it."
Thompson also warns that losing the automakers would put manufacturing sectors like steel, chemicals and the already weakened electronics industry at risk, because they depend on purchases from the auto industry. "There is no country in the last 200 years that has managed to be a major power that did not have a strong manufacturing sector," he says. "The argument that the world has changed forever and we don't need a manufacturing base is naive. I hope we don't follow through on this logic and end up losing a war."
Bailout proponents say that even if Detroit isn't directly involved with defense production, the automakers constitute the bulk of sales for small factories that supply parts for military vehicles. So if the Big Three went under, these factories might in turn shut down, and the parts would no longer be available to the defense industry.
But Christopher Hellman, a military policy fellow for the Washington-based Center for Arms Control and Non-Proliferation, says the military could prevent factories from closing by paying more for the same products.
The shipping industry is an excellent model for "how defense survives without the commercial sector of the industry," Hellman says. In the 1980s, the U.S. was one of the world's largest builders of commercial ships in the world. That changed after government support was eliminated. But the U.S. military kept alive a small industry to build ships for the Navy, Hellman says. Factories that produce axles and other parts for the military could be kept afloat in a similar manner.
No Skilled Labor Shortage
Another reason cited by supporters of an auto industry bailout is engineers. Many defense industry engineers started out in auto manufacturing, and a Big Three bankruptcy could create a shortage of skilled labor — making a rapid ramp-up in military manufacturing difficult.
Hellman counters this argument by pointing to the foreign auto industry taking root in the U.S. There are still plenty of engineers in training, he says, but they may come from Honda, Toyota and Subaru instead of GM, Ford and Chrysler.
Manufacturing needs aside, the loss of yet another American industry would be a big blow to national security, Thompson says.
"The U.S. has exited commercial shipbuilding and electronics — that's what historians refer to as a decline," he says. "It's not a bright future; it's a bright past slipping away." Thompson notes that the manufacturing sectors are major contributors to the nation's economy, and particularly to the tax base that is crucial to maintaining a strong military.
Wood doesn't quite see it that way. The economy, he says, is certainly an argument in favor of bailing out the auto industry. But in terms of national security, "you could say the same thing if the movie industry collapsed."