Job Migration Harmful to Automaker’s Competitiveness Says Automotive Components Group Chairman

New industrial policies aimed at reducing regional rivalries would do more to help the domestic auto industry than having a “car czar” according to International Automotive Components Group chairman, Wilbur Ross, Jr.

Ross claims that the formation of a federal “industrial strategy” aimed at eliminating waste that results when states compete against each other for jobs would make domestic automakers more competitive against foreign automakers.

Following an address to the Automotive News World Congress, last Wednesday, Ross said, "We need a whole industrial development plan. The reality is that industrial development in the U.S. is largely done at the state and local level, and as a result you’ve had this peculiar phenomenon of Southern states spending tens of billions of dollars converting $35-an-hour jobs in the Northeast and the Midwest into $17 an hour jobs in Alabama and Mississippi.”

Ross went on to say, "That can’t be a sound industrial policy to move jobs within the country from high wage to low wage areas at a cost of tens of billions of dollars.”

Commenting on last year’s bailout of GM and Chrysler Ross said he feels that President Barack Obama made the right decision. He said, “I believe that with the economy as feeble as it had been at that point in time, having two or more American icons fail, along with Lehman Brothers, and Bear Stearns and AIG, would have been too much for the system to take.”

According to Ross, the failure of two of Detroit’s “Big Three” automakers would have resulted in a domino effect of business failures that would have included auto dealers, and suppliers. The ripple effect, he says, would ultimately have affected the entire U.S. economy and led to job losses of between seven to eight million.

When asked to assess the current conditions of Chrysler and GM, Ross was measured in his response. “As to whether they are permanently saved,” he said, “time will certainly tell that story.”

To improve the odds of long-term viability of domestic automakers Ross said, “I do feel that there should be more follow through to figure out how we position all American manufacturing to be more competitive globally. I don’t feel they’ve done a good job of that.”

Concerning China’s emergence as the new powerhouse in the automotive industry and concerns over what many consider to be trade inequities between Chinese and U.S. automakers Ross said, “China lacks a legal system, and so you have to sort of start with that. But we believe that as long as a developing country wants outside capital to come in, and come in a big way, the probabilities are that you will be reasonably well-treated. And the automotive industry is clearly one that China intends to develop big time.”

Responding to questions about last summer’s Cash for Clunkers program, Ross said it was “a relatively complicated system, relatively modest in size and relatively modest in amount.” However, despite his criticism of the limited scope and onerous complexity of the program, Ross said the CARS program was “good from an environmental point of view.”

When asked whether or not he would consider a position on President Obama’s auto task force Ross answered simply, “It might be a conflict of interest. And I haven’t been asked.”

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