Don’t Feel Sorry for the Auto Industry

Currently the top auto execs from Detroit are at the Washington DC doorsteps of the House and Senate, pleading for bailout money for their beleaguered industry. They claim that without bailout money, one or more of the “Big 3” will collapse. Well, maybe that would be the best thing that could happen!

Let's look back at some auto history. In 1955, the American auto industry (aka, Detroit) was proud of the fact that auto manufacturers, and related industries, accounted for 22% of the GNP (now known as GDP – Gross Domestic Product). During the 1960's, Detroit was in its heyday. Most carmakers had one or more 'muscle cars' as the flagship vehicle for that car division. Detroit was the market share leader for all but the least expensive (VW), and most expensive (Rolls Royce) automobiles.

Beginning in the 1970's, the environmental movement kicked in, resulting in major changes in how American autos were built. During that same period, the United Auto Workers (UAW) began successful negotiations to increase worker pay, medical benefits and pensions for the 'Big 3'. And while this was going on, European and Japanese auto manufactures began building cars that had better performance, better safety features, better fuel economy and better quality control than what was coming out of Detroit. Plus, they continued to score higher on customer surveys than their American counterparts. It is not at all surprising then that the European and Japanese market share of domestic car sales has increased every decade since then.

Then, the labor situation in Detroit got totally out of hand. The UAW set up programs that allowed laid off workers to receive up to 85% of working wages, which can go on for up to 48 weeks. Then, they can move into what is called a 'Jobs Bank', another UAW perk, which provides an additional funding source for non-working auto workers. It's one thing to pay a good wage for work performed, but to pay a good wage for not working – I don't think so, and I would bet that most American citizens don't think so either! Do you wonder who pays for all of this? Its only been the last couple of years that Detroit Auto makers management has gotten some significant cost reductions. At some companies new workers earn substantially less than veteran workers. But this is small consolation when looking at the big picture, and may even prove to be a problem over time. The inefficient groundwork that resulted in mess on the table today, took years to produce. It make take additional years to turn it all around.

One thing is for sure. You needn't feel sorry for the Detroit auto industry. They spent a lot of money getting themselves into this mess – and now they need to show a reasonable plan for getting themselves out of it – without burdening the taxpayers. One potential solution might be to let the 'Big 3' pare down to the 'Big 2'. This could make a 'healthier and more competitive' Detroit , within the world wide automobile marketplace. At this point, the market share of auto sales shows that a 'Big 3' of American car manufactures is no longer needed. Why not let capitalism set its own course for a change, and let the bailout funds go where there is greater need.

(Source: John Gallagher, Detroit Free Press, 11-16-08/Sacramento Bee Editorial, 11-15-08)

The recent budget battle at the State Capitol has got a lot of people thinking that the Legislature is a partisan-deadlocked place where nothing ever gets done. Admittedly, the State Capitol is often the place of warring ideologies that can grind legislative action to a halt. But while this year's budget battle was raging, legislation was being developed by a bi-partisan group of legislators that will help to correct what I believe had become a huge problem for our state.

Disability lawsuits, many of them frivolous and nothing more than legal extortion, continue to be filed against businesses up and down the state. Sometimes, small, family-run businesses that are trying to earn an honest living while providing jobs and a service to the community are actually being put out of business by these lawsuits. In many cases, lawsuits aren't filed, but rather, a threatening letter is sent to the business that extorts a sum of money from the business in order to avoid the lawsuit.

The Federal Americans with Disabilities Act of 1990 ( ADA ) was watershed legislation that affirmed and protected the rights of millions of Americans with disabilities to full and equal access to all public facilities. Equally important, the ADA has also helped the public understand that disabilities do not diminish a person's right to live a full life. Unfortunately this worthy intent has been perverted by a cottage legal industry that was developed by attorneys who do nothing more than file lawsuit after lawsuit against businesses that are not in complete 100% compliance with the Act.

For many years, legislators who believed like I do that these lawsuits and threatened lawsuits were unfair, tried in vain to pass laws that would bring sanity to ADA enforcement. Recognizing that many business owners were just not familiar with the complexities of ADA law and inconsistencies between state and federal requirements, many of these legislative attempts would have simply enacted a ''right to fix'' provision that would have allowed businesses to fix the ADA violations before being sued. Unfortunately, year after year, these efforts went down to defeat in the Capitol.

This year, however, legislation that was being developed for the better part of the 2007-08 legislative session was finally approved and signed by the Governor that will bring certainty to the implementation of ADA laws in California . This new legislation will encourage business owners to work with state-certified access specialists (CASp) that will be trained specifically to survey business sites to assess where the business is deficient according to accessibility standards and then make recommendations for the business to follow in order to bring their facility into compliance. Business owners who take the proactive steps of hiring a CASp and following the CASp recommendations would be eligible to request a stay of any lawsuit and early settlement conference through the courts in order to bring the parties together for a quicker resolution to the access dispute.

The advantages of the early settlement conference are significant for both businesses and people with disabilities. For businesses this early resolution means avoiding additional damages and costly attorneys' fees and expenses, which can accumulate quickly if litigation proceeded without the benefit of the early settlement conference. For Californians with disabilities, the quick resolution that would occur as a result of the conference means a speedier removal of disputed barriers, which would allow access to these sites in a much more expedient timeframe.

Other provisions of the legislation will ensure that state and federal ADA laws are in agreement with one another. At two recent ADA workshops that I held for small businesses in my district, many of the small business owners expressed great frustration at the frivolous nature of these lawsuits and the extortion tactics being employed by attorneys who weren't necessarily out to help the disabled, but rather to line their own pockets.

But through the frustration was a common theme. Business owners want to comply with the law. Business owners realize that as frustrating as these ADA lawsuits have become, noncompliant facilities can be very frustrating for the disabled. Unfortunately, the increasing number of lawsuits filed in cases of non-compliance have pitted portions of the business and disability communities against one another.

SB 1608 reflects a strong bipartisan commitment to address the affected communities in a fair and equitable manner. I believe that this legislation will go a long way toward addressing the issues and will promote increased compliance without the need for litigation, thereby reducing the antagonistic relationships between business and the disabled communities.

EXECUTIVE DIRECTOR'S MESSAGE

Last year had its ups and downs for the Taxpayers Leagues. The old computer system crashed in March - wiping out months of records. Then our long time secretary, Susan, left us (we’re now on our 3rd clerical person since then). Finally, we lost some members as a result of the economic downturn. We did have some positives too: Gained ten new members, had a complete desktop system donated to us (from Diane Schachterle) - now we have two office computer systems, plus we cut our operating costs by about 40%.

Next year will see new committees set up to address major taxpayer concerns. The first will be the Membership Committee, headed up by Karl Dambacher. Others will follow shortly. If you know anyone interested in League activities, please have them contact me - (916) 399-5600. We’re looking forward to a great 2009.

Cheers

To Kevin Johnson, for showing so much energy and enthusiasm as he prepares to step into the Mayor's Office. He has already put together a transition team, and has stated he will look at ALL areas of City budget expenditures. We wish him well as he tackles a huge deficit with declining revenues.

And by the way Mayor Johnson, it might be worthwhile to take a close look at how REDEVLOPMENT MONIES are being spent. In fact, we would be glad to help with the analysis.

Cheers also to Cal Expo leadership for taking a pro-active, non-taxpayer funded approach to exploring the possibilities for a new arena at the Cal Expo site. They are working directly with the NBA, to get an independent analysis of the proposal, which also would include a major upgrade of the State Fair facility, and housing/commercial development. This is not a simple task, and will obviously have to include major infrastructure upgrades in the nearby roadway system and transit systems. This is an interesting concept, potentially offering strong long term benefits to the community.

The League provided testimony to the Cal Expo Board late last month. We'll be watching, and providing updates, as the project moves along.

Jeers

To the Detroit auto execs who flew to Washington DC in private jets, then arrived in rented limos to ask legislators for bailout money. Come on guys, you have had some of the best marketing/PR programs ever - to sell your product to America. But this time you needed to sell yourselves. Couldn't you have rented an inexpensive Chevrolet sedan to drive to your meetings?

And once again the Sacramento Metropolitan Fire District (not to be confused with the City F.D.) makes our 'Jeers' list. It seems like every six months or so, we're reporting some gross misuse of taxpayer dollars. This time it's legal battles and fees, which will cost the District over half a million dollars. The Bee's Terri Hardy reported that “A jury ruled that the District retaliated against a former arson investigator who reported a subordinates alleged wrongdoing to the Sacramento County's District Attorneys office”. The jury awarded a total compensation of $674,191.

OK, does anybody oversee this group?

Energy economist Philip Verleger states that the price of oil should never have gone much above &70.00 a barrel. He feels that it did so because of a “Perfect Storm” of the following:

U.S. Policy mistakes

European economic developments

European currency shifts

I'm sure that most everyone is glad that the election cycle is over. After a while, you don't even want to hear your own candidate anymore. One thing that I will continue to remember though, is the organization called ACORN. We hear some disturbing things in politics, but to find out that a liberal non-profit group of people out to register new voters, actually had 'quotas' to achieve! Reach your quota or be fired. Hmmmm. I wonder which political party that favored?

In 2003, Alan Greenspan among others, warned Congress that subprime loans (8% then) were becoming a problem. It was suggested that Fannie Mae and Freddie Mac be 'reined in', but the Democratic Congress did nothing. And President Bush gets blamed for this! (from L.A. Business Journal, 10-2-08)

Bob Blymyer

<< Back to Index

Officers