On “Meet the Press” Sunday November 16, 2008 when Alabama Senator Richard Shelby was asked about if a bill to provide a government loan to the automotive companies could get done in this session of Congress, he replied “hope it won't get done because I think it's a waste of taxpayers' money. It's throwing money down the drain, and it won't work in the long run. It's postponing the inevitable. Remember that.” Earlier in the program Shelby stated “They're a dinosaur, in a sense (talking about the auto industry), and I hate to see this because I would like to see them become lean and, and hungry and innovative. And if they did and put out the right product, they could survive. But I don't believe the $25 billion they're talking about will, will make them survive. It's just postponing the inevitable.” These are odd statements from an elected official in state that ranks sixth nationally in the number of automotive related jobs. According to the Alabama Automotive Manufacturer’s Association, in 2006 there were 134,000 direct and indirect jobs in the auto industry that generated a payroll of $4.8 billion in 2005. These wages made a significant contribution to the state through state income tax and through sales tax as those wages were spent, not to mention the amount of federal income tax paid through those wages. This doesn’t even factor in the corporate taxes paid by the 263 automotive manufacturing plants in the state.

A bankruptcy by any one of the Big Three would result in a domino effect that cost over three million jobs and $150 billion dollars in tax revenue according to a number of automotive experts. Because the automotive industry is inter related through suppliers, the trickle down effect would result in massive bankruptcies of second tier suppliers that would eliminate the supply chain to all U.S. manufacturers including those located in Alabama –which by the way ranks second nationally in the manufacture of vehicles right behind Michigan.

Business Week Magazine quoted Shelby as saying “"The financial straits that the Big Three find themselves is not the product of our current economic downturn, but instead is the legacy of the uncompetitive structure of its manufacturing and labor force."

However, Senator Shelby is sadly misinformed on the facts concerning the current financial crisis facing the Big Three companies. In 2006, the UAW made concessions in their labor agreement to eliminate the cost disadvantage GM, Ford and Chrysler faced with their rivals. Shelby has also stated that the Big Three’s problems were the result of buying SUVs that no one wanted. The Big Three simply reacted to public demand with the production of trucks and SUVs. Toyota, Honda and Nissan were playing catch up on trucks and SUVs when gasoline prices resulted in dramatic changes in buying decisions by consumers.

The current issue facing the automotive sector is a result of the credit crisis brought on through the failure of the housing market and the subsequent limit of credit. The absence of consumer confidence as a result of the credit crunch resulted in an abrupt halt to the purchase of big ticket items such as automobiles. In October GM saw a reduction of 45% in sales because of this scare. At the same time, the credit crunch dried up the availability of loans hit the automotive industry. These companies routinely borrow money for various expenditures such as product development or new factories. The absence of the availability of loans resulted in companies such as GM having to burn through their cash reserve to operate. The reduction in their stock price has lowered their credit rating to the point that banks that would lend them money are requiring ridiculously high interest rates to loan the money. So, the automotive sector is requesting loans from the government to allow them to work through this downturn in the economy. The money will be repaid with interest, not resulting in higher taxes for anyone.

During Richard Shelby’s tenure in the Senate, Alabama has pursued a number of automotive manufacturers and their suppliers. Mercedes Benz, Honda, Hyundai, Toyota and Volkswagen have all been courted by the State, with promises of tax breaks and incentives that ran into millions and millions. One has to pose the question,” did the honorable Richard Shelby express his feelings that the auto industry was a dinosaur whose demise was imminent?” I am guessing he did not. So, if he didn’t, you have to ask yourself “is it only American companies this patriot statesman feels are dinosaurs?” What about the foreign automotive companies? Are they not dinosaurs as well?

When the time came for extinction came, all the dinosaurs fell to the same fate. None were spared. In the current perfect storm that is brewing for the automotive companies, as one species of dinosaur falls, the domino effect will trickle through the industry, eventually wiping out all the dinosaurs – including those species that seem to be sacred cows to Senator Richard Shelby. He may feel that his foreign friends are immune to the climate change, but just as the original dinosaurs all fell, his will too. In the end, it will be the workers and their communities who pay the ultimate price for Richard Shelby’s indifference to the calamity that stands before this economy and this country.