Fatal Crash
why the american auto industry must be saved
2008-11-18
By Eric Easter

A few years ago when I was teaching a college course in entrepreneurship, I struggled for a way to explain to students the complexities of the economy and the almost limitless opportunities open to them if they could look beyond the obvious.

I finally came up with a solution I call the "Chair Theory."  In short, I placed a simple wooden chair in the middle of the classroom and had the students "deconstruct" the creation of that chair by trying to the identify the number of people and businesses that went into making the final product.

Though the actual chair was only several pieces of wood, some glue and a few screws, the exercise resulted in the discovery of several hundred relationships that were a surprise to those who participated. The list included tree growers, lumber workers, chainsaw manufacturers, truckers, designers, shellac producers, tool and die makers, shippers, box makers, glue factories, screw factories and all the utilities, machines and systems that support those companies.

If you want to understand why a thriving American auto industry is critical to its economy, use The Chair Theory and apply it to your average automobile. Take the hundreds of parts and materials that go into the making of a car, work your way back to the people who make each part and you'll find a dizzying assortment of co-dependent and inter-dependent economies that is nearly impossible to calculate.

Forget all the sentiment about The Big Three being "part of America" and the psychological value of an American car industry.  That's a nice thought, but it doesn't get you $25 billion. No, the best argument for a bailout of Big Auto is that if the American auto industry falls under the weight of its own arrogance and mismanagement  (as some suggest it should), then hundreds - thousands -- of related and worthy businesses will suffer.

That's the clear difference between saving General Motors and saving, say, Circuit City or DHL. It's the collateral damage -the civilians who die after the big bomb drops  - who we have to worry most about.  And it goes far beyond the obvious tire makers, seat belt designers and auto parts manufacturers. American car culture has spawned all manner of businesses that are part of the automotive extended family, from NASCAR to satellite radio to apparel to the after-market and yes, I'll be self-serving, to the media business and the advertising it relies on from Detroit for survival.

People who want to punish Chrysler, Ford and GM for being out of touch should be reminded that it was not so long ago that foreign cars were not allowed into the U.S. because they lacked the kinds of safety and emissions innovations led by American companies. Detroit may have been outflanked in the last three decades, but that kind of innovation can be found again with some real incentive.

Let's bailout Detroit - for now, but with some new rules of engagement and clear incentives toward technological leadership and fuel efficiency.

It also needs to be made very clear to the Big Three that a future-based American auto industry doesn't necessarily have to be based in Detroit.  From classrooms at MIT to garages in Silicon Valley, there are smart, aggressive entrepreneurs who could go very far with a few extra billions in investment. Half of any recovery plan needs to go to the little guys who are already living in the 21st century while the fat cats in Detroit try to catch up.

Eric Easter is Chief of Digital Strategy for Johnson Publishing Co., Inc. He writes about media, tech and politics for EbonyJet.com