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The Honolulu Advertiser
Posted on: Tuesday, December 2, 2008

COMMENTARY
Time bomb ticking for U.S. automakers

By David H. Rolf

Tick, tick, tick.

Some say a time bomb is ticking on our economy.

Without question, a time bomb is ticking for the Big Three automakers.

A collapse of the proposed bridge loan financing will affect a lot of us in Hawai'i — dealers who need the cars, and the various vendors supported by car sales as well as insurance companies to shipping companies to other small businesses. That amounts to thousands of employees, who need the jobs.

Cars. Jobs. Both are little words with big implications when you consider the losses.

But it is important to take a moment to consider the positives of a vibrant retooled auto industry, able to serve the upcoming needs of the Hawai'i Clean Energy Initiative.

There's been a lot of talk about the anticipated $1 billion in federal funds Hawai'i may receive with the rail system; but with a simultaneous transition to electric cars and light trucks Hawai'i could also benefit from billions in federal funds from the $7,500 per car in tax credits to those who purchase qualifying plug-in electric vehicles.

These new vehicles without tailpipes have roughly the same features of current cars and trucks, but operate with electricity. Abundant Hawai'i "green electrons" can be produced from our world-class wind resources in Maui county — and can charge vehicles at night. The newly published clean energy initiative plan reports that a 400-megawatt wind farm on Lana'i could supply all the power for that island and 20 percent of O'ahu's needs.

That energy plan calls for 3,000 plug-in electric vehicles on Hawai'i roadways by 2010, and 50,400 plug-in electric vehicles on the roadways by 2015.

These plans would be severely affected by the loss or reduction of American auto manufacturing. GM has plans to market the Volt in 2010 and Chrysler has announced plans to manufacturer three new plug-in electric vehicles — one of which will be in showrooms in 2010.

More infrastructure, including highway widening and added capacity with smooth-flowing overhead lanes for some areas would bring even more billions in federal dollars.

Of course it won't happen overnight, but change is happening faster than anyone imagined six months ago. The transition cars are already in showrooms. There will be more than three dozen 30-plus mpg gas-powered and gas/electric hybrid vehicles at the popular First Hawaiian International Auto Show March 26-29, 2009, at the Hawai'i Convention Center. These are vehicles like the popular Ford Escape Hybrid, which was one of the stars of last year's show.

And these fuel-efficient vehicles and more infrastructure will help Hawai'i transition to high mobility and a cooler future.

One Hawai'i dealer, who recently saw his employees' retirement plans hard hit by the drop in automaker stock prices, hopes things will turn around for the industry and his company's retirement fund will get a boost from a return in the value of the automaker's stock purchased over the years.

A bridge loan to automakers and the credit for car buyers now, like the proposed tax credit for financing a new car that is being reviewed in Congress, can bring about all these positive changes. These changes will help other U.S.-based automakers also because they use common suppliers. The credit for financing a car will help all manufacturers, and help move cars out of the showrooms now.

Ford, by the way, just announced that its truck plant in Wayne, Mich., last Wednesday began the transformation for the retooling to a new car plant.

Yes, change is happening. And it is happening much faster than anyone thought.

American manufacturers will be changing some plants to electric cars soon if these auto manufacturers can obtain the financing. Right now, with tight credit markets, the federal government is being asked to step in. Hawai'i would be the among the first to benefit from this move to a "fuel-less" transportation system.

Without such a big vision, it's just more worries about the environment and the volatility of oil.

Right now, without bridge loan financing for automakers, their financial difficulties — brought on largely by the tightening of the credit markets — could spread to the rest of the economy, leading to the so-called nuclear winter scenario.

America just shouldn't let that happen.

David H. Rolf is executive director of the Hawai'i Automobile Dealers Association. He wrote this commentary for The Advertiser.