From the governor’s office to the showrooms of small auto dealerships throughout the state, many Mainers are paying close attention to the proposed $15 billion bailout of U.S. automakers.
Most involved in the industry are hoping that the U.S. Congress will vote to give the ailing industry some relief.
“We’ve never had anything like this since we’ve been in business,” Paul Thornton, owner of Thornton Bros. in Lincoln, said Tuesday of the economic downturn that’s negatively affecting his business.
Normally he sells about 30 new and used Chrysler automobiles each month at his family-run shop on Main Street. However, business has dropped by 50 percent, despite the sales he’s running, Thornton said.
“I would hope they would pass [the loan] and monitor how it’s being spent,” he said. “That’s the big thing … It’s bound to help.”
Although no vehicles are manufactured in Maine, the auto industry does affect the state in many ways. If the bailout doesn’t pass, auto dealers and others are concerned about the local impact of an industry that often has been described as “too big to fail.”
The $15 billion bailout would provide emergency loans and other benefits to Detroit’s Big Three automakers – General Motors Corp., Chrysler LLC and Ford Motor Co. – as well as create the position of a “car czar, to be named by the president.
“The ripple impacts of doing nothing are just too great,” said David Farmer, spokesman for Gov. John Baldacci. “The auto industry and its constituent parts are too important to the national economy and to the Maine economy not to answer this call.”
Farmer said the governor spent part of Monday on the phone with Gov. Jennifer Granholm of Michigan discussing the proposed loan to American automakers. Baldacci also intended to speak with members of Maine’s congressional delegation Tuesday night or early Wednesday morning, to encourage them to vote for the bailout program – with taxpayer protections in place limiting how the money can be spent, Farmer said.
“Obviously, this has a big impact on Michigan – but it’s a problem that comes home, right here, where there are thousands of people employed as dealers and as parts makers,” Farmer said. “This is our industrial base. It’s important that we maintain this base.”
According to Howard Segal, a University of Maine history professor, the auto industry went through even tougher times during the Great Depression in the 1930s.
“What you had in the Depression was lots of auto factories closing, lots of people losing their jobs,” he said.
The professor said he thinks there has been an “unfair bias” against the auto industry on the part of members of Congress.
“They’re not reluctant at all to provide $700 billion to banks – which is by definition a white-collar industry. When it comes to blue-collar workers, that is, to people who make cars, there’s a real class bias,” Segal said.
He said that many Republicans in the U.S. House of Representatives and the U.S. Senate who have been vocally opposed to the proposed bailout hail from Southern states where foreign auto companies have their U.S. factories.
“I’m really dismayed by this vitriolic opposition to the American auto industry,” Segal said. “Not least by those who stand to gain if Japanese cars had fewer American rivals, or less American competition.”
Under a microscope
Ron Mahar, the general manager of Blueberry Ford and Cranberry Motors in Machias, said that he’s down about 20 percent in sales this year – and that he has been paying close attention to what’s happening in Washington.
“We’re watching that under a microscope, like anyone,” Mahar said.
He and Thornton both said they were very concerned about the tight national credit market – and Mahar didn’t know whether the loans would help loosen things up.
“We are experiencing a downturn in business,” Mahar said. “We’re finding that banks are tightening up their requirements for loans. People with great credit, they’re even looking at those harder than they ever did … and people who were marginal are just not getting approved.”
Ron Russell, the Darling’s director of Bangor operations, said he is “ambivalent” about the bailout and personally believes that the government could help his industry more by stabilizing fuel prices.
“I didn’t see a whole lot that would affect us,” he said of the proposed bailout. “I think it would be easier for the car companies if they did get it, and keep going.”
Russell, who sells both foreign and domestic autos from the Bangor Darling’s dealerships, said cars and trucks made by the Big Three get bad publicity, but that they are quite close to foreign-made autos in terms of quality.
“They really are making pretty good cars,” he said of the Big Three. “I think that Detroit’s gotten a little bit of a bad deal on this.”
Tom Wheeler, the sales manager at Morrison Chevrolet in Ellsworth, agreed that the American-made vehicles often have better quality than they are given credit for.
“The vehicles are lasting much longer. I think it’s a great thing – but it’s also going to cut into sales,” Wheeler said.
He remembered an unusual trade-in brought by a Bucksport man last summer: a pickup truck with an unbelievable-sounding 625,000 miles on its odometer.
“The truck was in fantastic shape,” he said.
Wheeler said his sales have been declining steadily since 2007.
“I’m a constant optimist. I think things are going to get better,” he said. “But if the Big Three went away, it would be just disastrous.”