November 4, 2005

Michigan Gov. warns of “emergency” in manufacturing

By Tom Brown

DETROIT (Reuters) - The U.S. manufacturing sector, and
domestic automakers in particular, desperately need help easing
health-care costs and other burdens to ensure their viability,
Michigan Gov. Jennifer Granholm said on Friday.

"We're facing a Category 5 economic hurricane," the
Democratic governor told Reuters, when asked about the plight
of struggling U.S. automakers.

"This is an emergency," she said, adding that the
administration of President George W. Bush can ill-afford to
deal with it the same way it did Hurricane Katrina and its
impact on New Orleans and the U.S. Gulf coast.

Granholm spoke in an interview after asking Bush, in a
letter earlier this week, to convene a meeting of his economic
team, industry officials, labor leaders and members of Congress
aimed at urgently mapping out a strategy to address the many
problems facing U.S. manufacturers and companies like General
Motors Corp..

The problems have been years in the making and fatalistic
talk about the need to address them has been heard before. But
Granholm said last month's Chapter 11 bankruptcy filing by
Michigan-based Delphi Corp., the largest U.S. auto parts
supplier, triggered alarm bells.

"Obviously, we're all reeling from Delphi's bankruptcy,"
she said. "Delphi is like the canary in the coal mine."

She was referring the high costs of labor, pensions and
health-care obligations that Delphi cited when declaring
bankruptcy. Those are the same so-called legacy costs with
which that GM and Ford Motor Co. are struggling.

The biggest issue hurting the competitiveness of U.S.
automakers and other manufacturers is health-care costs and
federal, or legislative action, is needed to address them,
Granholm said,

At the very least, the government will have to come up with
some way of easing the catastrophic health-care coverage burden
faced by companies like GM, she added.

"I know that every single automaker would very much support
a catastrophic reinsurance pool that would help them with the
most expensive aspect of their health care," she said.

Additionally, she said there was a need for sweeping
pension reform measures and for a more level playing ground
when it comes to international trade and issues such as
currency manipulation.

"We negotiate trade agreements and yet we do not enforce
them," the Canadian-born governor said. "There are export
markets that are blocked by trade barriers that need to be
unblocked. We need to have an aggressive effort at

Granholm said she was not calling for a
government-sponsored bailout of GM or Ford. But she said
Michigan alone had lost 200,000 manufacturing jobs over the
last five years and that a bipartisan consensus was urgently
needed to get Bush to help shore up America's industrial

"The president needs to understand how critical it is, not
just for Michigan, but for all these manufacturing states," she

"We need him to have a very real perspective on this
de-industrialization problem and the sucking of the middle
class away from America."

Granholm said she had not yet received any response to her
letter to Bush. But a similar letter was sent last month by
Sen. Hillary Clinton, the New York Democrat, and Granholm said
she had no doubt that a positive answer would be forthcoming.

"The White House has to participate," Granholm said. "We
need to have this, not just on the president's radar, but on
his agenda for action so that we can provide relief to workers,
competitiveness to businesses and economic growth for our