‘I can only imagine that the overseas corporations are lining up to eat the fat from the trough of opportunity that the (U.S. automakers’) loan package will provide them.’
— Councilman James Flynn
By BROOKE STEVENSON
Sunday Times Newspapers
ALLEN PARK — Several suggestions for the Big Three automotive industries were expressed during a recent City Council meeting.
Members recently passed a resolution to support the carmakers brought by Councilman Francesco Tucci. He believes the success of Chrysler, General Motors and Ford are vital to Michigan’s economy.
His resolution, which calls for reinstating a trade allowance program in Michigan, will be sent to Gov. Jennifer Granholm, state Sen. Raymond Basham (D-Taylor), state Reps. Edward Clemente (D-Lincoln Park) and Robert Constan (D-Dearborn Heights) and the Downriver Community Conference.
A trade allowance program is a discount provided by retailers in order to stimulate sales by lowering retail prices.
“There are 40 states that offer this program, including Alabama, in which (U.S.) Sen. (Richard) Shelby (R-Ala.) was against us,” Tucci said. “This is to inspire auto sales.
“You trade in a vehicle for $3,000, they give you the value of your vehicle trade-in, you’re buying a new vehicle for $10,000, so they deduct the $3,000 and only tax the $7,000 difference figure.”
Michigan had a trade allowance program until Feb. 1, 1985, when it was discontinued.
“I think this program should be reinstated,” Tucci said. “Every little bit will help our automotive industries survive.”
The resolution asks the state to consider reducing the sales and use tax from 6 percent to 3 percent for 12 months on transactions involving new purchases of the carmakers’ core automotive products in order to boost ailing sales.
“The Big Three automotive industries and the UAW are challenged with the toughest economic times for survival in their history,” Tucci said. “Sales have plummeted 30 to 53 percent following the downturn in the economy.
“So many conduits come off of our automotive industry in this state. We need to understand that is is the nucleus of success in the state.”
Councilman James Flynn, who works at a car dealership in Dearborn, offered suggestions for the industry based on personal experience.
“A customer of mine came to me to turn a lease vehicle in last week,” Flynn said. “He basically said to me, ‘Hey, I can’t do anything else, I can’t renew my lease and I can’t buy a new car.’
“That was disturbing to me.”
In a letter addressed to U.S. Sen. Carl Levin (D-Mich.) and U.S. Reps. John Dingell (D-Dearborn) and John Conyers (D-Detroit), Flynn voiced his concerns over the federal loan package to the automakers.
“As a taxpayer and an individual with a vested interest in the success of the American automotive industry, I’m concerned with the accountability involved with the loan package,” Flynn said. “We are supporting companies that continue to send more and more jobs overseas.”
His everyday experience has led him to believe the Big Three are cutting jobs here while looking for large overseas vendors.
“The politically correct word for this is, of course, globalization,” he said. “The definition of globalization at this point in our economic history is, stick it to the American worker and taxpayer — all in one broad stroke.
“I can only imagine that the overseas corporations are lining up to eat the fat from the trough of opportunity that the loan package will provide them.”
Domestic automakers received a $17 billion loan from the federal Troubled Assets Relief Program but have not yet received the entire amount.
Because of that status, Flynn strongly urged Congress before distributing the rest to restrict the number of overseas vendors to which American automotive companies can outsource.
“Call center employees in New Delhi, India, do not buy American cars or pay taxes in the United States,” he said, “and as a result do not contribute from where loan packing funding comes from.”
He believes American corporations are morally responsible for employing as many Americans as possible.
“If they want the benefit of a loan, they should have the responsibility of employing Americans or at least outsourcing to Americans,” Flynn said. “The people that are actually here in this country and have a potential to buy their product.
“Without this direction the American automotive industry is doomed.”
Flynn wrote a similar letter in November to state government officials. Their response?
“I got a form letter,” he said, “I’m hoping this particular dialogue will get us more than a form letter.”