Enlisting Detroit for Operation Consumer Confidence
Even before the Sept. 11 terrorist attacks in New York and Washington, the economy was teetering on the brink of a recession. Almost nothing -- not a $300 per taxpayer rebate from President Bush nor a succession of seven interest rate cuts by the Federal Reserve -- has been enough to change that. With last week's tragic events fanning the uncertainty, the White House is out prodding American industry to do what it can to boost confidence.
The message: When it comes to the economy, we're on the case. That's why on Sept. 19 Commerce Secretary Don Evans and Labor Secretary Elaine Chao stopped in Detroit on their tour of American's industrial captains. They're out to reassure business leaders that the economy has staying power and that Washington is working to keep it strong. On their latest stop, Evans and Chao met at a General Motors Cadillac and Buick assembly plant in Detroit to brainstorm with several top-ranking executives from big auto and steel companies and leaders from the nation's largest labor unions.
The two Cabinet members drew an unprecedented crowd of corporate titans and labor leaders. The 14-person list included GM CEO G. Richard Wagoner Jr., Ford Motor Chairman William C. Ford Jr., Chrysler Group President and CEO Dieter Zetsche, United Auto Workers President Stephen Yokich and AFL-CIO President John Sweeney. Said Yokich: "I've never seen a meeting like this, and I've been around a while."
DON'T THINK TWICE.
The high-powered confab towers as a sign that the nation's power brokers are bound at the hip when it comes to keeping the economy moving after Sept. 11's tragedies. All of the leaders expressed great concern over the confidence of American consumers when feelings of national security are perhaps the weakest since World War II. Said Secretary Evans: "It's as much internal security as it is economic security."
One point was certain: Auto industry leaders must be careful not to stir up any panic about the economy. Sending the wrong signals could cause would-be car buyers to think twice about getting a new set of wheels. And that would have dire implications for the delicate economy.
DaimlerChrysler's Zetsche cautioned other industrial leaders not to rashly shutter plants or furlough workers. "It is our responsibility to try to do whatever we can to contribute to stability," Zetsche said. "It's important that we not overreact and not try to preempt demand shortfalls with production cuts."
Not every executive is tip-toeing around the sensitivities of consumers. Last week, Ford announced it would whack vehicle production by 13% in the wake of the terrorist strikes. The cutbacks reflect expectations that U.S. car and light-truck sales will fall by 1 million or more units this year from last year's record 17.4 million. "There is general unease out there in the marketplace," said Chairman Ford. "Obviously, to drive production into the face of low demand, at some point, it catches up to you."
That's why all of the auto makers are trying to push demand. At the Detroit meeting, GM's Wagoner said his marketing staff is "watching sales on a daily basis. We're looking at what [sales strategies] we think will be most effective." Indeed, GM has already decided to pump up incentive spending to get sales moving again. Starting Sept. 20 and ending Oct. 31, GM is offering interest-free financing on purchases of 2001 model cars and low-rate financing for purchases of 2002 model cars and 2001 and 2002 model trucks. GM dubbed the sales campagn "Keep America Rolling" and said it's part of its effort to push the economy as consumer confidence wanes and sales slip.
It could be, however, that the only thing that will bring back brisk business is real stability.
By David Welch in Detroit
Edited by Thane Peterson
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