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Civil War Brewing Over Autos Bailout

Here's an intriguing sub-plot to the $25 billion in government loans being sought by Detroit automakers: opposition from Dixie.

GM, Ford and Chrysler are based in Detroit and are in real danger of going under unless they get the cash, they argue.

But South Carolina has a BMW plant. Mississippi has Toyota, Alabama has Mercedes-Benz, Hyundai and Honda.

The governor of Georgia is now driving a Kia SUV because that company plans to build a big plant there.

Even though the decline in auto sales is global -- even Toyota's sales are dropping -- the foreign automakers located in the American South are doing much better than their Detroit rivals. The South's advantage: Many states are "right to work," or non-union, bringing down labor and benefits costs.

Few foreign automakers are falling over each other to site a new U.S. plant in a union state. Though, to be fair, the United Auto Workers gave significant concessions in its most recent contract with automakers.

Lawmakers from the South are wondering why the U.S. government should give a bailout to Detroit and save Michigan's economy, which would rightly anger the foreign automakers doing business in their states.

"Let's face it, who would want to come over here and put their investment into this country if they knew the government was going to be subsidizing their competitors?" South Carolina Gov. Mark Sanford told the Associated Press. "It's just not right. It just goes against the grain of the free-enterprise system."

One of the loudest critics of a Detroit bailout has been Sen. Richard Shelby (R-Ala.), the ranking member of the Senate Banking committee.

So, while the constituency of Michigan lawmakers is based largely in Michigan, a powerful constituency of Southern governors and lawmakers resides in Tokyo, Munich and Seoul.

-- Frank Ahrens

The Ticker is Twittering!

By Frank Ahrens  |  November 19, 2008; 1:26 PM ET
Categories:  The Ticker  | Tags: Detroit bailout, automakers  
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Comments

Is everyone aware that the State of Georgia has given Kia a "bailout" of over $258 million to build their plant in Georgia? This money doesn't have to be repaid to anyone.

And that doesn't count tax abatements.

Posted by: RichK1 | November 19, 2008 8:27 PM | Report abuse

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