The New Economy meltdown may have a silver lining for industrial giants in the Rustbelt. Automobile industry executives gathered here for the 2001 North American International Auto Show say that the "dot-bomb" effect -- battered stock prices, sluggish sales growth, and deteriorating worker morale in the technology sector -- may work to the Old Economy's advantage. For example, they say that the tech sector's ills have made it easier to recruit and retain workers -- the same folks who last year were eager to jump ship in hopes of landing millions of dollars worth of stock options. They also say that the depressed stock prices of many tech companies make the start-ups ripe for acquisitions. By contrast, many relatively small start-ups in the late 1990s debuted on Wall Street with larger market capitalisations than 100-year-old industrial behemoths. "We don't like to see misfortune for anybody," said Mark Hogan, group vice president for eGM, the e-commerce wing of the world's largest automaker. "But potential partners have become more attractive to us financially... It has become a buyer's market." Hogan would not say which companies GM is angling to acquire, but he said that the automaker is especially interested in companies in the wireless sector and any company that already has a high profile with GM customers or car buyers in general. He said GM would be interested, for example, in partial or complete ownership of any popular automobile buying site. "Rather than us developing the code," Hogan said, "we could simply take their technology suite." Hogan and other executives were also eager to note that the tech sector collapse has stanched the torrent of Old Economy workers defecting to the New Economy. GM and Ford Motor executives said that they have each experienced a surge in the number of so-called boomerang workers -- those who jumped ship, worked elsewhere for a short period of time, and returned to their original employers. On Monday, the Old Economy boomerang club got another high-profile member; Joseph Galli, who left e-tailing giant Amazon.com six months ago for the top spot at business-to-business company VerticalNet, announced he had joined old-line consumer products giant Newell Rubbermaid as its new chief executive officer. Galli left VerticalNet as the booming market for online trading exchanges has been bogged down by an overall market shakeout and growing scepticism over investing in Internet-related companies. To be sure, now is not the best time for Detroit automakers to engage in a buying or hiring spree; in fact, many are embarking on severe cost-cutting measures and radical plant closures. By many counts, the auto industry is facing even leaner times than the technology industry. Automobile sales are typically dented more severely than those for any other consumer good if the nation enters a recession. The slowdown is palpable at the Detroit auto show, one of the largest industry events in the world. Executives are supposed to be awash in klieg lights and fake fog, touting more than 50 new concept cars and production vehicles. Last year, GM and Ford took pains to outdo each other by announcing a string of e-commerce initiatives, from partnerships with America Online and Yahoo! to online exchanges that eventually culminated in the formation of the industry portal Covisint. But the overriding issue for everyone at this year's four-day media preview is the ailing economy and how it will ding the nation's largest industrial employer. Auto industry analysts predict that Americans will purchase roughly 16 million vehicles in 2001, down about 8 percent from a record 17.4 million vehicles in 2000. The decline will likely be the largest in a decade, and the most bearish analysts are forecasting sales as low as 13.8 million. GM, Ford, and DaimlerChrysler have all idled plants in the past month. GM announced Monday that it will build 1.2 million cars and trucks in the first three months of the year, down 21 percent from the same period last year. The Chrysler division of Germany's DaimlerChrysler cut first-quarter production by 26 percent, and Ford expects to slash production in the first three quarters of 2001 by 17 percent. The gloomy situation parallels a rapid deterioration in the technology sector, which has been hammered by a scourge of woes: sluggish demand for PCs, a dried-up market for initial public offerings, belt-tightening at venture capital firms, and a rash of layoffs at e-commerce companies. Despite the fact that both the auto industry and the tech sector are haemorrhaging, Detroit executives -- long accustomed to severe boom-and-bust cycles -- see a bright side. Many are optimistic that the current economic slowdown may not be as painful as others because the Old Economy has slimmed down thanks to New Economy innovations. "The New Economy built tools that will really enable the Old Economy to become more efficient," said Gary Diltz, head of e-commerce initiatives at DaimlerChrysler. Compared with tech execs, it's a bit easier for auto industry titans to be nonchalant about a downturn. Unlike start-ups and tech companies, most automakers rely on cash reserves instead of market capital to fund new ventures and insulate themselves in case of a slowdown. Automakers are also eager to capitalise on the New Economy by finding new revenue streams to supplant their core income from the sale of cars and trucks. GM executives outlined a sweeping strategy Monday that might enable the automaker to become a lucrative application service provider, possibly charging corporate clients for hosting expensive and complicated software and processes. Executives say the market collapse has not hampered funding at Covisint, an automotive virtual mall that could eventually link automakers with 30,000 suppliers. If it achieves its founders' goals, the venture would become world's largest Internet business. "The bust in the capital market hasn't impacted us at all," said Brian Kelley, a Covisint board member who is also in charge of Ford's e-commerce initiatives. "The biggest ironic twist in the 2000 (market collapse) is that we've learned that the New Economy will come to be defined by the Old Economy companies' applying technology and digitising processes. That's the new game." Find out how the Internet is revolutionising the economy at the E-commerce Special. 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