The Dying Auto Industry: Should We Save It?
While we’ve all been distracted by the election, the American auto companies (and, to a lesser extent, the auto industry more generally) has been brought to the edge of collapse. I’m going to do a few posts on why that happened (CW oversimplifies the issue dramatically), what to do about it, and–in this post–whether we should save it.
Why to Save It: To Salvage Our Non-Financial Economy
Different people have different reasons to argue for saving the Big Two and a Half. Some people talk about nationalism, some people talk about the sheer number of jobs tied to the auto industry. But the most compelling reason, IMO to save the US-owned auto industry, is to reverse the trend toward an increasingly financial-based economy.
Kevin Phillips, among others, has written a lot about how unstable economies become as they become more and more dependent on the house of cards of financial-driven economics. We have seen about the risks of such a shift in the last few months and years. Our economy has been largely built on consumer spending driven by credit card debt and the housing industry–and by the "profits" of real estate-related debt (and, in the auto industry, more debt-driven spending as I’ll explain later). But that growth was largely illusory and largely reliant on the goodwill of other nations to the dollar economy.
Our economy increasingly relied on finance (at the expense of agriculture and manufacturing and other productive industries) for several reasons: it’s what we did well, the developing world was increasingly competitive in other sectors, and our own government made conscious policy decisions that favored finance. You could say that even while manufacturing was disappearing because NAFTA and other policies our government adopted made us increasing uncompetitive, our government refused to let finance fail.
And look where that got us.
The biggest reason I can offer for salvaging the US auto industry is because, given the lessons of the financial meltdown, we need to return our economy to one that better balanced making stuff with financing stuff. Sure, we should have bailed out textiles before it all went overseas. We should have slowed the loss of electronics. But because we didn’t save those industries doesn’t mean we shouldn’t now–particularly given the lesson of the financial collapse–work to save what manufacturing we have left.
We need to save the auto industry because cars are one of the few things we make anymore–and we need to focus our economic recovery on the things we make rather than on the bubbles we finance.
One more point. This is a security issue as much as an economic issue. Granted, most of our defense related manufacturing is now done by other companies (and that’s a sector that’s booming). But in the same way that we should not become dependent on food production of other countries, we should not be dependent on other countries sharing the technologies developed within transportation industries.
But Are the American Auto Companies Really American?
The question is in whether the American auto companies are really American–and whether it isn’t enough to have viable manufacturing done by some company, regardless of whether that company is significantly American or not (that is, is it enough that the European and Japanese car companies have opened plants in the non-union south?).
First consider the reality about nation-based auto manufacturing. Both the US and the non-US sell a mix of US-assembled and foreign assembled cars in the US. With very few exceptions, though, foreign manufacturers’ US-assembled cars are not union-made. This has a difference in wages, but it has a bigger difference in legacy costs, which I’ll address in a later post. But one of the things you’re getting when you’re sustaining a US-owned auto industry is the history of unions fighting for decent healthcare and retirement benefits (and, if the US-owned auto companies failed, you’d have the government picking up some of those costs at the expense of taxpayers and some people going without the benefits they used to have).
I’ve been talking about US-assembled cars, because even if a car is put together by a UAW member, doesn’t mean that the brakes and wiring and lighting of those cars are union or US built. While developing nations have not yet taken a big role in vehicle design, they have gradually taken on much of the manufacture of parts. For more complex parts, companies often do the design and testing of a part in the US, but have the parts built in a Mexican or Asian factory. Also, we lost a lot of the high-skill tool and die manufacturing jobs when Bush fiddled with steel tariffs in his first term. In other words, while there are still a bunch of white collar jobs involved in parts production in the US, more and more of the blue collar jobs producing parts are going overseas.
And it’s also not like we’re building many cars in Detroit or Lordstown or Paducah and shipping those cars overseas. The US car companies are competitive overseas–in many key markets, they are maintaining or growing their market share, though rising gas prices and other inflation is slowing the growth of auto sales in these markets. For several years, GM and Ford had enough success in China and India and other developing nations to offset some of their losses here in the US. But cars sold in other larger markets (like India or China or the ASEAN markets or Brazil or Mexico or Argentina) are usually built in those markets or nearby cheap-labor countries with similar market needs. In spite of its doom and gloom, GM even opened a new plant in St. Petersburg today! From what I know (which is somewhat limited), the US manufacturers have ceded more control over vehicle development to those areas (though often short-sighted Americans are still too involved), so the number of jobs tied to overseas production–which has always been primarily white collar–is decreasing. But a lot of the design and branding of US vehicles is still done in either the US or western Europe.
So understand: while retaining US auto companies are important for sustaining a union-built manufacturing tradition in this country, so long as the US auto companies are competing against companies that have much lower legacy costs, and so long as US car companies lose market share here in the US, those union jobs will continue to disappear over time. The US auto companies are paradoxically healthier overseas (though they need to build more efficient cars to stay that way), but that supports primarily white collar workers here in the US, to the extent it does.
Should We Be Subsidizing Cars–or Human Transportation?
There’s one more question we should answer before we bail out the auto industry, though. Should we have the government invest in sustaining car manufacture in this country, or innovative and energy efficient human transportation?
Thus far, the US car companies have pitched their bailouts in two forms, primarily. The $25 billion in loans Congress has already provided is targeted to retooling plants to build more efficient cars.
The loan program was approved as part of a 2007 energy bill requiring vehicles to have an average fuel economy of 35 miles a gallon by 2020 — a 40% increase over the previous standard.
Auto makers and parts suppliers will use the loans to retool aging auto plants to make hybrids and other fuel-efficient vehicles.
The loans are expected to principally benefit Detroit’s Big Three auto makers — General Motors Corp., Ford Motor Co. and Chrysler LLC — who are struggling and stand to save hundreds of millions of dollars by borrowing at below-market interest rates.
This money–which right now will take up to 18 months to get in the hands of the auto makers (which will be way too late)–will almost certainly be tweaked during the lame duck session. But it is still, ostensibly at least, supposed to help auto makers become more competitive by helping them build more efficient cars.
Similarly, Obama has talked about larger sums to help the US auto industry develop battery technology and other efficiencies (he will face real opposition in targeting this just to US manufacturers, though). These two forms of bailout are about making the US manufacturers more competitive and making sure the US remains competitive in technologies that will have a long-term impact on both nation-wide competitiveness and Obama’s hoped energy-based growth.
Since the financial meltdown, the US manufacturers (particularly GM) are looking for a way to get money to bridge them through the period when tight credit dooms their business, as well as to have their finance arms (Ford Credit and GMAC–the latter of which has been partly spun off) to tap into easy credit made available to banks. In other words, they’re looking for the same support from the government to keep their credit-driven businesses flowing. Thus far, they’ve been unsuccessful making the argument they should be treated by banks, but one proximate cause of the imminent collapse of GM, at least, is the same credit crunch that is hurting the banks in this country.
Now, the efficiency-based support makes some sense–after all, investing in leading technology in the auto industry closely parallels investments in alternative energy. But I wonder whether we’re thinking of transportation in the right light. Americans dramatically decreased their driving miles when the price of gas skyrocketed this summer. The question is how? Did they commute more? Take public transportation? Cycle or walk places? While I think there is some argument for salvaging the US auto industry (and many people disagree), I think we need to pay just as much attention to the production of alternative paradigms for human transportation.
Disclosure: I spent five years doing consulting to one of the US auto companies, working primarily in Asia and dealers in the US. mr. emptywheel works for an non-US owned auto supplier. And I don’t drive an American car, having fallen in love with the Honda Fit while studying its competitors built in Europe.
Your disclaimer at the end says it all; if I had the $$, I wouldn’t even think about an American car. I agree that a healthy manufacturing sector is beneficial and desirable for our company, but wouldn’t the $$ be better spent on something that’s not such a dinosaur, such as alternative energy research? Also, the assets of the big 2.5 would certainly be attractive to an expanding Toyota or Honda which could likely use them more efficiently. As for nationalism being a primary consideration in making policy decisions, just remember with fondness such things as the Iraq war – things that “nationalism” has helped spur on in the last 8 years.
I’ll get to that in future posts, but there’s a lot of misperception about American cars. Toyota’s quality has declined such taht a number of American vehicles beat it out in the segment (Honda’s is better and Honda made better choices on where to put its hybrids and got lucky because of some competitive inability to keep pace, but that’s just a testament that the AMerican car companies have been suffering financial structural problems for some time.)
American MARKETING still sucks. Their pricing and packaging does too. Structural issues make them less valuable over time then they should be. And in some segments–such as the B-MAV that is a Fit–they don’t have quality competitors, because their futuring sucks.
There are a lot of reasons not to buy an American car. But there’s also a misperception about quality that doesn’t stand up to the actual data on reliability and functionality.
“American MARKETING still sucks. Their pricing and packaging does too. Structural issues make them less valuable over time then they should be. And in some segments–such as the B-MAV that is a Fit–they don’t have quality competitors, because their futuring sucks.”
I told them that in 1984. How appropriate the year (Former District Sales Manager for Oldsmobile) Then I quit.
And the District Sales Managers are still saying it. It’s one of the most intractable problems with teh American car compnies. I keep saying they’d do well to bring their best and brightest from around the world–who really are the best and brightest–and really integrate them into management in the US, bc it would really break them out of the whitebread culture they’ve got. I think I had more in common with some of the folks I met in S Africa, for example, than I do with your average GM white collar worker, and that S African would be better able to design cars that would work for entire crowds of people in the US.
I would like to thank JClausen, known to me as “Claus” for not mentioning that he and I were in law school together when he left to go to Oldsmobile. At the time, we were discussing it, and I told him it looked like a fantastic opportunity. I am surprised he doesn’t want to string me up! On the bright side, being a lawyer ain’t all it’s cracked up to be either, so he really probably came out ahead by far in the end.
That is quite true and, in fact, Detroit has been closing fast for a while. But, the design, execution, ergonomic layout, handling and simple driving “feel” and are still lagging seriously. Big time. Take our best, not average, but best, say for instance a Cadillac STS or CTX, or the new Lincoln Mark and drive and compare it side by side with the equivalent BMW 5 and 3 series. Reliability and functionality may be equal, heck maybe better for the Yank wheels; yet there is still no comparison. The American car will relative to the German lurch around corners, feel like a tank, and just flat not feel as refined.
And DeadLast @7, I agree. We are losing our critical and cross domain thinking ability. Turning into self important, selfish, entitled hedonistic druids. Not that I have anything against hedonism, but that has to be the icing reward for having done the job of making the cake. We are losing that.
Honda fit is something new. We’ve got a ‘92 Accord and ‘97 Civic. The dealership we take them to for service just layed off staff, causing a rescheduling of work we were planning to have done. A year ago, August, I was asking our service advisor if they had felt any of the effects of the credit crunch. He was confident that people would always need a car and to have a car serviced. A year later, the shock is starting to affect their business.
All heavy industry should be encouraged, if not on a large scale, in some way. The inflationary policy of the Fed is the main culprit behind the drop in long-term capital investment required to support industry. Warehousing parts doesn’t cut it. Making the parts and the machines that make the parts does. Those industries should be restored with appropriate adjustments to Fed philosophy for starters. It’s not happening as long as things continue the way they have been in finance.
I have mixed emotions. I drive a 16 year old Ford Escort that was built in Hermosilla, Mexico. I have cousins who work at Toyota in Georgetown, KY.
I understand what you say about the wages being non-union at Toyota yet the car I drive, purportedly an “American” brand, provided benefits mainly to a few families in Grosse Point, MI. The Toyota’s provide a lot of jobs around my hometown.
More and better Mass Transit I guess.
Yup–that’s part of the reason why I posed this as a question. Is it enough to have successful Toyota factories in lieu of successful unionized GM factories? I don’t think the answer to that is simple.
If this is about transportation, I would have to agree also that passenger railroads should be built back up.
One big problem with the financial sector is the lack of rationality of the practitioners. Yes, the finance people are “rational” in the sense of myopic economic self-interest, but they are somewhat out of touch from the physical world. Everything is about “efficiency” — which does not allow much room for “humanity”.
I have worked for big accounting and consulting firms, and I have to say most of my current and former coworkers have very little understanding of how to make or fix things. As a nation, we are not only exporting our manufacturing base and jobs, we losing the human capital, the knowledge and experience, of how engage physically and mentally with the space around us. Maybe I am lamenting my own separation (which I am), but when books come out on “Nature Deficit Disorder“, part of that has to do with the fact we don’t build or fix anything for ourselves anymore. And when the manufacturing jobs go, we are that much further removed.
It’s a calculation based on the inflationary policy of the Fed. The trend in the trade of governments has drifted toward the shorter term, e.g. This is an indicator of the overall investment environment in this country. It has decimated heavy manufacturing.
You are advocating a shift in thinking. Be patient.
EW,
Thanks for this very important and very thoughtful piece. There were no responses when I started reading, but by the time I finish writing this there surely will be a number, so I’m not trying to be first.
The auto industry is the iconic American Industry, from Henry Ford’s mass production techniques to the famous claim (in the 1950s?), “What’s good for General Motors is good for the country.”
First, you are right to ask whether it is in our best interests to allow so much of our economy to be dominated by the financial sector, and you are right to doubt that the answer is “yes.” Compare, for example, the end of the British Empire and what happened to their economy. Their worldwide empire certainly provided a basis for a financial emphasis, but that direction has proven limited.
Second, you are right to wonder what kind of manufacturing industries (”making stuff,” as you so eloquently put it) would serve us best in the long run. How much should we invest in an industry that might soon be outmoded? What other forms might “human transportation” take, and from an ecological point of view, what other forms should it take?
I think you did miss one major industrial sector that rivals the auto industry, however: the military-industrial complex that Ike warned us about. People don’t talk about it much, but we are the primary arms dealer for the world. We make most of the best instruments of death and destruction in the world. Whoopee. (NOT).
I think Al Gore has the right idea: Invest in transforming the American Industrial system into the world’s best environment-friendly technology: First, for energy production, and second for energy-efficient devices of all kinds.
How do cars fit into all of this?
First, will America persist in its love affair with individualized personal transportation machines (such as cars), or is public transportation a better bet for the human transportation system of the future? I suspect that it will be another generation before the balance between public and private transportation shifts. In the meanwhile, environmentally friendly, energy efficient personal vehicles (i.e., cars) are the short term solution. If we opt to “save” the auto industry, it should carry the price of demanding that it adapt to 21st Century needs for energy efficiency and environmental friendliness. Let’s show the world that we can be a leader again.
Finally, you raise the broader question of whither the American Labor market? Do we need a labor force that can make stuff? and what kinds of stuff should we be making? Rather than continuing to focus on making bigger and better gasoline powered engines for cars, buses, airplanes and tanks, maybe we should create a system favoring more innovation and creativity.
Finally #2, I think its time to bring back the anti-trust system. Bigger is not always better. What it seems to get for us is systems that are “too big to fail,” and require expensive bail-outs. The answer to the current financial crisis that some people are offering is that Banks aren’t big enough: the “strong” ones should buy up smaller problem banks. In fact, it is rumored that some big banks want to use their bailout money to buy more banks. There is too much consolidation! We ought instead to be thinking of how to break up these giants– so that if they fail, they don’t take down the whole economy with them, or worse yet, use possible failure as a way to con the Government into providing more billions in bailout money.
Anyway, thanks for a very thought-provoking piece that deserves to be spotlighted!
Bob in HI
Bob
Great comments all around.
I agree with you about the MIC–it’s a point I just made to Ian elsewhere. Right now the MIC is the govt’s way to stimulate the economy and keep some kind of mfg alive. Of course, that comes with teh price of fostering war around the world. We need to find a way to channel a lot of that money into other govt stimulus that serves the common good.
Your point about monopolies is important too. Thankfully, the Chrysler GM deal hasn’t gone through yet. If it does, it’ll contribute to the price wars that American car compnies engage in, which brings down teh value of their cars, which has more problems elsewhere. And it won’t bring much in terms of innovation.
One gripe I have with Obama’s planned stimulus for the auto industry–at least as I understand it–is that it will go to the big three, rather than to a research institute in MI. While it was hokey, at least McCain’s contest for battery technology would have fostered innovation in start-ups.
And your estimate for a generation away from weaning Americans off cars might be right–with the proper planning. If so, though, we ought to make sure the car companies start diversifying now–developing technologies taht will be applciable elsewhere–so we don’t go through this again in 20 years, if they’re still around.
Thanks for the kind words, EW. You wrote,
Why not bundle the stimulus in the form of innovation grants that the car companies (and others) can apply for, to develop the kinds of technologies that are needed? We’d need to be careful here about copyright issues, however, and we wouldn’t want to make it easy for anyone to get the grant and then just sit on it, to prevent others from developing similar technologies. I’m trying to think of a good model for a copyright/implementation combination for a new technology that worked well, but I can’t think of one off hand.
Bob in HI
Urgent as it is – as it HAS BEEN for years now – investment in addressing environmental collapse is a component – a “thing”, to adopt ms ew’s syntax – of a larger theme that is – & IMO it’s high time should be recognized as being – the ultimate expression of the “American dream” of equal opportunity – a.k.a. the “redistribution” bogey man Wingers tried to hang on p-e Obama in the last few days before the election.
In an effort to illustrate, I will try to start small: Take an auto worker living in a town in Michigan who can make $50 an hour [The numbers aren’t that import; it’s their relationship.], due to hot markets, real or perceived, for product. Then take a pre-school or early school-age child care worker in the same town, who if she can find a job will have to settle for $5 an hour.
Yet it’s largely impossible to determine that even a highly trained and skilled auto worker has a more demanding job than a child care worker, and if argument were attempted it might very well settle in favor of the child care worker’s job being more so.
Some would say: well, you included the main cause – the free market spoke.
But then it must be because the unregulated free market is speaking with the forked tongue on the issue of EQUALITY: if that auto worker is unable to find someone to take care of his pre-schoolers, a prudent legal and regulatory regime would not allow him to take any job outside the home. His very ability to take that job that pays him so well is being subsidized by the child care worker.
That economic injustice can be – SHOULD be – addressed in government policies & regulations, and in legislation from Congress [I’m thinking now of Teddy Kennedy’s most recent, hopefully not last, great speech on the floor of the Senate, in favor of the minimum wage hike.].
Now I’ll try to take this macro on a current [and due to the outcome Tuesday very hot] issue: NAFTA.
First, consider that in a number of industries, notably the vehicle manufacturing industry, there were regimes in place between the US and Canada to accommodate both ground facts, including among many other facts, the location of educated/educatable, trained/trainable & motivated/motivable workers, and at least as importantly the rough sense of what competitive equality in what employment should stand for. Not surprisingly, the realities that led to the Auto Pact were carried over into the NAFTA both in treaty form and in the form in which the respective affected countries turned the treaty into law – and thus the US-Canada Auto Pact, while it still has some problems, is the single clearest, least disputatious aspect of the NAFTA. That part treats Mexico differently, for reasons, I would argue, that go deeper than merely the ready supply of such workers, i.e. into the roughly parallel histories in the US and Canada of unions, auto worker unions in particular.
I don’t have any pull or inside info on this front, but I think that when the Obama administration gets to dealing with NAFTA, it will take a very different attitude toward Canada than toward Mexico in dealing with problems, overall because of the closer approximation in social values that are had by the US and Canada versus those had by the US and Mexico.
[I say that granting the current Canadian government does not seem to have expressed those values the US has identified with Canada for most of the period since WWII – yet on the assumption that even a Winger Canadian government is unlikely to feel more out of touch with an Obama administration than with a Bush administration. I could be way off base on this, but I’d be pleased to be informed so.]
I want to distinguish this from the Bush administration’s policy of exporting democracy [which was really the Bush so-called administration’s policy of exporting so-called democracy to effect regime change], but I really think the Obama administration would do best to follow an over-riding policy, whether or not one wishes to call it ideological, of shining a beacon of equal treatment under law, in the context of fixing in place a market-driven economy with meaningful policy and regulatory INCENTIVES as well as necessary restraints.
Among many other advantages to pursuing such a model, particularly in contrast with the Bush “invade & attack to impose democracy but really to impose regime change” model, is that it stays entirely within US borders and the reach of US law, and thus INFLUENCES rather than imposes change – and since the US is, and will continue to be, very much a consumer-purchase driven economy overall, it would end up leading manufacturers in other countries, especially those with some meaningul level of choice in the matter, towards greater job equality [and along the way greater equalities in terms of gender, and sexual orientiation, and even religious and other first amendment expression].
Such foreign manufacturers would have to adjust, or else lose the right to compete. And meanwhile local, regional and national manufacturing in the US, which presumably would have less in the way of social and legal context adjustments to make, would have a big head start.
I’m tempted to suggest we should really be re-convening that thread from some months back about how administrative law, regulations, operate on the social fabric.
The MIC is a pathological consequence of fiscal policy that has prevailed from the time of Woodrow Wilson.
Sure. If they can convert their shops to producing high speed light rail, why not?
In the near term (5 years) all three American auto maker’s must be saved. Not to do so would allow an additional 2-3 million jobs to disappear in 2009. This would rival Hoover’s response to his banking crisis for idiotic economic policy – with the same results. However, the resulting 21st Century depression would provide alternative transportation – walking.
When Congress was struggling over the wisdom of the original Chrysler bailout, they ordered a study to find out which districts would be affected by Chrysler’s failure. The bailout was remarkably bi-partisan when the research determined each and every congressional district would suffer. Greatly.
Get them through 2009. God knows they’ll be lean enough then. As will we all. We can worry about new “transportation paradigms” after we work out of this recession. Right now we don’t have time to redesign, retool, and re-market a completely new and different transportation system. Not going to happen in time to help us now.
Your main point – spreading investment and risk through many sectors rather than few – is the correct one. And investing in the auto industry, the manufacturing sector, is a necessary first step to creating a better national economy.
One thing no one is talking about is dealers–who are omnipresent, deep into debt, and some of the leading employers in a lot of communities.
The car companies are really going to need to rethink their dealer relationships–it’s one of the things that really prevents certain kinds of innovations–but they need to do that gradually.
Just look at the Lincoln-Mercury brand. It was five years ago already, but only two lines were selling. The Town Car(for old folks .. I am not kidding) and the Navigator(for the rich soccer moms .. before gas became a problem). The way their dealer agreements work is a mess. Ford basically had to buy out a lot of L-M dealers because that line was selling peanuts and so there were too many L-M dealers. They basically bought out a lot of the sole L-M dealers instead of garner the bad pub letting them go belly up would have. The car companies are using a dying business model. While I agree that the car companies(at least GM and Ford) have to be saved for now, I do wonder if they’ll survive over the long haul. Is the government going to give them $100 billion each to get through the next 5 years? Will part of the package be nationalization? Firing idiots like Rick Waggoner(sp?)?
The dealers are also not advertising. This is hurting our local TV stations that bring local stories, weather and sports.
Yes, advertising firms are also crippled by this.
Used to be NFL football was wall-to-wall car/truck commercials. Now it’s car insurance.
This is kind of OT, but I expect advertising is going to get cut back so far in the recession that we’re going to have to find (or, to put it differently, have an opportunity to propose) a different way of paying for tv.
I completely agree.
um
i hate to bother here, i’m trying to learn, but what’s “The Big Two and a Half”? i tried to find that out my own self without bothering the discussion, but,
well,
failed.
GM and Ford are the two and Chrysler is the half since they aren’t doing so well and GM almost bought them – maybe still will
They used to be the Big Three
omg,
thank you so much!
feelin’ el blondo here
i’ll be quiet now and just keep learning.
Sorry–it was a bit of a joke. Chrysler is a shell of its former self, after the Daimler merger than divorce. So I was counting it as a half.
so what, literally then, is the 2 1/2 thing?
sheeeeeesh
i love the funny stuff, but i’m trying to get this here and now.
lol
ty
Ford, GM and the shell that was Chrysler = 2 and 1/2 automakers. Chrysler being the half.
They had a chance. They were shown the way. And they pissed all over it especially GM. The auto industry and CARB (California Air Resources Board) blew it, especially former Chairman Alan Loyd; but they’re still giving Detroit anything they want. to. this. day.
Rational people don’t want big clunky monster truck SUV’s
Who Killed the Electric car (google video)
more
http://www.ev1.org/
Jesus Christ, can we make it through ONE discussion of the auto industry without bringing up that crockumentary? Seeing that one guy rant about GM and his assorted conspiracy theories was enough to damage my view on electric cars. And the director of that crockumentary is warming up to the Chevrolet Volt plug-in hybrid, so that line of attack is no longer valid.
look, the auto industry here didn’t market the technology that would have saved itself
with the proper marketing, nobody would even want to own an explosion vehicle anymore, electric cars are faster, quieter, less maintenance.
as far as the infrastructure, that would also create jobs, just like we built the roads and tunnels when we needed to build the middle class
by the way, the best system I can think of is a fuel cartridge
pull into a station, the station can read how much charge is left and the quality of the cartridge, it is swapped at the proper rate considering charge left, recharges left, etc
anyway, the industry put it’s money behind the oil men in power and that was a big mistake
no worries, they can fix the mistake now
and they have to
One of the reasons for that, though, is its sales structure.
I said this upthread–to make a more innovative industry, the auto companies are going to have to change how they sell cars. But that’s thousands and thousands of jobs, all over the country, that will be shifted or lost.
I don’t understand why the salse industry would suffer, I do understand why the maintenance industry would though
in any event, jobs are created and that’s what we need
here’s a point;
paulson asked the fed to print billions of dollars so he could give that money to banks and they would then lend that money to us
what do we get out of that?
more investment industry that’s what, whatever product we get from that investment is marginal
on the other hand, if we used that same printed money and created infrastructure, refueling stations, research, development, etc, then we would actually have something for those dollars that was printed
and as your post points out, we would invest in making stuff here and producing an actual product
Heck… they didn’t even lend the money… they didn’t have to… they paid off their debts and give some to shareholders so they didn’t flee and leave them completely without capitalization.
What a fucked up biz model them there wall streeters and banks have.
You can’t separate sales from service for dealerships. The profit model for dealerships depends on using sales to set up service relations with customers–dealers don’t make enough off of sales to cover their costs and the margins are much higher on service.
So in other words, if you’re asking dealers to sell cars that come maintenance free, you’re asking them to do a freebie for you.
At the very least, you’ve got to change the compensation for the sale, which will add to the price of the car.
Marcy, you commented higher up that manufacturer relationships with their dealers need to change. I just have to wonder if those dealers are not victims of their own business dealings. Car buying has turned into such an emotional experience, and there have been so many ways that dealers have abused buyers…. I would rather have root canal surgery than go near another dealership! The economics of car buying should be simple but the dealerships do their best to complicate it.
Why not make better cars, with fewer associated costs such as the marketing and hype? If they make a good product, people WILL buy them. Stop trying to dictate style changes every year that do nothing but add to the retooling and design costs.
Maybe cars are just transportation to me and I just cannot see them as objects of style or class…
Trust me, the manufacturer-dealer relationships for the US manufacturers are the source of it. There are a lot of reasons for this–which I hope to go into. But that’s kind of my point–if the reality dictates that manufacturers treat dealers like shit and dealers in turn treat customers like rubes, it’s not helping anyone.
Got news for you on this. I grew up around dealerships, and the real profit center of big dealerships is service, maintenance and parts department. By a long measure too.
This is why EW is right about a whole paradigm shift top to bottom. It is not just the cars.
Big dealerships? Try any dealership. What do they call it in retail? A loss leader? That’s what selling cars is. Especially now. Why do you think service at a dealer is so much more expensive than say at a chain(like Goodyear stores .. at least in PA)?
You are dead on there. I said big dealerships because we were talking about Big Three autos, as opposed to used car dealerships, brokers etc., and there are still a few small rural dealerships that don’t have much space for the big service and parts gigs, but you are right. I know parts managers that have told me they could sell an entire Camaro by the individual parts, that was selling new in the adjacent showroom for $15,000, to someone ove rthe parts counter for like a $100,000 or something mind bogglingly insane like that.
Wasn’t part of the rational for Saturn Corp. the difference in its sales methodology?
Are we really talking about every GM dealer, for example, morphing into a Saturn-like dealer?
A person with that handle should have been joining us for the weekend Trash Talk Formula One discussions. Next season join up!
speakin of that
why not post a trash thread now
instead of trying to recruit F-1 fans on any old street corner …
(ducking and running)
I’ll be totally honest, I’m more of a NASCAR fan myself. Mock away!
Heh heh; okay, but we’re gonna need that handle back then.
Excepting Daytona, and the twin qualifiers, which I really like as a concept, I admit to not being much of a fan. But hey, we needle and get needled; it’s all good. That is why it is called Trash Talk. The F1 is my little sidelight that I threw in one day because, well, I could. I was watching qualifying for some GP when I was writing up that weeks Trash Talk and threw it in; turns out there a few other cognoscenti. But not a lot, it is mostly football. Stop on in, you are always welcome, and there are undoubtedly others that would be thrilled to talk left circles with you. By the way, the NASCAR good old boys and traveling road show is here in my city this weekend. They always bring in a lot o money, I’ll give them that.
Hi guy
You must be new, haven’t seen you comment before, welcome.
Bit of advice.
Most people here aren’t into name calling, so if you want to be taken seriously, facts are what people here are interested in. You made a few statements but I’m not seeing where you back it up. Usually what is involved is something like, “when I was involved in this industry and my experience is …” or “I’ve taken several classes in …” or “read this link where it says …”
I gave an tangible and not abstract suggestion. Only one suggestion, but still one which has been studied and reported on. I personally know people who leased the Ford electric pickup and who were very happy with said vehicle. Still it’s only one suggestion, I’m not asserting I have all or any answers, just one suggestion
You mention the Volt but don’t go further. What do you have to share on this topic other than negativity?
I look forward to your response
GM did a pretty good job by themselves – they weren’t selling the EV-1, only leasing it, and only to the high-income groups, as a status symbol.
When the hybrids came out, GM’s CEO (and others) spent a lot of time talking about how unnecessary they were, and how they wouldn’t sell well until gas prices were (I think they said $2/gallon, and gas was already that price in CA). They were so wrapped up in SUVs and full-size pickups and luxury cars that they missed a whole market.
The other thing is, that the big 2 1/2 tend to design their stuff with 6-ft tall guys in mind. If you’re short, you can’t drive one safely: you can’t reach the pedals without having your chest up against the steering wheel. I won’t even go into the Hummers and the supersized vehicles ….
There needs to be some serious soul searching done at the Big Three.
They have had the opportunity to do the right thing for forty years and have persisted in their “Bigger is Better” ways.
Even when forced by reality to sell more fuel efficient vehicles they have gone out of shop and partnered up with foreign manufacturers and just slapped their name on the product.
GM went with Toyota and Ford went with Mazda as the two most prevalent examples.
They need to start manufacturing quality fuel efficient vehicles designed in house and do it fast,IMO, and get the hell away from high performance cars.
The problem is that these little efficient cars are not sexy enough for the average American who is so in love with high horsepower, sports tuned suspensions and every bell and whistle known to man packaged in a flashy car with fancy aluminum wheels.
There is the rub.
I am seriously ambivalent about bailing out the auto industry. I am absolutely certain about one thing, however. That is there can be absolutely no bailout unless current management and boards of directors are sacked (sans bonuses and parachutes). These people have been driving the industry into the ground for 30 years with they egregious stupidity. While Japanese, Korean, and European automakers changed ans adapted, American companies insisted on doing the same thing they always had. These brain dead asshats absolutely have to go.
The management at GM and Ford whould have to change.
GM needs a complete cultural overhaul. They’ve had 30 years of bad cars.
Ford needs to explain why all those small cars in europe can’t be brought over to the US quickly.
LOL
I wanted to buy their new Fiesta, but settled for teh Honda Fit instead. They’ve got great cars in Europe and always screw it up in he translation.
How many of those cars could be brought here & sold now or made here & sold?
If some regulations were changed how many?
Instead of socializing we should invest in new & better stuff.
So, maybe we need to offer funds with some very big chains attached to require them to do three things:
1) bring better cars to America that they’re already manufacturing, so they can begin right away to rehire employees and to put better cars on America’s roads;
2) build the next generation AFTER those better cars, so we can use fuel(s) more efficiently in a sustainable way;
3) split up their company to make it less than “too big to fail”.
If government is to intercede in the ‘free market’ there should be big public gains.
…. When I see who Obama consults on the economy, I realize that he will make the crisis a lot worse, much more than it needs to be. These are all people who have made their names and fortunes in the financial system and climate as it functioned over the past few decades. Because of their success in that system, they will refuse to see that it is dying.
They will ignore the demise as long as they can, and try to repair what is broken beyond repair. In the process, trillions of additional dollars will be wasted which are badly needed to build a new system, one that actually works. It is as foolish to try and mend the old one as it is to try and take away a gay man or woman’s right to feel whole and happy.
Obama’s chief of staff is a former Freddie Mac board member and fervent supporter of the invasion of Iraq. Many of the “experts” are, or have been, Goldman and Citigroup execs. These people like the power and the money they have gathered while driving the economy into the ground. They’re not going to give that up just to build a financial system that would better serve the people. They’ll build one that best serves them.
Sure, some loose ends will be tweaked, but mostly they’ll spend the nation into a depression by attempting to salvage corporations that would have long since died if it were not for America’s 21st century version of Mussolini’s corporate fascism, and the unlimited access to the public trough it provides.
The broke man in the street will be broker, until he’s broken, until he lives in the street, his last hard earned penny squeezed from his hands and dumped into banks, insurers and carmakers that have zero chance of ever turning a profit again.
The taxpayer will be taxed, and will be forced to pay until (s)he can pay no more, if need be at the barrel of a gun, until (s)he no longer has a job, a home, dignity or a future. And then the growth machine will spit her out. Whoever can’t produce or consume is a write-off.
We’ve spent too much, and now we’re broke. Let’s spend more, and lots more, ‘cause then we will be whole again. Double or nothing, it’s all we know.
The dice will come up nothing…..”
A few years ago when GM was tanking the CEO of GM was on NewsHour and he stated that they were building SUV’s because that was what Americans wanted. They did nothing to keep up with what was selling so at that time I said let them fail. We can not become a bailout nation. We also cannot continue to ship continue good jobs overseas, so I do think we need to build a better automobile company without GM.
I take no credit for this idea as I got it from a friend but I think its truly awesome.
You allow give money to the car companies BUT, you then split them apart into say 5-6 separate entities and you get rid of and fire the top layer of management. You then give them financing for multiple years but because they are leaner and separate entities they will be better equipped to deal with a faster moving economy . In addition, you also give tax incentives to small-medium businesses that want to try their chances in the auto industry. This way, you get rid of the old fossils who ruined the industry that America started first, and you give fresh young blood the chance to make a name for themselves. In addition, you require that each separate car company has to produce at least one car line that gets > 50mpg.
Hey, that’s pretty good. It would solve one of the marketing problems they have. They keep building cars for generic Americans, bc that’s what can sell the volume htey expect a model to sell at. But if they were selling smaller numbers, they could aim to target their cars better, like Volvo and Subaru have done.
Yeah, purplefishes (we are going to need to know about that name sometime), I agree with EW, that is a fascinating, maybe brilliant, idea.
A couple of thoughts:
1. That “financial-based economy” more and more consists of “imaginary” money. Stuff like CDOs, CBOs, CSOs and their ilk. All murkily traded by child-like souls who believe in Monopoly money.
2. Related to the above, a major component of the non-manufacturing US economy over the last 30 years has been the “Software” economy.
While it has provided US (and the world) some interesting and pleasurable stuff (blogging on the Net, games like Halo or Grand Theft Auto and the bane of many workplaces, Solitaire), and even some productivity improvement stuff (writing via Microsoft Word is far more productive than using a typewriter (and I know whereof I speak), and don’t even talk about spreadsheets versus olden times accounting), this “software” is produced by a tiny fraction of a percentage of the US population and very little of this “software” would stand the test of time defined as an credible, barterable, “worth something” asset.
As an analogy, imagine that the society we live in, the “system” broke entirely down. Now imagine trying to trade a CD of Microsoft Office for enough carrots and potatoes to feed your starving family. Good luck with that!
The point EW, that I’m trying to make here, sideways to your “let’s manufacture…well at least cars” discussion, is that a lot of the stuff, perhaps even most of the stuff we Americans “make” these days consists of…hmmmm… nothing. At least nothing apparently real. Merely electrons flashing on and off through the cold, empty darkness of space.
That most of the stuff we product isn’t…real. And that the real stuff we actually do produce isn’t enough to employ more than a fraction of our people.
If the rest of the world ever finds out, good luck in staying alive.
The rest of the world has figured it out.
One of the reasons we always make Intellectual Property the centerpiece of global trade agreements is because the most valuable stuff we make–software, pharmaceuticals, and Hollywood movies–is very easy to pirate or otherwise steal.
And intrinsically worth less than a carrot or potato.
As I’m of Irish heritage, I prefer the potato, but carrots aren’t bad either. *g*
And a rip off
The automobile company has to change from the top down. Chrysler hired Nardelli after he was let go for destroying Home Depot and at some point the execs have to pay.
I’m not sure the auto industry should be saved unless it actually revamps production to foster fuel efficiency – that was mentioned above – AND it must also become realistic as to how it competes globally. The big 2 and a half auto makers made money through their finance arms because they were uncompetitive as far as car production was concerned. If they cannot compete, I don’t think its wise to just throw money at them. The US has the opportunity to become a leader in alternative energy, and it would be a waste of taxpayer dollars to attempt to save the auto industry if it is destined only to fall behind its overseas competitors. SplendidMarbles
What would you have as a suggestion to replace the lost jobs for those folks in the short term? That is the problem. ?????
They are much less reliant on finance in other places (in some markets there is no finance at all)–but then, making the same cars with cheap labor and not having to pay the legacy premium right off the top, they can make ten times the same profit.
When I was working in China in 2005, Buick Regals made $200 profit here, and $2000-$2500 profit in China.
Manufacturing employment has been falling since 1900 thanks to automation. Even if we moved all of our manufacturing back state-side, we’d still be facing shrinking employment in that sector. Sure, it is a good idea to subsidize the sector to some extent, but it don’t count on it for the jobs of the future.
Bending metal is valuable, but the real money is in design. There is a need to encourage design and development, with less concern for the actual manufacturing. If nothing else, it is easier and easier to configure automatic machines for short runs for prototyping and then moving them to compatible gear for mass production.
One of the biggest things we could do for American business is socialize health care and then throw money at it. This would make it much easier to set up a small or large business, it would improve a lot of balance sheets, and it would provide further health care related employment, including employment in health care related manufacturing.
That’s really where they’re headed already.
The OEMs basically have become engineers, designers, and buyers. And then they outsource a lot of their design of pieces parts. Those pieces parts are made in Mexico. ANd if the UAW is lucky, someone in Detroit puts it all together.
To be fair, I think transport costs will go up and make offshore production less advantageous. So there will need to be people running the robots in state-side factories.
Man, I love hanging out with the eggheads.
/s
Totally OT (and I do apologize for interrupting this most excellent discussion) – H/T to Laura Rozen who has this via CQ:
And from that CQ post:
Ok, now back to making cars and other real stuff.
I guess I start at more basic level of ignorance. We don’t seem to know/ or have the right technology yet, and I don’t mean just to meet the 35 mpg standard but in terms of thinking what the transportation system needs to look like 20-30 years from now. Why build another slightly improved version of today’s technologies?
We don’t have a process for determining the answer to that.
We have managements at the big 2 1/2 who didn’t see oil shortages coming and didn’t have anything ready in case. They watched stock prices but not sustainable employment in the US. Their current projects are to build cars that start at $100,000 plus, which no one could afford.
We don’t have in place the governmental criteria for overseeing billions in bailouts; government doesn’t know what it wants or how to ask for it.
I see the $25-50 billion bailout as something that should go to labor, their health care, retirements, their reeducation and possible relocation. I can’t think of a single reason why we should give that money to GM/Ford management.
Tell me how/whether to save THESE companies, other than we don’t have a better idea.
I drive a Japanese hybrid car. It’s Japanese because when I bought the first one there were NO American hybrids. As soon as gas prices go down the morons in charge of Ford et al. decide that huge monster trucks are the way to go again. As far as I’m concerned if they decide to sell a product that people can’t afford to drive they should fail.
NO!
I never considered that point, we have exported our industry and that does indeed need to be reversed
the way to save the industry is pretty simple;
autos that come from other countries that have a lower labor code then we do need to be tariffed.
it is unconsionable that we allow autos in this country from nations that do not provide living wage, health care, education through college, retirement, 40 hour work week and vacation.
and we need to get that “look for the union label” stuff going again, the word “union” has been turned into a perjurative and we have to take that word back
The USA is notorious for signing trade agreements and then complaining when their Senators and Congressmen complain about the impact on local industry. And will there be a rebate to countries with higher standard labour codes and worker benefits?
My experience with Detroit pig-headedness is what they did with the Ford Focus Wagon: Got the kinks worked out, and produced a fine little station wagon. I have a 2004 Focus Wagon. So what did they do? Stopped making it. Oh, yeah, they’re still making Focus Sedans. But the Focus Wagon was an excellent small station wagon, given the standard gasoline engine fuel system. I like mine, and plan to keep it for a while. I need it to haul around my upright bass. But then, I *never* buy new cars, so what do I know?
Bob in HI
Agree on the Focus.
The FOcus competes well against either the Civic or Corolla–and its multiple body shapes was one of its advantages. Plus, it actually comes in as more fuel efficient than the Japanese competitors. It had very serious packaging issues (their stupidity about cars generally carries over to not knowing how people use cars). But they should have kept the station wagon. And a real hatchback.
That said, the diversity of body styles is one of the things that makes US manufacturers less efficient–at every level of operation. They just shouldn’t take the body styles I like…
At one time Honda had a nice small wagon. They stopped making it about the time that SUVs started coming in. (Volvo has something like one, I think.)
There may not be much of a market for small wagons.
Tell that to Subaru, who has made a brand on it.
Re small wagons.
Ford used to make Escort/Tracers. These were, at one time, in the early-mid 1990s, the best selling cars in the world. Ford removed the extremely efficient 88HP engines from the line and the line suffered here and abroad as a result. The mph was reduced approximately 10-15% by going to a bigger “more zippy” engine.
I owned a Tracer because it was such a good car. It had more room than subcompact Hondas and Toyotas. Big Americans™ could fit in the front seats too. But, alas, the stupids at Ford went with “more pickup” rather than keep a great selling car fuel efficient. They reduced the efficiency and surprise! the Tracer stopped being the best selling car in the world.
Yeah, so if there is a bailout coming, it has to get back to making sure that American cars are competitively efficient…the gas pigs have got to be ended once and for all.
How much do car co executives make in benefits, wages in US? When toyota was little company what it did best was detail carefully pieced together, copying design from a German motor co. Iacocca got honoraria and bailout but still Toyota grew and made better cars than US. Honda always had a balance other mfgrs could only admire, rarely approximate. Why invest in big iron cars if Detroit wants max profit and minimum new design? If Dingell says it is indefensible, Detroit will change to a product he sees will gain respect of lawmakers and regulators. US defense industry needs Detroit to build military vehicles. Environmental regulations are going to change the landscape of what is salable in US. How much does a compact car cost in its country of origin? I once saw a new Mercedes on sale in its home country new for $3.k, same model on sale in US $6.k If oversize agriculture converts more to local supply and demand, trucks from truck farms will be driving fewer miles. Internet has enabled geographically dispersed workforce in many industries. Then there is the social side of driving, which is a lot about what US people do to direct their efforts to meet. What does US do if China owns all 2-1/2 mfgrs, then gets into a tarrif escalation round in some unallied field of trade? Build cars from soft nonmetals assembled by robotics. Will UN ever garner sufficient cooperation to alter trade agreement impacts? For me, the economic instruments are byproduct with less existentiality than the industries which generate them, i.e., the economic view is like the forcefield, and only in that sense real, but there is no cleft between economics and its generating activities. The vision necessary to plan based on these conundra and evoke a more humane future is precisely the kind of trait in Barack Obama’s outlook that caused people to want to vote for him. The caption photo said it all; something crunched, and someone flipped; but there was something wrong in that moment, something that calls for reassessment of commerce US style. Let’s see, commerce committee, ?Waxman? May be good idea, at that.
The solution to our economic problems is not to be found in getting the old system to work by clearing out a few slacker CEOs.
We cannot sustain a “growth” model. We don’t have the resources. We need to change to a complete new paradigm and that means no growth – stable economic model. It also means we need to control population and get rid of “credit/interest/debt financing” which is what drives the need for growth.
Why do you need investments? If you have a state sponsored pension, free health care and housing… all you need is some food, clothes and “fun stuff”. And the fun stuff needs to be scaled way back – forget the safaris to Africa and trips to the north pole and jumping on a plane to visit your sis across the continent. The airlines will simply have to evolve into a different model. We will have to think local
Capitalism is not a sustainable model and needs bubbles and we are running out of gas to inflate them… whatever sector they are in.
Until we begin to make real moves toward a new economy we will on go lower and lower in the sinkhole that this one has created.
Great points, all around.
But we do need to make sure people are gainfully employable.
We have been become too dependent on others for the things we need. Fine if they are locally made… like a loaf of bread… but when we need to “import” something to the area where we live we open the flood gates to industrialization, conglomeration of production and eventually to globalization where products are produced (for the capitalist) in the lowest wage market and or where the cheapest raw materials and energy are to be found.
Corporations went offshore to cut their costs and increase their profits… they didn’t lower prices and hold profits. It was greed basically at play because a corporations and its shareholders are in the game to make MONEY.. shareholders UNEARNED income. Now when they take their “means of production” and that includes their plants, tooling and labor to an offshore location and they then raise the standard of living in the new location, cutting margins…. driving up energy costs as the new locals demand for “everything” increases… and the corporations (capital)… finds that their model is not making them the big bucks they were. Move to a new locale? Yea… but that’s gonna end. There aren’t enough new cheap places to exploit. There is no way to make this globalization for profit model work in the long term.
Now to get us to buy they introduced consumer credit making consumers like business – using credit to buy, grow… but always running up expenses and exposure to risk. So we ended up owing not OWNING what we have. The gov owes to china, the corporations owe to banks and we owe to the banks and the banks can’t get anyone to pay their “loans” cos the interest has gotten so large that defaults are all over the place. Oy!
The model is not going to work… and the notion of…. we need jobs is not going to work either. We need to do something and have a comfortable life. We don’t need jobs.
you still haven’t convinced we that the big 2 and a half should be saved
they’re dinosaurs
they have a failed business model (they’re fookin bankrupt, you don’t get to argue that point)
they have a failing sales strategy, a failing marketing strategy, and a failed product base
the can only build vehicles that contribute to global warming, and this is a self-chosen position. They had the past 30 years to figure out this was coming, peak oil didn’t just fall off the fucking turnip truck last night
now, here comes the part you guys ain’t gonna like …
they got an unfavorable labor base, and they’re tied into labor contracts and conditions that pull their profitability down
they got unfunded pension liability
they got out of control health care obligations
and finally
we ain’t socialist here, no matter what lush limpbag says
if we’re gonna invest in something to revive the economy, why bother with these dinosaurs that contribute little other than jobs ???
we could find jobs in an eco-friendly enviroment, and fund people who ain’t stuck in a 20th century business model
the “Richie Cunningham” 1950s that everybody dreams about never really happened, so we ain’t gonna be able to recreate it
the auto industry in America has to change
let the big three die
either way, we’re stuck with the bill, but without the big three, we don’t have to endure their shitty cars
SanderO # 60 – i also want to commend you on the line of thinking you have taken, clearly out of the box and it is not going to be adopted until the whole system falls in one itself which will indeed happen given time.. your position needs to be understood better by more and adopted as well, but it would be political suicide in the short run.. what is good in the short run ends up being bad in the long run and this is where we find ourselves for the most part.. what appear like good short term ways of resolving conflict lead to much bigger problems down the road as the basic structures everyone takes for granted are all fucked up… no one questions them.. you did.. thanks!
It can be done with the right leader, the right subject impetus, and the right moment. As much as I like Obama, I have always had some significant concerns that he was/is much more of a centrist standard politician whose dedication to bi-partisan, unity, togetherness action rendered unable for transformational change in anything but rhetoric; when what we need is fundamental policy and conceptual transformation that is so necessary that if it requires one side, the Dems, pushing it through, so be it, we no longer have time to wait. I still have that fear unalloyed. But, I will give him this, he has the personal confidence and gift of motivational and inspirational speech and leadership to meet the task of the times. FDR war effort demand for unity, sacrifice and one for allness; think Kennedy moonshot. It can be done. Bush screwed the country in the southside by not taking the moment of 9/11 to do this, and the nation was almost begging for it; instead he pursued the most craven diametric opposite imaginable.
bmaz, my impression is things will have to get a lot worse before they get better.. sometimes a complete breakdown is necessary.. that’s what is called for in the auto industry.. folks are going to lose jobs.. it goes back into the comments on growth SanderO made in post 60..
someone upstream was annoyed with the mention of the electric car… well why is it some joke when the west is held by the balls via oil?? our way of life has been built up around the automobile. one doesn’t have to look far to see it isn’t working.. transportation of food is a good place to take a look.. we are dependent on transportation for our food at present.. it’s a form of slavery… okay, throw a few more billion at the auto/oil industry and see if it makes a difference?? c’mon.. you can’t make this shit up… that is what i refer to as short term thinking.. it is the politicians way to secure jobs and economic growth without an attempt to alter the basic structure which brought us here in the first place.. until that is addressed, everything is going to continue to go in the direction it is going..
Yeah, maybe, but progressive work toward a solution should not abide idly waiting for the “final bottom” or whatever. Quite frankly I think Detroit is there anyway. Time to get to work.
As to the electric car, I basically agree with you. However, if i recall correctly, that commenter was blasting the documentary which I think is called “Who Killed The Electric Car”. That movie was indeed arguable slightly unhinged in the conspiracy regard; not to say that it completely was, far from it, much was very true. Just took the truth a bridge too far you might say. I dunno, I am sure some would contest that, but that is the way I saw it. The main focus was the EV-1, which I know well of, even drove one for half an hour or so back in the 90s. Thing was a pile of shit. It needed to be killed. The real issue if you talk to designers, engineers and car industry people is energy storage, whether you are talking battery, capacitor type of deal or hydrogen. True electric cars (not the glorified golf cart or mini-mini types) just have not been practical to build and drive to date. We are getting there though. Another issue is that if you could have everybody in an electric car tomorrow, it would collapse the power grid. Not to excuse the idiocy of Detroit, they should have been doing all kinds of progressive work for the future that they have avoided and flat out obstructed, but don’t kid yourself, we would not be in electric utopia yet even if they had not. Could be a lot closer though.
Yeah, that was what I was referring to. The EV-1 was simply way ahead of its time, and the battery tech wasn’t there just yet.
Sticking to the issues EW poses, because there’s so much more to address, too much for one go…
The why of saving the auto industry?
1) national security — it’s imperative that some amount of manufacturing be retained in the U.S. so that we are not held hostage by other countries that produce the products we consume. We are no longer in the business of making certain kinds of technology and could easily be screwed with if certain countries decided to stop shipping to us. Ricardian theory be damned; it is not an absolute.
The question then becomes, what manufacturing do we keep, how much, and which companies?
2) interdependence of the global economy — if GM goes bankrupt, it will affect the suppliers of all other automotive companies in some way, increasing the costs and adding the complexity of getting any car made. If a firm can’t get paid by Company A, not only will they write down some of the loss, but they’ll have to redistribute fixed/sunk costs over a smaller number of customers which in turn will increase costs. Doesn’t matter where you’ll be, either; it will affect the market for your product if you’re an auto manufacturer, and it will affect your supplies. Prices will most assuredly go up, and many vendors will crash and burn, not always to the best of Darwinian effect.
3) the amount of commercial paper that financial industry and investors hold in GM — if allowed to go bankrupt, the paper is worthless and could likely set off a real meltdown worse than we saw in September. We cannot tell how much of this paper has been used as leverage against other investment and risk management vehicles like CDO’s and CDS’s.
Are the American auto companies really American?
Ask a Chinese national. Hell yeah, they are American companies. They are run using American culture and American business know-how, which other countries envy (although if they really grokked the Shock Doctrine, they might envy less). It is in part because they are American companies that the products their foreign subsidiaries make don’t arrive here.
The best proof? Daimler-Chrysler, a so-called marriage of equals, was supposed to be a merger between equals (at least that’s what the court told Kerkorian when he got stiffed on his suit that claimed Daimler lied about the true nature of the deal — an acquisition). Daimler was a German car company, Chrysler was American, and the two cultures simply never meshed at all.
Should we be subsidizing cars–or human transportation?
The mess we’re in today is a direct result of the automotive industry seeing itself as car manufacturers rather than people movers. It’s not for the lack of products when one realizes that GM actually makes bio-diesel buses or has the ability to make light rail products, or that it has had large sized fuel-cell technology that could power buses or a fleet of electric buses. We should be pushing GM in particular to remedy the wrongs of the past, when it deliberately undermined Detroit’s efforts to install earlier forms of mass transit.
Waiting for the next go round when you’re ready, EW.
I do like MadDog’s concept of a “software economy”, but I don’t think that it’s quite as easy to compare a tangible product to an intangible product. I suspect that’s why so many analysts struggle with grokking Google’s business model, particularly when it meets phones; where does the intangible meet the tangible, and what if they’re interdependent? Cars aren’t quite like that, although at one point in time they could have gone that direction with OnStar.
A “software economy” is close to the mark, but not quite. And intangibles might well be the key. Financials are a kind of intangible, and some of those financial “assets” are about as intangible as you can get! But they are a harbinger.
What this is really about is information management. This is about having the strongest and most excellent system of universities in the world. It is about having the strongest and most excellent system of intelligence gathering and analysis in the world. And it requires a citizenry that is able to process information like never before.
I don’t think we don’t have good metrics about this yet. The Bush administration has set us back at least a decade. If we let others get better than we are at processing information, we are in much deeper doodoo than anyone realizes, and it will mark our decline as a world power.
Yeah, it means computers and computer hardware. and software. But “low information” citizens are going to find themselves falling behind. I don’t really mean that the issue is how much information you can grasp. I mean the citizen of the future will need the tools to analyze, filter, and manipulate information at a dizzying pace.
Bob in HI
If the government loans/invests in a GM and requires them to split up, then it would make sense to pay good attention to divisions which produce these new fuel vehicles and for government to begin Greening-up it’s own fleets and encouraging businesses which keep fleets to do the same.
This has been a way government pushed for higher fuel efficiency in the past. When they buy a lot of them it makes the manufacture of large numbers more profitable for the GMs of the world.
Yep, and you know, making the proper incentive for other big fleet purchasers too – rental car outfits, businesses, cab companies, schools, delivery companies, etc. – along with govt. entities would really make that a powerful motivation for the quantum shift.
Okay, I was writing to EW off blog and decide to post that content here too. In that meantime writing, thinking, eating, drinking, playing with the dog etc. there have been a boatload of comments posted I see. Most, though not all, of what follows was unique when I wrote it, but has now been covered (some very well by Bob Schacht and others).
I would also like to say that the discussion on this blog is always the finest to be found in the toobz/blogosphere, but the real genius has been tunnel visioned for too long by the election. This thread is a powerful reminder of what really is so superb about the entire group that hangs here in Wheelville. It is a strikingly awesome thing. That said, here is what I wrote about two hours ago now:
Absolutely awesome auto post. Seriously. I think the defense aspect is even more significant than you had in the post, but I also suspect you already know that, it just wasn’t the critical discussion point of this installment. It is not just the vehicles, and capacity to make them, but the motor/drivetrain capacity. And your point about “are American made cars American” is very valid. Still, as long as you have the steel and aluminum (a separate issue of it’s own), and you have the ability to manufacture drivetrains, you can make vehicles, especially the stripped down defense variety, so that is key. As they did in WWII, production capacity can be shifted around in critical emergencies fairly well; but you have to have the basic production capacity, or there is nothing to shift. And for all the talk about nukes, smart bombs, drones and blah, blah, blah; it still takes men and the ability to move them. In a pinch drivetrains can drive and power a whole lot of other critical things too, think pumps, planes, generators, you name it.
As you point out, there has to be a manufacturing flight firewall, where you just say “No more, we are keeping this, and rebuilding some of what has been lost back”. Well, I don’t and effectively won’t own and drive American, haven’t for 30 years (German and Jap; lust for Italian), but I’ll be damned if I am letting the American Auto go the way of the dodo bird. Even if I have to own and drive one of the damn things (so they better start making better cars).
And, lastly, there is simply a psychological element. “Baseball, Hot Dogs, Apple Pie and Chevrolet” was the long time ad slogan for the biggest arm of General Motors (by far, Chevy was always bigger than the rest of GM combined). Well, yes, it is a slogan, but there is some truth to it as well. The automobile is, uniquely more so than anywhere else in the world, a part of the national psyche. People talk about the home being part of the American dream, well baby, the car is even more so. It may be the dumbest of the reasons for preserving Detroit, but it is, indeed, a solid reason.
I don’t know that we need the car as we have been accustomed to it… driving 100miles RT to work… this gotta stop.
We need to think locally and the cars that are being made today are not in the future.
EW started this discussion revolving around “making cars”.
I’m going to broaden it a bit by asking: “What do Americans want to build/make/produce that provide them the standards of living they desire?”
Cars are just one focal point. The “outsourcing” of US manufacturing has been ongoing for decades.
After WW II, the rapidity of movement of manufacturing/making/producing stuff (like steel, cars, TVs, radios and other sundry electronics, clothing, shoes, and on and on and on) was the only viable corporate policy as our corporate masters eschewed the idea of national interests and focused on maximizing profits while reducing costs.
Otherwise known as “outsourcing” these days. Regardless of name, this has been intellectually defined by many as “moving up the creativity chain” or “brain versus brawn”.
I do not defend such myopia, but merely remark on it.
Now that the brawn well is drying up, we come to a place where it can and should be questioned as to whether we are capable of continuing to pursue the brain well.
What is it that we think we know (intellectual capital – a most amorphous concept) that we believe can sustain our dreams or heck, something even more dear, our lives?
Software was one of the mainstays that ruled our roost in the 80s onward, but that too has been outsourced over the last few years to cheaper providers like India, and likely China, Russia and others in the future.
Financial wizardry? That too is gone global far beyond anything imagined by the denizens of Wall Street.
I would posit that it is highly unlikely we as a nation will return to primarily making/building/producing physical things – “brawn” (cars, electronics, clothes, etc.), and that our path forward in the “brain” category is becoming more tenuous, murky and less assured for an American populace.
So for me, the questions become “what will we make, and who will we sell it to?”
dunno, I think SanderO is onto something.
FOr a variety of reasons I think you’ll see a reversal of globalization in the coming years. That’ll be partly because global finance is drying up (already shippers aren’t getting the credit they need), once that happens, countries are going to realize that for their security they’ll need to provide necessary goods more locally (particularly food), and as the cost of transport goes up, it’ll make it harder to globalize all but the lightest and smallest of goods–or goods that must be produced in a certain locale, like pineapples (though you won’t be able to get those $4 pineapples anymore).
And so I think we’ll revert to producing fewer higher quality goods more locally. And we’ll have an associated dismantling and recycling capacity, to unbuild the things we’ve built when we’re done with them.
There’s already been a bit of that happening, as container shipping costs have soared over the past few years. In 2005, it cost around $2000 to ship a container from China to the US; it now costs around $9000. This has caused companies like Thomasville Furniture to reopen some US factories.
bmaz sez,
I’ve had 3 Hondas and a Nissan; my spouse has had 2 Chryslers, 1 Ford, 1 Olds, 2 Chevys, 1 VW and 1 Fiat since I met him 28 years ago. I’m very much a Honda person; they have a consistent feel that no other car has. The Nissan Maxima that I owned was very much comparable in feel to the 2 Chrysler 300’s that my spouse has owned, and somewhat like the Pontiac Grand Prix in firmness of steering (but the Pontiac felt cheesier). The VW was crisp, but almost too damned tight, and I never drove the Fiat which was little more than a rickety tuna can. The American vehicles, with the exception of the Chrysler 300’s, were all much softer in their handling and road feel. But I guess that’s what most Americans like.
I think I’d hate to have a limited choice since we are all of us built differently; if only there was a way to make cars in a more modular, customized fashion.
Can’t we run a blog without using racial epithets?
It was an abbreviation, not a racial epithet, if it was perceived or taken otherwise, I apologize.
Apology noted. But I hope you will forgive me for not finding the claim of an abbreviation overly convincing. This is no different from the “n-word” or similar level of epithets….. Anyway let’s me more careful in the future.
You can always find something if you want to see it; that doesn’t make it so. I say stupid stuff constantly, all the time, I also try to admit when I am a dick or wrong. I seriously neither meant, nor inferred, any negative connotation. I don’t disagree necessarily with anything other than your allegation of some apparent or hidden intent; that is just wrong.
the internet is incapable of conveying much with regard to the more complex nature of communication… words on a page is a piss poor way to communicate with people… i find it instructive when people get their ass in a knot over words on a page too, not giving another person the benefit of any doubt and wanting to lay their up tightness onto others.. of course that is what i get from just reading the words, but without looking a person in the eye, i have no idea how close or far off i am from what is going on in the persons head… give people the benefit of the doubt and try not to lay trips on others would be a nice motto for some especially…
“Jap” and “Italian” no longer carry the legacy of legalized white supremacy that they once did. “German” never did in the US that I know of.
It’s a damn car thread. It’s very legit imho in THIS very narrow context to talk about German, Jap, and Italian. It was obvious that bmaz was referring to the auto manufacturers in three separate nations.
Casually accusing any commenter of hurling racial epithets is real serious on any blog. This is basically a social justice blog, so here it’s like yelling “candy” to a bunch of diabetics.
As far as I am concerned referring to American citizens as “white” and “black” is a much more egregious problem, but that’s just me. A lot of people here don’t agree with me on that one.
Unfortunately, this blog imho is overwhelmingly made up of people who are 100% European American. Another limitation imho is that of those us who are not 100% European American, very few have any ancestors who were slaves. I want to do everything I can to broaden the ethnic range of FDL and emptywheel’s readers/commenters and those who donate money.
OT, unlike my lumbering prose, bmaz is one of many here who is fun to read, snappy, clever. If we kill that, we kill a lot of the enjoyment of blogging and drive down traffic. That’s a bad thing, because that reduces the revenue FDL receives from their advertising.
There’s always a tension with these things. If you still have concerns about the level of sensitivity to ethnic issues here, don’t fold your tent. This is a place where all of us can broaden our cultural horizons. Based on what I’ve read so far, however, I’m all down with bmaz.
In my 50’s here and I did not know “Jap” was a slur. I will say I don’t know any Japanese American people either. So I jumped over to wiki and found out since WW11 it is considered a slur. Guess my dad who was in that war would have known it. I won’t use the word. We learn new things every day.
Fascinating discussion and topic…
I worked for 20 years in oil and gas exploration. During those 20 years, there were several energy crises when there were extreme shortages of natural gas, and panics about gasoline. Something that has always fascinated me from those times and now is just how spoiled the American consumer is. We were told, “Use less… Conserve energy…Let’s break our reliance on imported energy.” Yet, cars are still a status symbol — the bigger the better. Fuel efficiency has truly been a minor concern to the vast majority of us… until prices go through the roof.
So, yes — somehow, the public’s focus on transportation needs to change. If the manufacturers are going to survive, the focus has to shift to energy efficiency — or else we will all go down the tubes.
If we had dedicated the money that we have spent on Iraq on development of alternative energy and improved energy efficiency, I dare say that we would be the world’s bright shining star again. Instead, we just did the same old thing and allowed business interests (as we know them) to prevail.
Lots of industries are going to be asking for bailouts eventually… the auto manufacturers are probably the most visible right now. With those bailouts, though, there has to be a partnership between the government (and the citizenry it is supposed to represent) and those industries that will begin to drive us toward where we need to be.
This feels like I am rambling… I could probably write a book! It is a great topic, though!
I am 61 and never owned an American car – all german and one acura. I have had no need for service aside from oil changes and tires with my audis for the last 7 years… Nothing breaks.
Excellent topic, this is big news for US industry, but isn’t being well covered elsewhere (yet). I would make a couple comments…
First, autos are here to stay. America is a big country and rail & buses will only serve a small percentage of the population. Factor in winter weather where only motorized transpotation is viable (and I’m speaking as someone who stubbornly continued to mountain-bike my way around campus even in 12-inch snowfalls – but I’m getting too old for that foolishness) and really much of America needs the automobile to get around.
The Japanese manufacturers are still turning a profit, despite the economy and despite the higher prices their vehicles cost. My guess, as a consumer is due to long term reliability & their dedication to fuel efficient options. We’ve owned a number of US vehicles and one Japanese car. Since purchasing the Honda we have been won over and probably won’t buy another Ford or GM product for decades, if ever. Maintenance frequency of the American vehicles was always a royal pain, the Honda was also a hybrid and Ford & GM didn’t have anything in the 50+ mpg segment at the time.
I understand the short-term reliability ratings are up on US models… but long term reliability is still problematic. However the larger problem is probably the top CEO’s not listening to their consumers or (in the case of EV’s and emmission / fuel economy legislation in general) outright alienating their customers.
What you said about profitability of Japanese makers is conventional wisdom, but they are now tanking too in the bad economy. Are they far better off than Detroit? Oh yeah. But this economy would kill them too with enough time. It just has put Detroit in the lurch immediately because they were already weakened; if the economy was sound, however, they would still be hurting, but would have a shot at continuing their slow evolutionary turnaround.
There’s a lot more to it than that.
To even make a comment about profitability without mentioning legacy costs misses by far the biggest item: remember that each US automobile has to pay for between $1500 to $2500 in benes to someone who didn’t have anything to do with the car.
And then there are efficiency issues all up and down the production and sale of the car.
Meanwhile, you need to balance your comment with the increasing short-term unreliability of the Japanese cars, particularly Toyota and–believe it or not–Mercedes. I got a Honda last year and had it recalled one week after I bought it. Toyotas and Hondas are becoming a lot mre complex to service, so the differences in complexity that used to make it more expensive to service a US car are disappearing.
I suspect that the increasing problems may have to do with the increasing market share: they’re having to build more cars and do it faster, and that always causes problems. Also they may be hitting limits on what the workers are capable of doing, because the most-skilled and most-experienced will be getting into management or retiring about now. Given the crappy education system in most of the states where labor is cheap and they’re building plants, they may be dealing with people who are semi-literate at best.
@69, I saw Fiats in IT converted into tuna cans: when folks are hampered by traffic at an intersection, arms extend out lowered side windows, and begin thumping on the tin can stylish Fiat. Think of it as symphonic, dozens of emoticons, though I think a few individual drivers waxed verbal. For the definitive experience of traffic school in that nation, the Ferrari provides the most melodiously shrill combination of airhorns when dashing through a redlight at the intersection.
Dude, you know they settled the Bong Hits For Jesus case, right?
Is it me, or is the schoo, district saying that they were to blame but it won’t be allowed going forward?
HOLY BONG HITS, BMAZ
Jes wanted to say it …
so does Jesus get a bong hit or not ???
you better hurry up an decide
most of “the GOOD stuff” is already smoked
Personally, I’m with the rainy day women on this:
I would not feel so all alone, EVERYBODY MUST GET STONED
that was a part of Obama’s campaign platform, right ???
We all forget that it was the auto industry that sold us on gasoline powered cars. They gave us what we wanted and we loved it. Now when we really need to switch to something else but they are the ones who are stopping that. If you watch television every couple minutes you will see an add trying to get us to buy more gas powered cars. They don’t even advertize hybreds or anything else. Just buy more gas powered cars. The way to get off foreign oil is to not make or buy cars that use gasoline. Cars can run on natural gas, propane, ethenol, and bio fuel but try to buy one or find a place to get fuel it if you could. The problem is the automakers and until someone or something gets tough with them we will be stuck with more of the same into eternity. Waiting for them to change is like waiting for dollar bill to fall from the sky.
Most cars could be converted to run on these fuels relatively easily but no one will tell us that, especially those automakers.
They are their own worst enemy and to ask us to bail them out really takes guts. They have thrown away millions of car buyers by getting rid of their workforce which were the most loyal car buyers. The government has stabbed us in the back by letting them manufacture cars outside of the country yet still continue to sell them here as if there was no difference. They will continue to close plants kill jobs and sell us down the river as long as we let them.
We should make the government know that we want off foreign oil and cars that use something else. If those auto companies won’t change their ways get rid of them and back companies that will. If they want bailed out make it with conditions that they make cars for the good of the country and our people not to satisfy their corporate will.
I disagree a little, not completely, but a little. The manufacturers really don’t give a damn if you convert them, long as you buy them. Quite frankly, they would probably be thrilled because it would void the warranty, so they are no longer on the hook for that, and it would probably result in faster engine degradation so more parts sales. Also, they would be happy to make and sell alt fuels cars; the problem is they don’t want to pay the costs, and take the shareholder hits in earnings etc. necessary in the interim, to rejig the production lines and sleds.
The idea that finance is an engine of growth has been proven wrong. As I said in one of my diaries, even Alan Greenspan has had to admit that the market does not allocate capital wisely, but instead follows the herd into foolish bubbles.
I think that if we are going to save these industries, loans are the wrong idea. We need an equity position, and we should have a way to insure that the money is wisely used. That includes the termination of dividends until our equity position is bought out, limits on salaries, raises for workers as productivity increases, and other changes. There is no reason to think that current management has the right perspective to insure the long-term survival of the industry, and I think it is quite possible that with sufficient oversight we can preserve these businesses.
I also like the idea of more and smaller builders. This encourages exploration of niche markets, and more rapid responses to changes in markets.
There you go. Fits right in with my last sentence @94 above.
When we needed large numbers of vehicles the big 3 gave us cars. Now we need innovation and it’s hard to start a new company when you know you won’t be able to compete.
So, we need to split up some companies, create more competitors and requirements to innovate to higher standards of fuel efficiency.
But, living in a free country, it isn’t natural for today’s politicians to think of taking that particular bull by the horns. Teddy Roosevelt might have. Cars were a new thing in his day and he saw lots of fits & starts.
It might even be a good idea for the government to begin a car company, buying off resources from existing companies, to produce a new car and a new company which could then be sold off in the free market.
Of course, that too is a big stretch for most of today’s politicians.
I really like this idea in some form.
Americans could start LEASING a whole array of experimental vehicles for $150 month from the U.S. subsidized remnant of the big 2 and a half.
None of the for-profit automakers can afford to lease, but they’d be doing their market research off of the leased experimental vehicles.
There are problems with it, but as a short term solution, I think it has leggs.
An Auto incubator if you will. Interesting idea.
Much appreciated.
All good points.
Bullseye bmaz.
I think as liberals/progressives we can’t afford to use language such as “save.” I think it reminds people of limousine liberals who failed to roll up their sleeves and win on the important issues of their day.
I think the tip of the spear for liberal/progressives has to be executive compensation. I think we have to demand voluntarily pay cuts of everyone making more than $100,000. I laid out some specifics in Brainstorming about TARP and Wall Street Pay Cuts. The comments provide more value than the original post. I don’t want the government legislating pay cuts, although I’ll take it if moral persuasion doesn’t work. If the fat cats don’t want to work for a lot less, they’re welcome to seek employment elsewhere.
ew, afaik, most of our trade imbalance comes from oil imports. IIRC, Ian Welsh has said that US exports in medical technology are really pretty robust. I’ll try and find a link.
I really don’t buy the concerns about national security. Canada and Mexico will not attack. I don’t see what Russia has to gain by invading Europe. Are we going to defend Taiwan? Strategically, air power, and warheads delivered by missile are the trend.
In terms of a short term urban silver bullet, I’d look at vertical farms. As long as you’re feeding your population, keeping food prices down, keeping people warm in the winter, and provide basic safety, you don’t have to worry too much about civil unrest. Vertical farms would compete directly with rural farms, but with biofuels so important, that may not be a bad thing. Vertical farms can raise YEAR ROUND fish, chickens, fruits, vegetables without fertilizer and in a pretty sustainable way wrt energy. I do have concerns about how you slaughter the chickens/fish, harvest the produce, package it and get into the local food distribution network. Until someone can actually do that profitably, it’s a big question.
I look forward to reviewing the future of the US auto industry after health care is nationalized. It sounds as though those union pensions will not be fully funded.
FWIW, I think the auto industry will segment. Motorcycles, and really small vehicles already dominate the emerging market for basic transportation. It’s that market imho that most directly competes with public transportation. As much as I don’t trust Boone Pickens, I think he has done liberals/progressives a tremendous service by carrying the sustainable energy argument to whole groups of Americans who regard us as tax and spend liberals aka dfh’s.
As long as liberal/progressive policy recommendations stay focussed on solutions that compete, provide value, we’ll be OK.
I seem to be a broken record on the issue of getting control for our money. Obama has promised to examine the whole bailout program, and maybe we will see some changes along these lines.
Sometimes we have to completely change things to get moving in another direction. Reagan’s revolution tore down a bunch of things created by the New Deal that had been covered over by barnacles and bailed.
Maybe Obama’s revolution will do the same thing to the ossified forms of capitalism that took over from the reasonably functional forms that existed before Reagan.
ummm, covered over by barnacles and Failed.
Thanks, completely agree that we have to keep the pressure on about the inequities in the way TARP is currently being administered.
IMHO, the weight of passenger vehicles is more low-hanging fruit for liberal/progressive policies. America allowed the sisyphean battle between safety (heavier vehicle) and fuel economy. Who will buy a more fuel efficient vehicle if it looks like you love your spouse and children less?
If people want to buy more expensive vehicles, that’s they’re right. They can’t, however, be heavier. That incurs a public health risk on many fronts. As a phase in, you might want weight restrictions in different classes of vehicles. In the long run, the world wants all the economic incentives running towards lighter passenger vehicles.
difinitive proof that princess pandora does NOT possess a “photographic memory”
I came across the word “Fungible” on the NY Times OpEd page
that reminded me of the “Fungible Molecules” interview
princess pandora couldn’t remember enough of that book to trigger a hit in a fucking google search
that’s one shitty photograph, huh ???
I normally wouldn’t be quite so picky, but this is something that hits close to home
most people don’t know what a “photographic memory” is (I didn’t know I had one until I was 24) It’s more about an intense level of observation than an increased level of intelligence
mostly it helps in Rorschach tests, and keeping an eye on your stuff in a house full of thieves
visual recognition and retention doesn’t always translate into comprehension (I can remember what a page of text looks like for years, doesn’t mean I understand what the text means)
I understood what princess pandora was babbling about, after some careful study.
If I had a 5 minute look at the book she was trying to quote, I could have repeated the first paragraph verbatim for years afterward.
these two talents are not the same
an as a side note, having a photographic memory can really be a problem when you learned to spell using fonix (fonix fukd mi up)
The same problems with the auto industry occurred in the 70’s. What did the CEO’s do to solve the problem? Some feeble efforts to increase fuel efficiency and then when they could get Congress to loosen the efficiency standards, they went right back to fuel hogs. When the same failures happen over and over, we have to look at economic systemic problems, management morality and societal values to find the root cause.
Why was there such a hue and cry during the bank bailout discussions concerning taxpayer stock ownership without any policy input? Consider taxpayer bailouts as a “mutual fund” with all of the rights that other stockholders have. If we do a bailout for the auto industry it must have taxpayer stock ownership and proportional representation on the Board of Directors.
Both the banking and auto industries have demonstrated the fatal flaw: greed, inertia, and lack of vision of corporate boards. Until this fatal flaw is fixed, all the technical solutions of electric cars, fuel cells, solar power, wind power and financial bailouts are useless.
The American automotive industry is a systemic problem, not a problem that belongs to any one party.
The CEO’s and the boards of directors of the auto makers are tasked with making a profit, and making one quarter-over-quarter. This directive does not allow them a lot of room to move the market in the direction they choose, at the risk of their jobs. To whom do they ultimately answer?
Shareholders.
In order to fulfill their objectives that shareholders dictate, automakers must respond to the marketplace. Sure, Americans became enamored of hybrid vehicles, but it takes American companies 3 years from design inception to production for a new car model; if hybrids were only commercially successful over the last 3 years, the American companies may lag behind the first mover in that market space.
There’s also the issue of the unique American market; the hybrids that became popular were produced as a response not only to an American market (primarily in California, which itself is the 5th largest economy in the world), but in response to demand overseas where fuel costs have been much higher. In the U.S. up until this last 18-24 months, the demand was much different, trending towards larger vehicles — and in the case of heavier vehicles including SUV’s, because tax policy provided an invisible subsidy to the American automakers to produce these vehicles. A tax credit has been available that encouraged hybrid purchases, but that credit was phased out in 2006; the legislation supporting the credit had also been highly diluted, unlike that which supported the purchase of SUV’s.
Who drove these tax credits through Congress? I suspect the auto industry, but it may not be quite as simple as that.
This whole mess is more complicated than it looks, and a good portion of the problem is looking back at us when we look in the mirror. Perhaps we as a group are not purchasers of big American gas hogs, but we are likely part of the “ownership society”, having investments from which we expect quarter-over-quarter improvements in value and yield. How many of us own mutual funds that contain stocks invested in the auto or oil industry? Why are we not telling directors and CEO’s that we’re willing to settle for yields at or above prime if they will ensure the long-term sustainability of their organizations? How many of us have really gotten our eyeballs soiled with the details of tax policy, following this work with calls to our Congressional delegation to demand better policy?
We’re all a part of this mess, and it’s going to take more than finger-pointing to solve it; it’s going to take a lot of communication which has been missing from the system almost from the beginning. Just for the hell of it, try the Beer Distribution Game and you’ll see what I mean.
Not to mention that the hybrids of today present their own issues; and would very much be problematic in their own tight of a mass scale. The batteries are huge cost and environmental issues. There are many others. We should be further along though.
About 8 years ago I had the opportunity to spend some time hashing over the future of fuel cells with folks working in new product development at a Fortune 100 company. They told me at the time there was no way that fuel cells would be viable commercially before 2015, 2010 at the very earliest; they’d actually sold off some of their fuel cell technology to a well-known competitor in the same market space because they could not improve upon it and reach commercially viable products in that time frame. I remember a vivid, heated argument with them about this, maintaining that they must be wrong.
I guess they won the argument.
The problem as I see it now, in retrospect, is that there is far too little money spent on this; it’s an afterthought, a throwaway for these firms because it cannot produce value in a short time frame and there is constant pressure not to spend money on anything that cannot produce a profit (GUARANTEE a profit, I should say) inside a 3-year time frame. The only means by which we can shortcut this drastically is to develop it publicly, using our tax dollars, and then allow access by commercial organizations. But there must be mechanisms by which we can ensure rapid development with real products inside a finite timeline. I look at the Ansari X Prize projects and Google’s annual Summer of Code, Android development contest other similar competitions, open source and proprietary alike as methods by which we might be able to achieve these ends.
If there’s one national attribute that we have underutilized and could be key to solving this crisis, it’s American competitiveness. We do not like to lose and we’ll put it all on the line to win.
Imagine the trash talk sessions we could have over our favorite fuel cell development teams…
Boy howdy; agreed completely. There have always been issues with the fuel cell as we currently know it and use for autos. Weight of containment vessels, volatility of hydrogen, and, the one most ignored, compatibility with the drive train. Fuel cell power heads as currently exist are really constant speed deals, i.e. they run at a constant output. Automobiles require a variable output power head for the starting, stopping, acceleration and deceleration of modern day driving. This is a huge issue, and the drive systems that have been developed to date (BMW probably has the most advanced and commercially viable) are ungodly expensive and extremely complex. Right now, fuel cells are much better suited for constant speed applications, such as for generators, pumps, etc.
They buried the hybrid tax credit in a form for business taxes. It was nearly impossible to find and use.
There you go. There’s one of the first answers to our problem.
CLEAR-like tax credit needs to be accessible consumers.
I do love how the internet makes this stuff possible, open-sourcing our problem solving. Now if only we could design commercially-viable automotive fuel cell in the same fashion…
This is good EW real good.
This is from a start-up Valcent and I think it demonstrates how much we don’t know about the immediate future of the auto industry. If this algae-biodiesel works along with hybrids, it could conceiveably breathe new life into the Big 2 and a half.
December 12, 2007 Initial Data From the Vertigro Field Test Bed Plant Reports Average Production of 276 Tons of Algae Bio Mass on a Per Acre/Per Year Basis
Per the OTC Bulletin Board Valcent
There are a lot of these algae start-ups competing with ethanol. It’s all indoors and a lot of it sounds very high tech. AFAIK, you could build these in empty buildings in downtown Detroit along with a refinery. If phred’s around, I’d be very interested to read her opinion. I’m not sure this is much of an improvement wrt global warming, but it beats the hell out of buying it from the Saudis. I think what your left with after refining algae still has some value as feed. My guess is this technology isn’t going to be available for another couple of years.
Ethanol in and of its self is OK. Ethanol from corn is not sustainable. But right now farming corn is about the only sector that hasn’t tanked.
So biomass would be a good alternative. Scaling up is a lot harder than it sounds.
Sounds promising on the surface, but we are pretty much getting to the point to where the on resource more valuable and expensive than oil is water. How much is this algae production going to require? And what are the by products and environmental impact of this algae production?
I just emailed phred about this thread with some of those same concerns. If you burn algae, it’s still going to release carbon. I’m not sure what Valcent mean by “carbon neutral” or how much less damage it does than sweet crude.
bmaz, I’ll try to find a link but there s an East Coast snack manufacturer that produces all the bio-diesel they need to run their fleets. They also have a pond on the grounds of their plant used for geothermal neegy and as a cultivation pond for algae. The algae is processed for supplemental bio-diesel and the by-products are re-used in their manufacturing. This company is working towards a 0 emissions goal and they are getting there.
An additional source for ethanol is native Switch Grass, which can grow anywhere. It’s a better source than corn.
Finally, we missed an out-of-the-box moment a few years ago but Tata motors in India snagged it. The Compressed Air car.
http://www.dancewithshadows.co…..ir-car.asp
http://www.businessweek.com/au…..pDiscussed
This car IS coming to the US in 2010.
geothermal neegy
Okay, need more coffee. That should read, geothermal energy.
I did not clarify that this company uses their spent vege oil from snack production in addition to the algae for production of their fleet bio-diesel.
In addition to holding out for a new Fiesta, I was also hoping that VW came out with a diesel golf. I sort of figure if I can get one before my friends who own the local brewery in town, I can get dibs on their fry oil before they switch cars and start using it.
I’m probably too late now, though.
Find an Indian restaurant…Get an old Mercedes…Keep both out of a landfill!
You ever been around one of those cars??? It is like driving around in a giant bag of McDonald’s fries. Seriously.
Hmmm…the smell of fries verses gas exhaust…
Personally, I’ll take the fries.
Sunday, 5 PM Ed Begley Jr. Book Salon…FDL
We should bring some of this dialogue along to the book salon.
Ed’s big on electric cars charged by solar and public transportation.
One area the auto industry could focus is on conversion technologies in order to retool cars on the road and keep them out of landfills.
This is a business opportunity that has been sadly neglected, IMO. It seems like there’d be an enormous opportunity for retrofitting.
On the other hand, the technology for retrofitting must be designed for older, heavier vehicles, must provide enough horsepower to propel vehicles designed for traditional gasoline engines.
Here in MI cars are scrapped out for money.
The whole issue of End of Life Vehicles (ELV’s) and Auto recycling is one for another post and is a huge issue.
Due to the 85% mark, it does leave room to keep vehicles that can run on bio-diesel out of scrap yards in the short run. Additionally, the older diesel vehicles that can be repaired and kept running on bio-diesel from scap oil can give a stop-gap in the short run in addressing environmental justice. Some folks will not be able to afford the new environmentally efficient cars. Transition technologies are a part of the picture when weighing environmental justice.
So the issue of scrapping cars still remains a huge issue in the industry and has a long way to go in terms of regulatory issues. Keeping a car out of a scrap yard in the meantime IS still a good thing.
http://auto.ihs.com/news/newsl…..ations.htm
I culd post a few more links but I think maybe I’ll work on a post regarding this issue for an Oxdown…
There are a few things missing from this discussion. First, what exactly is the U.S. auto industry? GM and Ford are transnational conglomerates, each with one foot in the financial economy and one foot in the real economy. GM is even a big mortgage lender. The auto side of those companies have been run with stunning incompetence over the last 50 years. That’s an amazing losing streak. Do we really want to reward that? Look at where Toyota and GM were in 1958 and compare that with today.
Second, I don’t buy the national defense argument. It makes no sense. The international arms trade shows that you don’t need an industrial base to get all the weapons you need. Even your enemies will sell you weapons.
This is an economic justice question, nothing else.
American auto companies may operate transnationally, but they are American companies. Again, see Daimler-Chrysler as an example. I studied transnational business and can tell you this is a major issue for nearly all companies with a presence in more than one country. Pick other companies and look at how they conduct business overseas — Procter and Gamble, for example. Yet another American company, but one that thinks globally, acts locally, and retains its American nature. Yet we’re not complaining about Procter and Gamble, are we? The difference lies in both products and execution, not their transnational nature.
And we’ll have to agree to disagree on the national security issue. Enemies will surely sell you weapons as well as consumer products, and we already have a number of examples of products that have arrived loaded with malware designed to spy on us. What happens if the products we are buying, whether weapons or consumer goods, are simply toxic, unacceptable to our welfare, let alone acceptable to our singular American tastes?
How about melamine contamination — are you okay with Hershey producing and buying all its milk chocolate in China, as one example? Why would this be different with cars?
Who says I’m not complaining about Proctor & Gamble? Transnational businesses are problematic in and of themselves, but that’s not really my point. My bigger point is that GM isn’t really car company any more than P & G is a soap company. It’s a mistake to identify a conglomerate with their flagship product and ignore the other lines of business. It’s really the same mistake as identifying both companies as ‘American’. It blinds you to the reality of the marketplace. We shouldn’t bail out GM and Ford because we feel some nationalistic pride. If we bail them out, it should be because we care about the people who will be hurt by their failure. We won’t structure a bailout properly if we don’t understand the appropriate goal of the bailout.
I’m sorry but this strikes me as stupid beyond belief:
Are you really afraid that Toyota, Honda, and VW are going to poison us if we let GM and Ford go under? Are you making an argument against all international trade? You really sound like you are making a racist argument against foreigners, but that doesn’t match up with any of your other comments on this site. What are you really trying to say?
I’m not advocating bailout simply because these are American firms. Truthfully, we should have let Chrysler die back in the 1980’s and then we might not have so much capacity today. The problem is that Ricardian theory has a fundamental flaw: if all of a nation’s manufacturing is offshore, they are vulnerable to externalities that halt imports of necessary products.
You ignored the example I cited of malware embedded in technology. How convenient.
You also really don’t know much about me; you are completely out of line with your comment about racism. I am part Asian; my half-Asian father worked in Tier I-III companies most of his career, including their Asian subsidiaries, and I have family that also work for Big Three companies. My husband is right now in China, overseeing installation of capital equipment for manufacturing vehicles; one of his clients is Chrysler as well, has done hundreds of millions of work for the Big Three in his lifetime. I’ve even worked for a GM subsidiary myself, and for service providers to the same. I do have some background in this area.
While nothing I have said in any way implies that Japanese or any other foreign automaker will deliberately hurt us, I do know that the issue of safety and excessive outsourcing is a real problem. It’s pillow talk in this household; we talk regularly about the differences in expectations between different countries and companies on matters like efficiency and safety. The contamination of food products is only one example that’s very easy for the average American Joe to understand; it’s more difficult to have to explain that other firms have problems with products made overseas by entities that do not operate at the same level of quality management (really, how familiar are most Americans with traceablity, for example, unless you talk about things like Mad Cow in the food supply?).
A certain chemical firm up the road from me designs products here, then has them manufactured overseas more cheaply; the problem is that the rework or rejection rate is quite high on these products. It’s not deliberate, it’s simply that these overseas suppliers are a generation behind yet in terms of quality control.
And they know it. Some of my spouse’s clients come here and buy American products to take home because they trust our products more than their own. The last visitor actually took baby formula home with them. You can figure out the rest of that story, use your imagination. And it’s not racist, it’s the unfortunate truth.
I tried to make clear that your arguments ’sounded racist’, not that I thought you were. I believe you need to know that, no matter what your intentions are.
Let me come at our disagreement a different way. I said ‘national defense’ and you’re talking about ‘national security’. This is an essential distinction in this conversation. The old national defense argument for saving heavy industry was that a heavy industrial base allowed us to win World War II. In today’s world, that’s totally bogus.
You are pointing out a very real problem (except for the malware stuff, I’ll come back to that), but it is fundamentally irrelevant to the current discussion. The auto industry has already addressed the issue you’re talking about. I would recommend that you read Krugman’s Nobel Prize winning work to get a handle on the broader context for the issues that concerns you.
On that issue of embedded malware, what are you talking about? Give me one example. I follow developments in the computer industry pretty closely (it’s my day job) and I have no idea what you are referring to.
Couple things. First, where is that multinational question left out of the “are they even American” section?
Second, GMAC has been half-spun off, with the car stuff still part of GM. I believe the mortgage stuff is all Cerberus now.
As for the 50 years (more accurately, 35-40), I don’t disagree that Toyota has done better up until very recently (as I said, currently GM is actually better on quality than Toyota across a number of classes).
But while you’re talking about social justice, you might consider the prime social justice question at the center of those last 35-40 years: unions. Toyota has had better products for that period. But they’ve also had a much easier finance structure, which has meant that when GM has tried to catch up, their legacy costs made it a lot harder to do so. GM was actually at the forefront of hybrid and co-gen technologies in the 1990s, but ended up not being able to continue to finance those programs. Ford was poised to get their hybrid Edge out before Honda got the hybrid Accord out, at a time when Edge was out-performing Accord in quality, but they had to cut the program to cut costs.
If saving the auto industry is a social justice question, we need to give really serious consideration about how to make the fact that the automotive companies have been at the forefront of unionization (with its consequent legacy costs), which is a key reason they’ve been unable to turn around in the last 15 years when they have made concerted efforts to do so.
Bingo. They have been sloooowly making the desire turn in that time period. The contemptible and deadly period was prior to that. No pun particularly intended; the die was cast back in the 70s when they did not make the move then, as Carter urged.
I agree you raised this issue, I just don’t see it being considered in the ensuing discussion. As far as I know, GM still owns 49% of GMAC. Did they get rid of the rest of it while I wasn’t looking?
I think the U.S car companies have used one excuse after another to explain away the fact that Toyota invented a better way to make cars. [My Disclaimer: I’m a huge believer in the Toyota Production System. I model the software systems I design around it and am in the process of revamping a software production process around it.] They’ve blamed the unions for their problems when, in fact, the unions have been better run, more responsible, and more forward-looking than management. I’d rather support the unions than the car companies. I’m all for taking the health care burden off the car companies through national health care system, but I don’t think that will help GM and Ford as much as they think. They’ve spent too long manufacturing demand for the kind of cars they want to build instead of looking at building the kind of cars we need.
On a side note, Toyota’s recent quality issues suggest to me that there really is an upper limit to how big a car company should be. I like the idea of busting up GM and Ford, but the transnational nature of those companies makes that more complicated.
GM may sell its stake in GMAC if it ends up acquiring Chrysler (Cerberus currently owns Chrysler, so such a trade would involve Cerberus keeping all the finance and GM/Chrysler keeping all the car stuff.
I raised that, though, just to say that if GM gets rid of GMAC entirely, they not only lose the ability to tailor car loans to consumers–with all its beneficial and detrimental effects–but it also loses the ability to finance dealers’ acquisition of cars. Frankly, we’re going to have to lose a shitload of dealers if the car companies are to survive, so this is not entirely a bad thing, but it does mean a number of marginal dealers may crash hard. That said, it also says that GM will have less pull over what the dealers do on a monthly basis, which itself might be good.
As to Toyota’s superior production: Chrysler had come very close to matching it even before the Daimler acquisition and GM and Ford have made significant progress (though RAyne’s 3 year development was actually too optimistic for either Toyota or the American companies). So that’s not really the procedural difference any more–though of course, the car companies focus on catching up on this is one of the things they had to prioritize over their timely hybrid programs in the last 10 years.
And I think you’re misunderstanding my comment about unions. I’m not blaming unions–they deserve a good deal of the credit for the quality of American companies now matching or even surpassing the Japanese companies now. But I am saying that so long as you start off with a $2000 per car cost to pay your legacy costs–which largely exist because in America workers needed unions to get the same kind of benefits that Japanese companies paid through nationalized systems. Or, additionally, that Toyota simply has fewer legacy costs associated with plants in this country, which have for the most part been open less than one generation. Until someone resolves this discrepancy, the US auto companies will continue to cut programs that would make them competitive with Japanese companies, and so long as they cut these programs they will lose market share.
It may be that Toyota is too big. One thing that’s happening, though, is that with the increased computerization of cars, Toyotas are finally as complex as American cars (which were more complex bc of things like more diesel and many more styles within model lines and more diversity of pieces parts). So they’re having more break-downs. And frankly, I suspect that as all manufacturers attempt to squeeze cheaper production out of parts manufacturers, they’re getting lower quality. Also, Japanese manufacturers are still inclined to pick a Japanese parts manufacturer over another competitior, and in some areas this is a bone-headed move.
I should also note that I had a recall just one week after I bought my Honda.
It still says GMAC financing and Homecomings Financial on my statements. No mention of cerberus. Also, there has been absolutely no change in the behavior of this company. It’s possible that they cannot produce my payment history…if that’s true, I hope I get the house free and clear! But they are fearlessless violating laws as we speak. We need to see the books.
great points, especially mentioning that GM is essentially in the banking biz.. it seems their was so much profit in the banking biz that everyone wanted to get into it.. i remember reading how Sears was making more money off their credit arm then selling products… capitalism doesn’t care about borders from what i can tell..
Rayne 146 – is P&G in the banking biz too?
perhaps the question of unionization is a key to understanding why some companies are where they are relative to others.. it seems to me the type of capitalism that has been justified the past 30 years is where unions are a burden on profits and profit has to be the guiding principle behind all decision making… the idea of unions would seem related to ’sharing’ the profit, which would seem to run directly against the some folks idea on the nature of capitalism…
For you and WO, a couple of links to get you up to speed on GMAC:
BusinessWeek, 24-APR-2006 – Cerberus buys a majority of GMAC
MSNBC, 14-MAY-2007 – Cerberus buys most of Chrysler
NYT, 02-JUN-2008 – Cerberus sells big chunks of GMAC, Chrysler
AP via Yahoo, 11-OCT-2008 – GM considers giving up its remaining portion of GMAC to Cerberus for control of Chrysler as part of merger
And as of this week, neither GM nor Cerberus wanted to give up their GMAC holdings as they could be considered for bailout money if they were part of the financial industry. And all of this is about American companies with American problems — the impact is transnational, though.
GM creating GMAC made perfect sense; if a bottleneck to selling vehicles is third-party financing, AND there’s another opportunity to both make more money on car sales while diversifying business, why not set up a financing arm? Absolutely made sense. The problem was the insufficiency of regulation on subprime loans across the entirety of the financial industry, as well as lack of regulation on upstream risk management/investments that were based on poorly regulated debt products.
As for your question about P&G and banking biz: have you ever heard of captive insurance or reinsurance companies? Find me a Fortune 100 company that doesn’t participate in one way or another and I’ll show you a firm that 1) is foolish with risk management, or 2) has no risk and I should be sticking my money into their stock.
Exactly. GMAC was the literal gold standard for decades. It was not a bad thing or bad idea as originally formulated. Not. At. All.
if a company ( auto or whatever) can lower lending standards to the point where they can sell impractical automobiles that appeal to buyers vanity rather then sanity it makes short term financial sense to do so… the auto company has a choice to make big gas guzzling vehicles that are part of a terminator movie for example rather then autos that are practical and economical.. and, indeed that is just what the american auto industry has done for 2 very obvious reasons both connected… the price tag is bigger and the payment on the loan stretches out longer leading to greater ‘profit’ (ideally).. if the vehicle becomes too expensive to drive( gas prices going up) or you are fickle enough to think you need another new vehicle, (an auto for a number of people is an extension of their ego) then you may decide to take it back, or sell if for something else continuing with an impractical approach to finances which this same ’system’ seems very happy to encourage, let alone support!
my impression is the big american auto companies are where they are due their own negligence and misdeeds.. i don’t think they deserve to be ’saved’..
They’re not the only ones. Circuit City makes more money off credit sales than off the products themselves, and is in trouble because of it.
I think DiTech was part of GM, too. Big lender, probably in trouble too.
Showing my age here: Right on, man.
[ I mean on the “economic justice” thing. I’m sitting out the side issue with Rayne, fingers in both ears. ]
Save
and push the changes that should have been implemented 30 years ago.
bmaz, I don’t know how much of a problem the batteries in hybrids actually are, because the first ones are only now coming up for replacement – they’re rated for eight to 10 years. I suspect the prices have dropped some because of increased production.
My car only has 50 kg of rechargeables, which, while it’s a lot in terms of the ‘cell phone battery’ that I use as a nickname for them, is not excessive in terms of, say, lead-acid batteries (maybe four?).
The GM Volt’s battery weighs in excess of 500 pounds; that’s a lot of weight to propel. But the problem is the same with hybrids, just on a smaller scale. Battery technology has not been as powerful as combustion engine technology on a horsepower-per-pound basis, making extra weight and aerodynamics critical to design.
The Volt’s body design had to change greatly from the sleek, sexy vehicle we saw at the Detroit Auto Show in early 2008, to the vehicle we saw in early September, because aerodynamics were bad and the battery-powered system could not provide the power to overcome drag from the body design.
The Volt — should it actually reach full-scale production, since I’ve heard scuttlebutt that says it’s not ready for 2010 — is a great improvement over the EV-1. The EV-1’s battery weighed 1600 pounds (and had an annoying propensity to burst into flames).
Oh, yeah, something else:
The City of LA uses hybrids (both Toyota and Honda) for a good chunk of its parking-enforcement fleet, and I’d bet that other cities do too.
CA is a large market, and if Detroit wants to ignore the possibilities, then it’s going to keep going toward the other automakers. Not everyone needs, or wants, full-size pickups, or SUVs, or mid-to-full-size luxury cars, which is what the Detroit companies seem to want to specialize in.
wow, just had GameDay on. The LSU fans held a scheduled event where they planned to burn Nick Saban in effigy. Scheduled and announced that it would be part of the program, and they did it last night.
Does that remind anyone of anything? Is it just me, or is that a bit much?
You mean where the Red Raider was executed??
I agree that we need to rethink, reform and re-establish our manufacturing base. We need to make things, especially the ones we use every day. It provides an enormous ripple effect: jobs beget technology, training, distribution, sales and services.
Our economy is rapidly being reduced to the latter three, which cannot sustain our expectations or our children’s. Tax policy/avoidance aside, that’s principally because the money goes where the technology is. More and more, that’s China. It is a serious, multi-prong competitor (not an enemy) that we take lightly at a peril. If we used half the focus and energy Texas Tech, the Aggies and the U of T devote to beating each other at football, it would be a good start.
When it comes to government loans, the fundamental problem we have is process. The personalities and political bodies that decide on such things formally disdain European-style government ”intrusion” into private business. We eschew institutional analysis of borrower’s management, its survivability and that of its industry. We ignore the social costs to local, state and regional communities. We just shovel money at the most lobbyist- and CongressCritter-connected companies, then hope for the best, knowing that the politicians who did the shoveling thereby extended their hold on power by doing so. The speed of the vortex increases, whether or not it spins in a virtuous circle.
Hank Paulson’s bail-out ”process” is a good example. No one, from micro-lender to Citigroup, would have used that process. A prudent lender, let alone a lender of last resort or the holder of a de facto equity stake, would have demanded new management, changed business practices, and full, timely and complete disclosure reports. Paulson, echoing his party and most American politicians, said, ”Nah, use the money however you want. Give it back if you feel like it. It’s only the taxpayers’.” No surprise, then, that the borrowers’ management will entrench and enrich themselves, not fix their problems, and never give the money back. It’s what a ”rational” capitalist would do, though not how a rational lender would act.
If that happens with the auto industry, we will quickly have third-world levels of government debt and an economy too weak to pay it back. So let’s demand that if the government starts lending real money to private businesses, it sets and enforces limits about what they can do with it. Part of that new process will need to be bankruptcy reform. If not, executives will give the government, labor and their local communities the shiv, keep their bonuses and move their manufacturing offshore.
Regarding credit, as I mentioned, there’s been some splitting up in GMAC of late (from WIkipedia, but it’s a decent summary):
Also, one more thing about credit: how do you think the manufacturers deal with dealers? Do you think dealers just pay cash for millions of dollars of cars when they arrive each month?
I’ve been saying throughout this thread, the dealer/manufacturer relationship is one of the structural issues that prevents the US companies from working better. Credit–and how it underscores the relationship between dealers and manufacturers–is part of that.
One more point, which I hope to return to: one of the biggest problems with the credit arms of the US auto companies is not that GM used to have a big stake in real estate, but that the car companies gave people extended loans which was not as bad as ARMs, but still really problematic: these loans meant consumers were trying to trade-in cars that they were upside down on. And of course, the reason was still the same–car companies were trying to get consumers into more expensive cars than they should have been in.
Those auto loan problems were largely caused by assuming that SUV’s were going to always have a premium value on the used car market comparable to what they had when they had initially when were in short supply. That was pretty bogus. There’s a common thread between Enron, the recent mortgage market meltdown, and those auto loans. The scams all worked by deliberately inflating the future value of a real asset to create false demand and, thus, short term profits at the expense of foreseeable future crash. In each case, the people pushing the loans had no incentive to worry about the future value of those loans and every incentive to make that sale today.
You got that right. No dealer flooring, no dealers. It is that simple. Same with their parts operation too.
Absolutely! We should rescue, bail out, or otherwise offer support for the auto industry. Consolidation and downsizing of financial institutions is a different, but equally compelling issue. Those institutions themselves must be preserved in order to deal with the markets – the warning shots being Bear Stearns and Lehman Bros. – but they really need policing.
The systemic problems of our auto industry must be resolved. It would be time to obtain investments from overseas. We have given away as much as we can there.
It’s been repeated noted by the thread creator that Toyota quality has declined and that relative to that, U.S. autos have improved in quality. This probably partly due to the fact that more Toyota models sold in American have been assembled in American. American auto company cars are still by and large utter crap. Even the Hondas built here are worse than Japan built vehicles. Ask any Honda buyer who knows how many beans make five and they’ll advise you to stick with Japan-built models (check the VIN).
The attitude of Americans about cars is all wrong. The highways remain filled up with menacing SUVs. This weekend, we noticed a marked increase in speed among drivers on the highways. I surmised that they were less inhibited as a result of lower fuel prices which in our area are now $2.25/gal. As ride down the deflationary path of a major depression, drivers will become even more obnoxious and dangerous on the roads.
The paradigm shift won’t happen till the need for it can be communicated to the broader public. First, blow up the tv. Then, eat a lot of peaches.
I think the point’s been made, but it’s worth repeating. A government “investment” in the financial services or auto or other industry would not and could not be for that industry to continue business as usual. If that were possible, commercial loans would do the trick and government loans would not be needed.
Government loans are the public’s investment in social and economic restructuring. They’re not so Monterey or Seattle circa 1960 can reclaim their fishing industries or for Boston or North Carolina to reclaim their textile mills. They’re not for 1980’s Youngstown or Pittsburgh to reclaim unchanged their defunct steel mills or 1930’s Cleveland to reclaim its title as oil capital of the world.
The money isn’t to bring back a long-gone spouse or to keep an unsustainable marriage together. It’s to pay for the divorce, the community “grief” counseling, to pay for businesses to refocus and reshape themselves for a future radically different from their past. It is a community’s reinvestment in itself, not a hands-off loan from a loan shark or private banker who cares only about getting his money back, plus the vig. How companies achieve their goals is necessarily, but not exclusively, up to them. What goals they pursue with public money, how well and how timely they do it, is the public’s business. That calls for a reassessment of government-as-lender as radical as any it would demand from a private borrower.
According to Bill Black who testified before the agriculture finance committee from MU stated that 40% of the predatory mortgages had accounting fraud in them. Alan Greenspan testified the number was 10% (but I think he is underestimating if you look through the hundreds and thousands of complaints). Accounting fraud. We need to see the books. There must be an investigation. WE cannot forget that these companies violated the law. They didn’t just make bad judgments about what cars to build. They invested in the subprime market and backed this illegal behavior. Innocent people lost their homes to accounting errors, and violations of laws. Until this aspect of the financial crises finally comes to the top, we cannot be “solving” the problem. WE cannot change what we don’t accept.
Look. GMAC owns Homecomings Financial one of the absolute worst predatory lenders of the last 10 years. During those 10 years this company engaged in major violations of TILA and RESPA laws. I do not know if they did this in regard to car loans, but you can find literally hundreds of complaints against Homecomings. GMAC used its name and status to perpetuate these loans and the illegal behavior. They stood behind the name and the import of it’s connections to the auto industry to avoid prosecution over and over again.
Fine, bail them out, but only after the criminals are removed and prosecuted. There must be investigations and we the American people need to see the books before we make any promises about who we bail and why.
I can tell you this, you would think that GMAC would have stopped their illegal behaviors, but I can tell you that they won’t give my lawyer my payment history. (hmmm wonder if that means they can’t find it?) They say I owe a good 7000.00$ more than my laywer and I can justify by any accounting means we know about.
GMAC is in trouble for many reasons but let’s don’t forget that they developed a very large and lucrative subprime division and that part of their current failure now, is the result of the ponzi scheme.
How long have I been predicting this crises as a result of these mortgages and having it fall on deaf ears. This is no different than Katrina. They picked on poor people who would not be heard. They raped the drunk girl at the frat party. And no one wants to open their eyes and see the truth.
THe president of the fraternity is a rapist. Many of the poorest in this nation have been striped of their homes due to this illegal behavior. ANd you all want to bail him out of jail because he’s such an asset to the community!!
We need to save those companies, but there must be investigations first. We have to get to the truth BEFORE we can solve the problem.
I meant to get back to this comment.
This op-ed suggests that the investigations you’d like should be wide-spread, across all mortgagors that wrote subprime.
But it’s bigger than that. I’ve gotten a class action notice because of a mortgage with WaMu — didn’t even realize the mortgage was with WaMu to begin with, and the underlying reason for the suit is one of the multitude of reasons we should be investigating almost every mortgagor who wrote loans over the last 8 years. There are systematic violations of RESPA across the industry. You’ve likely been one of the victims, too.
That means GMAC’s DiTech and Nuvell and any other subsidiary should be fully investigated, too, should be a condition of any government aid that their business is audited.
Another wrongheaded notion promulgated on this thread is the idea that the major auto companies here asking for something new from the government in the way of direct payments. The state corporativist system we’ve had in place since the onset of mechanized warfare has had major corporations such as GM on the dole for generations. It is the very nation of this system that the majors receive entitlements from the government to furnish armaments and equipment for waging war. This relationship became entrenched as opportunities emerge out of a concomitant foreign policy that favored more production of munitions and the like. It’s impossible to separate the fortunes resulting from this relationship from auto business which had to be a beneficiary of the public monies as well. Then there are all the economic subsidies owing to fiscal and monetary policy.
Massive injections of public funds into private business is not a novelty in American.
…nature of the system…
Agreed. Massive payments by government to private businesses is not new, at least not since the unCivil War, and certainly not since the Second World War. What ought now to be different is what the public expects in return for massive loans.
Before now, in simplified terms, in return for massive government contracts, politicians expected cash to pay for their re-elections and, eventually, jobs for voters, which would yield taxes for government. Companies expected tax credits or subsidies for themselves, statutory or regulatory limits on their legal liabilities, and regulatory or statutory axes to wield over labor. Otherwise, companies demanded no “interference”, meaning hands off on what companies made or sold or how they did it.
The stakes should now be different. Government, acting on behalf of its taxpaying employee citizens (by far, the bulk of voters), should make more demands on its private business borrowers. At a minimum, those should include the same changes in management and management practices and increased disclosure that any prudent lender would demand from a borrower in extremis. That is, instead of asking WWJD, government lenders should start by asking these borrowers for no more than John D. Rockefeller or Andrew Carnegie would ask from them. Sauce for the goosed, and all that.
I appreciate your broadbased viewpoint wrt the general question here. People seem to get lost in detail that’s irrelevant at this level of abstraction.
However, I don’t see any advantage in continuing the government hand-holding even if it were possible to get auto makers or any other manufacturing concern in this country to meet certain requirements in return for the hand-outs.
The basic fuel mileage goal posts have been moved so many times over the past 40 years, I’ve lost count. We went utterly backwards in the Clinton/BushII period as far as mass consumers of gas guzzingly vehicles go. The auto makers (domestic and foreign) accomodated without regard to the environmental impacts and economy measures we would expect to prevail in saner periods. Said governments paved the way for this eventuality. This dismal record in a fairly straightforward unequivocal demand placed upon them doesn’t inspire confidence in any plan of a similar sort.
There was a time, btw, when manufacturing of autos was regional rather than national, let alone, transnational. There was one, e.g., in nearby Martinsburg, WV. It was possible to produce cars, e.g., for a regional market as opposed to a national market. Those manufacturers disappeared with the rise of consolidation, goaded on by finance capitalism encouraged by central bank policy and national fiscal policies. It is not impossible to have smaller regional auto builders in this country. The loss of the remains of a failed business model would not necessarily mean the end of car manufacture in America. (Consider the allusion to micro-breweries industry in an earlier comment made by the tread creator.)
The auto-maker consolidation had another pernicious aspect that would not be missed, the rise of gas-powered tire-based modes of public transport. Electric-powered trollies and trains were eventually shut down as a result of public policy promoting GM, etc. busses, and paved over.
The auto-combines have been more a bane than a plus, all in all, imho.
Cerberus is in the cat bird seat regarding GMAC, GM and Delphi (the mega-parts supplier GM ”divested” in 1999). That’s an enormous plonk of the US manufacturing economy. The latter remains in bankruptcy because of its mismanagement and because of the manner in which GM divested it. GMAC’s divestiture, GM’s most readily available source of big cash, is stuck in mid-stream. A raging river of a downturn just swept away the horses hauling it across.
As with newspaper and other industry consolidations driven by ”private bankers”, Cerberus will demand investment banking — not manufacturing — rates of return on its money. The radical surgical techniques of the current bankruptcy code — especially the ability to shed labor and supply contracts — cannot be far away. Most of those will hit labor and local communities, not management. As with the demise of Delphi and Lehman and the bail-out of AIG (and Carly Fiorina’s departure from HP) top managers rarely pay a price for their mismanagement. Putting in place their retention bonuses is always top priority. It’s like re-employing the surgeon who took out your liver instead of your gall bladder.
Big Auto is too big. Changing its course is like turning an aircraft carrier in the bathtub. Tooling and machinery are expensive. Supply and distribution chains are complex. Product, systems and parts design, delivery and lifespans are lengthy. Its a business that breeds caution in managers, Wall Street and shareholders. Managers win big by deferring costs, including virtually all change decisions. That increases total costs that are lumped into cyclical downturns, the bureaucrat’s favorite device to spread blame so thinly no one can be blamed, and hence, no manager’s job or bonus can be nicked.
To survive, an American auto industry will need to reshape its risk tolerance along with downsizing its manufacturing resources and its work force. Its hands will be tied by private bankers, who want liquidation rates of return above any that a well-run manufacturer could produce.
Great comment, all around.
So, while not picking a particular plan or side (there have been many interesting ideas presented here, as well as some awful ones *g*), what does the crystal ball say:
1. The rump 110th Congress adds another 25+ Billion for the Big 2.5? Or does the current political control configuration of Repugs and Dems punt/pass or veto?
Or
2. The new 111th Congress and new Administration, with Democratic control of both Legislative and Executive branches, using “conventional wisdom”, handout another 25+ Billion gratis after January 20th?
Or
3. The new 111th Congress and new Administration does “something” radical after January 20th? Something like suggestions posted here like “equity positions” for loans, radical surgery in splitting apart the Big 2.5 into multiple smaller companies, Federal assumption of autoworkers health and pension plans, etc.?
Conventional wisdom would lead me to think Number 2, however one could be hopeful that the new Obama Administration might just possibly break with conventional wisdom and choose Door Number 3.
Place yer bets.
Oh and EW? Why are your Wolverines kicking my Goofers’ butts?
I think the first thing that will happen, during the rump, is a renegotiation of the $25 billion, to allow them to use the money immediately for purposes that have nothing to do with retrofitting. Of course, that means they’ll still need to retrofit after January 20, in addition to the money Obama wants to invest in new technologies. I think that money will be slower, partly because new auto states–AL and SC and so on–have an incentive to make sure the American car companies don’t get anything they don’t get.
EW, your post here reminds me in many ways of the Terry Schiavo case, in which politicians, judges, popular sentiment were all involved in trying to determine how to intrude into an area that, generally speaking, americans feel it doesn’t belong.
In this case, the inert, brain-dead body in question is represented by “detroit north”–your 2.5 big auto corporations.
It seems to me that Bill Frist and Tom DeLay had already made up their minds regarding whether government had a role in keeping a person alive indefinately, using life-support. They then fixed the evidence, bent it, to fit their needs.
Two questions I don’t see you asking here are:
1. CAN the US govt. save the 2.5 corporations? There is considerable question in my mind whether we actually have the ability to “save” these companies. Sure, we can put them on life-support. But that is a different question. The 2.5 have failed leadership, and a failed business model. How does an infusion of yet more Public BILLIONS “save” that?
2. Does the failure of the Big 2.5 mean an end to manufacturing, or even an end to a home-grown US auto industry? Clearly, if Ford, GM, Chrysler went away tomorrow, there would still be auto manufacturing in the US (Toyota, etc.). Further, there is no reason why new companies, either those existing now, or new startups, couldn’t eventually grow to fill the gap. A surprising number of these companies are out there, struggling, burning cash, barely making it. I’d much prefer boosting companies like this:
http://findarticles.com/p/arti…..i_69860769
Than to prop up old companies turning out yesterday’s products while doing everything they can to hinder, delay, or demolish the country’s energy and transportation policies, via the usual political channels.
I was going to try to get to that in later posts. And the truth is, I don’t know the answer. I suspect Ford is a lot closer to making it than GM, though frankly their ongoing success will depend on the luck of the dice on whether the other countries they’re particularly strong in expand or contract their own auto purchases. For example, if India’s auto market recovers and China’s doesn’t, Ford will survive. If it’s the reverse, GM will have a better shot. So, too, the European market will be critical.
That said, it would be well to be careful about damning the entire business model. In the US, they are losing market share. That’s NOT true around the world–there are places where they’re competing reasonably well with teh companies they’re sinking to here (though even in those plaes they still have problems).
And finally, part of their “business model” is just that they had the crummy luck to be the unionized American companies in an industry in which later entries had many fewer expenses and the ability to start afresh.
EW, they have legacy problems for sure, and I’m glad to hear they’re making some progress overseas. I’m not an industry expert by any stretch of the imagination–but somehow I do not think union shops and other legacy issues (such as health care) are the primary reason for the collapse, which has been going on for a long time.
I think its simply that they can’t produce products that compete, and that is a leadership issue.
You are right about ford relative to GM; but only because GM has not had the fortitude to go lean and mean yet. If/when they pare down, like FoMoCo did in reeling in Lincoln and trashing Mercury, GM would again be way above Ford. Question is, will they do it. They have to bring GMC trucks and Chevy trucks into the same deal and eliminate GMC as a separate division. Same with Buick into Chevy and Cadillac. Got to make streamlined option packages on their vehicles (foreign manufacturers have been doing this from day one; Ford caught on about ten years ago – GM still slow on the uptake) If GM did some of this and more, they are probably again a superior entity to Ford.
They build different cars in those countries, too: not so many gas-guzzlers, more fuel-efficient models.
I hope that the government doesn’t hand over money without strings. I get tired of money being thrown down ratholes, just so the rats can continue buying fine handmade cheese.
An essential vegetable for this let’s-reorganize-American-manufacturing stew is nationalized health care.
Enact it promptly. That will solve a major headache for the Big 2.5 Auto companies, and put them and American businesses on par (regarding that one sizable cost item) with, e.g., their French and British and Japanese competitors. Among other transition items would be a transition period for health insurers (who take a $350 billion piece out of the health care pie) and a mandatory buy-in for companies to offload current health plans onto the public one.
Trash Talk is up
it would be one thing to “save” Detroit but i for one don’t think it’s possible. the auto makers have repeatedly refused to make good decisions. this has been going on for a minimum of forty years. i’m not interested in having a car with the name of a foreign corporation on it no matter where it’s made, but i haven’t owned a car in more than ten years and i don’t plan to buy another one. if America doesn’t develop a public transport plan and with it an energy plan we will be missing out on one of the most important aspects of having a more positive future for our country. unfortunately, or maybe not, the auto industry as we have known it is over. our denial of that reality isn’t.
Emptywheel,
(mods: sorry so long, but she asked)
I had to wait till today to write. Last night as I read your article and the posts I had tears rolling down my cheeks. As mad as I am at the auto companies management and their partners in crime, the oil industry, we must remember we are also talking about the workers and their families that work in or retired from the auto industry. It’s not just about paying back the people in management and the lobbyist’s who made these bad decissions because they wanted make every dime they could suck out of us and to bust the unions these past few decades that will be affected. Many I know including my family will be effected by what happens to them. We have been concerned these past fews months already and it is stressful. My husband was drafted during the Vietnam war. When he got out he got a job with GM. 33 years of HARD LABOR and DANGEROUS jobs in a POLLUTING enviroment and he finaly retired nearly 2 years ago. He has many aches and pains now. We are concerned that his retirement checks may not arrive if they go bankrupt and in our old age we may have to be seeking employment where there is none now. In the buyout contract GM put in a clause that we are not able to receive the PBGC insurance if they go bankrupt. I don’t even know if that was legal for a corporation to include in a contract that we are not able to receive a government insurance program. But there it sits in the contracts of thousand of buy out plans. BTW, the buyout plans are another way of union busting.
That said and with the employees and former employess and future employees and other industries affected in mind:
The Big 3 had/has a large part in giving us a middle class. They got us through WW2. They gave us assembly lines, labor unions, safety standards at work (OSHA) and efficiency. They got children out of dangerous jobs and back into schools.
The Big 3 and Unions gave my family, my friends, and my neighbors good jobs with decent wages and later good benefits. I remember when GM (with the help of the UAW) gave their employees dental insurance and both my parents were able to get their rotten teeth pulled and dentures put in. In those days seeing adults with rotten teeth was common. My sibbling and I were able to have a dentist pull a tooth instead of my dad pulling our teeth with pliers. Before that I didn’t know any one who went to a dentist unless they were in extreme pain and it was an emergency. Today the dental industry is far advanced and thriving and I haven’t researched it but I’d say it was largely because of the Big 3 and other companies providing dental insurance. Because we had health insurance and eye vision insurance those industries also thrived. I don’t want to go back to those times.
Wiki says in 2004 General Motors was named one of the 100 best companies to work for by “Working Mothers” magazine. http://en.wikipedia.org/wiki/General_Motors They provided families with a good life. My grandparents, my parents and my husband was able to pay their bills, have enough food to eat, take care of their health and go on vacations. For every job in the auto industry we lose about 9 other jobs. Auto parts are are a huge industry all by itself. And now even those jobs are overseas, many in China. I do not want to depend on China for anything. They are poisioning a huge amount of people and animals. I don’t want food or anything else made in a country that does not had the same legal standards that my country has. We need to bring these jobs back here. I agree that we cannot survive on “paper jobs” or “stock market” paper! We must produce products and produce. If the world is as dangerous as the far right thinks it is then we should for security reasons bring our country back to self sustainability. If some kind of world wide epidemic or World War were to happen then transportation of goods would be drasticly reduced our way of life. The 1918 flu pandemic lasted nearly 2 years. How long could we survive through some thing like that if we rely on food, clothing, medicine, auto parts, etc. from China or some place else? I don’t want to depend on other nations for necessities during a world crisis’s. Oil is another reason to get on the renewable energy kick with electric cars. Selfsustaining right here. Keep our dollars right here. Not just our oil dollars.
NAFTA and CAFTA and other trade issues not only took our jobs out of our country and/or over seas but they took the health care, dental care, eye care benefits away form us. Families could no longer afford bowling, movies, sporting events, traveling and vacations with the jobs that replaced them. All those industries suffered, not just the auto industry. Millions of families were effected, not just auto workers families. NAFTA and CAFTA and world wide trading took some of our middle class away from us. And gave us millions if not trillions of lost trees (and dollars); which is the lungs of the earth; through various insect investations brought in from ships and planes. If you drive through Michigan in the summer you may be shocked to see how many dead trees are standing with no leaves or dead fallen trees, it’s heartbreaking and financialy disasterous. Our trees are dieing at an alarming rate at a time we need them the most to clean our air. Not to mention what has happened to our fish industry through invasive species such as the (VHS) viral hemmorhagic septicemia. It’s also caused us millions of dollars due to zebra mussel infestations, etc. in our water through the Great Lakes and our waterways.
GM had an electric car EV1 in the 90’s. http://en.wikipedia.org/wiki/EV1 They were ahead of their time and we didn’t want those little cars then. And I don’t want a small car now. When I was a new teen driver there weren’t the millions of 18 wheelers on the roads as there is now. We gave my eldest son a small truck and will give our youngest son a small truck not only because of the amount of snow fall we get here in Michigan but because we feel they are safer on the road in a truck as opposed to a small car. If cars on the road were no larger than the cars and trucks families own then we would be safer but we have 18 wheelers and and large cargo trucks. I long for the day products and produce traveled the US on trains and give us our back our roads. I’d rather wait for a train then drive along dozens of 18 wheelers. I’m not as concerned with the motorhomes and trucks pulling boats because they aren’t on the roads as frequently as the 18 wheelers and there aren’t as many of them. If we could get some of the huge trucks off the roads then I would give my child a 4 wheel car to drive.
I do believe we will be driving electrical cars in the future. I read this article about how electrical cars could help us with the electrical grid problem. I know, your thinking if we all had electrical cars we would be sucking off so much electricity would there be enough left for our homes. Here is an article a guy has about charging our cars at night and putting that power back into the grid during the day. It could work and I hope they figure it out. We drive our cars less than 5% of the day. 95% of the time they are sitting in our drive way or a parking lot at work. In the future we may have battery stations instead of gas stations. We just stop and exchange those nearly dead battery packs with fully charged battery packs like we exchange our propane tanks for our grills at many gas stations and Kmart stores now.
Hackers have made it possible to get 100 miles per gallon in a Prius. http://news.cnet.com/Hacking-y…..?tag=mncol
I read (on the above website I think) that gov can’t figure out how to tax us using electrical cars and that has slowed things down. That’s the problem with our gov they want to tax everything we earn, tax everything we save, tax everything we purchase, tax everything we own, tax everything we eat, drink or do. Soon they will be taxing the air we breath and the rain that falls on us. Then they get groups of people to vote for them depending on how the politicians decide to use our money they collected through taxes. Am I the only one who thinks this is wrong? We really need to overhaul our entire tax system. If they didn’t tax every damn dime we the unwealthy made or saved we would not have lost trillions of dollars during the Clinton market crash or the Bush market crash trying to avoid those taxes. And they can stop telling us we don’t save enough. After they taxed every dime earned or saved our gov and corporations came up with more ways to take our money by inventing this illisionary savings plan called retirement/investment accounts and stold that money through the stock markets. I am teaching my children not to give their money to lieing manupilating retirement/investment accounts who won’t disclose what they do with OUR MONEY and charge huge fees and when we want or need our own money. F… them. We have some power we need to use it. Why do we let so many institutions control our money? Why do we allow them to charge us to cash a check or take our own money out of a bank? We have to force changes.
IMO, I would like to see the auto industry in the United States bailed out because I believe they could make the electric car of the future and grow into a new and revised kind of American company putting American people and American jobs first and building up the middle class in the process. I would like to have my child have a job with good pay and benefits. It’s the American dream. But they have to seperate from being in bed with the oil companies because the oil companies don’t want us to have electric cars. The oil companies have too much to lose. Maybe we should help out the auto industry for the workers and middle class and for our kids and the retirees sake. Help them with electrical car retooling and battery research. Keep them afloat a while longer because I have faith in the workers in those companies. Maybe give the money to the UAW and let them decide how the auto compaines should spend it.
Thanks for that, sunshine.
I’m not very good at describing the real anxieties of a lot of people in MI and OH and KY and IN and other auto states. I’m glad someone did it.
Good article/editorial about cerebus and hedgefunds.
http://www.thetruthaboutcars.c…..er-and-gm/
Don’t know if many here know about Jimmy Barnes, but if you are talking about driving wheels, you should.
I think there is some consensus here on several points.
1. If we are going to invest in these companies, we need to do it like investment bankers rather than like patsies.
2. We need to figure out ways to get innovation, as current management isn’t going to be able to finance that, and doesn’t seem to have the necessary intellectual flexibility to do it.
3. The rationale for investment is preservation of manufacturing know-how and systems. We have a lot of intellectual capital tied up in this industry.
4. Legacy costs are a huge problem, which could be relieved by nationalized health care and better control over retirement planning.
There is some agreement on the proposition that smaller might be better. There is a real taste for trying other fuels. I note that in Europe, small cars use gazoil, a clean diesel, and get over 45 mpg, if my experience and metric translation are accurate.
As is always the case, the discussion is thorough, informed and penetrating.
Nice summary. I have no problem with restructuring and saving the auto industry. I have a problem with any bailout that might enable them to hide illegal activity where it exists.
alank (176), WO (193) — there is not only a national security issue in play here, but a defense issue as well. Think worse case scenario: how quickly could we ramp up manufacturing of our own military equipment? how compromised are the entities upon which we already rely heavily, given that we already know we were compromised during the last 8 years but have no idea how deeply? this is a legitimate question; it should not be the only criteria by which we evaluate the automotive industry’s plight, but it is one issue nonetheless. I do not believe the entire American industry should be saved, but some appropriately scaled, appropriately focused portion of it should be, and one of the numerous reasons should be national security and defense.
There’s also a security and defense issue from the perspective of a asymmetrical warfare — and one of the largest potential markets/economies in the world has invested in studies of the same. At the moment we have done far more damage to our own economy all by ourselves, but what would it take to deliver a coup de grace? This country has been simplistic, naive, shortsighted for far too long, and has been completely unprepared for an asymmetric war against it.
WO (193) — I have read Krugman’s works for years, thank you very much. His writings in particular on liquidity traps and multiple equilibria are particular valuable right now. (How does a behemoth like the American automotive industry design for market demands that lag the performance of oil given multiple equilibria? We’ve slid past another point of equilibrium which will soon skew demand again…)
As for the malware: you work in the industry and have no familiarity with Mocmex and W32.Rajump? You need to do your own homework.
If you think those virii are relevant to the conversation, we’re not having the same conversation. They are completely trivial. I think I must be missing something from your argument. The knowledge you display is completely unrelated to the arguments you are making. Melamine and Mocmex are representative of China’s problems with quality control. They have absolutely nothing to do with what we should do about the auto industry. What is the connection you see?
Just because we haven’t seen a problem with a Chery or other Chinese-made so far doesn’t mean we won’t, ditto the components
And just because you can’t think of a manufactured piece of technology that goes into a vehicle that might included embedded software doesn’t mean it’s not an issue.
The melamine problem is an example of a challenge in quality control to both China and the U.S., both from cultural expectations and from the lack of controls in China and by U.S. purchasers who cut corners at their own end. This recent article from NYT does not in any way assure me that melamine has been ruled out as a possible reason for the increase in kidney stones in this country, particularly since the American diet has not changed much in 10 years; at what point do you think this is or isn’t a security problem? Right now it’s obvious to the world that the American food supply is comply insecure, open to tampering. Can you say that car components are tamper-proof?
You need to read more about Mocmex. It may only have been gathering moderately harmless data like passwords to games, but it was a complex and highly engineered software that had the potential to do far more. I suspect it was a proof-of-concept. You do know that both the Obama and McCain campaigns had their computers “hacked”, yes? How do we know that Mocmex wasn’t part of that “hack”? And at what point does the real payload come — and can you not imagine this used in vehicles?
Trivial my left cheek.
I’m done with this conversation. You’re imputing tom things I never said:
That’s dishonest and insulting.
That is exactly what I was getting at in my comment @63.
There is a peace factor in the oil production equation. Traveling from a time seven years ago when prognosticators barely could envision $50./bbl to a fastforward commonplace $90./bbl, and sequential quarters with recordsetting profits at the principal three oilcos, which find it easy to sell at the new elevated price given the nearby war zones in oil producing regions, is a factor in some of the finance crunch ongoing in late 2008. Commenters have tied to the diversifications, upthread, to various parts of the economic crunchtime now. If Barack Obama’s foreign policy relieves some of the international strife, there will be downward pressure on bbl prices, and a ripple thru the economy, reassuring Detroit of its extended grace period to reconceive, retool, redirect. It will be interesting to see how the new administration relates to the watchdog agencies, and to hear what Chris Cox thinks will be a fair way to maintain a shoulder’s length objectivity when doling hundreds of BBNs into finance instead of letting the new handouts be free from the bonds of Soxleydom. The neocons are going to resist letting peace be a contributor to creating wealth this way, though, given the thrills of the past eight years.
I don’t mind helping the 3 domestic car builders by infusing a set amount of money to enable them to retool to build smaller more efficient cars, or even a short term loan like Chrysler got with the US getting a first priority stake in the company that it could sell if the company goes bankrupt so the taxpayers would get back at least pennies on their dollar.
As for the legacy costs, well I sorta think of that like the ”liar-liar” scenario we just had in the lending industry, where one side lied and said that ”I can pay that,” and the other side lied and said ”I know you can.”
The unions for years worked the car companies against each other, one company at a time striking to raise their compensation. The individual companies had to give in and prices went too high as did compensation while quality decreased.
The Union should have had to strike the whole auto industry at once and then wiser decisions might have been made on the whole.
I remember now how I really envied the pay and benefits the Auto workers and the Airline pilots got.
Now the cycle has ended. I don’t feel sorry for them. I never had a health plan that I didn’t pay in to. I am retired now from the military, and still don’t have a free plan like many retired Auto Workers still do.
And the poor Airline pilots flying transoceanic only get about $150K instead of $300K a year ”when” they have a job.
”So solly, so solly” says the Chinese laundry man when the customer doesn’t have his laundry ticket.
And like Big Tent Democrat, this Big Ship Gerald speaking only for himself.
I haven’t read all the comments, but this is a great topic and a critical problem to discuss, and I hope EW will continue to post on whatever aspects she finds important. And the worries expressed by sunshine are worth stressing. Regardless of where one comes down on this, I don’t think anyone will argue that the stakes aren’t incredibly high.
That said, it’s also important to see the situation as objectively as possible. GM announced recently that it is burning through cash at the rate of about 2 billion dollars a month, if I remember the report correctly (as reported on CNBC). At that rate, the company will become unsustainable within the year. It’s unclear to me how we solve GM’s problems by giving it a few more months worth of public cash to burn through (we’ve done the same thing for the financial industry, and they appear to be hoarding cash and paying dividends–not lending) In addition, it’s totally unclear that we can save the industry by nationalizing it.
GM’s 3Q2008 actually said that, as did CEO Rick Wagoner on CNBC on Friday, that they will not have enough cash to get through 2Q2009 (he was being rather careful in his statement to the media, too, trying to avoid panicking people by way of understatement).
Here’s the key text from the financials, from the Cash and Liquidity portion of the statement:
Emphasis mine. The Chrysler deal was nixed because it generated expenses that didn’t improve the bottom line in the short run, not because it didn’t make sense in the big picture.
I’m not certain, but I think that part of the increased burned rate of 2-plus billion per month during 3Q2008 versus the lower 1-plus billion in 1Q and 2Q2008 may be due directly to the market crash in September. May have been related to higher costs of money and losses in the stock market of any monies they had invested, including downward shifts in dollars.
Without the promise of public monies, they can’t buy better terms on money and any credit purchases — that’s how part of the public money would would assist GM without even being spent, acting more like a guarantee.
The Bush Republicans decided against Diebolding the November 2008 elections because they didn’t want a Republican in the White House to bear some responsibility for the coming Bush Depression of 2009. Their electronic voting-flipping and election-stealing machinery is still in place, and it will be until we return to hand-counted paper ballots in our elections.
November 8th, 2008 at 9:48 pm Recommend (0)
11 8 08 to TP:
The Republican way of keeping our economy out of recession was based on short-term tactics which have created several long-term problems. By repeatedly cutting the interest rates, Greenspan has virtually destroyed personal savings in America. Instead we borrow billions from the Chinese, the Japanese and the monied folks in Europe and the Middle East to “pay” for our wars and our spend-thrift ways. This won’t work in the long run as we are know learning to our sorrow.
Republican-run corporations have been outsourcing and exporting our good manufacturing jobs and high-tech jobs for many years now, dating back to NAFTA and WTO in the corporate Clinton days.
Now the criminals and traitors that run GM and Ford have their hands out, begging for free money. This is obscene. These folks outsourced thousands of American jobs in the auto industry to Mexico and China and other foreign locations. Now Americans can’t earn the money to buy the GD cars made by GM and Ford. What an idiotic plan. Outsource our manufacturing jobs and then act surprised when Americans no longer have the bucks to buy cars. Short-term corporate greed is destroying America.
we are going to have to tighten our belts, get the hell out of Afghanistan and Iraq and start living within our means.
We cannot borrow our way out of debt. It only took the Bush gangsters and the greedy corporations 7 and 2/3 years to destroy America.
The caption photo of one car upsideDown is an apt image of the tangle the next presidency will have to address. Humorously, once an ex of mine flipped her new beau’s car, and I happened first upon the scene, sure in that moment she had perished. Strangely, the car was empty. Nearby soon I located her and the gentleman, actually already laughing about their mishap; she had been driving. I doubt that is the sort of humor which will be required to reconfigure the car industry. I can detect Republicans laughing at a Democratic party administration having to explore the anguish of unions and a key industry longtime a driver of the US economy. Similarly, the puzzlement of modern Democratic party theorists when devising acceptable paths to the global integration economy also must elicit smiles from Republicans who garnered profits and left the flipped compact car in traffic. There was one south American negotiator at a round of freetradezone talks about two years ago whom I will paraphrase as saying as it ended amid US refusal to negotiate some parts, the zone ‘wanted a freetrade agreement but not That FTA’ (too suppressive of the socioeconomically disadvantaged in their already historically polarized economies). I supported Nafta and its sponsors’ enthusiasm. The Democratic party certainly will revise some of those regional arrangements to improve outlook for downtrodden people. Barack Obama may even make a work of art from the congress’ assistance redesigning the auto sector domestically. The many expansive and insightful thoughts in the thread will be part of the complex planning too.
Life would be a lot easier if people here could just say, “sorry, my bad” and we could all move on, instead of offerred belabored arguments in defense of the indefensible. It’s notable that no one here is talking about “Kraut cars” and “Dago cars” (not that we should be, needless to say).
Here is a link to an incident in Canada involving the use of the word “Jap,” which might be instructive.
http://www.ctv.ca/servlet/Arti…..TopStories
From your link:
As far as most of the WWII leaders of Japan were concerned, his statement appears pretty accurate to me.
Nanking Massacre
Full disclosure, my uncle was deployed to the Pacific, but died in a vehicle accident before they shipped out. His unit became part of what we now call the Bataan Death March.
Korean WWII sex slaves fight on
Do you have any more examples?
quake, since you’re so ethnicly sensitive, please name a few of the really bloody acts of U.S. white supremacists since the Civil War.
Boo, Perhaps you might recall that many tens of thousands of Japanese-Americans living along the west coast were illegally rounded up and incarcerated during WWII for no reason other than that they were “Japs.” Why can’t you just acknowledge that the use of the word “Japa” was inappropriate, regardless of the context.
The virulent ethnic problem in this country in 2008 is the legacy of legalized white supremacy. By any reasonable calculation, Africans and Native American tribes suffered far more than all the other ethnic groups combined.
Since you don’t appear to know anything about post Civil War genocide against the slaves and their descendants, I’d suggest you google on Tulsa in 1921. Some European Americans tend to call it a riot. I think “massacre” better describes it. No one tries to spin what happened in Colfax, LA as anything but a “massacre.”
A lot of partial restitution has been made to Japanese Americans for the wrongs they suffered during WWII. I don’t know that any descendant of any African slave has ever been offered a nickel in restitution for the wages their ancestors never received.
Instead of going off topic on this thread, why don’t you post at Oxdown about your concerns? Americans of Polish descent have suffered greatly.
Please note, it appears that you are the only person on this thread who thought a slur was uttered. Everyone but you appears to have understood the context the author intended. Whether it’s intentional or not, it seems pretty evident to me that you’re “crying wolf.” It’s not that ethnic slurs aren’t important. I am confident that everyone here agrees with you that they do. Your inaccurate characterization actually makes vigilance about genuine slurs more difficult.
OT, a quick review of this thread reveals that your comments are all about diction. You’ve made no substantive contribution to the topic. In case you have not noticed, the state of MI has a very large percentage of citizens who are not 100% European American. This topic is of critical importance to them. In case you don’t know who emptywheel is, she was instrumental in blocking for Pat Fitzgerald’s investigation. I don’t know if his investigation would have made it to trial, had it not been for emptywheel and some other committed Americans. A lot of Democrats pay attention to emptywheel’s opinions on a wide variety of policy matters. We’re actually trying to get something done here and your comments are not helping.
quake, I kick in $10 bucks a month to FDL. How much do you donate a month?
Boy wouldn’t it though. But some people just won’t do that. Take for instance the person who wrote this.
I explain and apologize that you were offended; you duly note the same and then proceed to prattle on implying a false and slanderous racial animus. I would not even bother to address such pure unadulterated crap if it were not for the fact that you are falsely accusing me of racial discord; that I will not abide.
Now you intensify you faux scattershot slander of imputed racism by equating the abbreviation of a country’s name by use of the first three letters, “Jap” for Japan, with “Kraut” and “Dago”. So, is every map that. due to space considerations, uses the letters “Jap” for Japan now published by a racist? Is every airline that uses that for the country code for Japan racist? Is every Japanes car manufacturer that uses those three letters to designate their cars built in Japan from those built here (yes, I recall seeing this designation in either a Toyota or Nissan’s owner’s manual) a self racist company?
I don’t know where you get off belligerently accusing me as you have, but it is a damn good thing it is from the remote anonymity of some distant modem.
US oil interests and the auto manufacturers have utilized politicians to exercised protectionism for decades. Who Killed the electric car? Energy is the economy. Yet like the drunk whose life is tattered because of his instilled addiction the handlers brainwash the masses to think energy is not related to the economy?? How dumb? US Auto industry has bled America and with the Iraq war, we protect the oil industry’s access to the next Jurassic oil slick beneath Al Anbar. Sound just like the King of England and the colonist; Mercantile / Protectionism? American???
Meanwhile America suffers the consequences of corporate aristocratic greed as forewarned by Jefferson! Financial institutions hold America hostage while energy interests suck the blood of liberty from our veins and the auto manufacturers do same. Jefferson’s distrust of the corporate entity was well warranted. Can America afford to ignore a most prolific founder’s prophetic words like drunks?
Well, lest this turn into a completely different issue, my want was to “let it go”. But the clinician in me and perhaps the codependent in me wants to fix.
Invalidation is a trigger. That is anytime we look at someone (especially where there might have been trauma or deep invalidation)there is potential for an extremely emotional response to a sense of “not being heard”. One of the most powerful ways to help people with this response is very simple. It is to stop invalidation and hear them. Seems trivial but it’s to look for the kernal of truth instead of denying or defending.
It’s just never going to be about who is “right” or who is “wrong”. It’s emotional. Emotions aren’t based on facts necessarily but they do create big problems and obstacles that cannot be denied or dismissed. If we dismiss, we are likely to have a firestorm.
Someone on this board is saying that they were offended by what someone else said. They were hurt. I can’t tell someone else whether or not they have a “right” to feel what they do. If I do this, I am in a sense saying they were wrong for “feeling” that way. Since you can’t “prove” feelings as right or wrong, the argument would continue on and on. Then perhaps someone else was offended or hurt by this emotional reaction. This is much of what goes on in the opinion in the middle east. So it’s not an insignificant issue or one without major consequences to humanity.
So my question is what would work here, if we validate the truth…instead of defending opinions that cannot be proven, what would it look like?
I don’t think Bmaz or anyone on this board is a “racist” however, I can state for myself that I have probably at one time or another said something that was insensitive or offensive to someone else. When this occurs the fact at hand is that someone was hurt or had an emotional reaction to what i said. I can argue their reaction OR I can aknowledge that they feel the way they do. Which one works to decrease the conflict or the emotion? That’s what matters.
Sorry, but my passion is world peace and I believe that the facts tell us that some behaviors work in creating peace and others do not. Many wars are started with this very basic dynamic right here. (certainly not in this case, but the point is that this is the process by which some wars occur). When in doubt look for the kernal of truth, validate to decrease emotional reactions.
If we all do this…it will change the nature of the discussion.
Love and peace to all…Yes we can!!
wavpeac – i agree.. intent needs to be examined more closely and it is not that easy to know what another persons intent actually is when relying on words in a thread on discussing automobiles..i have used the word jap to refer to japanese autos and i know for a fact their is no derogatory intent in any of it.. if someone wants to read some into it, that is their choice, but it is not a peaceful one.. i think the biblical saying is “cast the mote out of your own eye, before trying to remove it from another’… in this example the onus is on quake..
Wow…instead of trying to prove others wrong we have to be able to see how they are valid or correct. It’s a paradigm shift, no doubt, but it is necessary for peace to occur. You can’t get to peace by saying the other person is wrong. You can get to peace by finding validity in their words and searching for your own mistakes.
Ugh…smart people have the hardest time with this!! There is a solution. Who is willing to do what works instead of be “right”? Who here has the courage?
That’s where peace lies. And it ain’t an easy road, but it is possible, and it does work.
One other thought…we can not factually, or accurately know what is in someone else mind or heart. It’s not possible to speak of that information from a fact basis unless they tell us. (and then, even then accuracy is not proven).
If we all seek facts, instead of trying to prove emotion we find solutions. Emotions are. They cannot be right or wrong. Facts are the basis for all truth.
>> You can’t get to peace by saying the other person is wrong.
got chopped off here is the rest – ‘who first responded in this manner on this particular thread??
wavpeac 234- i was saying some of the same in post 217.. interesting conversation.. too much to say on it, so i will save it for another time..
We’re going off topic. Let’s just acknowledge that a certain word is understood to be inflammatory and used as a racial epithet much as other words are used as racial epithets.
We’ll also try to be more specific about manufacturers and makes of cars going forward. Automobiles like Mercedes, Porsche and Volkswagen may derive from companies that share a single country of origin, but each manufacturer has a different history and at this point in time, very different markets at which they aim and very different quality issues. Ditto for other companies and countries of origin.
bell (215) — I hear you, but the automakers are not acting alone. The public and shareholders and government are all as much to blame for the failure of the business model. Did Americans stop buying their products? No. Did voters demand more regulations on CDO’s and CDS’s before and now even after the market crash? Have they protested at shareholder meetings? Have shareholders demanded better of the automakers, insisting on long-term sustainability instead of short-term measures designed only to improve immediate profits? Have government officials appointed and elected taken any serious steps in the last couple of decades to insist on the same?
It’s not just the automakers. The lack of ability of the public at any level or relationship to the auto industry to take responsibility is toxic, and can be seen in myriad other industries and in government actions.
Rayne i agree with you on where the responsibility lies with regard to the auto industry.. it is also with the people, gov’t, shareholders and etc and when i start to consider these topics i truly feel that a major shift has to take place in the world where short term profits with long term negative implications is not the choice that we make as a collective species here on the planet. this type of thinking seems to come out of banking and economics more then anywhere else, where the top and bottom line is always short term profit to the exclusion of much else…until that changes, the problems in the auto industry reflection larger problems that need to be addressed.. unfortunately political systems at present seems designed the wrong way for making these types of changes where long range priorities are the top and bottom line… we have sacrificed future generations for where we are now and it ain’t pretty… will it change?? i hope so, but believe a complete breakdown is more likely before the necessary changes are made.
What are the facts:
1) racism has destroyed and tortured people.
2) white people are part of the ruling class in america.
3) feelings have been hurt on this board.
4) accusations have been made.
5) there is pain being expressed.
6) There is pain in being victimized and pain in being the perpetrator of pain or being percieved as perpetrator.
7) we cannot prove any one else’s intent.
If we agree to take the purpose of this board, the purpose of this discussion, this diary, this blog, and put it first, what would be the most effective way for us to go on? What would work? Each of you involved has to consider what might work, let go of self righteousness, put the blog, the universe, first and decide what is best for self, and mankind here?
This is exactly the dynamic I have discussed in the past about invalidation, culture and trauma. This dynamic here has big picture consequences. We can all be part of the solution or part of the problem. Each of us gets to make our choice and then each of can respond in a way that works for the universe, this blog, this moment in time…if we choose.
It’s ain’t easy, it takes far more courage and humility. Seems simple, but really challenges the depth of what it is to be human.
Alright. This will hopefully be my last foray into this morass that has taken over what had previously been one of the most outstanding threads in quite a while. And I might note, that I find it abhorrent that that has occurred. One commenter took offense to a word I used and considered it racially tinted. But, it was not so intended, I explained that, depreciated myself in the process by full admitting that I say dumb stuff all the time an, while innocently uttered initially, apologized if discomfort was taken by said commenter.
That should have been that absent some rational reason to plow deeper. In spite of there being no such rational reason, this commenter not only continued to ascribe a racial animus to my original utterance, but escalated the implications and dialogue. While I appreciate the high minded philosophical discussion that wavpeace and others have tried to bring; for me, the problem is that this person is making me out to be some type of latent or hidden racist. While others can be high minded as they see fit, I am not so quick to write it off from this clown because it is me that he/she has attacked. Where I come from, you don’t get to do that. I stll live where I came from, and you still don’t get to do that. Quake can kiss my ass.
Here, look at this chart; there’s a direct correlation between the immediate desperation of the auto industry, and what’s on this chart.
How should automakers have dealt with that?
@239, Broadly, offshore oil seems the same tradeoff as high prices, shifting the impact to visual and marine biota health with an addition of projecting the entirety of negative outcomes to some future time, meanwhile bolstering the politics of natural resources rapine which has been legion in the currently fading administration. The linked chart might be illustrative of contemporary events in a timeline, too. I certainly respect the varied expertise in the thread, and in the external graphic. Hearing Pelosi reverse her longstanding interest in preservation of seascapes and the integrity of our already mired neashore marine resources only makes me long for the day she has a vibrant challenger in the primaries, though I have voted for her dedicatedly for decades since she entered electoral politics after the stint she served as state Democratic party chair. I agree with bmaz that the record of Barack Obama is one of understated action. My hope is a few good people will begin the change and that his leadership catapaults from that new energy. Although the conversation begins about vehicles, there is tie-in with the morass known as nuclear industry for electric generation and for wmd.
Now, I have one further request. PLEASE return all conversation on this thread back to the high minded and important issue that Marcy intended to engage, the auto industry and where and how it goes from here. This is not a racial discourse thread, and it has been flogged to death now anyway.
Bmaz. I apologize for getting involved. Not my business.
I just keep hoping that humans are capable of peace.
Perhaps I am wrong. It seems simple but so hard to do.
Back to the auto industry. As to my hopes of people being able to validate one and other, put aside resentments, see truth in an opposing and even hurtful position…dashed. You win…hope it gets you what you wanted.
It is not a win or lose deal. All I want is to not be falsely painted as a racist; if that is wrong, then I am wrong. This thread is not about racial peace, it is about the auto industry; it should be returned to that worthy subject. Perhaps we will take up your valid and important discussion another time, but this wasn’t the time nor place. It is Marcy’s thread, and this stuff has killed it. Time to be done with that for now.
I vote to delete the racism discussion and put it in a separate thread. It may or may not be important to the American auto industry…but it certainly is taking us far afield where economic solutions to the auto industries problems are concerned.
My bad. I always thought “JAP” meant Jewish American Princess, not the American colloquial equivalent of the “N” word for African Americans. The latter argument is not only way off topic, it’s factually challenged. Americans, of course, are the world’s only racist. English “Paki” jokes, German Turkish jokes, and the Japanese obsession with and continuing disdain for those with a hint of Ainu genes are just good natured fun, non? Likewise, their disdain for the “inferior” Chinese and Koreans, most endearingly expressed pre- and post-Second World War.
Racism, like political and sexual predation, is universal. Thankfully, so is the majoritarian preference for cooperation. Economically, racism is a ready tool the wealthy have frequently used against their workers, to make them demand less and oppress those lower on the totem pole, lest they demand more and make those above them less comfy. The history of membership in American unions illustrates the issue in microcosm. But since this is really a “car” column, the best example would be Henry Ford, who despised Blacks and Jews in equal measure.
“Jap” in colloquial American English is perhaps mildly rude shorthand familiar to Kikes, Chinks, Polocks, Eyeteyes and the fookin’ Irish, shorthand bandied about by the current president like cocktail weenies and towel slaps. (For more examples, pick up any novel by James Ellroy.) It wasn’t what bmaz was talking about. Incarceration of Japanese living in America during the Second World War was cruel and oppressive. As Howard Zinn has documented, it was not akin to the sustained cruelty and oppression suffered by African Americans for four hundred years, circumstances that endured long after the end of the unCivil War.
As for “auto” companies, they’ve earned much of their pain, especially the Big 2.5 in Detroit. Rest assured, private bankers will give them even more grief as they exact their pound of flesh. (Hmm, allusion to The Merchant of Venice; racist?) But as with the financial sector, just throwing big money their way — ironically, GM’s historical “fix”, when it had it to throw — will only further deplete the US Treasury. Fixes will require complex plans, fairly distributed chronic pain and enormous political will light years beyond the talent or interest of the Bush administration.
I think that every discussion is a place for peace. But that is my bias. I understand that not everyone shares this view. That’s okay…I get it. I think there is value in this thread, regardless of the way it went off. And it derailed. I sincerely apologize for my part in that, but it helped me see what I know deep down. I can only help there be peace by role modeling it, not by telling others how to get it.
Thanks for my lesson today. I will keep my nose out of this stuff. I think the discussion on auto companies and bail out was about done anyway. We need to help the industry get on a track that is lucrative and will create jobs and at the same time hold accountable those who have engaged in criminal behavior as well as those who made poor judgements.
Monks brawl…guess even holy men can’t do it!!
http://www.huffingtonpost.com/…..42453.html
Walk more
And is that what we tell the 2.5 million people who will probably lose jobs and homes if the American auto industry is allowed to succumb in a purely Darwinian move?
We may all need to walk more, but we’re going to have to figure out how to replace one of the largest components of our nation’s economy in a hurry if the answer is simply to turn our back on American automakers and walk more.
I think we can make money on changing our cars over to more economical and green solutions. India did it, didn’t they? But it will require the feds to get involved, less freedom for the corporates. I think it needs to be coupled with accountability so it sends a clear message that pure greed won’t be reinforced and allowed. Lawbreaking will be countered.
Walking…?? I live in nebraska. I couldn’t even ride a bike to my work from where I live. There is no bus that runs passed 5pm and I work until 8pm two nights a week and seven one night a week.
Besides all those buses still put out carbon dioxide.
We need to quit eating so many cows, change to alternative oils sources, hold the law breakers accountable. This will I think, create jobs in the long run.
In the meantime we have to help people stay in their homes, give them health care, and keep them from going bankrupt as they pay for healthcare.
There. That should do it Smaller cars, hybrids, small business loans to anyone wanting to develop alternative sources of energy.
We can do it…walking is fine…but that there would have to be some major changes in my city for that to be a reality. We don’t have much housing downtown where the jobs are…and nebraska is spread out…way out. Might work in some places.
Marcy, I take it we’ll have another thread listing the top five possible solutions? I’m still in favor of the trade-in coupons from the Federal Gov’t to encourage fuel efficient manufacturing of vehicles here in America.
For those of us unfamiliar with this idea…which has been floated from the Obama camp…basically, companies and citizens would be allowed to trade in gas hog vehicles, (say the worst 20%) for the most efficient models (say 10%) on the market. This would include cars and trucks, commercial and private vehicles. How this program would work is not clear at this time…but it would lead to a much more efficient vehicle fleet. The costs to the government would be huge…but perhaps we could swing it with a peace dividend?
Yes, let’s bail out all failed/failing corporations and other businesses. Why should any business ever be allowed to fail? Come to think of it the American taxpayer should fund every business anyone wants to start or keep running. After all, its only fair. *winks*
The only reason to “save the automakers” is to continue the massive corruption that is endemic to our society.
Well if we don’t have something to replace those lost jobs, it’s going to hurt all of us…and bad.
why can’t some other company rise up to build better more fuel efficient cars that use alternative fuel? That’s the free market and that would provide jobs. The Detroit Gang has always refused to adapt. Mutate or die.
I feel the same way about the banks. what a scam.