Wednesday, November 19, 2008

Whither GM?

The American carmakers are appearing before the Senate Banking Committee asking for a bridge loan. The GOP seems not to want to give it, citing the Auto Industry's refusal to make fuel-efficient cars.

Of course. longtime politicians have a grip on the lives of the average constituent that's tenuous at best: they argue against subsidised health care for Americans while enjoying free health care for themselves. They pontificate on what the American Auto industry could have or should have done while being chauferred around Washington in a Limo, sirens blaring because Senator Thingummy needs a Venti Latte, STAT. So they villify the US Automakers for making big fat trucks that nobody wants, like Ford's F150 pickup, the best selling vehicle in the US for 26 of the past 30 years (and as of May still firmly in the top 5), ignoring the fact that Toyota spent a bazillion bucks to open a new plant in Texas to build their own bloated, gas swilling Tundra. A plant that they closed for a few months due to the "unseen economic issues" But Toyota is the green company right? They aren't out there asking for money either.

Well, one could argue that they have been in a different position: their government is severely protective of it's industry, keeping the Yen low, keeping foreign competition out while States such as Texas, Alabama and Tennessee are willing to give major deals to foreign carmakers to build plants in their states. There's of course nothing wrong with that, but it does make one want to ask how disingenuous it is for Senator Shelby of Alabama to act all self righteous about the US Auto industry when his state rolled out the red carpet for Mercedes Honda and Toyota and just recently Hyundai. Meanwhile the Big Three are languishing under the burden of legacy costs like pensions, healthcare pacts and Union contracts that the other boys don't have to pay for.

People are often decrying the US car companies as being behind the times and having shitty products. I was discussing this with a co-worker who had an 80's Chevy that was terrible. I had to point out that this was 20 years ago when all cars were terrible and yes, American cars were in particular. But all of the quality reports these days say that the Americans are on the top ten with the Japanese while Mercedes languishes near the bottom of the quality list. including it's Alabama built M-Class, named "worst reliable midsized SUV" in 2007.

People say that American cars aren't economical, but two minutes on the EPA website will show you that Chevy's Aveo and Cobalt get 34 and 36 MPG highway, an Impala 29, a Malibu 32 (to it's direct competitor Camry's 31). Heck, a Corvette will get you 26 on the Highway. That's right, a Corvette. Ford? How about a 35MPG highway Focus? A 28 Highway Taurus? How about a 30 highway Chrsyler Sebring? Or a 29 highway Dodge Caliber?

People say that the Americans don't do hybrids like the Prius. Well, the don't yet, but they have hybrids Malibus, Vues, Escapes, Auras, Yukons and even Escalades. And 2 years from now we'll have the Chevy Volt, the real-life every day useable modern car to crack the 100 mpg mark and move past hybrid into a real-life electric car. If I drove a Volt the only time I would use gas would be on a trip I woudl have to remind myself to take to use up the gas before it went bad.

Did the US Auto industry suffer from a lot of bad decisions and bad cars? Yes it did. Did they have a big part in putting themselves in this dillemma? You betcha. But the insurmountable fact is that many jobs, directly and indirectly come from the American auto industry. Turn on your TV or pick up a paper and look at how many ads are for car dealers and imagine them gone. Drive down your local auto-plex and imagine the showrooms empty. Look at the magazine rack and imagine it half empty. These companies have a big economic reach and unless you live on the moon that reaches extends right into your wallet. I might also humbly point out that 50 years ago it was the manufacturing might of these companies that won us a World War.

To the people who think that Toyota and Honda will take up the slack I'd like to ask, when and how? They'll rehire all the workers, take over all the plants and begin immediately producing Camrys to the adoring masses freed from the banality that was Buick? I don't think so. In the time it would take for these bridge loans to be paid back, this country would swing into an economic crises that our grandparents would remember from the thirties. I am too old to wait on a breadline. Are you?

Image: Cadillac Ranch Webpage


Jason said...

To reduce costs GM should consider bankruptcy. For those concerned about their retirements the Pension Benefit Guaranty Corporation (PBGC) protects the retirement incomes of nearly 44 million American workers including those at GM. Dumping the retirement cost is one way to reduce legacy costs. A bankruptcy would also give workers an incentive to take the buyouts that they have been offered. The two changes alone would save GM $24 billion a year..

1 \Who Killed GM? Will it rise again?

tmp00 said...

Bankruptcy would guarantee that no-one buys another GM car. Why would you buy a car that in effect now has absolutely no warranty?

It also screws the suppliers and does nothing to speed the new, fuel efficient cars already in the pipeline to the market.