Memo to GM: Drop Dead

17 Comments

Many of the readers on this site support or invest in cleantech companies, of which green cars are an important component. We’ve all seen the dire predictions about what will happen if the Big Three automakers fold. Millions of people will be thrown out of work, the economy will implode, etc. If this happens in a vacuum, true, but nothing happens in a vacuum.

American automakers have been producing a mediocre product for decades, and have fought cleantech at every turn (remember the EV1?). They’ve earned their failure, and should be allowed to go into bankruptcy so that their assets and workers can be reallocated to companies that are not freighted with old baggage.

The government should send a clear message that it will bail out soon-to-be-idled auto workers and their suppliers, but not the companies themselves. Let’s look at where the real value is in the American auto manufacturing base.

The value is not in the upper layers of management or the corporations themselves. The value is in the millions of people who are employed by the auto industry, in their institutional knowledge and skills, and in the factories in which they work. Those people will still know how to build cars even if they are out of work for a year, and if supported during this interval, most will find work with new and more dynamic companies. Meanwhile, the factories will still be there. Such assets that can be sold in liquidation to entrepreneurs seeking to build new car companies.

I view this chapter of the economic crisis as a great opportunity, a chance to drive a stake through slow-moving companies that have done more to retard innovation than anyone. Get rid of the corporate shells and the bloated management and start anew. Provide special programs to support idled workers, fast-track universal health care so company-sponsored health insurance is rendered moot, and spend the rest on funding and incentives for new car companies to scale and bring hybrid and electric cars to mass production.

Remember, it took the U.S. just months to retool the auto industry in response to WWII. This may be the best opportunity in half a century to restart what was once the pride of this country’s manufacturing sector. It’s called creative destruction. The U.S. car companies have earned it.

17 Comments

Chris Downing

If you cant build can’t build an American Car (even if it’s built in Canada or Mexico, like many GM’s and Fords) and outsell Honda Accords and Toyota Camrys which are both built in The USA with USA built components, then you should be ashamed. They need to go. I’m tired of mediocre innovation and poor build quality. All cars were electric in the 1800’s until Ford’s success backed by Big Oil. The oil companies have been working the Big Automakers and Government to squash technology and support Big 3 propaganda, such as NASCAR to influence peoples believes. I’ll give one example. I was recently at a pushrod engine forum. These people have had the blinds pulled over their heads; quoting how powerful NASCAR engines are with their pushrod technology versus Formula One cars. And how much more “Torque their pushrod V6 has over a Honda Vtec” These people don’t even no what torque is.
Maybe when these Automakers finally leave town we will finally get to see some good Auto-racing series in the states like Formula One, which by the way, are using 2.4liter hybrid engines next year.

Food for thought: NASCAR used LEADED fuel until July 2006! I really wish NASCAR would go bankrupt too!!!

Kevyn Miller

Brian seems to have overlooked the fact that the European, Japanese and Korean car makers are all layer off staff due to falling demand. The three million unemployed US workers won’t be finding jobs with foreign automakers taking over the big 3’s vacant plants because there are idle plants all over the world that can produce the cars with much lower labour costs, and without the combined lobbying muscle of the big 3 and the UAW to maintain trade barriers there is nothing to stop that process once the big 3 have gone belly up.

On the positive side USA emission regs can be harmonised with Euro IV or V so you can get modern diesel fuel efficiency in space efficient cars so that reduced spending on imported fuel will balance increased spending on imported autos.

Eideard

With a few exceptions, GM has produced the homeliest cars in the marketplace for decades. This ain’t about sexy; but, the example of Corvette speaks to the whole rage of issues.

Zora Duntov had to fight for the introduction and advancement of every aspect of the Corvette because GM only plans on what’s been around – instead of what probably will be.

They – like the other 2 dungheaps comprising the Big 3 – all produce cars running small, cost-effective diesel engines outside the U.S.. All could be brought over to sell in 49 states and CA ain’t too much harder to meet.

They’d have to advertise, market and sel a bit to overcome memories of crappy Oldsmobiles. Well, boo-hoo.

Anyone notice that the world never heard of hybrids before Toyota showed up with the Prius? They advertised, trained dealer salespeople, marched down a pretty standard marketing path and delivered a quality product. They created a market they own, now.

Why reward cowards and incompetents?

Spend the money on retraining, support, alternatives in Michigan. Some folks will move to Tennessee. Thousands lined up, yesterday, for the Volkswagen job fair in Chatanooga.

Garry G

Agreed on most of the comments… it seems a bit harsh to make some of the connections to the auto industry’s current failings (from legacy costs) to the the rise of more efficient cars… I think if you dug deeper and learned more about the history of the auto industry (beyond the EV1 conspiracy theory) you’d see a more nuanced reality. GM is one of the best situated companies leap into the next era. But if they leap too fast, tens of thousands of workers will fall on their face. And we cannot dismiss the people side of this story.

I do however share your support for rapid re-tooling… but if we’re going to do it be prepared for the electric vehicle industry to go global. I think it’s going to be hard for US factories to compete against Asian energy storage supply chains that are already ready to go. (Again, do you have a plan for workers?)

Being ‘slow’ in the IT sector is different than ‘slow’ in the auto industry… And I think this is the source of the gap between Silicon Valley and Detroit. Tesla is a project, not a platform.

We need to recognize real opportunities- namely to kill the combustion engine and move towards more modular platforms based on wheel based electric motors, batteries, fuel cells and capacitors.

Garry G
Editor
TheEnergyRoadmap.com

Doug

I think Th!nk’s backers are stupid. Kleiner Perkins, while having some successes, have made plenty more failures in judgement; that’s not genius in my book, just luckier more than unlucky. If you want to be considered legitimate in the auto industry, you need to be producing Millions of units/year. Tesla, while interesting, is just an auto-tuner at this point (like Saleen, but less successful). The big auto makers are the only organizations (today) that can really take the electric car main stream (if there’s enough Lithium on earth to do it – which I don’t think there is).

CNCMike

Their very first move should be to rid themselves of the UAW which is as much to blame for the current state of the big 3 as their failed and outdated policies.

Joe B.

You may not want the Tesla but plenty of people want one. Perhaps you don’t know that the Telsa competes in the luxury sports car market. Do you know what that range is? Tesla is relatively cheap compared to it’s competitor.

Do you have any idea who is supporting the Th!nk? Do you think these people are idiots? Do some research on the Th!nk and tell me if you think their backers are stupid.

One of the options available with the Th!nk is a battery pack from EnerDel. EnerDel can mass produce battery packs. Do research on their production capability. They CAN mass produce. That is why they are getting a lot of interest from multiple EV producers.

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I don’t think selling a two-seater for $106,000 is “building a car that people would want to buy”. Your double standards are mind boggling. PBP is a sham.
The Th!nk is a good niche vehicle but not mainstream and also not buildable in large numbers anytime soon.

Gail Nickel-Kailing

I think your message hit the nail on the head! Let the Big 3 go down, but give a safety net to the workers, keep the warranty process in place to service cars on the road, and keep the parts available.

They will reorganize, retool, and reopen – smaller, chastened, and focused on providing transportation options necessary for today’s population.

The advertising industry will have to turn its thinking around too and educate/influence the market and promote transportation options that don’t guzzle gas, require expensive infrastructure, and – here’s the most necessary – make it a good thing to be careful and considerate of the environment.

Jim

I don’t think selling a two-seater for $106,000 is “building a car that people would want to buy”. Your double standards are mind boggling. PBP is a sham.
The Th!nk is a good niche vehicle but not mainstream and also not buildable in large numbers anytime soon.

Joe B.

The Volt and it’s underlying technology will be bought by some one if it gets sold at all. GM isn’t the only company producing electric cars. Last I heard Tesla beat them to the punch. Th!nk with its City will be available in Norway early next year. Nissan and Renault are moving aggressively with Better Place on electric cars as well.

Jim

It’s interesting how it’s called creative destruction if it happens somewhere else. (NIMBY). Who is this Guest Columnist? Jean-Baptiste Emanuel Zorg? (look it up.)

I think the people at Tesla are finding out how hard a car company is to build and run. I don’t think that people not close to this industry (that includes California and Wash. D.C.) have any idea how hard it is to make a modern automobile.

I understand that the Big 3 has made some missteps, but most of their money problems are institutional, not technical. These include legacy pension benefits (already addressed; will fully take effect by 2010), health care costs (a problem shared by many others in this country), a parasitic dealership relationship (far too many dealers), and too generous payments to union workers (also being addressed).

If these changes (many already in place) can be given a chance to take effect, then the Big3 will save about $3500 for every car that they build. This is huge!

They do build cars that people want! People wanted SUVs and trucks! So they built them. Now, apparently they want something else. Like the $30,000 Prius. Compare this with a Chevy Malibu for about $20,000. Now GM didn’t understand the greenness cache of the Prius (they do now).

GM is still the leader in world car production. They are doing very well in China, so they do know how to make vehicles at very low cost.

I agree that this is a great opportunity to rebuild America’s energy infrastructure. And the automobile is key to that. But you need large, experienced companies to do that! GM has crushed far more cars than Tesla will ever build. (They do that will the first few thousand of ANY car they build, by the way, for legal reasons. That being said, their behavior w.r.t. the EV1 was a PR disaster.)

A solid PHEV vehicle concept could lead this country out of oil dependency and onto alternative energy sources to power much of our infrastructure. Now is not the time to make rash judgments based on past mistakes. GM, Ford, and Chrysler all “get it” now; as you can see with their furious efforts at alternatively fueled vehicles. Give them a chance to get these new technologies to the showrooms. If we have to wait for new companies like Tesla, that will set us back a decade or more.

Doug

The point is understandable, but, I think, rife with Californian condescention. The EV1 failed because Californians didn’t want to buy it. It wasn’t some Billion dollar rouse by GM to invite greentech just to kill it. The reality is that the Automakers make what the people want to buy. What you should ask yourself is why Americans are (were) still buying large trucks from the Big 3 (they were also buying cars from Asian auto makers – just fewer of them). This is still the country that voted for GW Bush…twice. Don’t blame the auto makers for our own behavior.

If they go under, you can forget about the Volt or any other electric car.

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