I tend to agree with people like Joseph Romm. The management of the Big Three doesn’t deserve salvation—which I didn’t make that clear in my original post. What I demand is a second chance for the engineers and line workers.
The poor decision makers presently running GM, Ford and Chrysler need to go—as a part of a bailout or bankruptcy reorganization.
It’s wrong to think of GM only as Hummers and Suburbans:
GM’s heavy-duty hybrid technology would be far more revolutionary than Toyota’s.
The Toyota technology can only be applied to smaller, lighter vehicles topping out at perhaps the Highlander SUV. Such vehicles are only suited to commuting. In contrast, GM’s technology (developed with BMW and Chrysler) can be applied to huge vehicles pickups, commercial trucks, and buses.
Why is the GM technology superior? The efficiency gains from hybrid technology are vastly larger in big vehicles. A Prius has only about a 20% gain in operating efficiency, compared to a similarly sized and shaped car. In contrast, the improvement for a full-sized pickup is more like 200-250%.
The Prius, in many instances, is replaceable; bicycles for short trips, mass transit for basic travel. Commute-shmommute; abandoning those cars will give us greater gains than switching to slightly better engines. But those larger vehicles, their tasks are still imperative.
Even if you buy into the environmentally clean car commute bullshit, GM’s approach here is objectively better than anyone else. The Chevy Volt drives its wheels only with electric motors, supplementing the energy stored in a modest battery pack with a gasoline-fired electric generator.
Electric motors produce all their torque right from the start, obviating the need for any sort of energy-sapping transmission system, particularly the ornate sort required when both gas and electric motors are driving the wheels. The small battery pack is sufficient in capacity for the vast majority of trips taken by people with these sorts of cars. The vast majority of energy in vehicle is stored as liquid fuel that is more weight, space and energy efficient than batteries will ever be. And, since the gas-fired motor is only attached to a generator, it can always operate at its optimal speed using only fixed gearing. The whole package uses each part to its maximal advantage, while being overall simpler than the Prius-hybrid approach. If people are going to continue to commute by car, and live in sprawl, this is the better approach.
Compare these technologies to the bullshit hydrogen fuel-cell cars being touted by Honda. Hydrogen is a total nightmare. It’s vastly more difficult to distribute than liquid fuel or electricity. When it leaks out, it acts as a greenhouse gas. And, the vast majority of hydrogen fuel is made by inefficiently converting fossil fuels—still dumping carbon into the atmosphere. The fuel cells require a tremendous amount of rare metals, the mining of which is a total environmental nightmare. Hydrogen cars, from a net environmental impact, are likely worse than a traditional gasoline-fired small car.
In contrast, the technology in the Volt really is revolutionary—a true net environmental benefit when you consider life of the car from start to finish.
The work done by American assembly workers is as good as any around the world. JD Power’s initial quality survey tells you that. Or the quality of US-made Hondas and Toyotas. US-made cars are objectively better in build quailty to those made in Europe or even most factories in Asia—on par with the best Japanese-manufactured cars, and have been for nearly a decade. You sound like a fool when claiming otherwise. If you seriously believe American’s cannot assemble things, when blessed with a proper management, I suggest not flying anywhere, ever.
I strongly disagree that there can be a healthy post-industrial US economy. A huge contributor to our present woes is the idiotic policy stance that we can somehow transition to a service-based economy, shedding all manufacturing to other nations while living on credit and currency imbalances. Manufacturing jobs allow people willing to work hard to live well—without the burden of years of education, for which many do not have interest, aptitude or access. One in ten jobs in the country is directly related to the auto industry—the sorts of jobs that still provide things like retirement benefits and health care for employees.
The dirty truth is, the migration of manufacturing jobs away from the US has been an environmental, economic and social disaster for the entire globe. Shipping heavy goods around the planet carries a heavy carbon footprint. Allowing imports from countries with lax or non-existant labor and environmental regulations leads to things like the brown cloud of doom choking people throughout Northeast Asia. The state-supported export-based Chinese economy has proven as brittle and unstable as many feared.
I’m not opposed to industrialization around the globe. Just, more of this growth in production needs to be for domestic consumption—where the people assembling can afford and purchase that which they are making. India took this path. China didn’t. Compare the states of their economies today.
We’ve had no industrial policy in this country for decades. Should we be really surprised that the auto industry is a total fiasco? So, yes. It’s time for the hand of government to enter into this sector of the economy—promoting manufacturing in the US through good policy. Policy like enforcing the environmental and labor standards in existing trade agreements. Policy like demanding the auto industry prepare for a post-carbon world. Policy that promotes and shares innovative technologies to US manufacturers. Part of this, I still believe, should be a helping hand to those who have done right by all of us—the engineers and line workers—right now when they need it most.
the work of US auto-workers may be on par with Germany, et al … but their product’s styling still is second rate.
The mostly domestically owned and operate auto industry is a total fiasco…
and do you even own a volt?
That’s a brown cloud of economic expansion hovering over Asia. Yes, workers of the East, breathe in deep the sweet, fragrant air of progress. With industrial production in China currently dropping due to declining demand, there is now a great danger that this cloud of wealth will dissipate, and soon those workers in the world’s last great free-market paradise may wake to face that bleak, chilling dawn where they are no longer coughing up the dense, bloody loogies of prosperity.
Their only hope is us: We must return to our tradition of consuming far beyond our means if there is to be any hope of that brown cloud of liberty swelling and thickening, until that glorious day when it finally and irrevocably encircles the globe!
and seriously, compare india to china? indea exports more service sector jobs than china. but we don’t want to talk about the success of the service sector do we now?
Many of the policies named in your last paragraph are arguably good elements of a regulatory framework. A bailout is not a regulatory framework; it is trying to fix the winners.
If the engineers and line-works are good, and their skills are actually needed for the post-crash level of demand for automobiles, they can get hired by Toyota, VW, and other manufacturers that will survive without a bailout.
GM’s executive level is apparently exclusively populated with morons. There are some brilliant engineering idea people at GM. Twenty years ago, they tried an experiment and allowed a small offshoot group to design and build a wholly new type of car, totally in the U.S. The car was the Saturn, and when they were still an independent entity, Saturns were great little cars. Once GM pulled them back into the bureaucracy, Saturns went to shit. They started building bigger cars, SUVs, their quality went down the toilet, and they started sourcing parts from other countries.
GM’s management should all be replaced. The engineering departments, however, should be supported, as should the line workers.
I’m no student of economics or social policy, but it seems to me that to make a governmental industrial policy at this point in our history would be akin to instituting, say, a national policy on horse-drawn carriages in the 1950s, or on whale-oil lamps in the 1890s. Outmoded and too late. The golden era of our industrial output was when Westward expansion was at full tilt. Now we’ve completed our infrastructure build-out and settlement of the entire country, so the dependence on industrial output to create and support that growth has decreased accordingly. Make sense to anyone else?
I’m no student of economics or social policy, but it seems to me that to make a governmental industrial policy at this point in our history would be akin to instituting, say, a national policy on horse-drawn carriages in the 1950s, or on whale-oil lamps in the 1890s. Outmoded and too late. The golden era of our industrial output was when Westward expansion was at full tilt. Now we’ve completed our infrastructure build-out and settlement of the entire country, so the dependence on industrial output to create and support that growth has decreased accordingly. Make sense to anyone else?
Blah, sorry for the double post. Even forcing refresh via Ctrl-F5 wasn’t showing my comment.
Oh you know GM’s a gold digger.
She don’t want no fed what’s broke de broke.
Yeah you know GM’s a gold digger.
Spend ma money on her CEO posse and them dividends for da investor homies.
Say it: WE WANT PRODUCTS! WE WANT PRODUCTS!
…
Seriously, don’t make a deal, just prepay for Production of Real high-mpg cars and trucks (no SUVs) and plug-in hybrids for all US government and military needs and prime the pump with PRODUCTION!
That creates more jobs than any amount you let the former CEOs and execs steal or give to their homies who get dividends as shareholders.
(caveat – I own 400 shares of Ford)
Why isn’t this article in the hands of the President-elect?
Obama should read The Stranger. Maybe he already does.
I read an interesting article on a blog I frequent called The Long Run Blog that provides what seems like good logic against the GM bailout. I’d be interested in your opinion of what he says.
Gm: General Mess – The Long Run Blog
And no I’m not affiliated with The Long Run Blog, but I do frequent it, and yes this is a real inquiry and not me trying to spam links.
@11, because this article is fundamentally wrong headed in desire and approach.
Bellevue Ave:
Are you being willfully obtuse?
Of course, the sort of exports that India is doing are better and more sustainable than China’s. There isn’t a shipping penalty for tech support or code like there is for things made of steel and aluminum. The barriers for entry to these jobs are vastly lower. It’s closer to a real free market–in the Adam Smith sense of that phrase. Do I need to read Adam Smith to you?
Look at Tata Motors. It manufactures cars, in India for Indians. That’s the model that works. Tata’s cars are meant for the Indian market, not export.
David Wright:
The problem is, the success of the GM powertrain team has a lot to do with organization and conglomeration of many talented individuals together. Just as the success of Chrysler’s design team.
Splitting up these talented people, and shoving them into other companies is unlikely to recapture what is working. Very few interesting things, today, can be accomplished by a single solitary individual. It’s that organization that I think is worth saving.
Or, to put it in another way: The grouping of talent at GM’s powertrain engineering team is productive and thus worth saving with governmental dollars just as we’d attempt to save a roadway by repairing a bridge.
But will the Volt push my subs to 10 and cool me off when the mercury hits 100?
Josh Wittner @12.
As I wrote in the post, I’m not hostile the idea of a GM bankruptcy. In the least, that would afford a chance to shed debt and the shitty management team, as well as renegotiate with employees and suppliers.
For GM to eventually emerge from bankruptcy, however, will take more than this restructuring. Fundamentally, there is far too much global capacity for building cars. (I think this can be largely attributed to *other* countries propping up their nascent or old auto manufacturers.
Likely, at least one of the major US auto makers has to go. If I had the magic wand, I wouldn’t do loans. I’d do a sort of shotgun marriage–combining the best parts of GM and Chrysler, liquidating the rest–with governmental loans to bridge the transition and restructuring.
I thought one of the major reasons the Big 3 have been going downhill for sometime is their healthcare & pension costs. Those dastardly unions followed the US Business model of employer sponsored health & retirement. The execs of the Big 3 agreed to those union contracts, in good faith bargaining, but then failed to properly fund those pension & healthcare plans in order to falsify a rosy bottom line for investors. Rewarding those execs, and their investors, for their failure to peform contractual duties doesn’t seem right.
This Ponzi scheme has been in the works for decades now, but it is the current climate of “no one is buying SUV’s” that has brought it to a head.
Fox News will blame this “crisis” on those evil unions, but it takes two to make a contract – only one to break it.
Jonathan @ 14:
Companies generaly try to be smart about how they acquire useful talent. If Toyota sees that GM does powertrains well because of a team dynamic rather than because of a few gifted individuals, they will try to acquire the team rather than hire the individuals. (For example, Microsoft bought Bungie rather than just trying to hire away a few of their people.)
But really, you don’t want your industiral policy to get down to the level of trying to identify indvidually useful projects. You may have good reasons for thinking highly of GM’s powertrain team, but there is no way you have put the due diligence into examining all the details and interaction of their design with other factors of production that a company considering a multi-million dollar bet on that technology would do. Let the firms do that research and make those bets, and leave the central planning to the Soviets.
Finally, let’s be honest about what is going on here. If GM gets bailed out, it won’t be because some some very careful economic analysis presciently identified as having the highest ROI for the next $25B. It will be because of the concentrated voice of the auto-manufacturers and the UAW, and their influence with the party now in power.
If only the management at the big 3 is shitty, then why can’t the rest of the plant workers go work at the Toyota or Honda plant?
@14 If the engineering group is so great as a group, it can be sold off as a group.
Though your shotgun wedding approach is a much better option than bailing out GM.
Hybrids are the 8-track player of the automotive industry.
http://www.8trackheaven.com/Images/pumps…
Go DVD. Go hydrogen fuel cell.
I don’t know about JD Powers, but I’ve been a Consumer Reports addict since childhood, and I trust them. Consumer Reports has shown American car companies consistently trailing Japanese manufacturers in long-term reliability for several decades. There is an exception here or there, but the overall trend is pretty damning.
I agree that American line workers are as good as any in the world. I agree that American Engineers are as good as any in the world. The failure of the American auto industry is not that of engineering or labor. The failure rests entirely at the feet of management. They could design more reliable cars, but they have actively chosen not to. They could design more fuel efficient cars, but they have actively chosen not to. They built all their profit margin in selling gas guzzling vehicles when anyone with a brain knew that gas prices would inevitably have to go up at some point. They hire teams of lawyers to resist any attempt to improve CAFE standards or safety features. If the American auto industry dies, it will have to be considered a slow suicide brought on by themselves, by completely short-sighted and incompetent management going back 3 decades or more.
I agree that it would be really bad to see the American auto industry collapse. Loosing that many decent paying jobs would be a big blow to the economy, and make a bad situation worse.
But we cannot reward execs for decades of criminally inept management. If taxpayers bail these fuckers out, it should only be done with huge strings attached, and upper management should be replaced wholesale.
Isn’t the real problem that the US has no long term strategy for anything?
Not healthcare, the environment, education, scientific progress, employment, nor even basic economic policy.
No one plans for anything long-term, so isn’t that why we careen from self-induced crisis to self-induced crisis?
I am wondering about the next big war. It really is inevitable and with our industrial production moving around the globe we could be very vulnerable. It was the key to winning the second world war. Ours was protected, theirs was not.
What an awesome post and thread – together, they suggest that, hell yeah, we need an industrial policy really really bad. And that there’s a lot of well-reasoned fundamental disagreement about what shape that would take. And that grudges run deep and fear’s electric.
We don’t need a National Industrial Policy! The all-powerful “Market” will decide which is the proper path.
That has been our plan for healthcare, the environment, education, economics, scientific progress, employment and social equality since at least Reagan, if not before. People used to take this as gospel: many still do.
How stupid does that sound now?
I’m not being obtuse at all. you claimed the service sector isn’t a replacement for the industrial sector and i pointed out how the service sector of india is good enough to export the services and replaces theoretical industrial sector jobs as a means of income for indians.
And tata motors relies on cheap indian labor. If you’re going to sell a domestic made car made wholly domestic you’re going to incur costs for labor that are far greater than foreign competition. Sure, slap a tarrif on those foreign cars but you know that isn’t going to make american cars any more affordable. Nor does it rectify how Toyota and Honda employ many thousands of americans in making cars and the net effect that it would have on their employment.
The fact that certain sector jobs in the past provided health care and retirement doesn’t mean the factors that persisted in those times are here today. You are linking manufacturing jobs to benefits without looking at the factors in transportation, technology externalities, resources, and competition that allowed those manufacturing jobs to command such value from their employers. No job sector has inherently more benefit than any other. it all depends on how valuable that job is.
@sir vic, The market incentives are skewed by mandate from government. Subsidies for social policy (like ethanol, like mortgages, like tax breaks for corporations) have clear impact on what is promoted in the market and what isn’t with negative unintended side effects often times.
and it hasn’t been true for any of those things you listed. there is a persistent battle and ebb and flow to the market vs mandate operation and guidance.
@21 – not viable until 2030 in large-scale production.
Plug-in hybrids work now.
Not then.
By 2030 we’ll have gone so far past the global warming tipping point that Vancouver will be a beachside resort year round.
Jonathan,
Hydrogen is not a greenhouse gas, it’s a homonuclear diatomic and does not absorb in the infrared. I’m not impressed with your grasp of science at all.
GM’s “vastly superior” hybrid technology has yet to hit the market. Until then, I’ll be driving a Prius, available since…yeah, a while.
“The fuel cells require a tremendous amount of rare metals, the mining of which is a total environmental nightmare. Hydrogen cars, from a net environmental impact, are likely worse than a traditional gasoline-fired small car.”
Rare metals, like the platinum in your catalytic converter? Ever hear of recycling? That’s the first thing that gets cut out of a car when it hits the junkyard. Same with fuel cells, you can recycle. More SUVs powered by fuel cells is hardly the answer, but they can be part of an energy efficient fuel use strategy. I forget, what are we pumping and mining out of the earth the most right now, oil and coal? Wasting most of it too with our inefficient machines. My bad…
@30:
This is too fussy to be in the main post. You are, of course, technically correct. The hydrogen that leaks, however, is highly reactive. Just about anything it becomes, including water vapor, is a greenhouse gas.
Your logic is like thinking adding CFCs to the atmosphere has no direct effect on the amount of UV radiation screened. It’s true, but only if you fail to consider how CFCs interact with the other components in the atmosphere–like say, ozone.
And I think you are a moron, if you believe commuting with a Prius in any conceivable manner makes you environmentally friendly. Take a bus or a bike, or walk, and I’ll be impressed.
and 31:
And how will the hydrogen for these fuel cells be made? From those same fossil fuels. Or from electricity, generated from the burning of fossil fuels. Producing the hydrogen wastes some of the chemical potential energy. It’s a non-solution.
Yes, catalytic converters use the same rare metals. And yes, they are recycled. Fuel cells of sufficient generation capacity for a car–at least those I could find specs for–need more metal per car than is required for pollution control devices.
In contrast, a setup like the volt requires a smaller emissions control device (as the internal combustion engine driving the generator can be very small.) The fuel cell car? More rare metal, more weight in the vehicle, more toxic waste during production, shorter functional life and it still needs to be fueled with carbon-releasing energy sources–only with another efficiency-sapping energy conversion step added in.
Call me skeptical.
Do you really think that all the Big Three’s talent and technology would disappear if one or all were allowed to fall?
If they really are valuable they’ll be snatched up by competitors. I definitely don’t think they should be allowed to collapse without permitting the foreign competition to buy up their assets as they see fit. It would be pretty awful if that weren’t allowed. But I’m sure it would be.
And if there really is room for all those jobs in domestic car manufacturing, again, their competitors will build more car plants here.
And really what’s most important isn’t actually that they literally go out of business. It’s just that they have to be ALLOWED to fail, otherwise they have no incentive to be competent at all. I’m pretty sure that right now they’re running themselves into the ground and not doing much work to stave off bankruptcy, because they’ve given up on surviving without government aid, and that’s completely unacceptable.
Thanks for this, it’s not really what I’d like to see, but it’s in the right direction. Especially with “What I demand is a second chance for the engineers and line workers.”
I’ve been saying for days now, it’s not the worker’s fault that the heads of corporation made horrible business decisions. All of these so-called leftist liberals are so quick to blame the Big 3, quick to wish them bankruptcy without stopping to consider what that does for the several thousand line workers that would affect in a horrible, horrible way.
I strongly believe that if the Big 3 collapse, Michigan’s economy collapses. If Michigan’s economy collapses, that has an effect on the US-economy as a whole. If something isn’t done *you will feel the effects of this*.