Micromanaging Detroit
Print
Comment
Email
RSS
Twitter
Micromanaging Detroit
Why banks get bailouts and automakers get stern lectures.
By Mark Gimein
Posted Friday, December 5, 2008 - 12:07pm
The irony is that while the automakers have long been the sick men of the American economy, they are much, much less responsible for their most recent cascade of troubles than Citi and other banks are for theirs. It's hard to hold them responsible for oil prices shooting up to $140 a barrel—and now that they've fallen back down to $50, the idea that, "well, of course gas will cost a fortune because we're running out of oil" no longer seems so compelling. Consider that since last year, GM's sales have plummeted 41 percent, and Ford's 31 percent. But guess what? Toyota is down 34 percent, too—and it's got nothing to do with making gas guzzlers or ignoring hybrids.
And in fact, Detroit has tried the favored solutions of the left (William Clay Ford Jr., who is Ford's chairman and who ran the company as CEO from 2001 to 2006, is as serious an environmentalist as you'll find in business) and the right (you can't say the automakers haven't moved aggressively to get out of as many union obligations as they could) and still find themselves on the verge of insolvency.
Who's really at fault, however, doesn't matter all that much, because for both laissez-faire Republicans and liberal Democrats, the financial crisis presents a rare opportunity to rebuild the most iconic exemplars of American industry in the way they hoped for all along. For the free marketeers of the right, it's a chance to extol the benefits of the strong medicine of bankruptcy. For the newly empowered liberals of the Democratic Party, it's a chance to put environmental consciousness in the center of industrial policy.
After many years of not having to think about the "battleground states" except in the course of the presidential election, Congress now, thanks to the financial crisis, actually has to think seriously about what to do with Detroit. After years of watching the old industrial core stagnate and unemployment creep up (it's at almost 9 percent in Michigan already), there is a sudden urgency in finding a solution to a problem decades in the making. And the message that Detroit is getting comes down to, "Well, now you'll do it our way."
It's certainly a lesson for Detroit—which has been hankering for federal handouts since time immemorial—in being careful about what you wish for. There's a great likelihood that it will turn out to be a similar lesson for the more fervent advocates of re-engineering Detroit on both the left and the right. This week's hearings are proving that whatever magnanimity the automakers get from the federal government will be accompanied by a double helping of cultural payback. Automakers' problems have shown themselves to be horrifically immune to Detroit's own solutions for years. There may be no one left to lecture if they prove immune to Congress' as well.
Comments
I enjoyed the article. It is
I enjoyed the article. It is very remarkable. Thank you for the information. I will be back.
micromanaging detroit
approx. 30 years ago Suzuki made an suv that got 40mpg and hauled 7 people in it. not sold in the usa. a couple of years later there were suv's from all the auto companies, but they got maybe 15mpg, didn't haul as many people....hmmm! despite hov lanes allowing motorcycles on them, most motorcycles don't get the mileage that they should. my sister had a harley sportster made in the AMC years with the plastic parts in the carb. when they broke, you had to buy the complete carb...but my brother in law bought an ordinary one barrel carb for a car and installed it. the bike had more power and got 70 mpg. doesn't that tell you that harley's engineering sucked? Normally they only got 45 mpg. most auto companies don't care what mpg you get and they mostly care about how much they can charge for the vehicle. by buying japanese, etc. autos we consumers have told us auto makers to "stick it"...and they still haven't figured out that we mean business...THEY DESERVE TO DIE. Once an auto maker figures that out; then they will make money...we want a car that will last at least 7 years, gets good gas/diesel/whatever mileage, doesn't cost too much, and is safe to drive. Tesla would be a good example if the trany was any good...even better if battery companies would get together and produce a really good electric car battery. the chevy Volt is a joke...in comparison. 25 miles per charge????
How the Bailout is affecting the globe
On a related note, see how news broadcasts from around the world are talking about the big three.
http://www.linktv.org/video/3330
Watch Global Pulse to know what the rest of the world is saying. I'm an intern working with them.
From LinkTV, a nonprofit TV channel dedicated to world news, documentaries, cinema and programming.
www.linktv.org
Micromanagement in general
It is not that Detroit is in need of micromanagement, virtually every industry in America is as well. This includes the financial industry. This also includes the industry of government and the industry of creating jobs for people who have more or less become just as complacent as industry and government combined. We have managed to create an entire society of American whose only focus is on the Ipod. What about solar collectors, sustainable green housing industries, organic regional produce farming, alternative powered vehicles with an equally alternative focus on what the vehicle is actually used for?
Will it be the Ipod that drives our 21st century industrial economy or will it be 21st tradesmen that actually no how to climb a roof and install the solar collector?
weak article
This is a very silly article. We do not bail companies out because their failures are or are not their faults, or because they are deserving. We bail out because the failure of that industry would have such enormous external costs to the rest of the economy that we simply cannot allow them to fail. This is true of the banking industry; no banks means no credit, which means total lockdown for the rest of the economy. This is not true of the auto industry. Moreover, the problems that are causing the American auto industry to suffer today will continue tomorrow if we do decide to subsidize them. The same crippling union agreements will be in place, the same poor business plans will be used, the same ineffective people will be in charge. Let these companies go into Chapter 11, get out of their union obligations and reorganize into something resembling a functional and efficient industry.
bailout
This is not about left or right. This is about the destruction of the middle class. If you kill the big 3 you kill the unions with it and thousands of big 3 supplier jobs. But one thing is becoming increasingly clear, the government (both left and right) want to kill the unions. It is easier to force American standards of living down then to force other countries in NAFTA and the EU as well as Korea and Japan and China to allow unions and force the enviromental laws that we have to abide by upon them. Not to mention the subsadies that other countries give their companies by providing national health care for them. It is easier to force thousands of Americans out of their homes and into apartments living in boxes like they do overseas than to promote our current living standards. We need fair trading laws and enforce them. Don't import from countries that do not allow their people the same freedoms we enjoy. Make sure that foriegn companies that have plants over here invest their profits over here. Give the big 3 the same tax breaks that we give Honda and Toyota etc. There should be a fair trade act, not a free trade act. The big 3 should go to capital hill and cry about that. And if the big 3 still bleed red white and blue quit building plants overseas and reinvest that money here. Build those fuel efficient Opels over here GM! Don't waste 300 Mil. in St. Petersburg on a plant that Putin will nationalize in a few years! Learn from the past. Export cars to China, don't built them in China. I say again FAIR TRADE NOT FREE TRADE. If the dems and the replucans don't learn this now, ther will be an independant libetarian in the white house in 2013.
Keep making bigger vehicles, but make them fuel-efficient
If Detroit is to be directed to build certain kinds of vehicles, it should not only be made to build better versions of the smaller, more fuel-efficient, hybrid, etc. kinds of cars that some people think everyone should be driving--in other words, more competitive with the kinds of cars overseas manufacturers produce--but also to make SUVs, trucks, etc. that are just as fuel-efficient as smaller cars, NOT to reduce production and purchase of larger vehicles. Large vehicles have very legitimate purposes (carrying lots of people, camping, hauling, etc.), which is why so many Americans buy them. It's silly to reduce manufacturing and purchase of such vehicles if they perform useful tasks that smaller vehicles can't do well, if at all, just because larger vehicles currently don't have the same mileage as smaller cars--the real task is to make larger vehicles just as fuel-efficient as smaller cars. Yes, I know larger vehicles have more mass to carry around per mile, and so they can never match the miles per gallon of a smaller car, but a smaller car will never be able to match the miles per gallon of a motorcycle, and nobody is proposing that everyone abandon their cars for motorcycles. Larger vehicles need to be engineered so that they get a similar MPG PER POUND (or kilogram, if you prefer) OF WEIGHT as smaller vehicles. We have to no longer be alarmed at the difference in miles per gallon between a smaller vehicle and a larger vehicle--we just need to make the fuel efficiency of the larger vehicles as efficient as possible, and not worry that there will always be a difference in MPG between vehicles of different sizes. Besides, once renewable energy sources are used to power more vehicles, the environmental impact of larger vehicles will be much less.