Why I love the US auto industry
I’ve been watching a lot of the talk about the US Auto Industry lately and I don’t see many people sticking up for it. That’s partially because the execs in that industry are horribly clueless and are flying around private jets. Come on, you missed the chance to really pull some PR magic out of the air. If I were an exec there I would drive an American car down from Detroit. But, let’s leave the PR cluelessness aside.
When I was in China over the past few weeks I saw that the Chinese market LOVES American brands. You really need to go there to understand just how significant this is. On nearly every corner you saw an American brand. The world’s biggest bookstore there? It has a 7-11 on the first floor. And a KFC. And a Starbucks.
Everywhere I looked I saw Buicks and Chevy’s (both American car brands).
I saw Nike and Patagonia and many other American clothing brands. And lots of American technology brands were used at the BloggerCon there. Dell. Apple. Etc.
So, back to why I love the US auto industry and why I’m going to stick up for it.
I own a GM car. My producer owns a GM car and a Ford car. My wife owns a BMW, German. My dad owns a Toyota. My brother owns a GM truck. My other brother owns a Honda.
Funny thing, they are all great cars. The last two cars I’ve owned are American (I had a Ford Focus, now have a Saturn Aura).
So, why are American cars getting such horrible press? Well, they haven’t done two things:
1. They haven’t protected their brand from mediocrity. Apple, for instance, doesn’t put its brand on crappy things. At least not in the past nine years since Steve Jobs came back. But Ford and GM puts its brands on all sorts of second-rate crappy cars that are sold to taxi drivers and rental car industry. Every time I rent a car it’s usually a crappy car. It really bums me out. If I were at GM or Ford or Chrysler I would stop making these crappy cars.
2. They haven’t innovated. Three weeks ago Ford gave me a Flex SUV to borrow for a week. I put more than 500 miles on it, and it is a great SUV. It is a state-of-the-art SUV. Has Microsoft’s Sync technology in it so you can talk with it. The lift gate has a motor in it to lift the tailgate up for you, which I really appreciated when we had some heavy rains and it kept me from getting my hands wet. The SUV itself had a great ride, handling, and was a lot nicer to ride in than my BMW is (my producer Rocky, says so). But, really, these are minor innovations. They aren’t any that you’ll get credit for as an auto maker because other brands have similar things (aside from the Microsoft Sync, which isn’t that satisfying, truth be told — it often didn’t understand when I wanted to switch the radio from, say, CNBC, to NPR). The kind of innovation that American car companies WOULD get credit for? Going all electric all the time. Even GM here, with its Chevy Volt, is coming too late to the marketplace to get all that much credit.
Actually, I think it comes down to the executives PR gaffe. Why are they flying private jets around? They need to demonstrate that they are car enthusiasts and that the American industry is worth saving. Bob Lutz has gotten close when he drives around the Volt and shows it off, but it’s too far away still. We don’t understand why it takes so long for American industry to come up with a new idea and a new car.
When the executives come back to Congress they should demonstrate that American industry CAN come back and CAN do something innovative.
Here’s how.
1. GM should shut down many of its lines and many of its brands. Do a real house cleaning. Why do we need Saturn, Buick, Cadillac, GMC, Chevy? We don’t. Pick two, get rid of the rest. Work on the brand. Make sure that the American brand remains one that’s viable in places like China and India. If we screw up our brands, or, worse, let them go out of business, then we’ll see America drop in influence very quickly around the world. Right now Chinese young people think that being like an American is “cool.” What if they figure out that it’s not? Yeah, there goes any chance of interacting with a billion-person market.
2. Ford and Chrysler should shut down all lines that make substandard, crappy cars. Yes, this will put hundreds of thousands of people out of work and move tons of market share over to Korea, Singapore, and China. But, sorry, this needs to be done if you want Americans to be in the car business at all in a decade. If you don’t, then the people who can build quality low-cost cars will eat our lunch and will take away our oxygen anyway (and, they are coming).
3. GM or Ford should make a strategic deal with Tesla to turn 20% of its best dealerships into Tesla dealerships and should help Tesla get access to the American market. The same company should make Tesla a premier American brand.
4. GM or Ford should figure out why rock star Neil Young could turn his big-ass-American car into an electric car that regenerates its electricity with a liquid fuel generator that uses natural gas, not the stuff that comes from Alaska or Saudi Arabia. Why can a freaking rock star out innovate big old American car companies? GM and Ford should be ashamed. We should take away all executive perks until GM and Ford demonstrate they can innovate again.
5. GM or Ford should make Shai Agassi’s car, Better Place. Why, again, is an executive from Silicon Valley out innovating the old-school US car industry? Give Shai one of those jet planes and let him get to work.
6. The congress should increase gas taxes to make all this happen. Obama should call for a “moon shot” for the US industry. One of replacing 50% of cars with electric cars by 2020. Can’t happen? Well, if you think that, then get ready for the Chinese. They are building their own car industry. Their citizens are getting tired of the pollution there. They are getting wealthy (I saw tons of Audis, BMWs, Ferraris, mixed in with those Chevys and Buicks) and they are building their own brand names too, that they will bring world-wide. We only have a couple of years of market window before someone else slams it shut.
These moves will not be easy. There is not a whole lot of love for the American car industry in the United States right now. Getting Congress to do ANYTHING for this industry will prove remarkably difficult (and will be impossible if American Car execs remain arrogant and out of touch and don’t sell all their jet planes and start riding in coach like the rest of us).
I’m hopeful, because I love my American car and I hope I can buy another one soon.
My experience with the Ford Flex demonstrates that we can build awesome cars here. The fact that the VW Beattle (and Tesla and many other great cars) were designed in Los Angeles demonstrates we still have the best car designers on our shores and that they build products that people want around the world.
What do you think? Am I off my rocker? Is there any hope? Or should we just shut down the whole industry and let the Chinese take over?
Oh, one other little data point. I met a former executive from Mercedes Benz (Daimler Chrysler). He said they built a car in Germany and built the same one in China and the one in China had fewer defects. Do NOT assume that the Chinese won’t take over the entire world in car production in the next 15 years. You will be proven horribly wrong if you assume that.
November 22nd, 2008 at 12:51 pm
On the behalf of my Father, a Retired G.M. Worker and U.A.W. member:
Thank You for still believing in us here in Detroit.
-Charles P. Adkins
Owner
http://www.politicalbyline.com
November 22nd, 2008 at 12:52 pm
I met with a Chinese businessman within the past year that we do some business with on a brand you would recognize. He was attempting to fill his factories in China with a western face to meet with American companies. In that meeting, he got so fired up he was walking around the room telling me that America doesn’t see what’s coming from China. That we are lazy and complacent and that China will steamroll us. Needless to say, we didn’t do business. Am I lazy or just freaked out by his act? Who knows.
November 22nd, 2008 at 12:52 pm
1) We should save Detroit, the Autos, those jobs and the large US wide eco-system that surrounds it. NO, we should not bail them out as a company (certainly not the shareholders). Should taxpayers fund this “bailout”, it should only be as THE senior lender, and not subordinated to equity holders of GM or Ford.
2) Detroit’s issue is not one of quality, there cars have been very competitive for years now. Detroit’s issue is one of credibility, when they earlier sold us or our parents crappy cars - and subsequently did not make good on them when they went bad.
3) As to bailouts in general there are huge counter consequences. As just two examples, everytime the government prints more money to pay for these bailouts - it devalues the US dollar longer term, has inflationary implications, and postpones the inevitable.
The reality is that there is just to much automobile manufacturing capacity world wide. We started as an agricultural economy, and went to the industrial economy. Now we have to complete the third stage (Service economy), show the “Tuff love”, and let Detroit live or die on its merits. I would rather see the short term pain, and retool Detroit and its workers to create solar, and other nexgen technologies.
Long live Detroit, not necessarily the Detroit 3.
http://www.twitter.com/A_F
November 22nd, 2008 at 12:57 pm
I really like point #4. Willie Nelson is another good example (if you’re willing to include his bus.)
The problem is, and I’m saying this as a trained organizational consultant, that the method of analysis often used to make decisions is poor. I don’t think it is a question of a desire to change, but when you get skewed or inaccurate information, you don’t see things as they are.
Ok. Maybe that’s too optimistic.
November 22nd, 2008 at 12:59 pm
Paul: the Chinese have their own form of arrogance. But, on other hand, that arrogance is right. I could be that Chinese business man. We HAVE to get a clue about our new global world and what is coming at us. China is changing VERY quickly (12 years ago I didn’t see any signs of wealth, today I see it all over the place). Americans who don’t visit there don’t really have a clue about what is going on there and what they are going to do to the world-wide marketplace.
November 22nd, 2008 at 1:01 pm
Andrew: I don’t disagree. But we need to make sure our brands have credibility with the world. Right now they are teetering. If we lose our brand leadership we’ll lose a LOT.
November 22nd, 2008 at 1:01 pm
I agree with much of the innovative thinking in your post. I do not agree with a gas tax. We’re all enjoying some relief in this crappy economy, and the last thing we need is for Congress to put the screws to us and make transportation more expensive. Some of are doing all we can, driving cars w/ great MPG, etc, but do not live near public transpo. Don’t punish us with higher gas prices to ‘change our behavoir’. And if someone chooses to drive an American made Suburban, needs/wants a big vehicle (safety anyone?), that’s their choice.
It’s interesting that Japanese carmakers Honda and Toyota are expanding their U.S. plants and hiring more workers in this crappy economy. They can do this because they’ve been making superior quality (low mileage/emission) cars for many years, and their pay per worker, including benefits, is about $45 per hour compared to the UAW’s $72+ per hour per worker.
The main problem many of us have with ‘bailouts’ is that we’re giving our money, our tax dollars, to businesses that have huge benefit/worker obligations, are not competitive, and have made poor decisions (like you’ve noted). Who likes to reward bad decisions???? Same reason a majority of Americans don’t like housing bailouts that reward people who took on more than they could afford.
All of that being said, you have very good insight into why none of us should be happy about the thought of American auto manufacturers going under. We want our brands to succeed. And we need our brands to succeed. But I need to hear the UAW make immediate concessions to make this viable. Along with the corp jets and excessive white collar salaries.
Good post, Robert, good conversation that needs to take place.
INNOVATION! No reason we can’t be the best at it, in any industry.
November 22nd, 2008 at 1:02 pm
Ditto! My lst car was a 1941 Ford which Ford stopped making again until 1946 (after WWII) ended. I found it in 1961 and adored it and wished I still owned it! If you ever are in Santa Fe on a Friday or Saturday night, visit the Plaza and see how our American brands are treasured as they circle our square plaza in a variety of low-rider forms and colors and styles. It is challenging to watch American auto executives be so out of touch with reality to actually “fly” to Capitol Hill in private jets. They need to get off the golf course, out of their private jets and office suites and on to the factory floor and learn about America today by getting to work for a change to save their companies not just themselves. Of course, they should read this blog post and get moving or move out the way from the next tide of auto innovation ready to drive us forward.
November 22nd, 2008 at 1:03 pm
Bail them out.
Make some conditions.
But give them the cash.
How come the execs from AIG did not have to undergo this grilling? What about all the Wall Street people, who created the subprime mess that caused much of the economic issues we are seeing today? They got bailed out. Now I hear they are getting year end bonuses on top of fat pay checks.
All of Michigan has been a donor state for decades because of the auto industry. We have sent billions and billions of our federal tax dollars to take care of problems in other states. We need some help now.
There is a youtube video on my blog (click on my name) of Rep Thaddeus McCotter dispelling many of America’s myths about Detroit. Please watch it.
November 22nd, 2008 at 1:03 pm
Well, this is a tough one.
I own a Toyota, a Honda before that and Mitsubishi before that.
The big three have their place in the market, but you’re absolutely right - they don’t need all those brands. Its pointless.
If any government gives ‘bailout’ money, its pointless unless these stupid union contracts get dissolved. Maybe they should be forced to renegotiate realistic contracts?
There’s no point in saving the big three just to save jobs. If that’s the argument, then let them die and pick up the pieces after. Use part of the cash you would have used and retrain those workers to other areas. Give relocation costs to move them to areas where there are more jobs. You get my point.
November 22nd, 2008 at 1:03 pm
Jeff: if we don’t change our behavior the Saudis and Chinese will have us up against the wall anyway. We MUST get off of oil. This is NOT an option anymore. More on that when I post my thoughts about China.
November 22nd, 2008 at 1:04 pm
Ok, I see some good point here, but…
1.) Learn from the british. They’ve put tons of money into their car industry in the 70s and 80s. None of the companies from back then are either exisiting today or have remained british.
2.) GM’s structure is way to complicated to be fiexd that easily. The GM cars you’ve seen in China were probably Korean built Daewoo’s that are now Chevrolet branded. Most of the modern GM cars on the US market were developed or use technology developed by the European technology center. Same goes for Ford, since they started selling the Euro Spec cars in the US. the Focus and the Mondeo were the first attempts to sell the same cars globally.
3.) From what I’ve read so far the biggest problem are the unions. Again, that’s what killed the british car industry. The only way to make the neccessary restructuring is to file for bancrupcy an bypass the unions. This will cost a lot of jobs at first, but some of the jobs will be recreated in the long run as business catches on an competitors take over plants and marketshare.
PS: Letting them buy Tesla and dragging it into the downturn is a bad idea for Tesla.
November 22nd, 2008 at 1:11 pm
Mirco: you’re wrong. The cars I saw in China were mostly the same as the ones we sell in the United States. Oh, and Chinese love SUVs. They are springing up all over the place. They want to be American and buy the same cars our movie stars use.
November 22nd, 2008 at 1:12 pm
Mirco: but I do agree with you about the unions. The unions need to get a clue. Their jobs are done. Their pensions are done. The Chinese will see to that in the next 12 years anyway.
November 22nd, 2008 at 1:13 pm
I agree with your points and I think you actually laid out a well thought out plan that they should look at. But, I don’t really think we can afford to see thousands more jobs lost. And I say this as someone who is working from temp job to temp job right now.
November 22nd, 2008 at 1:16 pm
Mathew: I agree, but we’re going to lose those jobs anyway if we don’t fix the fundamental problems. If that happens we’re done for and will quickly spiral into real trouble.
Interesting discussion on this post happening over on FriendFeed too: http://friendfeed.com/e/e8f9dc56-53ce-739d-e616-0a962e781de3/Interesting-the-responses-I-m-getting-to-the-car/
November 22nd, 2008 at 1:19 pm
I agree we have to end our dependence on oil eventually, and I look at it as a national security issue. But until a viable alternative that’s affordable arrives (plug in electric hybrids my favorite near future vehicle), it’s not fair to say to low/mid income Americans “we’re going to take $1200 out of your pockets in a gas tax” right now. Some of us can’t afford it.
I’ve driven low emission, high mileage, high quality Hondas (Civics) for years. Honda’s a great example of what’s right with an automaker. They happily met California air standards (exceeded them) without a fight, and were Green before it became a business trend.
American car makers still have a few years to rebuild their brands. I’m not going to buy something to please someone or to keep someone working. I”m going to purchase a product that best serves my family (cost, affordable to maintain, long term purchase, low transpo $$). And so far, that’s been Honda for me. Hondas, which incidentally, are built in Tennessee by American workers using top notch Japanese assembly line techniques.
November 22nd, 2008 at 1:21 pm
Jeff: did you know that in China they pay $5000 to buy a license plate? Their highest paid engineers make $25,000 a year (most make half that). So, their government is taking real steps to make sure that they invest in their future. Why shouldn’t we do the same? Or, should we just give up our country to global forces? You will NOT be able to stop those forces. But you CAN invest now to get on top again and make sure we have a viable society.
November 22nd, 2008 at 1:21 pm
Benefits and pensions. Streamlining the brand lines and eliminating the crappy cars won’t overcome a $72/hr rate versus a $48 rate. So cost cutting must be done.
A gas tax, from an environmental and US Centric view point isn’t a bad idea. I don’t like high taxes in general, but…. collective action problems like pollution are ONLY solved in three ways; 1) regulatory (laws) 2) social pressure (flogging in the town square) or 3) monetary (taxes, fees).
One sacred cow not mentioned is the US Automobile Dealership Franchise system. Some estimate the cost of distribution and regulatory protection at up to 2k per car sold. 2k is a lot of friction. This is both for US or foreign cars purchased here. But why can’t I order my car online and save the 2k? Isn’t that the equivalent of a stimulus check? We can improve this.
I would love to see Jack Welch step in and clean up these companies. It can be done. Americans are great workers, just in a bad system they produce irrational results.
November 22nd, 2008 at 1:22 pm
After visiting China I’m convinced we do NOT have “a few years.” By the way. I think you’re absolutely wrong about that.
November 22nd, 2008 at 1:27 pm
As a Brit - with an outsiders view - In response to your first point I think the Big 3 need to become 1 with about 3 brands. I would also say that they would need to become smaller too, so that lends itself to one or two of them going to the wall rather than mergers between the three. The government as a rule should not support sickly (inefficient companies) - nature should be allowed to take its course (it took a decade and billions of pounds before Rover did what everyone knew it was going to do anyway). Touche, with the innovation point - however, when companies get to a certain size its impossible for them to innovate because of all the layers of management and lack of a creative/innovative culture. A lot of this beef needs to be stripped away and there is no easy way for this to be done without the company shedding jobs and becoming smaller.
November 22nd, 2008 at 1:27 pm
Interesting insights. I agree with your points about the image problem. When people think about Toyota one word comes to mind - “reliable”. What words come to mind when you think about Ford or GM? I have a few - SUV, gas guzzler, recall, etc.
I’m vehemently opposed to a bail out for the auto industry. We can’t continue to throw taxpayers hard earned money at companies that aren’t viable. There’s no way in hell these guys can turn it around. Let the markets decide whether or not these companies should survive - not the government.
Best,
Jeremy
P.S. You praised the Beetle in your post. IMO the VW Beetle is a pile of junk. I owned one back in ‘99. I’ve never had more problems with a car. It may have been designed in LA, but it was assembled in Mexico. I’m not sure that the production quality in Mexico can rival the US or China.
November 22nd, 2008 at 1:27 pm
I think its time that we learn from the Chinese. They are pragmatic, technocratic, long-term in perspective and highly protective of their national interests. We should do the same. Pragmaticism means abandoning our free-market deregulation doctrine and embracing industrial policy that works with capitalism. How about learning from the Japanese and Koreans in how their government supported the development of key industries? Or look at our own example of US defense spending spinning out innovation in Silicon Valley?
I also think the Chinese government is highly protective of its national interest. We have to do the same. This might mean providing support to key industries like clean tech and yes, the auto industry. These companies need to shrink and need to be reformed and floating them a lot of bailout cash make not make the changes happen. But investing in important industries to make sure they are competitive is absolutely something we can do.
November 22nd, 2008 at 1:33 pm
In 1873 the long crisis (20 years) was mainly due to two events:
http://en.wikipedia.org/wiki/Gr%C3%BCnderkrach
- Europeans had been building houses on crappy loans
- The US was invading Europe with low priced farmer products in large quantities
Resulted in the collapse of the Vienna stock exchange.
http://en.wikipedia.org/wiki/Long_Depression
The change this implemented:
- The financial power changed from Europe to US
- The industrial power also went to US - bye bye UK.
- Up to that time almost all technologies were invented in Europe, then slowly the US became the leading innovator
Over the years the US people became rich enough to become the world leading consumer market. Think Ford.
In 2008:
- Houses build on crappy loans
- China had invaded the world with their products at low prices in large quantities.
China has a large internal market potential. If they succeed in getting their population wealthy enough, China will become the largest consumer market. India maybe the second largest?
Compared to 1873, communications are now instantly instead of days and weeks. Thus the crisis and recession won’t probably last 20 years.
As for US cars:
- Adapt new technologies in production
- Adjust to change indemand
- Change concepts
- Copy European car manufacturers as they have survived even with unions and high labor prices.
November 22nd, 2008 at 1:35 pm
I, too, love the U.S. auto industry, but no way should Congress impose a gas tax to save the industry. Historically, we didn’t do this for the aviation or steel industries, and they both survived after a period of necessary internal reformations.
You’re critique of the many missed PR opportunities is spot on. The auto CEOs didn’t even arrive in Washington, D.C., via their own products, and once there, they weren’t prepared. I watched GM CEO Rick Wagoner painfully stumble and stutter through vague answers to common-sense questions anyone should have been prepared to answer with $25 billion at stake.
As so often happens, the Big Three actually have the means to help themselves. Let’s take the example of GM. For years, GM has possessed the capability of producing natural gas vehices (NGVs), and, in fact, does successfully produce these cars for othe countres (Brasil, for example). NGVs run clean and, best of all, in this country, we happen to possess the fuel ourselves.
The question is, why hasn’t GM re-tooled and manufactured these cars here in America? We could kill two birds with one stone: Reduce our dependency on foreign energy sources (oil) AND reduce our carbon footprint without sacrificing U.S. auto jobs. Even better, we begin to put a dent in that $700 billion that’s flowing outside our borders to pay for our oil addiction.
This is a position touted by T. Boone Pickens in his energy plan, and the message is pretty simple: America needs to depend on herself for energy consumption. Check it out: http://www.pickensplan.com/
I’m glad you’re discussing this issue. I see it as an energy crisis that is entangled with the economic meltdown. The time really has come to put feet to our words. I’d love to buy an NGV produced by GM, but until the Big Three show some real leadership, enlist the help of visionaries (like Boone or Neil Young) and generally tighten their own (very mammoth) belts like other industries have, I’m not willing to bridge them with my dollars.
November 22nd, 2008 at 1:36 pm
I think we absolutely need to bail out the American auto industry-but I want an ownership stake and strong environmental standards attached to any monies if the taxpayers are going to foot the bill.
November 22nd, 2008 at 1:43 pm
Of course I think we should invest, on infrastructure, etc. But I believe in tax-cutting to incentivise, not tax punishing to ‘change behavior’. No one needed to push me to change my behavior. I’ve been making the best decisions I can, based on family needs and personal beliefs, and the last thing I can afford right now is Big Gov’t stepping in and taking more money I don’t have out of my wallet. It’s ironic that the current low gas prices will actually spur sales of larger cars and SUVs, the ones that are highly profitable to Detroit, and it will allow people to get more for their trade-ins if they want to downsize to smaller cars. So low gas prices actually HELP Detroit, but that doesn’t fit a worldview that hates anything carbon and embraces the most dire Global Warming models at the expense of people being able to pay their bills. (it’s friggin freezing in DC by the way, but I digress :-)
I think the gov’t causes far more problems that it solves. For it to tax more and make decisions based on special interest groups and particular industries is the worst thing for our economy. It was happy to print more money and write me a stimulus check to cover the high cost of energy. Huh??? Surreal.
I believe in the free market and entreprenuerial American spirit. That’s what made Detroit great years ago, and it’ll make it great again if we unleash it. It’s tethered right now by high corp taxes, unaffordable pension benefits, brand damage dating back decades, idiot CEOs/execs and gov’t meddling.
November 22nd, 2008 at 1:44 pm
This is an awesome post. I’m so proud that you’re pro-American!
Go Ford!
jmyers0341@gmail.com
November 22nd, 2008 at 1:52 pm
The American auto industry has made some horrible mistakes. Investing in foreign brands (Ford and Jaguar come to mind) didn’t work.
We purchased a four year-old low-mileage US-made car with a foreign nameplate because it had a better warranty than the similar new US-made car we were considering. The dealer has always treated us like we purchased a brand new car and we never had to jump through any hoops to get a loaner or had make a co-pay on a warranty repair. The cost of ownership has been less than any other US-made car we’ve ever owned.
If Detroit wants me back, they’re going to have to match this standard.
November 22nd, 2008 at 1:57 pm
So, 50% of all cars electric? First, there are the range problems (which are worse when you need A/C). Second - and this is a problem for Obama - you’ll need a lot more power generation capability.
He wants to run the coal industry out of business, and he’s opposed to nuclear power. If you believe that the “Pickens Plan” will solve all of that; well, I have some nice land is south central Florida you’ll also be interested in.
November 22nd, 2008 at 1:57 pm
It has nothing to do with the cars, regulation, or the democrats, or the republicans, or management. It has everything to do with the benefits the big three pay thier workers.
Either level the playing field, by breaking the UAW, or unionize all the auto companies who have factories in America.
In many segments the Big 3’s products are heads and shoulders over the competition, it’s not the products that are the problem, its the price.
How many retirees in the U.S. is Toyota supporting? What about Honda? Do the research, run the numbers, this is the real story. How much of the price of a GM car goes to worker benefits .vs. the price of a Toyota?
If you think companies have an obligation to thier workers, buy American.
If you don’t think companies should take care of thier workers when they retire, don’t buy an American car.
Guess what?
You have all voted with your wallets, and you think pensions, and great health care benefits for workers are a bad idea. You won’t pay a higher sticker price for these benefits.
When you buy Chinese products at Wal-Mart, you send the same message: Stick it to the American Factory Worker. This is the message you, the consumer, has been sending to Detroit for years and years. Well, you are getting what you paid for.
All the reform in the world isn’t going to change this… All the money we can borrow from China, to hand to the big three, isn’t going to change this.
No amount of wealth redistribution is going to change this…
November 22nd, 2008 at 2:03 pm
First of all, I absolutely agree that Detroit’s brand lines need to scaled back.
But I actually do think Detroit should be bailed out. And cleaned out.
Detroit shouldn’t be bailed out by the government and the people. It should be bailed out by Chevron, BP, Shell, and the other oil companies that coerced Detroit into sticking to an untenable business model for 30 years.
A coworker of mine started doing car ads for Detroit’s biggest brands in the 70s. He’s presented to plenty of CEO’s and talked to even more engineers while test driving the latest models. According to him, everything that’s happening now, Detroit was actually starting to talk about 30 years ago. But they never managed to navigate towards a sustainable solution. I think we have a good idea why.
I feel badly for the hardworking Americans that were the backbone of this once great industry. And, after enjoying their most profitable quarters ever, I’m pretty sure the Chevron’s of the world can afford to contribute to a $25 billion dollar bailout for an industry that their greed helped to drive into the ground. Perhaps (as punitive damages) they should be made to support blue-collar auto industry workers who lose jobs and pensions.
But it shouldn’t end there. These private-jetting Detroit CEO’s should be put out. Replace them with true visionary leaders–like the Hiruka Nishamatsu’s, Neil Young’s, and Willie Nelson’s of the world.
November 22nd, 2008 at 2:06 pm
Gas tax? I don’t believe in manipulation to get things done. There already is momentum building towards more fuel efficient technology. All we really want is a higher MPG sticker. The Volt only does 40miles with its battery, what is its total reach?. We need to get rid of the “plug-in” name, it scares the crap out of people. The Chinese don’t care about American car brands, they’re just choosing based on availability, quality, and price like any rational buyer. The only way to have the Big 3 streamline their business is to let them file to restructure; get rid of some of the weight they have from the UAW, get rid of brand redundancy, get rid of incompetent myopic unimaginative management.
November 22nd, 2008 at 2:17 pm
James: I agree with you that we’re going to need to go nuclear big time. I would also do a “moon shot” that says we get off of coal in 25 years. We MUST do this to save our planet. But, we’ll do it in 50 when our cities are under water due to global warming anyway. I just hope we, as a people, get a clue long before then. Seeing how deep the pollution problem is in China is a real eye opener.
November 22nd, 2008 at 2:21 pm
James: Neil Young’s car runs on natural gas, which comes into my home, and probably comes into yours. I cook and heat with it. That natural gas runs a generator in the front of his car which charges the batteries. If he’s home he doesn’t even need to do that, he just plugs it in. He probably will get a couple of hundred miles from one battery charge, just like the Tesla does (the Tesla costs $3 in California to go 240 miles). If he needs to go further, then he’ll rely on natural gas.
But, either way, we HAVE to solve this problem in the next 25 years. If we don’t we’ll see global warming really hurt our cities and all people. And, even if you think global warming is bunk, you need to go to China and see the pollution that’s being generated there (and elsewhere, Los Angeles is almost as bad).
November 22nd, 2008 at 2:22 pm
Ajai: you really should visit Europe. How did they get their nice trains and public transportation systems? Taxing gas. They pay a lot more per gallon than I do. We need to use taxation to both change consumption habits as well as provide funding to invest in our future.
November 22nd, 2008 at 2:23 pm
US car makers should stop making heavy and inefficient SUV cars and focus on environment friendly, innovative, small and light-weight cars.
That’s what the Japanese do (and to some degree, also Europeans) and they’re obviously (more) successful.
Don’t be confused by the Chinese demanding SUV cars. Fuel efficiency and pollution may not be an issue there yet, but they’ll learn quickly. There’s no reason why a car should be inefficient if it can be efficient.
Anybody surprised? It’s what people have been telling for many years already.
November 22nd, 2008 at 2:25 pm
> Moosemiester. Sorry, we live in a global economy now and I’m going to buy the best products made at the best price. If that comes from China, so be it. It’s up to us to either compete or become a third-world nation. There’s too much American arrogance that says we’re entitled to these things. Hint: we’re not. More than half of the world’s population lives on two dollars a day. It’s very possible lots of us will join “the other half” soon unless we figure out how to innovate and compete in the world marketplace.
November 22nd, 2008 at 2:26 pm
Robert,
I’m sorry you’ve had a poor experience in Ford vehicles. I’d be interested to know what you define as “crappy.” The excellent Ford Flex that you noted is a crossover not an SUV, btw. :)
You’re wrong about Ford not innovating. Innovation comes from much more than creating an electric car, which seems to be the idea that you’re fixated on. Let me see if I can enumerate the innovations at Ford that I’m aware of:
- Ford’s vehicle mix was about 70% trucks & SUVs (largely because we were giving people exactly what they demanded in times of cheap gas); we have restructured to produce 60% cars & crossovers.
- We’re using our successful European & South American manufacturing models to bring the more of those outstanding small cars to the United States.
- We’re committed to being best-in-class in fuel economy in every vehicle we produce.
- We’ve doubled the number of hybrids we offer, and we’re actively testing plug-in hybrid electric vehicles (PHEV), battery-powered electric vehicles (BEV), hydrogen, compressed natural gas, and more.
- We’re environmentally friendly in every aspect of our business. It not only includes the vehicles we make, but the before and after effects as well.
- We’re using soy in creating seat cushions, replacing plastic with polyol in certain parts (thus reducing our carbon footprint), and creating materials that more easily biodegrade at the end of the car’s life;
- The lights shut off at the world headquarters at 6:30 and I have to dial a code if I want more power, and tell the system how many more minutes I need;
- I use Ford pencils made from recycled denim; our Rouge plant has the largest green roof in the world;
- Our Dagenham, UK facilities are powered by wind turbines; facilities in Spain have solar panels.
At Ford, we’re committed to making the cars that people want and value, and that comes down to making *affordable* fuel-efficient vehicles. Which is why we want to be sure that if we do make an electric car, it’ll be done in a way that millions of Americans can afford it.
There is a lot of misinformation out there and many Americans, from Congress on down, are oversimplifying the problem as well as the solution. If it were easy, we wouldn’t be in this situation. But we need Americans to understand the U.S. auto industry’s commitment to the country and its future, and we need to ask the same in return.
If you haven’t yet had the opportunity, I would recommend that you, and every one of your readers, spends about 8 minutes to watch/listen to this very eloquent statement:
http://www.youtube.com/watch?v=U7YBjjLKLd0
If there’s more information you need or would like access to some of the subject matter experts at Ford, you know where to reach me.
Scott Monty
Global Digital Communications
Ford Motor Company
November 22nd, 2008 at 2:27 pm
Peter: I disagree anymore. People want bigger cars around the world. When I was in China I saw a TON of SUVs, both made by American brands along with Japanese and Korean brands. The trick is we’ve got to get these big monsters off of gas and onto electric (and produce tons of nuclear plants) if we’re going to save our planet from both in your face pollution, like i saw in China, as well as global warming.
November 22nd, 2008 at 2:30 pm
Nice post, Scoble.
I agree with a majority of your points. Innovation is certainly needed. The American brands need to have more credibility put on them. Especially since so many people in other countries want to “be American” (which I personally find odd). During my last visit in India, I was shocked by how much everyone loved anything and everything American. A meal at McDonald’s was far nicer than I could ever expect it to be here in the US. People who were wearing jeans and t-shirts/sweaters were mostly wearing American brands. Same goes for the shoes. American brands can play this in their favor if they go about it in the right way. And innovation wouldn’t do anything but help immensely. On the other hand, we can’t really let the unemployment rate go any higher. Though it probably doesn’t matter, as they will head down that path if they don’t get to work anyway, I’m sure those people who have families to support wouldn’t mind having their jobs for a while longer.
November 22nd, 2008 at 2:31 pm
Scott: the taxis in New York City are inferior to those in Europe. Totally inferior. And they mostly are Fords, although I have started seeing Toyotas and they are more comfortable (and more fuel efficient).
Sorry about calling the Flex an SUV. I don’t get the brand difference between Crossover or SUV anyway. Seems pretty arbitrary. OK, so it’s sort of like a minivan combined with 4-WD Jeep technology. Either way, I really loved the Flex and would love to have one, other than the gas mileage was only about 17MPG in my experience. The BMW gets 28 on average. My Saturn gets 22, which is too low, me thinks. Of course, if I had three kids I needed to fit into something the Flex would be a great answer. It’s really a great vehicle and Ford should be proud of doing it. I just wish we had an electric version.
I think it is VERY cool that you took time out on a Saturday to answer my blog, by the way. That demonstrates you are listening to the marketplace conversation in a new way.
November 22nd, 2008 at 2:32 pm
If we bail out the auto companies, where does it end? what about the credit companies? the housing/homebuilding industry? Doesn’t make sense to me.
November 22nd, 2008 at 2:33 pm
By the way, I am fixated on electric because I physically was ill in Shanghai from all the car and truck pollution. If we don’t solve that problem millions of people around the world will die and autos are contributing a HUGE amount to that kind of pollution. If we don’t solve the global warming problem we’re all toast and if we don’t get off of oil as our fuel source our economies will continue to be held hostage to offshore interests.
November 22nd, 2008 at 2:41 pm
I can understand the pollution issue. I was talking with one of our marketing guys who was in Bangkok for about 4 years on a rotation, and he said it was horrible there (and that was 6 years ago).
I agree that the taxi fleet in NYC does need some updating. Ford has been working with Mayor Michael Bloomberg’s office to introduce the Ford Escape Hybrid as the vehicle of choice for the taxi fleet. Plus, with our Ford Fusion hybrid (mid-size car) that was just released, the technology allows you to go up to 47 mph in all-electric mode. That means that in typical city driving, you could get 700 miles between fill-ups.
If you’re interested in seeing firsthand some of the innovative solutions that Ford is experimenting with, then may be we should talk. DM me on Twitter if you like (@ScottMonty).
Scott
P.S. Thanks for acknowledging Ford’s efforts in social media. It’s a start, but we’ve still got a long way to go.
November 22nd, 2008 at 2:48 pm
Robert, thank you for getting my point. We consumers vote with our dollars, and we have spoken. We can whine, cry, pontificate, and point fingers, but everytime we open our wallets, we vote.
Like it or not, we have voted on the UAW, and their big worker benefit and retirement packages. We SAY we want these things with our mouths, and our pens, and our keyboards, but we are not willing to pay for them.
Everyone SAYS they want a safe car, very few people will pay extra for it.
Everyone SAYS they want a car with zero emissions, very few people will pay a premium for it.
Everyone SAYS they want a car that gets 50mpg or better, we’ve had them for years, they don’t sell as well the F150 full size pickup.
You are voting with your wallet, and I applaud you, Sir. However you have voted the big three into bankruptcy in thier North American Operations. You got exactly what you paid for :-)
November 22nd, 2008 at 2:48 pm
Robert - how’d you get a test vehicle? Also, good to see you pushing valley companies to fix the auto industry. God knows there isn’t anyone outside the valley that could help!
Putting tesla into ford dealerships would be a horrible idea - get people who already overextend themselves to overextend even further! Why don’t we give them a 2-3 year adjustable rate car loan…. you know what comes next.
My belief is that for today’s consumer, the US companies lack the style and the profile. No one wants to ride around in a taurus anymore. US car companies missed the fact that people bought the ipod because its sexy.
BTW - I would disagree with you on the taxi situation - the reliability of the taxis (say in NYC) is a testament to the reliability of the cars. When I heard Consumer Reports talk about cars today on CNN - they pushed reliability for the US auto manufacturers. The problem is that if you ask 100 people where reliability ranks, it’s not first. People want to feel good in their cars, and frankly as you suggest, it’s just not there.
Before i moved to nyc, I owned a jetta for 7 yrs and absolutely loved it - it made me feel good when i drove it and gave me relatively few problems (except for the recalls). We spend a lot of time in our cars and detroit needs to realize that. Sticking a fancy dvd player into the car isn’t enough.
November 22nd, 2008 at 2:49 pm
while working in china on sustainable transportation, I was most interested in the rental-car markets, which have the ability to speed innovation in many ways. (specifically, regulation will be closer; turnover will be faster; and pollution-critical maintenence will be better in managed fleets.)
Ford has been unwilling to work with rental companies in china. I spoke to several chinese rental companies. Ford percieves the opportunity to gain marketshare, and does not seem to have the imagination to enable other ownership models that are more appropriate fore these dense cities.
Rental cars and taxis are themselves innovations. In the long term, these will enable ‘electric vehicles’ much faster than focusing on the technology alone.
November 22nd, 2008 at 2:49 pm
IMO, the Big Three need a government bailout like an alcoholic needs a quart of vodka - and it will do about as much good, long-term. It’s in pretty much the same position IBM found itself in not long ago: crippled by inefficiencies no longer masked by a market stranglehold, being beaten in the marketplace by more efficient companies making smaller, cheaper products it cannot match while it haemorrhages money at a terrifying rate. Pumping cash into IBM wouldn’t have done anything more than delay the inevitable - perhaps making things worse, by delaying the necessary correction. As plenty of other people have already said, they need to use chapter 11 to restructure properly, shedding obsolete structures and burdens including the excess dealers, brands, factories and workers. Do it properly and ten years from now GM and Ford will be making cars - and money as well - but half their present size. Keep feeding the habit, they’ll follow the trail to oblivion blazed by the likes of Rover when the UK government tried exactly the same strategy: a dead company and a pile of government debt for others to pay.
Sadly, a government which plans to remove the secret ballot from union elections probably won’t be amenable to fixing this problem. If Scoble is right about the tight deadline, a bailout might just delay a proper solution until it’s too late to save any of the big three!
November 22nd, 2008 at 3:00 pm
Robert, Thank God for sanity. I was dreading reading this post. I almost didnt. I thought “here we go another polemic on why the US has the best car industry in the world and why it ought to be saved. With no regard for business or economics or anything rational” - my apologies for doubting you, but everything I have read to date about this issue has fallen into that vein.
Then I read your post, then I read it again. Obama needs to appoint you Secretary of State for Trade & Industry. Finally someone who has the sense to not say, well lets just let the US car industry go out the window or we must save it at all costs. Finally someone who says, lets get real. Lets apply some real business acumen to this issue and make an industry that will not just scrap by or survive in some form, lets make an industry that booms, that goes into the future with all that implies.
If someone had give this much thought to the British car industry Tata Industries of India wouldnt know own Jaguar!
Regards
Simon
November 22nd, 2008 at 3:01 pm
Thinking about US auto worker benefits, especially heath and pension and the similarities to those received by members of Congress, especially health care. I am not sure the story is all about cars anymore, but more to do with the nature of our political economy and loss of US manufacturing base due to tax structure and the political power of 20% financial sector in all things made in America. Every time I bought a US auto industry car, I bought someone healthcare and contributed to their pension as it was a fixed cost. Cheap money financial policies made it work without much transparency. Now there is a realignment in play and unfortunately the issue is more than bail or not bail. We are all connected by the fact we drive more than walk. What happens next has to be in a new direction with out-of-the-box initiatives, not a fix to the same old auto/highway path that got us here today.
November 22nd, 2008 at 3:02 pm
On the Taxis… Sure, a big V8 isn’t the most economical choice for driving in a city. This is the only place a hybrid really shines.
Diff between Crossover and SUVs is: SUVs are build on a ladder oder perimeter frame which makes them really heavy, while the crossover uses a unibody like a regular passenger car.
On the milage… according to my onboard computer my old BMW 320d made about 43 MPG. I could have gotten it to about 48 if I weren’t driving so fast ;)
November 22nd, 2008 at 3:02 pm
I believe that providing some sort of bridge capital to the US auto industry is as important as the financial bailout of the banks. Ford $F and $GM are as iconic to the United States as Coca Cola. If they go bankrupt, the entire country will be perceived as being bankrupt by the rest of the world.
I like your idea of Obama calling for a “moon shot” (ala Kennedy) to get the country to have 50% electric car usage by 2020.
Regardless of where we get the money, the trickledown effect of a bankrupt US auto industry would be disastrous. “One job in Detroit affects seven others elsewhere.”
We are all in this together.
Shannon Norrell
http://twitter.com/thewebdood
ps - By my calculations, imposing a nationwide tax of $0.298 per gallon of gas consumed would produce $25 billion in one year alone.
November 22nd, 2008 at 3:06 pm
Some good points, the american car biz is fragmented across far too many brands. They need to kill at least half of them.
It may help but well probably never buy american cars again, we are now a two audi fam, mostly because im very big on quality and performance. We did own a saturn for many years as well though and were very happy with it. Sure it wasnt the fastest car but it was reliable and looked half decent.
November 22nd, 2008 at 3:07 pm
top beer to who wants to puctuate the iplayer for
top gear :)
http://www.bbc.co.uk/iplayer/episode/b00fq31w/Top_Gear_Series_12_Episode_3_(new_series)/
iplayer only available to the british adiance at this time
clarkson will promote the vee eight till hell turns out
November 22nd, 2008 at 3:07 pm
I find it interesting that the three men running these companies arrived on private jets with $20 million salaries and blame circumstances. It’s the hubris of a $20 million salary that creates the conditions for these sorts of problems. If any of there staff had the same excuse they’d say “your salary is paid for you to plan for these things and fix them”
Contrast Toyota - no crazy salaries. They started the Camry say 25-30 years ago. While Ford were in medium cars then out of them, then in them the Camry got a little better every year. Now I understand it’s the best selling car in the USA. No wild innovation - Windows software - who cares, they roll out the first Hybrid, then another and now hybrids are really good. They have one good car in every category not 20 SUV’s because it’s fashionable.
Toyota is staffed by a team of real people who work to a common set of principles and have over 100 years grown to be the worlds most respected car company. The senior executives fly commercial, they keep in touch with the real world, they have lives that are not totally removed from the lives of the staff and the buyers of their product.
Interesting Toyota are not closing factories moving to China etc. In fact as I understand it they have increased their manufacturing in the USA over the past 10 years.
The staff of GM and Ford are the ones that will suffer if these places close but it’s about time there was a new model. If you are on $20 million it’s human nature to think you are special, different, better. The belief money buys the best is clearly nonsense.
A plan for these should be, get rid of the plethora of brands and stick with the performers, reduce the ranges to make sense, reduce costs starting with the CEO and start making good reliable products people want. Unfortunately for the staff the hubris of management will never deliver a pragmatic plan.
November 22nd, 2008 at 3:14 pm
I believe in America! I believe in GM and American made cars. (I think my Cadillac was made in the US. Buying American insures jobs and a future for America. That is why I am buying American made this holiday!
November 22nd, 2008 at 3:16 pm
Electric cars are nice, but I want an “Air Car” - not one that flys(of course I want a flying car too, but that’s a whole different rant…), but one that runs on compressed air:
http://www.theaircar.com
November 22nd, 2008 at 3:17 pm
Seen the number of posts, cars seem to engage people more than information technology.
There is passion is cars, not so much in IT.
November 22nd, 2008 at 3:17 pm
Pollution is one thing, Global Warming another. China’s a great example of non-regulation of industry crippling air quality. One of the reasons I chose Honda years ago: low emissions, in addition to knowing I could drive it 300,000 miles and get high gas mileage. Ultimately, the car cost less to drive (a wallet decision) and spew less pollutants (an air quality issue, but not a Global Warming decision). No one will convince me to make a purchase out of some feeling of Green Guilt. But when I can make a decision that first and foremost is based on safety, price and quality, and also is a good Green choice, great.
I care deeply about the air I and others breathe, and get angry when a dump truck passes spewing a thousand times more than my car ever will. And does anyone know that inefficient shipping design (looking for article link, it expired on Yahoo/PR Newswire) is estimated to waste more than 4 million barrels of oil per day? 5% of the world’s daily consumption. All of those massive container ships and tankers are horribly inefficient, and the industry knows it.
As far as Global Warming, since it’s been raised in this article and is a key driving force behind gas tax, anti-offshore drilling, anti-coal thinking, etc … I encourage you to read the abundance of material offering a different perspective on the causes (not all under our control) of environmental change, and that recent data shows we may actually be entering a long term period of Global ‘Cooling’:
http://tinyurl.com/6×6k2j (one example)
http://tinyurl.com/4pf8l3 (another)
Making fuel efficient vehicles, especially plug-in hybrids powered by an electricity grid powered by Nuclear energy, should be a top priority. But let’s not forget the same focus on trucks, ships, etc., that pound for pound spew much more pollutants and get much worse mileage than cars.
November 22nd, 2008 at 3:20 pm
Robert, Big Three AutoMakers are not very smart. To arrive at the meetings in their corporate jets was a mistake.
Yes, they have innovated in the past. But they are too slow to react to the changing marketplace. That is why Japanese and German carmakers are so successful. They ‘Get It’.
Thank you for a well crafted post, and the Santa Cruz video was cool.
Respectfully, Nicholas Chase - ‘the video guy’ at BlogWorld Expo 2008
http://donotreadthisblogunless.blogspot.com/
November 22nd, 2008 at 3:25 pm
Hi Scott,
It’s funny that you note the wind turbines at the Ford Dagenham plant East of London. It is instructive to look at what has happened to Dagenham plant which at one stage employed 40,000 people. Today, it’s a much smaller (a few thousand people) operation which manufactures engines only. The site itself is strange to look at as you drive through it on the A40 - deserted for the most part.
In the end, Ford chose to close Dagenham (which at one stage was slated to build the new Ford Fiesta - a car which went to Spain in the end) for two reasons. First, it was an old plant which is fair enough and second because UK workers are easier to lay-off than their Euro brethren. The UK tends to get jobs first and lose them first but ultimately, we survive without a UK owned car industry.
What is really interesting though is that today, with a workforce a tiny fraction of it’s 1970s size, the UK produces more cars than it produces in the 1970s. Honda for example has one of their most efficient plants in the world producing the Civic.
November 22nd, 2008 at 3:41 pm
I wish the Chinese would LOVE my videos more. I could use their traffic stats to wow clients. Maybe I’ll try a Marc Jacobs purse and a Slurpee for my next on-cam moment. Many things to ponder within this post!
November 22nd, 2008 at 3:44 pm
Scott Monty: agree with Robert that’s it’s great to see you here on a Saturday engaging and informing and listening. I can’t imagine an American not rooting for Ford and the other auto makers. We WANT you to succeed.
November 22nd, 2008 at 3:45 pm
I think we have to go further.
The Big Three should consider bankruptcy and reorganization as a single car company. A leaner one. GM has the drivetrain of the near future with the Volt. Ford knows smaller cars from its European operations. It makes no sense to spend hundreds of millions in competing R&D. Cooperate and start over together.
I’m with you on getting off gasoline. Prices are rock-bottom right now, but it won’t last.
November 22nd, 2008 at 3:46 pm
Scott Monty: agree with Robert that’s it’s great to see you here on a Saturday engaging and informing and listening. I can’t imagine an American not rooting for Ford and the other auto makers. We WANT you to succeed.
November 22nd, 2008 at 3:47 pm
[...] Why I love the US auto industry [...]
November 22nd, 2008 at 4:02 pm
Robert, although you say you haven’t seen much support for the US Auto industry, it does bear mentioning that there are several (many) voices that suggest that the best way to “love” the US (which should be North American, BTW) industry is through a highly structured Chapter 11 bankruptcy process. Andrew Ross Sorkin in the NYTimes is one of them (Charlie Rose interview and a link to his original piece on this here: http://dealbook.blogs.nytimes.com/2008/11/21/video-sorkin-on-rescuing-the-automakers/ ) and his proposal is pretty interesting.
In any case, the important point is that there is a middle position between “let ‘em hang” and “bail em out” - neither of which position seems to be very good.
No matter what kind of successes the North American industry has had recently, they’ve had 30 years to take into account the changes in the global industry. It’s not like all of this crept up on them. Instead of being truly innovative and moving the market along to where everyone knew it had to go - and the company presidents admitted this before the House committee last week - they chose quarterly numbers every single time. A bailout doesn’t seem right in that context - but you’re right, the industry is too important just to let it sink. So it seems to me that some kind of middle ground is the only real option.
November 22nd, 2008 at 4:39 pm
I agree that we would all love to see american car companies succeed, but not when the fight pollution reduction, CAFE standards at every opportunity. They still have to yet come up with THEIR OWN significant high efficiency low pollution solution… They have dragged their feet, thinking that they could survive with their gas guzzling vehicles. Be careful of the consistent “green washing” that is taking place… Look at their products and evaluate them on that.
November 22nd, 2008 at 5:01 pm
I agree on the point about car rentals. Avis has mostly GM cars and they are all terrible. Even when getting an upgrade.
As for Tesla, I think they are a blip on the market and who knows if their cars are even quality? Given the issues they have had buying a car from them could be risky. The battery could blow up after a year of driving, no one knows. That is Silicon Valley bias coming in.
November 22nd, 2008 at 5:02 pm
Hi Scott, out of interest, were you behind establishing the rather great Ford-sponsored “This Is Now” Flickr group that’s been advertised as of late?
(Apologies for being slightly off topic here)
November 22nd, 2008 at 5:04 pm
James and the others who’re talking about power. A recent study found that if we converted to plug-in electric vehicles (PEVs), or hybrid plug-ins (PHEVs), we CURRENTLY have the capacity to power over 70% of the light-duty car and truck fleet.
IOW, we could convert 7 out of 10 cars to PEVs/PHEVs TODAY, and meet their needs using the existing grid.
See: http://www.pnl.gov/news/release.asp?id=204
November 22nd, 2008 at 5:06 pm
Robert, the thing that bugs me about calling for tons of new nuclear power plants to power all these electric cars is that hereby, the world just runs from one wall into another.
The US never experienced something like “Tchernobyl” in their close neighborhood, but Europeans know what it means (and that wasn’t even the worst case, just an idea of it). Please note that nuclear power plant safety not just a problem of construction and maintenance. There have also been close to catastrophic incidents in Sweden and in France, among others. With every new nuclear power plant being built, the risk of having a catastrophic incident increases.
Further, there’s the problem of the atomic waste (emitting radiation for thousands of years to come - our grand-grand-grand-sons and -daughters will love to care about OUR waste problem). And the problem that, like oil, suitable uranium is also a natural resource that isn’t renewable and very scarce (much scarcer than oil). There’s also a transportation problem (safety, again).
Also think about the millions of batteries that will be required to drive all those electric or solar powered cars. They can be partly recycled, but there’s always some waste.
I don’t prefer fuel driven cars over electric/solar cars, but I would love to see some initiatives that promote mitigation in regard to energy consumption per capita. We don’t need to become tree-huggers, but we should at least start thinking about our overall energy consumption and how we can lower it to a sane level while keeping our lives enjoyable. We should start thinking again about substituting as many of our business trips by teleconferencing. About reducing the space we need for living (world population increases every day). About how to live a less luxurious, yet happy life that is even healthier at the same time (e.g. by walking to the next corner store instead of driving to a huge shopping mall for shopping).
And last but not least, we should think about whether cars really need to be that heavy and big, as even if they’re driven by environment friendly power sources, energy consumption of a car that weighs the double, will also be doubled, rest unchanged (blame the laws of physics).
The strategic direction is thus pretty clear (also for China) and those car manufacturers who adapt to this mega trend the quickest will have the best outlook.
November 22nd, 2008 at 7:18 pm
Since 1970s, the U.S. cosumer has steadily lost confidence in the U.S. auto industry to produce economical, reliable and eye appealing cars. It sold power, size and glitz, more interested in bragging about complex radios and tape players and other electronic gadgets in them rather than putting emphasis on quality, reliability and economy. In the 90s my new Ford spent half of the time at the dealer for repairs, that lasted for a week or two and back to the garage. It’s my time, grief, and many times very frustrating arguments with the dealer and zone managers about warranty coverage. Many of my friends have had and still have similar experience. On my recent trip to Chicago, my friend rented a Mercury from Hertz. Guess what. He got stopped by police and was ticketed at night for the car’s tail lights not working. On account of that he missed his flight.
Since my fiasco with Ford, I bought 2 Toyotas and 3 Hondas. In the first five years I never never needed to go back for repairs. Besides, they deliver very good mileage, 26-28 mpg, and I experience very friendly and considered service when I need it.
Do I need to go back to this kind of aggrevation again? GM, Ford and Chrysler lost almost deliberately through complacency two generations of consumers. They need to convince people that what they offer is more consumer appealing, friendly, more reilable and at a competitive price. The rescue plan is a band aid that would not solve anything, unless the corporations began to convince people and produce evidence to support their wishful dreams.
November 22nd, 2008 at 9:38 pm
You make a good point about quality, and I 100% agree, but the problems go much deeper.
These companies couldn’t get rid of the brands, but that won’t reduce costs, just make PR easier (which is still the least of their problems). These companies did such poor jobs negotiating union deals over the past 30 years that a few thousand dollars on every car goes towards pensions and paying people who should have been subject to layoffs and don’t even put in a days work anymore (but still get a paycheck and benefits). On top of that, the large number of dealers essentially being subsidized by the manufactures are strangling the companies.
Assuming they work out these problems, they still need to figure out how to react to the American energy concerns. Foreign cars are becoming very efficient and affordable. US cars are not nearly as efficient and cost more.
For China, this is really the perfect time to invade the US market. If they could produce a reliable, energy efficient car that still looked and performed well in the next 5-8 years, it’s over for US automakers unless large taxes were instituted against foreign cars.
Their problems aren’t just the product, it’s also how it’s made. Fixing both at the same time is nearly impossible legally and technically. A bailout doesn’t fix these problems, it just lets them squander more time, and gives the foreign competitors more time to workout how to kill them off.
What the US auto industry needs is exactly what it has right now, and ultimatum. Fix it or die. That simple. If it becomes any less dire, they aren’t going to suffer the necessary pain to resurrect these brands.
I’m hoping they rebound… but I want a true rebound, one that creates a viable industry, not one like we have had for several years that despite records sales they hemorrhage money.
November 22nd, 2008 at 9:51 pm
sorry Scoble, it’s too late. your suggestion last year about turning Saturn into the all hybrid brand would have been a great one, but Detroit doesn’t move like that, they buy the competition like Buick, Olds, Saab, Volvo etc. Detroit doesn’t know how to innovate. Finally backed into a corner, the big three are whimpering cowards, they won’t stand against the unions, they can’t stand against competition. As much as it pains me the big three need to die a painful death. Maybe Microsoft can buy GM and fix things…………oh the humanity.
November 22nd, 2008 at 11:12 pm
Robert wrote, “We HAVE to get a clue about our new global world and what is coming at us. China is changing VERY quickly”
We’ve got plenty of examples already of Americans having the evidence right in front of their eyes and still not seeing how much the world is changing. I wrote about that, how Detroit has never had a Pearl Harbor-type moment where the change was so sudden it couldn’t any longer be denied or ignored
http://allthings.blogsome.com/2008/11/14/still-in-denial-detroit-never-had-their-pearl-harbor-moment/
But it’s not just Detroit, changes are coming faster and faster from every direction, impacting every part of our country, yet so many Americans still don’t seem to get it. It’s both puzzling and frustrating.
Just like in World War II, I’m sure we could rise to the occasion and deal with the increasing levels of global competition, etc., if we put our minds to it, but there has to be the collective will to do that, to really try to compete and innovate.
November 23rd, 2008 at 12:25 am
[...] this post: When I was in China over the past few weeks I saw that the Chinese market LOVES American brands. [...]
November 23rd, 2008 at 1:01 am
Who do you mean by “we?” We Americans? Or GM/Ford executives/stockholders?
As an American, I’d like GM/Ford to stay in the game, but not due to any sort of bailout. A bailout is just forcing Americans to buy stock in these failing companies. They should sink or swim on their own. Maybe if we let them sink, something better will spring up to take their place.
November 23rd, 2008 at 1:12 am
Robert, last week brought the announcement of the first 20 registered teams to compete in the Progressive Automotive X PRIZE. Of those 20 teams, 15 are American. I feel that it will take some amazing innovation on our part to shake up the American auto industry and these teams are poised to do just that. The question will then become whether or not one of these vehicles will be able to penetrate the market and be adopted by us consumers.
November 23rd, 2008 at 2:58 am
Agree.
November 23rd, 2008 at 4:18 am
Good lord, I am glad that Scoble isn’t actually in charge of anything important.
November 23rd, 2008 at 7:10 am
Robert wrote: “I really loved the Flex and would love to have one, other than the gas mileage was only about 17MPG in my experience.”
Just for comparison’s sake, I get between 5-6 kms/litre (about 17 mpg(US) from my fully-loaded 7.5 tonne truck. How the hell does Ford (another wave to Scott Monty) justify that ridiculous fuel consumption for a CAR?
Nuclear power can only be a short-term fix (and a dangerous and massively polluting one at that) — uranium is expected to become scarce within a couple of decades, even sooner given the likely expansion of power plants to reduce oil dependency.
Oh, and where are you thinking of storing all the spent fuel, irradiated equipment, etc. for a couple of thousand years?
November 23rd, 2008 at 7:23 am
I’ve been turned off by the US auto makers for years. I’m a former Ford Pinto owner and you might remember what a piece of crap that car was. It barely made it 100K miles. A lot of really stupid things went wrong with that car while I owned it. From broken knobs to the arm rests on the door falling off. I put a lot of time and way to much money into maintaining that car. As soon as I could afford it, I made the move to Toyota and purchased a corolla that made me happy for years. The only maintenance I had to do on that car were the tune ups, battery replacement and exhaust. The car was far more fuel efficient as well.
The US auto execs have a lot of work to do to win back my respect and part of that would have to include inviting in the innovators. I think they need to be more open to ideas from outside their ivory towers and encourage a two way conversation with their consumers. Maybe even create some “Open Source” cars. Basic body style choices and publish all the specs including the engine so smaller start ups and innovators can create new add ons or experiment with the engine design. US car companies would reduce their internal R&D expenses by using the ingenuity of inventors and creative thinkers across the country. Keeping the industry closed the way it is guarantees failure, if not now by providing a bail out, then later.
If the Feds are going to assist these companies, I want to see a plan to remain open, innovative and flexible. I won’t agree with providing assistance to keep doing things the same way. That would be throwing good money after bad in my opinion. I feel awful for the families that have worked for years for these companies and are now suffering because of the mess the US auto industry has made. We owe it to them to insist that changes be made to prevent this from happening again.
November 23rd, 2008 at 9:52 am
I don’t have time to sit and type an essay, but I wanted to touch on one point you made about slimming the brands down. I’ve been wondering this for years. GM needs to follow Toyota’s lead (for the most part) possibly keeping two lines going, Chevy and Cadillac.
Think Toyota and Lexus. A standard line and a luxury line. Chevy and GMC are just pumping out the same styles every year, why not consolidate them into the more popular one? Saturn is nearing irrelevance in this market. Buick would be an interesting merge, though. “Luxury crossovers” don’t really fit with Chevy’s models or Cadillac’s models.
November 23rd, 2008 at 10:24 am
When the rules of the game are known, the windows of opportunity have long been closed.
Maybe the window of opportunity is closed for US car manufacturers.
In the sixties and seventies, coal mines needed to close too.
November 23rd, 2008 at 10:57 am
I think all the blow up regarding the CEOs flying private jets to Washington D.C. was ridiculous. How many multinational companies don’t own, lease, or charter private jets for their executives? There may actually be practical reasons why these companies have jets, and besides even if all the Big 3 got rid of their jets and forced executives to fly commercial, that is not going to solve the problem. Is Congress forcing every bank they give money to to give up their jets?
People seem to think it is easy to downsize these companies, when it is not. For example, there are state franchise laws that make it very difficult for GM to close down a brand and basically put independent dealers out of business. (GM doesn’t own all those dealerships you see everywhere.) It cost GM in the order of $1 billion in buyouts when they closed down Oldsmobile. And let’s not forget that downsizing GM means laying off hundreds of thousands of people, and affecting hundreds of thousands more indirectly for everything from parts to the Dennys across the street from a plant.
The real problem we have here, like with everything else, is that people want to place blame on someone else instead of taking responsibility. Got a 401K or own stock? Happy with making 10% return or were you bitching that you should be making 20%? What about getting into mortgages that you knew was too expensive for your income?
Sure, greedier people in corporate offices on Wall Street and Main Street, and on Corporate Drives have made stupid decisions. It is easy to have little sympathy for decisions that affect other people’s lives until it affects your own. The nation’s view towards Detroit this past week has been too much like it was towards New Orleans when Katrina hit.
November 23rd, 2008 at 11:16 am
I used to own an American car, a Saturn… My previous cars to that were American (and Oldsmobile and a Plymouth). When my Saturn got totaled (not my fault), I looked at the American cars and guess what, I couldn’t find one (this was 2006) that either wasn’t an SUV because they were well out of my price range, or one in my price range that didn’t suck and wasn’t horribly small. Oh and none, and I mean NONE, were fuel efficient.
I went over to Toyota and was able to find a compact, but with space, fuel efficient Yaris for a good 5k less than what the cheapest Chevy was priced at!! I’d be tempted to buy another American made car in the future, especially something like the Dodge Caliber. It’s a cool looking car, and everyone I know who drives them loves them, but when I needed a car, they were nowhere to be found!
-Adam
November 23rd, 2008 at 11:20 am
Here are some comments for you:
*One of Chrysler’s contributions to automotive innovation is the cooled beverage holder.
*The consumer market that is impressed with the cooled beverage holder is not a great market to pursue.
*Younger consumers with lots of education and disposable income is a better market to pursue.
*Older consumers like American cars, but this market is decreasing because some day soon, many of them will no longer be able to drive.
*Powerful cars don’t impress people as much as they did in the late sixties.
*How about focusing on making what makes a car betteras a car first? How’s the gas mileage? Is it comfortable? Does the sight of the car make me want to vomit? Will the car last a while without too many troubling issues? Will the car retain good value a few years down the road? Do I feel good about driving the car?
*Maybe Cadillac and GMC trucks and Chevy cars should survive. Toyota has three brands and two of them are less than twenty years old (Scion and Lexus). By the way, Toyota is the auto industry benchmark. They have tons of cash in the bank. Their cars are desired by the public and just about all their cars make a healthy profit for the parent company.
*Toyota makes great cars and they sell a bunch of them to highly willing,less stingy customers.
*By the way, I like the Tesla partnership idea.
November 23rd, 2008 at 11:45 am
Why should taxpayers bail out an American car company when they are building factories in other countries?
http://info.detnews.com/video/index.cfm?id=1189
For the record I own three Fords and a Jeep.
November 23rd, 2008 at 12:29 pm
Re: Gas tax
Probably a better idea would be a revenue neutral feebate system:
give efficient non-polluting vehicles rebates, and tax gas guzzlers.
November 23rd, 2008 at 12:54 pm
Frank: regarding the planes, I agree with you, but we live in a PR-driven world and if they really wanted public sentiment on their side they HAVE to be more clueful about this stuff. Especially when so many Americans are getting laid off it’s just not clueful to use a private jet plane to come to Con