The Case for Making Bigger Cars 54 comments
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I just watched the webcast of Paul Krugman's Nobel Prize lecture (slides here). In it, he laid out his theories of economic geography, which help explain why industries tend to cluster in certain geographical locations.
He ended on a topical note: Detroit. The fact is, he said, that the world as described in his models -- "one of circular logic and agglomeration" -- actually peaked in the 1920s, at least in the US. Since then, the world has become increasingly classical, and while Krugman's theories remain relevant, they're not quite as relevant as they were.
Krugman didn't go so far as to predict the (further) decline of Detroit, although he hardly needed to. But his theories do suggest what might be needed for Detroit to survive: specialization.
The old GM slogan of "a car for every purpose, a car for every pocketbook" can't work any more. Back in the 1920s, or even the 1960s, making cars was itself a specialization. Cars were made in Detroit, carpets were made in Georgia, and the two would trade with each other. But now there are so many different types of car, and the global competition in the car industry is so fierce, that there's no point in Detroit trying to do what it's bad at.
Specialized car companies can be spectacularly successful: Look at Porsche. But when Detroit tries to do that kind of thing, by, say, buying Aston Martin, it never seems to work. It's just not what Detroit is good at.
What's more, Detroit knows what it's good at. For decades now it has railed against any Congressional attempts to mandate increasing fuel economy, and its single biggest success -- the SUV -- has been the vehicle which did an end-run round fuel-economy standards by classifying itself as a truck. If you try to force us to make more fuel-efficient cars, say the Big Three with monotonous regularity, we'll lose money. We can't do it. We don't have the technology. (And please don't notice that our European subsidiaries, such as Opel, seem to be very good at such things.)
Right now, the Big Three -- Chrysler and GM especially -- will say anything which will get them the money they need to avoid declaring bankruptcy. But their declarations that they've suddenly got religion when it comes to small, fuel-efficient cars ring hollow. What's changed since they last protested that they were incapable of manufacturing such things? Why should we believe that Detroit will ever have any kind of comparative advantage on that front?
Ironically the Big Three might be better off if they stuck to what they're good at: gas guzzlers. Why is Ford (F) the healthiest of the three? There's one big reason: the F series pickup truck. And the brightest of GM's (GM) dim bulbs is Cadillac, a marque which has never been known for its fuel economy.
Detroit knows that it needs to get smaller. If it's going to downsize, it should stick to what it's good at, rather than try to compete with Japanese and European manufacturers on turf it conceded to them decades ago.
Either that, or persuade the US authorities to adopt European safety standards, thereby allowing Detroit's successful European models to simply be introduced directly to the US market. If Detroit is going to undergo wrenching reforms, Congress could at least help out a little on the regulatory front.
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This article has 54 comments:
I'll let others point out many of your errors, but I'm going to take on your assertion that the F-150 is the best pick up on the market. I'm afraid you have fallen prey to the marketing people at Ford's attempt to spin the data.
The F-150 has sold 473,933 units so far this year (thru November). GM's pick ups (Silverado and Sierra) have sold 587,289, a full 113,356 more units. By way off comparison, the Toyota Tundra has sold 128,858 units in the same time frame.
The Silverado has won the following Truck of the Year awards:
2007 Motor Trend Magazine
2007 Detroit NA Autoshow
2008 Road and Travel
2008 Automotive Journalist Association of Canada
It was awarded the 2008 J.D. Powers Initial Quality Award for large pick ups in 2008.
In a few months, you will be able to purchase a strong 2 mode hybrid version which will improve fuel economy by 40% (Silverado is already the best FE for a large pick up with a conventional powertrain). This will be the only full size pick up truck with a hybrid system on the market.
In my humble opinion, people connected with the financial sector should stick to that. It would seem to me that that industry has a critical shortage of "experts" right now.
Funny how you can be right and end up dead after all.
It would have taken extraordinary leadership skills to move the Fs, the GMs, the DCXs in a way as to position them for what we now know. Exactly that kind of leadership is what they get the $20M annual compensation for, right? They have, to a bozo, failed. Their vaunted leadership skills? Insert favorite hand gesture here.
On their epic road trip to DC, I hope they have had time to not only admire the scenery outside Detroit, but also to note how little space their products occupy on roads once they leave their little bubble-world. They are not half as important to this country as they think they are.
> but I'm going to take on your assertion that the F-150 is the best pick
> up on the market.
Where in the article did the author state this?
All he's saying is that the income generated by the F series trucks is the key to Ford's financial health. Chevy and GMC trucks may be better built and outsell Fords but, unlike the F series, they do not generate enough income to offset many of GM's shortcomings.
So you suggestion that they compete at what they are good at is ridiculous. You need to talk to the feds to eliminate CAFE and replace it with gasoline taxes, which is wjat every other western nation uses to get small cars.
The big 3 never said they did not have the technology to make small cars. They said they can't make money on them due to the high labor costs. It takes just as many UAW people to put a door on a $15,000 Focus (Consumer's Report recommended buy, by the way) as on a $30,000 F-150. It is all about economics.
So many mistakes, it's hard to know where to begin.
Well, let's take Porsche. It has made the bulk of its profit growth in the last few years not from the slow-growth and niche sports car market, but by making overpriced, gas-guzzling SUVs that, until the gasoline price spike, were sold in relatively high numbers to a subset of Americans who didn't know any better and had lots of money to burn. Surprise! Now they are planning the world's ugliest sedan. They are doing the exact opposite of what you advocate, Felix, which is trying to be all things to all people.
- the world is increasingly distributed commerce wise; being in Detroit is not a competitive advantage for the big 3 (might be the opposite)
- focusing on one's competitive strength is key to economic success
- the big 3 are more competitive in bigger size vehicles
Frankly my biggest beef with the big 3 is their acquisition and ruination of other smaller brands. I've no longer any interest in Saab, etc. Lets make every flavor Detroit Vanilla, gee thanks.
cheers
"I know not that I know not"
Truth: really intelligent people have driven (and purchased) the new Chevy Malibu - it really pulled ahead of Camry and Accord in 08.
Car versus Trucks, big versus small is an irrelevant conversation when you're not even on the buyers radar. The buyers (for many, many years already) have been telling the Big 3 that all your products are terrible, your quality stinks, styling is ugle, resale values are awful, materials are bad, technology is lacking, fuel efficiency is awful, and the dealership experience is well, let's just say it's an experience. Yes, the F-150 sells, but that is purely out of customer loyalty, not because of superior product.
The big 3 have done virtually nothing to address these issues. They do the opposite. They arrogantly say they don't understand why the consumers say these things and act this way. It's the media, it's not us. It's the economy, it's not us. It's the UAW, it's not us. It's Japanese protectionism, it's not us. If they had ANY product that the consumer actually wanted they would have no problem. So actually, yes, it is YOU. Instead of shedding brands like Dodge, Buick, Mercury, etc. that clearly have no value in the auto industry of today, they are buying Hummer, Land Rover, Saab, and Mazda. They really don't get it at all. They are a model for poor management, egotistical and arrogant leadership (not to mention plain old stupid), and overpaid executives.
Obviously I think a bailout is a complete waste of funds. The fact that only now is Wagoner's job in jeapordy, is an indictment of the entire board at GM. This guy has lived more in Washington in the past 7 years than he has in Detroit. Bankruptcy would be a blessing for GM. They need to shed brands, dealers and their managment team that has lead them here.
Ford doesn't need the money and is in better shape becuase they have wised up (somewhat) in recent years. So why should we the Gov. give them anything they didn't need anyway?
Chrysler, as far as I'm concerned if Cerberus is not willing to inject anymore capital into Chrysler (which they have), why should the government or taxpayer? They should be left for dead andscooped up in chapetr 11 as is so common in the private equity business. Oh the irony.
Great idea! And tailpipe exaust standards as well. Just make it easy for companies to move cars around. GM and Ford actually lose the most here, Ford could've sold Fiesta here in May, during the oil craze.
The cars they make are clearly the reason why they are where they are (that is trading below $5 a share). So why not let the market take care of that? Let them fail, let them crumble, let them empty those big stuffy warehouses up in Detroit so they can be used for other things...
If it's true that they're not good at what they do (I own a BMW)... well... they shouldn't be doing it in the first place...
On Dec 08 04:40 PM quasar71 wrote:
> Can someone tell me why the world would arguably be a better place
> if all or any of the Big Threes were kept from sliding into oblivion?
>
>
> The cars they make are clearly the reason why they are where they
> are (that is trading below $5 a share). So why not let the market
> take care of that? Let them fail, let them crumble, let them empty
> those big stuffy warehouses up in Detroit so they can be used for
> other things...
>
> If it's true that they're not good at what they do (I own a BMW)...
> well... they shouldn't be doing it in the first place...
No car company can withstand the risk of high energy prices as that is clear now if it wasn't before so the time for gas guzzlers has been. US car companies will have to compete with the rest in their own market and in the world market.
> Yes, the F-150 sells, but that is purely out of customer
> loyalty, not because of superior product.>
So, all Detroit needs is more stupid customers.
On Dec 08 02:55 PM Alex Filonov wrote:
> 'persuade the US authorities to adopt European safety standards,
> thereby allowing Detroit's successful European models to simply be
> introduced directly to the US market'
>
All European manufacturers who export cars to the USA build those cars to meet US EPA and safety regulations -- they may be built in Europe but they meet all applicable US standards (or they can't, by law, be imported). So I guess I don't really see your point -- if GM, Chrysler and Ford wanted to send European-built models to the States, they surely could do it. That they choose not to has little/nothing to do with US safety regulations.
On Dec 08 07:17 PM fatcat wrote:
> My Chevy Impala gets around 28mpg on the highway and almost that
> much in combined driving and can carry 4 big men comfortably on a
> golf trip with four bags and luggage....try that with a Camry...
On Dec 08 02:11 PM vvti wrote:
> Maybe it just me, but I think Honda and Toyota people think they
> are the smartest on the planet!
>
> "I know not that I know not"
>
> Truth: really intelligent people have driven (and purchased) the
> new Chevy Malibu - it really pulled ahead of Camry and Accord in
> 08.
It can fit all 4 of your fat friends plus 3 other fat people to boot, plus their big gear to go round.
That's the issue. The Big 3 have built a sub-par product for too many years. Now you have Tahoes built in Mexico and Sequoias built in Indiana. Buying 'American' is a hoax.
On Dec 08 07:17 PM fatcat wrote:
> My Chevy Impala gets around 28mpg on the highway and almost that
> much in combined driving and can carry 4 big men comfortably on a
> golf trip with four bags and luggage....try that with a Camry...
www.youtube.com/watch?...
The reviewer is 6'5". The car has a 3 cyl 5 valve per cyl turbocharged intercooled 660cc engine that is fast AND fun. 60mpg! All for about $7500!
But, no, that could never be. It's a Japanese car. That just wouldn't do!
On Dec 08 08:19 PM tb1975 wrote:
> Indiana is still in the US, right?
1) making nat gas powered cars and trucks and be telling congress to authorize money to incentivize the buildout of nat gas refueling stations along the interstate highway system
2) make their US factories be able to build the same fuel-efficient vehicles in the US that they are selling in europe and in asia (succesfully i might add)
3) reducing product lines and shutting down those factories
4) fire their current CEO's and marketing chiefs for pushing the unpatriotic hummers and SUV and spending billions in lobbyists money to pay congressmen to reject higher fuel efficiency standards.
the big 3 executives wear USA pins and speak about freedom and patriotism when all the time they are working for oil producing countries like russia, iran, iraq, and mostly saudi arabia. this is complete lunacy. if the US doesn't adopt a sane energy policy like this one:
thefitzman.blogspot.co...
we are simply hosed economically. the "big 3" could be part of the solution, if they continue to refuse to help the US throw off the shackles of foreign oil, then to hell with em. honda and toyota will do it for them...
But you can bet that the Detroit carmakers are bringing EU cars here if they think will sell well in the USA as fast as they can. It takes awhile to certify them for safety and tailpipe emissions and fuel economy. It can't happen in days or weeks, it takes months to a year or more.
If you remember, there were some fine European models brought here in the past, but they didn't sell well. They weren't "American" enough. Americans didn't want to buy them back in the days of cheap oil.
Toyota Land Cruiser:
MPG (city) 12
MPG (highway) 15
MPG (combined) 14
www.fueleconomy.gov/Fe...
On Dec 08 07:50 PM sickofthehype wrote:
> My 1998 Toyota Land Cruiser is paid for, has 229,000 miles on it
> and has never had a mechanical issue, EVER.
>
On Dec 08 09:00 PM Class1warrior wrote:
> It's amazing how much ignorance passes for opinion these days. If
> we allowed cars designed for EU safety standards into the US, how
> long do you think it would take for someone to sue that auto maker
> for selling an unsafe vehicle?
> But you can bet that the Detroit carmakers are bringing EU cars here
> if they think will sell well in the USA as fast as they can. It
> takes awhile to certify them for safety and tailpipe emissions and
> fuel economy. It can't happen in days or weeks, it takes months
> to a year or more.
> If you remember, there were some fine European models brought here
> in the past, but they didn't sell well. They weren't "American"
> enough. Americans didn't want to buy them back in the days of cheap
> oil.
www.teslamotors.com/
This wasn't an article about fuel efficiency and if it were, the Big 3 wouldn't be much to write about anyhow.
Sure, the Land Cruiser gets crappy mileage, just like the trucks and SUV's from the big 3. And how about the Hemi-engined Chrysler cars and SUVs and trucks... and the V10 Fords.. and the 'GTO' (laughing).. the list goes on. The point is that it's a nearly 11 year old vehicle without a single issue for well over 200,000 miles. THAT is the point, and THAT is why so many people buy Toyotas and Hondas.
If you're trying to make a fuel efficiency point then it didn't work. Unlike the guy who drives 30 miles to work from his oversized tract home, wasting fuel, I work under 1/2 mile from my home, which is the average sized home as it were in the 1950's. Me getting 14 mpg in a 1/2 mile commute is much better for our environment than the other hipocrites out there. And on the weekends the entire family can easily fit, along with 3 dogs. Try that in your Chevy Cobalt.
On Dec 08 09:05 PM Tesa wrote:
> Who said a Toyota can't bea gas guzzler
>
> Toyota Land Cruiser:
> MPG (city) 12
> MPG (highway) 15
> MPG (combined) 14
>
> www.fueleconomy.gov/Fe...
>
> On Dec 08 07:50 PM sickofthehype wrote:
> Well, let's take Porsche. It has made the bulk of its profit growth
> in the last few years not from the slow-growth and niche sports car
> market, but by making overpriced, gas-guzzling SUVs that, until the
> gasoline price spike, were sold in relatively high numbers to a subset
> of Americans who didn't know any better and had lots of money to
> burn. Surprise! Now they are planning the world's ugliest sedan.
> They are doing the exact opposite of what you advocate, Felix, which
> is trying to be all things to all people.
You only got the surface of the story. Yes, Porsche starts making money after switching on production lines for SUVs. But it's not the SUV that earn them the money. It's the brand name, the type of cult that surrounds Porsche over the years (namely, the performance, reliability and technical excellence) that earn them the money. So at the end, it IS dedication that wins the biggest. You have to remember, no matter what type of vehicle it is, at the end of the day, it is the exact same exercise of driving a 4-wheeled machine. So if you are able to provide superior quality to that very core human activity, you will be appreciated.
Detroit does not need to produce vehicles that they cannot sell.
There is a lot wrong with Detroit, but even more wrong with Washington.
But the base problem is there is too little demand. Detroit along with the foreign manufacturers have "sold forward" several years of demand with rebates and low cost financing. Too few people need to buy cars now and for the next few years. Keeping Detroit at current production will be throwing good money after bad.
Instead of using tax money to support Detroit, we should take the money and 1) provide retraining for the employees; 2) find new industries to take over the idle auto plants and provide new, needed products.
However, as we see in the news, the government is going to try anyway. Is this a good investment, one that a rational person would make? Hardly. But they're going to attempt it regardless.
We'll get to watch this bailout process blow by blow as it unfolds. We shouldn't be surprised if it fails.
On Dec 08 12:24 PM mycargets52mpg wrote:
> 6 years ago, the B3B (Big 3 Bozos) were likely planning gasoline
> as of 12/31/08 to be what is was back then, about $1.60 per gallon
> Regular. That would have given them the confidence to keep producing
> whatever made money at the time.
On Dec 09 09:36 AM paulk8756 wrote:
> Detroit brought ALL of this upon themselves for the many reasons
> you folks cite and a myriad of others. The question is can they now
> turn it around? One would have to logically conclude the odds are
> against them.
>
> However, as we see in the news, the government is going to try anyway.
> Is this a good investment, one that a rational person would make?
> Hardly. But they're going to attempt it regardless.
>
> We'll get to watch this bailout process blow by blow as it unfolds.
> We shouldn't be surprised if it fails.
Because their competitors have lower costs (labor, pensions, healthcare, no "job bank") they can make a profit on big OR small cars and expensive OR cheap cars.
This puts Toyota, Hyundai, Nissan, Honda, VW, etc. at a competitive advantage in an environment where subprime auto loans for $30-$40k cars have dried up due to the credit crunch. They'll just buy a $20k Honda Civic, or a $15k Hyundai Accent instead. If they buy a $15k Ford Focus, Ford loses money on the deal.
In essence, the big 3 are already specialty producers of expensive cars that are cheap to build and can only be financed in large numbers by subprime loans. Unless their labor/healthcare/pensi... costs change, that will always be the case.
This includes eliminating the truck loop holes that allow them to meet lesser safety, emissions, and fuel economy requirements.
The only problem being that making trucks function as cars without their loopholes would make them prohibitively expensive - and again help put Detroit out of business.
Good for humanity, bad for the Domestics.
I would characterize the short term quarterly focus as catering to Wall Street. The analysts, consultants, and experts form a consensus about what management should do to keep the stock price up. This view is then called "maximizing shareholder value" and no one should question the wisdom of decisions made with this goal in mind.
The problem is that "maximizing shareholder value" by slavishly managing quarterly results often requires that firms sacrifice investments in projects with the longer-term potential to substantially improve the business. Do we invest in fuel-efficient vehicles or do we kill the project? Do we try to make a market or do we simply churn out gas guzzlers for the masses? My point is that in order for an executive to make the right decision for the long term he must have the experience and knowledge of the business and customers and the focus on the long-term needs of the business.
Perhaps the proper function of a Board of Directors should be to provide a balanced view of the long term needs of the business to the CEO. All too often the board simply parrots the pressures of Wall Street to make the quarter. There seems to be a growing view that BOD's are not adding value to the management of corporations.
To be fair to the automakers, they have unreasonable legacy costs and other factors that handicap the industry and exacerbate their problems. However, these factors are no excuse for failure to run an excellent, or even a solid business.
In my industry I have seen my publicly traded companies repeatedly fail to listen to the advice given by customers. Customer will inevitably tell you the details about what they want. I have seen my management consistently fail to follow through and deliver these things to customers. They deliver what the larger customers say they want and then they ignore the edges of their market. This maximizes economic results in the short term. Eventually, however, competitors arise who address the needs of the customers at the edge of the market.
In the example of the auto makers, they served the most profitable part of the market by building trucks and SUVs. They maximized their profits by building redundant brands and dealer networks. They ignored the edge of the market that asked for better quality, more refinement, and better fuel efficiency.
The problems facing the auto industry are long term problems and can only be addressed with long-term thinking:
$1,500 per car in legacy medical costs
Redundant brands and dealer networks
Negative customer opinion of the companies
Poor fuel efficiency and a history of fighting any efforts to increase fuel efficiency
Too many employees
High labor costs
Inflexibility and inability to respond nimbly to changing market conditions (UAW)
Detroit has to do it all (Big and small, diesel, gas, hybrid). Stop thinking there is an easy way out. Stop being lazy. Instead of having 75 stupid brands try to have models that make sense. Fire all the marketers with their stupid econometric models (I know econometrics, I know what I am talking about)
Fitzman
You suggest natural gas powered cars. If you are thinking along the lines of T. Boone Pickens, there is a big flaw in his energy plan. His ideas for wind farms and HVDC power lines is right on.
However his ideas for natural gas are not. For starters, if we are trying to cut CO2 emissions, it is coal plants that need to be phased out, much more of a priority than shutting down gas fired plants. Gas is relatively clean compared with coal for electricity production. Coal has many other pollutants to worry about, like mercury and radionuclides.
The other problem with his plan is that burning gas in a power plant is far more efficient than using that same gas to power vehicles. What we want is a cleaner electric grid that can power PHEVs and EVs. Why would you take away a relatively efficient way of using gas to apply it to a less efficient use?
Also it's a lot easier to capture or otherwise cut down on CO2 emissions at a centralized power plant than to do it to millions of cars.
I fully agree with your call for getting rid of management who are part of the global warming deniers club. They and the oil and coal companies have been disinforming the public in one of the biggest PR campaigns in history. I strongly recommend the book "The Heat is On" for anyone who doubts this. They even have been quoted as admitting that the science confirming the IPCC's findings was getting stronger and still trying to confuse the public on the issue. GMs vice president is still talking about the completely discredited and debunked Oregon Petition, which claimed thousands of skeptical scientists. If anyone still believes that nonsense, you need to know that it was a hoax perpetrated by a group that contains not a single climate scientist. Their leader believes that the more CO2 we pump into the atmosphere, the more wonderful life on earth will be. A ten year old kid knows better than that. Common sense.
As long as people like that are running our auto makers, they will be nothing but obstructionists on this issue.
If you saw the episode about Saudi Arabia's oil industry on "60 minutes" this week then you know who Bush and co and the deniers are in league with.
Obviously Movingonup is another denier or he wouldn't be making such foolish remarks. Screw the environment right?
Someday maybe you will wake up to the fact that the survival of our species is 100% dependent on a healthy environment.
And right now it is far from healthy.
sumosama do you actually believe gas and oil prices will stay low in the future?
Chris B
Are you blaming this on the unions? I hope you know that the $70/hour worker's pay is a lie put out by the auto lobbyists to fool us again. The real numbers are $28/hour wages. $38-$40/hour total compensation with benfits.
They added in all the pension money etc paid out to retired people to come up with the $70/hour, to make it look like present workers got that much. I'm not saying labor costs aren't a big factor but this has been intentionally overblown to make the management look good.
What Detroit needs to build is plug in hybrids which will give the average driver over 100mpg, since 60% of their driving would be electric powered. And that's based on engines that get 25mpg. The results could be even better with more efficient engines.
Info on PHEVs here:
Plug in Partners
www.pluginpartners.org/
A plug in hybrid would be cheaper than a conventional car over the life of the car at $1.75/gallon of gas. And the costs of the batteries can be further reduced. Power companies want to use them after they are too worn out to run a car, as they still have enough useful life to be used for modulating the electric grid. The idea is that this can be factored into the selling price of the car.
PHEVs don't have a range limit like EVs so people would be more inclined to buy them. EVs are already good enough for delivery vehicles, city cars etc. Phoenix Motor Cars is marketing their electric light utility pick up vehicle for farms, ranches, industrial job sites like mining etc. For these purposes, long range is not a factor.
Someone mentioned the Saudis selling solar power. Abu Dubai will be doing the same thing. Here's Green Wombat's take on that.
"Abu Dhabi is not content to just sell you the oil that fuels your SUV; now its going to sell you sunshine to keep your lights on and power your electric car when the internal combustion engine goes the way of the buggy whip. Masdar, the oil-rich emirate’s $15 billion renewable energy venture, and Spanish technology company Sener on Wednesday announced a joint venture called Torresol Energy to build large-scale solar power plants in Australia, Europe, the Middle East, North Africa and the United States."
(They are targeting the same American southwest, where the authors of the Solar Grand Plan proposal, published by Scientific American, are encouraging America to invest.)
"The irony is too rich to leave unsaid: A leading oil producer invests billions in carbon-free energy while a leading consumer of fossil fuels - the United States - continues to subsidize Big Oil, while offering only tepid support for green technology."
"It is inevitable that climate change will foster the rise of renewable energy - the only question is which countries and companies will profit from the new energy economics. It is entirely possible that the U.S. will trade energy dependence of one kind - on Middle East oil - for another - on Middle East and European solar technology - in the era of global warming. It’s no coincidence that most of the solar energy companies with contracts to build utility-scale power plants in California and the Southwest have overseas roots - Ausra hails from Australia, BrightSource was founded by American-Israeli pioneer Arnold Goldman, Solel is based in Israel and Abengoa is headquartered in Spain."
U.S. subsidies and tax credits for oil and gas companies is estimated at between $39 and $80 billion annually. The descrepency is because no one can find them all. They have been accumulating for several decades, ususally hidden from public scrutiny.
"Subsidy programmes from 1918 are still in place. "I'm not aware of any oil and gas subsidy that has ever been phased out," said Koplow, the leading expert on U.S. energy subsidies"
"In a time of skyrocketing oil prices and profits, why did the George W. Bush administration in 2005 authorise an additional 32.9 billion dollars in new subsidies over a five-year period?"
(McCain wanted to add another $4 billion.)
"This massive government intervention distorts energy markets, making it very difficult for alternative energy sources to compete without similarly massive subsidies. "And it promotes America's addiction to oil," Larsen added."
www.heatisonline.org/c...
Next time someone tells you solar and wind can't compete without subsidies, you'll know it's a crock of sh....
Its not that Ford is in such better shape. They just have more of a financial cushion to burn through due to better timing on seeking additional financing before credit disappeared.
Another overlooked fact is that the big 3 have been manufacturing small cars overseas for those markets that have had that demand.
Here in the U.S., the demand for small cars has been dismal for years. It was only with the abrupt change in gasoline prices that demand is changing. Even more important is that because of their much more expensive legacy costs and decades of much higher wages, the big 3 wouldn't have been able to cover those expenses in cheaper economy cars. They couldn't compete in little cars here in the U.S.
Now, for the elephant in the room. They still aren't competitive manufacturing economy cars in Detroit. Nothing has changed.....well actually, nothing has changed with their expenses that will make them competitive. If we just subsidize them going forward, the automobile companies can be more competitive with the Japanese economy cars, the UAW will be happy, and the Democrats in Congress will strengthen their support among union workers. The loser is the American taxpayer. Its not about the 15B. its about the first down payment on the auto companies future heroin habit. It will never stop because they can't survive without it.
follow up to my previous comment...
On Dec 08 04:17 PM rhodope wrote:
> If the US adopts European safety regulations and ALL European cars
> are introduced into the US market won't that exacerbate the Big 3's
> woes by adding to the lineup of their competitors? Fiat, Citroen,
> Lotus, etc ad nauseum