Howard_T

Chrysler, GM Dealer Termination Data: How Much Politics Involved?

I took a look at fivethirtyeight.com's rebuttal, and it seems to be focused only upon the supposed correlation between campaign donors and dealerships continued in their Chrysler relationship. Ms Cook's testimony takes a narrower focus, and it shows a clear correlation between a political relationship and business success. What is even more interesting is the role of Mr. Landers in all this. I have just finished reading the news that Penske Automotive, of which Mr. Landers is a former executive, will buy all of Saturn's dealerships. Penske will, at least for a time, continue to sell Saturn vehicles, but it appears it might be positioning itself to market an import. Do we have another sweetheart deal as a reward to a supporter?

Preview from Europe: Too Big to Fail? Not GM

The death of the "greatest generation" is not only a problem for GM, but also for Ford and Chrysler. Don't forget they built a lot of the rolling stock (and aircraft) that won WW2. I can't blame engineering for the ills of the industry. Marketing calls the shots in Detroit, and the marketeers have long been under the impression that the customers who make the car-buying decisions were not interested in economy or performance, but rather preferred comfort and amenities.

When the first wave of European imports hit the US market in the 50s, the cars were, for the most part, economical but generally uncomfortable, not well finished, and poorly equipped. The second wave of imports was from Japan, and they learned from the Europeans. Their cars were better, but still not quite up to Detroit's products, especially when it came to fit and finish. By the 70s Japan had learned how to improve the quality of manufacture as well as build in the amenities and performance without sacrificing economy. The European manufacturers, pared down to the Germans and Scandinavians, studied the lessons from Japan, and it was only a matter of time before the demise of the US industry began. Many blame the unions for the problem. While they certainly haven't helped, I cannot fault them for seeking the maximum reward for their labor. I hold management to be the most responsible entity for the industry's problems. The insistence on short-term bottom line results in order to make the stock look good produced suicidal contracts with the unions, inefficient factories, too many truly bad designs mixed in with the many good ones, and product lines that ceased to appeal to consumers who shopped with their pocket books rather than their emotions and loyalties.

Now we own GM. The unions have agreed to concessions, but for how long? When will their contract expire, and what will they seek in wages and benefits when it does? I am truly afraid that the public's representatives on the board (loyal Obama appointees, I'm sure) will be too willing to give in to those who helped elect them in the first place. If management and the unions begin the spiral again, it will likely mean the death of GM, since the public might not be willing to continue throwing their tax money down the drain.

Obama Wants To Split GM Into 'Good' and 'Bad' Companies

jpiretti seems to think that the Toyota, Volkswagen, BMW, and Mercedes plants in the US are not part of a domestic car industry. If a national military emergency so required, these plants would be turning out trucks and tanks for the military, just as the GM, Ford, and Chrysler plants did in WW2. Try to find a US built vehicle in the model years 1942 - 1945. If the foreign ownership tried to stop this, the plants would be nationalized in a heartbeat. Again, there's a wartime precedent for this in the government dictating steel production priorities during WW2.

Six Cars That Represent the Future of Driving

I'm an average American driver. Please give me the following:

250 - 300 mile range on one tank (or charge)
Refill (recharge) time of 15 minutes or less
Price premium of less than or equal to 20% more than the cost of a present-day gasoline vehicle (adjusted for the coming hyper-inflation, of course)

If these requirements are not fulfilled, the only way you'll get us average guys to drive the exotic vehicles is to outlaw anything else. When that happens, look for the pitchforks and torches to come out of storage.

Automotive Depression: Government Needs to Let the Weak Fail

All of us have heretofore overlooked that one reason Detroit (and everyone else) is selling fewer cars is the fact that the cars that have been built over the past 10 to 15 years last longer than older models did. It used to be that, even with careful maintenance, a vehicle would wear out within 5 years, and it would be necessary to purchase a replacement. Vehicles now are built with better materials, better design (yes, even from GM, Ford, and Chrysler), and because of the repeatability of robotic manufacturing techniques, better workmanship. They just don't wear out as fast, as long as they are relatively well maintained. (I know, try telling that to anyone who has fried the transmission on a Chrysler minivan) So now the automakers are caught in the unintended consequence of having to build more reliable automobiles in order to remain competitive. There are many factors at work here, but increased life span is one that we have overlooked.

As GM Goes, So Goes the Nation (Part 2)

The solution for GM is obvious; let it go bankrupt, liquidate, sell the pieces to those who know how to use them, and perhaps some entrepreneur might be able to make something good out of the residue.

The solution for the US follows the same lines. Those who persist in leading us into solutions that will work toward the long-term detriment of our country must be declared bankrupt and expelled. I propose we start now so that phase 1 of the bankruptcy goes into effect in November of 2010. Look at the congressman from your district. Does he support real solutions to our problems, or does he work toward increasing government involvement in our lives? If the latter, and your congressman is a member of your particular political party, find someone to run against him in your primary. Otherwise, make sure that the opponent supports the reduction of government and the making of fiscally sound decisions. We have to begin now to stop our rush over the cliff.

GM Wants Another $27B at a Minimum: What's the Use?

Those who fear GM's going under are doing so for irrational reasons. GM sells a lot of cars in the course of a year in spite of its inefficiency, bad design, and questionable workmanship. If GM ceases production, someone (Ford, Chrysler -er, probably not- , Toyota, Nissan, VW) has to make up for the loss of supply. These manufacturers will then need additional sources of parts, extra workers, more plant capacity, and so forth. Have you fearmongers figured it out yet? The same suppliers for whom you predict doom will be in position to become the suppliers for the other companies. The same downstream service providers (parts, repairs) will still have vehicles coming into supply for them to service. In other words, anyone who says that America's auto industry will suffer a major disaster if GM goes under is either naive or is deliberately attempting to mislead.

For Your Amusement: General Motors' Restructuring Plan

The auto makers claim thousands of jobs at their suppliers and thousands more at their dealers, service shops, and accessory dealers will be lost if any of the Big 3 goes under. May I beg to differ? There is a certain finite demand for new vehicles in the United States. This demand will not go away if, for example, GM goes under. It will be made up by increased production at the remaining car companies. GM's suppliers will thus have the opportunity to become suppliers for Ford, Chrysler, Toyota, and so on. I see some job loss there, but not of catastrophic proportions. Car repairs will still be needed. People will still need tires, batteries, and other consumables. As for the dealers, how many single-brand dealers are left in the US? Most of the larger ones sell multiple makes, many of them European or Asian, but made in the US. Again, perhaps some job losses, more because of resource concentration rather than lost demand, but not catastrophic. Can those who make our laws not understand the fundamental law of supply and demand?

Turning Japanese: The Audacity of Reality (Part 3 of 3)

Mr. Jeremy Needham has the correct slant on things for those who believe massive spending, a la WW II, will generate a recovery. Anyone who believes that throwing massive amounts of paper at the crisis will bail us out, just because it worked to end the depression of the 30's, hasn't looked at reality. In the late 30's, the US was the only economy among the major nations to be producing consumer goods. Europe and the industrial nations of Asia had been on a war footing for at least 3 years prior to 1941. During WW II we spent massive amounts of treasure to produce the means to fight the war, but at the end of 1945 we were the last nation left standing. Our productive capacity had not been touched, and with the pent up demand for goods fueled by the savings of a fully-employed population, the economy recovered to a consumer footing with blinding speed. Europe and Asia were forced to buy from us, and whatever treasure we had used during the war was rapidly replaced.

Perhaps once the population of the US figures out the ineptitude of our political leaders, we will take the correct 14 steps Mr. Quinn has proposed. Then maybe someone will emulate an impoverished Japanese mechanic at the end of WW II. This guy bought some surplus electrical generators from the US Army, removed the gasoline engines from them, and mounted the engines on bicycles to make motorbikes. He did pretty well thereafter. His name was Honda Shoichiro.

Why We Need Higher Gas Prices

As I understand it, the argument is that higher petroleum taxes, and thus higher fuel costs, will encourage the manufacture and purchase of fuel-efficient vehicles, lessen the amount of oil imported, help to reduce emissions and global warming, and provide funds to repair road infrastructure. All these are noble causes, and should be encouraged. The problem is that higher fuel costs translate to higher costs for all goods and services used in the United States. It amounts to a tax on everything, and it hits the poorest among us the hardest by essentially taxing the basic necessities of food and clothing.

One can argue that tax exemptions could be applied for fuel used in the transportation of goods, but what of the local repair man, delivery service, building contractor, and the like? As soon as selective exemptions are applied, some government bureaucrat is now picking winners and losers, and the probability of corrupt practices grows. Let the markets dictate the price, and let the economy heal itself.

Does the Auto Industry Deserve To Be Bailed Out?

After the high-demand times of WW2, the textile industry in the Northeast began to fall on hard times. The mills were old, energy costs were high, and the workers didn't come cheaply. One-by-one, the manufacturers packed up and moved south. There was no such thing as a bailout available. In my home town, there was no industry left to speak of. What was still available was "Yankee Ingenuity". Electronics moved in where cloth moved out, and the Northeast, particularly in areas where good colleges were located, began to boom. It would seem to me that the educational institutions of the industrial Midwest could take a hard look at their curricula and start putting out graduates who could lead the recovery. If bailed out, the "Big 3" will just keep on with the old ways, the fat cats will get out with their bonuses, and the rest of the workers will watch the industry die. I don't blame the unions for what they get. The old adage is that you do not get what you are worth, but what you negotiate. It will not be easy on the workers, but the mill hands of 60 years ago survived and are now the parents and grandparents of today's engineers and technicians.

Ten Cars That Could Save Detroit

The GMC Acadia is not the savior for anyone. I rented one a few months ago, and while it ran well and had lots of nice "bells and whistles", a fundamental flaw soon came to light. I was using the vehicle for work on unimproved roads and hills in desert terrain. I had a tire go flat, and found that the vehicle not only did not have a full-size spare, it had no provision for carrying one. Even though GM promised that the donut spare could go several hundred miles at moderately high speeds, once the spare was on, the vehicle would not handle correctly at low speed, and anything more than 30 mph was out of the question. Oh, by the way, jacking up the vehicle to put on the spare was even more frustrating. The jack is built so that the handle is nearly on the ground, and it is not hinged in any way. This meant that one can only get a half-turn on the jack before having to remove and re-insert the handle.

The whole experience tells me that the stylists and bean counters have kicked the engineers out of the automobile industry, and the traditional American auto makers will soon become extinct. Once auto makers (and sadly, many other American industries) begin to design and build useful and reliable products, the US will again become competitive in the world's markets.