Today we conclude our small series on General Motors. As you can probably tell by now, I favor helping out the company. The company has history of market incompetence, it not only failed to meet various customer demands. Adding to this, it designed its product line in such a way that made it at times more at the mercy of the price of petroleum than anything else. Saying this, there are reasons to keep GM alive.
Nov 15 2008
Nov 13 2008
In our first installment, we introduced you to the current battle for the fate of General Motors. We highlighted why they share some if not all of the blame for their current situation. We talked about the various sides involved in one way or another with the situation of GM. Today we tackle the big question, what many deemed “unthinkable” previously, what bankruptcy would mean for General Motors and you.
Nov 11 2008
It looks like GM is going to be nationalized, but with a twist. Because we can’t bear to say the S-word (Socialism) in America when the taxpayers start funding a private company, the incompetent management is likely to be retained and given more money to burn. Readers of the business pages may recall that the GM CEO was given a vote of confidence by the board just a few months ago, and so this bozo expects to retain control of a company that is too distressed even to file for bankruptcy protection.
The Wile E. Coyote moment never seems to come for incompetent US top managers. They continue to defy the laws of economic gravity because their spin control is so highly perfected that it functions as a levitation mechanism. I wonder how much longer the taxpayers will be willing to provide unlimited funding to companies led by idiots? Here are some practical measures the Obama administration should consider when it takes over a private company:
1. Conduct a thorough post-mortem on the management decisions leading to the business failure.
2. Remove all managers associated with poor decisions revealed in step 1.
3. Hire replacement managers with proven records of business turnaround execution.
4. Reclaim all past bonus compensation paid to managers associated with a failed company for the last five years.
5. Restructure the business model of the failed corporation to address shifting national priorities. (E.g., GM should start making rail cars and trolleys, in addition to fuel-efficient cars).
6. Introduce a high degree of transparency into the financial records and management deliberations of the nationalized company. All key decisions and their supporting documentation should be visible on the Internet. A taxpayer-funded company should be accountable to the taxpayers.
7. Put private citizens and worker representatives, with no connections to existing management, on the board of every taxpayer-funded company.
Nov 10 2008
THE BUSH administration’s Wall Street bailout may be a prelude to a sweeping government intervention in the auto industry–even before Barack Obama takes office January 20.
Nov 07 2008
If the peak oil theorists are correct, within 20 years Americans will have to live on 10% of our current per-capita energy consumption. This means that the auto industry as we know it must undergo radical change. The conclusions for the auto industry are clear, and it will be up to the Obama administration to transform it according to the following imperatives:
1. The era of high personal mobility is ending. Americans may still own lots of cars, but they will be driving and replacing them dramatically less.
2. Auto sales are going to plunge to a fraction of what they are today, and the types of cars and trucks sold will shift to electric-powered vehicles.
3. The productive capacity of America’s auto makers must be shifted to the manufacture of other goods to avoid massive unemployment and further economic collapse.
4. The precedent of WWII factory conversion of manufacturing away from automobiles should be followed by the Federal Government, but it is mass transit vehicles, buses and train cars that should be produced, not weapons.
5. The production of clean buses, electric locomotives, and rail cars will absorb the unemployed and under-employed workers of the auto industry and enable the rapid expansion of public transportation in America.
6. The Federal government should supply funding, leadership, and technical assistance for this strategic industrial conversion.
7. Fiscal stimulus, in the form of massive subsidies for the build-out of inter-city rail, light rail, and bus service, will be the most productive anti-recessionary policy the government could pursue.
Americans should understand that the current economic turmoil is not a temporary interruption in our old energy-squandering way of living, and that the fat times are not going to return soon. We have got to radically restructure our society to function with less energy, and we will have to start with our automobile industry.
Nov 04 2008
When everyone is mad, only madmen are respectable. The sharp collapse of automobile sales in America is supposed to be a dire omen of economic failure, and pressure is mounting on the government to “save” the US auto industry. But on closer inspection, the US auto industry has been encouraging wildly wasteful and environmentally destructive behavior for decades, and “saving” it is the last thing we should do. This industry should be shut down and rebuilt from the ground up. Here is why:
1. Automobiles are ecologically and socially destructive. Producing, fueling, and disposing of them consumes vast amounts of precious resources. Yet their impact on world society has been to spread unsustainable living patterns and isolate individuals from contact with their neighbors.
2. Automobiles have been sold as disposable fashion merchandise, an extremely wasteful practice. There is no reason an automobile cannot be designed to last 20 years, like a refrigerator, stove, or washing machine. (The billionaire founder of IKEA drives a 20 year old Volvo.)
3. Automobiles generate a huge number of deaths and injuries and inflict enormous insurance costs on their owners. Actively selling “high performance” cars and encouraging drivers to drive them as fast as possible contributes to this mayhem.
4. The toxic wastes produced by automobiles are substantial. Discarded tires alone account for a huge problem, since no efficient recycling system has been developed for them. Similarly, vast amounts of plastics and toxic fluids are dumped into the ecosystem because of artificially stimulated junking of cars to permit the frequent replacement that is vital to the current industry model of selling cars as fashion statements.
We need to stop this madness. The world auto industry should be producing only about 1/3 of its current output of cars, and these cars should be engineered to last indefinitely, with a minimal negative environmental impact. GM, Ford, and Chrysler should be shut down, because they are unlikely to reinvent themselves as “green” vehicle manufacturers. New organizations should replace them, and the US government should provide appropriate research and development subsidies to help these newcomers rebuild the US auto industry.
The future of the world automotive industry should be grounded in sustainability, not disposability. We literally cannot afford to keep making and buying cars as we have for the last 60 years.