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Detroit must die

Rob

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Below is an editorial article written by a staff member at the San Francisco Chronicle newspaper. What are your thoughts on this?
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Detroit must die
American cars are still uniformly god-awful. Why save them?

By Mark Morford, SF Gate Columnist
San Francisco Chronicle
Friday, November 14, 2008

This is what I think whenever I see someone plodding along the freeway or struggling through the city streets in some older and terminally bland or even brand new and yet still terminally bland Malibu or Cobalt or Taurus, Sebring or Nitro or Mustang or Corvette or Neon or hell, almost any car from any American manufacturer whatsoever...

I think: Oh, you poor thing. I think: Do you not have any friends? Did no one tell you? Have you not yet heard of this crazy thing called the Interweb? Did you not even bother to do ten minutes of research and comparison shopping before you purchased that squeaky, ill-built lump of misfit steel and crude design, homework which would've instantly revealed to you what even the most amateur automotive buff knows the instant she becomes a fan of quality engineering and design refinement and, you know, basic drivability?

This is what you would've learned: that American cars are, to this very day, still uniformly awful. Or if they're not awful, they're just passably mediocre. And your money would be oh so much better spent on German or Japanese or even Korean. I'm so sorry about your urine-yellow Chevy Aveo. Here, have my parking space.

You might disagree. You might say, hey wait a minute, not all American cars are as dreadful and ill-equipped as Sarah Palin at a science fair. There are a few exceptions, a few gems among the dirt clods.

Like the new... um, the Ford, uh, what was it again? Right. The Flex (that's not a car, but whatever). And hey, the new Fiesta is supposed to be hot, because they brought it over from Europe -- aka "land of wonderful, efficient, well-designed little cars we almost never see." And wasn't that big pseudo-gangster slab, the Chrysler 300, sort of cool about five years ago? Sure it was.

And you're right. Those cars are exactly that, exceptions. Rarities. Flukes. The truth is, American cars haven't been interesting or exceptional in decades. When it comes to small and efficient, there isn't a single truly desirable American car on the road today. And innovation? Dear God. The last new idea a U.S. manufacturer had was sticking a mini fridge under the seat of the Caravan. Neato.

And now here's the other thing I think when I hear that the bloated American auto industry is on the verge of complete collapse, failure, bankruptcy, that the Big Three -- Ford, GM, Chrysler -- are losing billions hand over tailpipe, and that Obama and Nancy Pelosi are right now considering shoveling many billions into their voracious maws to try and keep them afloat for a while longer, just so they can keep producing crap no one really wants.

I think: Are you kidding me? We have a chance to let this fat, lazy, top-heavy, SUV-glutted industry implode like it so very much deserves, and we might not take it? I think: What an opportunity. We could begin to reinvent the American automobile starting next week, and we might instead keep the old ways alive simply because the Big Three were too stupid and greedy to see past their gross SUV sales figures for the past 25 years? Come on.

Look. You are free to reminisce all you like about some hazy, throbbing, "American Graffiti"-tinted golden era of American cars, all about Steve McQueen and 'Cudas and '67 Mustangs and peeling out in the high school parking lot. Knock yourself out. But the truth is, this economic crisis might be our best chance yet to wipe the flabby, useless U.S. transportation slate clean and begin anew, armed with a whole new set of tools American auto manufacturing has never used before: efficiency, ingenuity, agility. Can you imagine?


I realize I am no economist. I fully understand there might be reasons far larger and more fiscally complicated to justify keeping the Big Three alive for awhile longer, simply because, like AIG, so many billions are wrapped up in their operations and in the various supply chains that support them, to let them all fail nearly simultaneously could rip a hole in our sinking ship of state far larger and more dangerous than the one that results from letting them suffer and die slowly, bleeding billions all the way.

What's more, I'm also not so heartless to ignore the brutal job losses, the tens of thousands of collapsed pension plans and failed retirement accounts that would result from the end of American auto industry. It would be horrible indeed. But maybe that's where the government's billions would be far more useful, to ease the meltdown and provide retraining.

(I am also urged to note that the enormous, overstuffed UAW isn't exactly a saint, either, and that a large part of the responsibility for Big Auto's lack of innovation and change lo these past decades rests squarely on its petulant shoulders, too. You can't blame all the ills of American auto on the greedy CEOs and their shortsighted accountants. Just most of them.)

Here's the upshot: The American auto market is the biggest in the world. Our near-religious adoration of cars isn't vanishing anytime soon. There are hundreds of billions of dollars still to be made. Let prehistoric Big Auto die now, put the old, tired, sickly circus elephant out of its misery, and watch what happens.

Innovation would skyrocket. Entrepreneurs would flood in. New and pioneering car companies -- or better yet, radical new ideas for urban human transport -- would flourish. New jobs would be created almost instantly. Those supply chains wouldn't vanish, they'd adapt. The American auto industry would convulse, struggle, acclimate, reinvent itself anew.

Hell, even most Republicans agree on this: You don't bail out lousy, overweight companies who've been dumping bad ideas on us since the Carter administration. Let the free market pull the trigger, and move on.

Yes, it might take awhile -- ten or twenty years, even -- before we'd see anything resembling a tolerable American vehicle that could compete with Toyota's manufacturing genius, Honda's simple quality, or any of the Germans' astonishing refinement or cool sex appeal. So what? Meantime, we'd all have to suffer driving Minis and Audis and Honda Fits while America figures out how to be ingenious and competitive again? Gosh, how horrible.
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Want to comment: http://www.sfgate.com/cgi-bin/articl...otes111408.DTL
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Looks like it is written by someone who uses public transportation and probably voted against Proposition 8. I wanted to puke :pukeby the second paragraph.

Ron
"Baldie88"
 
You got to wonder where this stuff comes from and why some people seem to hate American car companies.

Sure the Detroit 3 need so restructuring and a few more better products but they're doing that. Unlike the electronic industry where totally new products come out every 3 months, it takes years to bring out new/improved vehicles and at billions in cost. GM and Ford have been doing that for years and have some really good vehicles out there but people like this will never know because their minds are closed.

I wish we could just let them die ignorant.

Oh well.
 
The first part of that story is pretty venomous. It is pretty apparent to me that the authors assertations that American cars are "to this very day, still uniformly awful. Or if they're not awful, they're just passably mediocre." is based purely on emotion, and not on facts.

A quick check on the JD Powers website shows that of the 36 car manufacturers surveyed by JD Powers for Over All Quality, 3 American manufactureres are in the top 10; Mercury at #6, Ford at #9, and Chevrolet at #10. The vaunted German cars the author speaks so highly about? Audi is #12, BMW is #21.

I think that summs up the biggest failure of the Big 3. The general consensus is that is that their cars are still poor quality. The JD Power results disprove that belief, but the Big 3 are doing a horrible job of reversing that image.

This whole situation reminds me of what happened with the dinosaurs. They all died out becuase they were not able to adapt to quickly changing enviromental factors. The resulting vacuum allowed mamals to evolve into us.

We all ready have small automobile manufacturers vying for a piece of the Big 3's market share. For example, there is the Tesla Roadster by Tesla Motors, the E7 Police Car by Carbon Motors, or the 100MPG Venture One tilting motorcycle.

I do agree with one thing the author had to say though. If the Big 3 do go belly up, it will take a long time for the American auto industry to recover, but I think it will be better off becuase of it. If the Big 3 do manage to survive, they will need some drastic reorganization.

:thumb Jason
 
It Don't like to -----------Oh ,hell i'll say it.The guys an idiot.If he went to college it was a waste of money.
 
Those who can't do, teach. Those who can't teach, teach gym. Those who can't teach gym go into journalism.

That said, he's sort-of right. The big 3 need to declare bankruptcy. That's the only way they can escape the deadweight UAW contracts and other obligations. They simply can't compete with their employees making nearly twice what the competition makes and paying some of those to sit in a room all day.

If the American automotive industry is to survive it has to first lean down substantially and then figure out how to make cars that people want at a quality level that people are willing to pay for.

A bailout will not help them do that. It will only delay the inevitable.
 
I'm a Rebel by ... well, my Red,White and Blue blood. Sooo I'm not impressed by his remarks of Toyota's genius or Honda's quality and don't see the German 'sex' appeal. That would be me plodding along in the Malibu or Cobalt. I am the guy that put the American Auto Industry in peril. Sorry... My point is; GM, Ford and Chrysler only make cars for a market. The public has been buying them. Hey, I bought a gas guzzling Chevy Silverado last year. Now this article makes me feel bad about it. What is a person to do! Guess I should have been patriotic and bought foreign. :eyerole
 
HI there,
For the opinions he has, there must be something underlying here.
Most of the technological advances have come from the big 3 over the past 25 years.
Looking at ABS, displacement on demand, airbags, computer commanded control, crumple zones and many other features have started with the big 3.
Now, with the hydrogen, 2 mode hybrids, electric cars like the Volt and direct fuel injection, let the changes come.
Truth is, the petroleum market and the economy did this, Ford and GM have been working for YEARS to restructure to meet changing times.
It was the economy from the feds that created the needs they have now.
Thats why, IMO, the fed needs to step up and figure out how to stop the bleeding.
Allthebest, c4c5
 
the big problem for american car manufactures is the price of gasoline is now again close to $2.00 and very few new car buyers are going to buy a small electric car or any small car of any kind. people are coming into the dealership even now looking for pickups. if the price of gasoline stays down for a while it will help GM a lot to weather the storm. GM can not stay afloat selling $15K cobalts when the could not stay afloat selling $40/50K SUVs that made them $15K profit on each one. GM cost per hour per employee is double the transplant companies and till they do something about that they are in trouble.
 
the big problem for american car manufactures is the price of gasoline is now again close to $2.00 and very few new car buyers are going to buy a small electric car or any small car of any kind. people are coming into the dealership even now looking for pickups. if the price of gasoline stays down for a while it will help GM a lot to weather the storm.

Don't expect the price of gas to remain at these very nice levels. The fall off in price is directly attributable to the fall off in demand for oil world-wide, as a result of the recession we're in. While this recession may be longer than recessions we've faced in the recent past, it will eventually end, and when that happens, expect demand for oil to drive the price back up.

Last week, I came across a link at Weekly Standard on the subject of a Bailout for the Big-3 Automakers. That link took me a blog by Prof. Stephen Bainbridge. Who is Stephen Bainbridge? Well, here's a part of his bio:

About Professor Bainbridge said:
Stephen Bainbridge is the William D. Warren Professor of Law at UCLA, where he currently teaches Business Associations, Unincorporated Business Associations, and Advanced Corporation Law. In past years, he has also taught Corporate Finance, Securities Regulation, Mergers and Acquisitions, and seminars on corporate governance. Professor Bainbridge previously taught at the University of Illinois Law School (1988-1996), where the Class of 1990 gave him the “Best Instructor Award.” He has also taught at Harvard Law School as the Joseph Flom Visiting Professor of Law and Business (2000-2001), La Trobe University in Melbourne (2005 and 2007) and at Aoyama Gakuin University in Tokyo (1999).

The man appears to have some street-cred on the subject of business, finance and law. Here's what his blog has to say on the issue, and I can't find fault with his logic:

[LINK to source]

No Bailout for the Auto Industry

Democratic leaders in Congress this weekend called on the Treasury Department to consider assisting the ailing US car industry through the $700bn financial rescue plan enacted last month.

Following meetings with the big three carmakers - Ford, General Motors and Chrysler - on Thursday, Harry Reid, Senate majority leader, and Nancy Pelosi, House speaker, appear increasingly convinced of the need for large-scale government intervention to aid the industry.

Let’s focus on GM. GM’s problems are manifold, but at the top of the list are:

1. An incredibly inefficient bureaucracy. GM has to continue cutting management. Shedding management will be a lot more more likely if GM is forced to go through bankruptcy reorganization rather than being bailed out.

2. An excessive number of brands, which results in substantial cost duplication. Alfred Slaon’s vision of a customer who graduated from entry to mid-level to luxury brands as he grew older hasn’t worked for a very long time. Instead, the brands compete to retain customers, which all too often leads to cannibalizing sales from one another instead of outside competitors. GM needs to shed brands. Pontiac and Buick, for example, exist solely to cannibalize sales from Chevrolet. Again, GM is much more likely to shed brands in a bankruptcy reorganization than in a bailout.

3. Although GM didn’t bet as heavily on trucks and SUVs as did Ford, it still has almost no profitable small and medium-sized car models. Toyota can make a profit on the Camry as long as the exchange rate is above 85 yen to the dollar. GM has no comparable product. Bailing GM out won’t solve that problem.

4. An antiquated distribution system cemented into place by state franchise laws that insulate dealers from any real changes. GM needs a radically new distribution system involving fewer dealers, just in time inventory practices, and considerably greater use of on-line sales. State franchise laws protecting dealers, BTW, are a big part of the reason GM can’t shed brands. Killing a brand simply gets too complicated when you’ve got hundreds of dealers protected by 50 different sets of laws. In a bankruptcy reorganization, it will be much easier to kill a brand despite dealer opposition.

5. Union contracts that impose astronomical health and pension costs, make innovation harder, reduce production flexibility, and fail to ensure quality. American workers can produce quality cars and do so at numerous foreign owned plants. Most of those plants, however, are not organized. A Democrat-sponsored bailout is certain to preserve the current union contract.

6. Massive pension and health costs for retired workers.

Here’s what has to happen. Cerebus needs to sell Chrysler to somebody with cash and a need for access to the US market. India’s Tata comes to mind.

GM and Ford should be allowed to go through bankrupt reorganizations. Yes, there will be huge transaction costs. Yes, some of those costs will be borne by the taxpayers. The bankruptcy court’s ability to remake contracts, however, will be critical. GM and Ford need to tear up their contracts with the unions, its retirees, and its dealers. Bankruptcy is the easiest way of doing so:

As airlines and steelmakers have done, GM could use Chapter 11 to rewrite union contracts, potentially enabling it to slash retiree benefits and close plants without having to pay furloughed workers. The auto maker could even dump tarnished brands and get bankruptcy court protection from dealer lawsuits.

Letting GM avoid bankruptcy by giving it a federal bailout ought to be unthinkable, because of the very real risk that a federal bailout will come with conditions that preclude GM from fixing its core problems. It’s likely to preserve the gold plated union contracts, the excess payroll numbers, the excess plant capacity, and the excess number of dealers.
 
According to an article on CNN this morning, it looks like Pelosi has decided to bail out the auto industry. Looks like concessions will all be on side of the equation with further government regulation to help things along.

Pelosi said the plan would call for "immediate, targeted assistance" and must include several principles, including the restructuring of the companies "to ensure their long-term economic viability," new fuel-efficiency standards, and the development of advanced vehicles.

She said it would include "even stronger limits on executive compensation and assurances to protect the taxpayer." House aides said the legislation was still being developed and a specific funding level had not yet been reached.

Pelosi did not mention any plans for the UAW to make any concessions as part of the legislation. UAW president Ron Gettelfinger told reporters earlier Saturday the problem is not the union's contract with the auto companies.
 
A little more than a year ago we needed another car. I wanted to buy another Impala, but the Chevy dealers only wanted to sell trucks. I was taken to see a truck by numerous salesmen even after telling them that I'd leave if we were walking out to see a F#$%ng truck. Long story short my wife got her way and drives a Toyota.

So in my opinion they are getting what they deserve and I guess I'll be keeping my 95 Vette, 95 Impala SS and 02 Impala since Chevy dealers don't want to sell cars and I don't want a truck.

Mike
 
Reality is now here, weather we like it or not. I'm afraide Proffessor Bainbridge is 100% correct, the unions have overplayed their hands in the world of business 2008 edition. If the unions do not want to come to the table and resolve this incredable mess the THEY and GM managment have gotton them selves in, than GM must file chapter 11 and reorganize. It's a tough pill to swallow but in the long run GM, it's employees and future customers will be better off.

There was a time that unions had the interest of the workers in mind but sadly those days are gone. This is no different than what we as Americans are facing in Washington DC, the congress and senate at one time had the American people as there employers and low and behold they like the unions are out for themselves and screw everyone else.

Reality bites..

There isn't a funny or sad face that fits!!!!
 
Bainbridge

Bainbridge may have lots of credentials but one important one he doesn't have is being a successful automotive business person. Everything he wrote about is pure speculation based on his assumptions about what he thinks he knows about the automotive industry. He has no idea what the American automotive companies are working on with regard to future products, everything he has written is fact less and presumptuous; it is not grounded by any data or experience. Suppose his proposal was implemented not knowing what the outcome would be and it doesn’t work? Suppose the American companies end up just going out of business? It is a distinct possibility because his proposal is nothing more than a prediction. What happens then when we have lost one of our largest manufacturing elements? Do all of these Nostradamus types go ooops? You can’t rewind at that point and say let’s put it all back together so we can try it over again. More importantly if it doesn’t work who is held accountable for this huge mistake? I’ll bet Bainbridge won’t be taking any responsibility because he has no skin in the game – just some wild theory. Think about it. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:eek:ffice:eek:ffice" /><o:p></o:p>
 

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