No car industry bailout ... unless they do it my way

On October 13th I gave my remedy for the car industry, ("GM and Chrysler: How the U.S. Chose to Fail"). My plan was probably over the top, but nothing I have heard or read since sounds even close to right. In fact, what I read and hear is so wrong-headed that I want to up the ante on my original plan. Here it goes.

In exchange for the taxpayers bailing out Detroit, we the people propose:

1. GM and Ford will promise even better fuel efficiency than we asked for before. 40 MPG by 2011 and 50 MPG by 2015. All models including SUVs. No nonsense about fleet averages!

2. Chrysler will be spared and be rechristened, Phoenix Motors. Phoenix will not make cars, rather the bailout money will go to developing technology for clean energy engines and systems. One big project ought to be refitting cars and buses for fuel efficiency and reduced CO2. Another ought to be developing high speed trains (target 300 MPG) as we spend billions on transportation. The train unit will be headquartered in New York City and staffed by hedge fund billionaires who agree to take 0 pay in service to their country.

3. No executive will make more than $500.000/yr., including performance-based pay. Designers and engineers who come up with real innovations will be rewarded accordingly -- as if they were the athletes who win the world championships in the big three sports.

I have lots more hare-brained ideas that could save the industry. I think them up as I type. And in the meantime, Washington and Detroit get nowhere because they refuse to accept that Detroit makes lousy cars and management stinks. To reinvent this business we need to kill it and then fumigate.

And one final key measure: Any and all ideas proposed (or supported) by Henry "Hank" Paulsen will be rejected out of hand.

Comments

[Nestor Maccagno]

Hello David,

For sure you are shocking people with this ideas. One thing during last days I was thinking about is related with regenerating industries (and users) more than only thinkinng in what can we do in every industry to reduce the impact to the environment during the process and with the products produced. The earth is our unique resource and has a limit and we are very close to reach the limit in some areas like petroleum.

I know some companies are decided to support sustainability paying an extra price for raw materials extracted for the earth in a sustainable (an natural) process. Also results funny how we can pay less for a product has a worst impact to the envirment than others can be recycled.

I think this is the biggest challenge for all our companies changing the actual process to those will regerate the environmet.

Saludos...

[Bryan Suggs]

Hi David,
As an American driver of foreign vehicles (2 Toyota and 1 Mercedez) I need to chime in on where and to whom my tax dollars go. The last time I owned an American vehicle was the first one my parents bought for me when I was 16 - Chevy Cavilier. Since then, my wise money has purchased Toyota for the most part with a few Bimmers mixed in. My dad, to this day, continues to buy Detroit junk because he thinks he's supporting the American economy. I have tried to convince him, albeit unsuccessfully, that he would still be supporting the American worker as Toyota, BMW, Nissan, VW and Mercedez-Benz all have manufacturing plants located here in the South, but at 78 years old he believes he's on his last car, a Chevrolet, that should last him all of 5 years. 5 YEARS!!! ¡Que Increible!

Like in class, my typing (and mouth) go faster than my brain but here's a couple of points I would like to make.

In a free market economy, should we bail out poor decision making? Should Joe the Plumber down on the corner who creates needless overhead, hires too many people for too high a salary and doesn’t tighten the valves to create a long lasting water seal be bailed out because his customers won’t return?

As you have stated in a previous post, the writing was on the wall for the automakers starting in the 80s. Since hindsight is 20/20, I'll forgive them for falling in love with the truck and selling out for gas guzzling SUV sales but I will NOT forgive them for showing up at the Congressional hearings in luxury jets -- all the Big 3. I don't believe that a bailout will change their strategy, only delay the inevitable – bankruptcy -- which may be the best option. During bankruptcy the Big 3, (more than likely 2 as Chrysler will probably not emerge), could cut the fat, restructure their union contracts, and eliminate the number of brands. Why does GM need Chevrolet, Buick, Saturn, GMC, Cadillac, Pontiac and Hummer? (GM Daewoo, Holden, Opel, Saab, Vauxhall and Wuling withstanding). Consolidation seems to be an ideal place to start re-branding. Wouldn’t marketing ONE quality brand be better than seven inferior brands?

Most any American will tell you, south of Detroit, that American car quality lacks much to be desired – where is that Yugo when you need it? Go back to the drawing board Detroit and devise a strategy to actually develop a quality, high milage per gallon automobile. Your customers aren’t all dead yet, but some may be driving their last Big 3 made vehicle.

…one last rambling before I go, if you really want to go “out there” from a strategic point of view then here’s one from Pluto – develop a hydrogen vehicle and make the distribution points the automobile dealers. It seems there’s an automobile dealer on every corner in the US. The US Auto Industry could lessen our need for oil, create a clean burning vehicle and generate a new sustainable income stream from the distribution of H2.

Cheers from Tennessee,
Bryan