I suppose since the incompetents on Wall Street are about to be bailed out, we shouldn’t complain that the incompetents in the auto industry are for headed similar treatment. According to the Financial Times – House clears $25bn for carmakers – cheap loans to GM, etc. are in the offing and both presidential candidates are supporting this dole. Any more of this and people will start screwing up deliberately in order to get a government handout.
Incidentally, the bill is entitled the “Advanced Technology Vehicles Manufacturing Incentive Programme” – double m’s courtesy of the FT, which does not say if the loans are restricted to high tech energy saving cars. If so, there is more justification. Still, Detroit should have been working on these things years ago. Toyota did and is now cleaning their clocks, as we know. Why are we lending money to the same cowardly bunch that failed before?
Sort of like “The Mouse that Roared.” Declare war on the U.S., surrender, receive aid.
“Why are we lending money to the same cowardly bunch that failed before?”
Because this cowardly bunch employs a lot of voters.
Aside from that, it makes no sense at all.
Scott
One thing is certain – the oil companies won’t be holding their hands out for a government handout.
Are the Sherman Anti-Trust Laws part of the problem? GE has had super-efficient diesel-electric locomotives for years. Naval ships are also nothing more than gigantic hybrids. But if the car companies got together with the defense companies and the locomotive makers, and they all shared research and technology, wouldn’t that be illegal? I know it would be illegal if they all shared in the research, development and manufacturing, and then said here is how much the propulsion system is going to cost.
Unintended consequences.
We are lending the money because Michigan is somewhat competitive in this year’s Presidential Election.
Yes, this is ridiculous. And if one of the campaigns makes a big issue of it– despite potentially losing working-class votes in Michigan, etc.– I will be impressed.
It would be wrong even if the money was to go for advanced technology cars.
Having the government suddenly shower huge amounts of money on “advanced technology” is the least efficient way to achieve that goal.
Don..I don’t really think there is an anti-trust issue here. Nothing would prohibit GE, for example, from going into the business of manufacturing hybrid power trains and selling them to car companies as components.
(GM was also in the diesel-electric locomotive business, but divested it several years ago, just in time to miss the great railroad renaissance.)
One possible shape of the future auto industry is that a few non-automotive companies (GE & Siemens, for instance) make the electrically-centric powertrains, while a much larger number of companies, including some new niche players, act as integrators, final assemblers, and marketeers.
Two points on the “bailout” for Detroit:
1)$25 billion is not near enough.
2)Check out this WSJ piece:
http://online.wsj.com/article/SB122211673953564349.html
Everything the Japanese learned about making cars so well they got from us.
The best book about the American auto industry is still British economic historian, Emma Rothschild’s, Paradise Lost: The Decline of the Auto-Industrial Age (1973).
The powers in Detroit are dense and insular. Engineering takes distant second place to accounting. Contempt for auto workers and customers alike is endemic.
We subcontracted on a project for GM during its brief flirtation with Ross Perot’s EDS years ago. The representatives of the primary contractor who were dealing directly with the fabled Fourteenth Floor in Flynt spoke of their clients in tones hushed and reverent. Their groveling obsequiousness spoke volumes about the Brahmin culture at the top of the automotive industry.
As goes GM, so goes America used to be said with pride. Today, the thought is frightening. Bailing out Detroit is merely putting off the inevitable.
The negative things said about the auto industry in Detroit are mostly true. It is also true that Detroit has higher labor costs than Toyota and Honda because of prior agreements with the UAW, such as paying much for retiree health benefits. The Moderate Three (no longer the Big Three) can surely do better. But let’s get the whole story.