Comments on: Detroit: No Bailout for Incompetents

By: Barry Dauphin

Barry Dauphin — Thu, 25 Sep 2008 23:15:51 +0000

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.

By: david levavi

david levavi — Thu, 25 Sep 2008 21:57:37 +0000

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.

By: d neal

d neal — Thu, 25 Sep 2008 21:54:30 +0000

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.

By: david foster

david foster — Thu, 25 Sep 2008 21:47:00 +0000

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.

By: John Moore

John Moore — Thu, 25 Sep 2008 21:36:08 +0000

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.

By: Mike Shuster

Mike Shuster — Thu, 25 Sep 2008 18:48:09 +0000

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.

By: MG

MG — Thu, 25 Sep 2008 17:40:38 +0000

We are lending the money because Michigan is somewhat competitive in this year’s Presidential Election.

By: Don

Don — Thu, 25 Sep 2008 16:54:49 +0000

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.

By: fred

fred — Thu, 25 Sep 2008 16:45:14 +0000

One thing is certain – the oil companies won’t be holding their hands out for a government handout.

By: srlucado

srlucado — Thu, 25 Sep 2008 16:08:01 +0000

“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