Sunday, March 18, 2007

Just Let Me Die at the Country Club

Sholnn Freeman (no relation) over at the Washington Post, recently reported Detroit’s collective decision in the automobile business to just throw in the towel.

Autoindustry Sholnn Freeman (no relation) over at the Washington Post, recently reported Detroit’s collective decision in the automobile business to just throw in the towel.
Auto industry leaders and the United Auto Workers yesterday put up a united front in opposition to congressionally mandated improvements in vehicle fuel economy…
…executives appearing at a House hearing not only rejected tough rules sought by Democrats and environmentalists, but also opposed a Bush administration proposal to improve mileage by 4 percent a year over the next 10 years. "It's time to move away from proposals that don't solve the problem," said G. Richard Wagoner Jr., chief executive of General Motors.
Gmrichardwagoner Well gosh, Rich, what’s your plan? To just keep pumpin’ out those SUVs and pickup trucks until the world comes around to seeing things your way?
Every other automaker in the world has looked at buying or merging with GM, Ford and Chrysler and made the decision to let all of you float on off into bankruptcy, like polar bears, on your own ice-raft. In a piece of irony much of your own making, the ice is on the melt and so are your options.
I know the ‘proposal’ you guys have in mind and it has as much chance as a wet polar bear in Lee Iacocca's living room—financial restructuring that offloads your pension obligations to the feds, essentially to me and my neighbors. There is a penalty, boys, for decades of picking the wrong horse. It’s called going broke, under, kaput, folding your tent and stealing away.
Stealing away is the right term, because you and your top henchmen will have gutted the last financial remains of the flopping fish that is the automotive industry in this country, before its last twitch. What’s in the employment contract, Rich? $40 mil to go away?
Getting back to the Post article,
Wagoner questioned the role of fuel-economy rules in reducing greenhouse gases or oil consumption since mandates were implemented in the mid-1970s.
Prius It’s a moot question. It doesn’t damn well matter what the rules were (or are). The American driving public voted with their wallets. They bought well made, innovative, fuel efficient, mostly Japanese cars. They bought them by the tens of thousands to begin with, then the hundreds of thousands.
Brand loyalty returned, it just wasn’t to American brands.
There was a time when Detroit upheld a proud (and deserved) tradition of leading the world in automaking technology. Cadillac was the standard of the world.
Wagoner and his counterpart at Ford and Chrysler brought Detroit to Congress, sniveling, sucking on its blanket, throwing a tantrum on behalf of someone, anyone to save its sorry, incompetent ass. It was sad to see.
Fordalanmulally Wagoner was joined at the House Energy and Commerce subcommittee on energy and air quality hearing by Alan R. Mulally of Ford, Tom LaSorda of DaimlerChrysler's Chrysler Group, James E. Press of Toyota and Ronald A. Gettelfinger of the United Auto Workers.
Three terrified auto executives, a despondent union guy and Jim Press of Toyota? What was he doing there, measuring Al Mulally for the runners-up suit? Bet Jim cruised into town in his Prius, getting around 35 miles per gallon. For 16 years, fuel standards have been stuck Chryslertomlasorda at 27.5 aggregate fleet miles per gallon. Starting there and realizing the wished-for 4% annual improvement in mileage, Press’s Prius is already rated successful under those too restrictive terms until approximately 2015.
By then, of course, Toyota will no doubt have cars on the market that get 50 or 60 mpg, are mostly electric, quiet and fun to drive.
Wagoner will be playing golf at Bloomfield Hills and GM, if it’s still around, will be looking for some other loophole that allows them to not face the music of manufacturing reality. The mantra of executives at the (formerly) Big Three will be
“Oh Lord, just please let me die at the country club, it’s not all that much to ask.”
The auto industry is prepared to fight over fuel-economy regulation. Its lobbyists include veterans of past fuel-economy fights. The industry also has thousands of dealers around the country who can be called upon to contact members of Congress or visit Capitol Hill. The UAW can unleash its members to press the industry's case.
Autodealership The thousands of dealers are on that same shrinking pack of ice with the polar bears. Might be that Rick, Al and Tom haven’t told them yet, but what future is left of U.S. built automobiles will surely be sold over the Internet, delivered to regional pickup points and serviced by a whole new structure of Jiffy-Lube type service centers.
No room in that constantly shrinking profit structure for dealers. Unfortunately, the Asian makers will probably lead that charge and Detroit will be allowed to pocket precious little profit. Detroit seldom leads these days.
Gettelfinger said stringent increases in fuel-economy standards could lead to a "calamitous result" of factory closings, tens of thousands of layoffs and the loss of retiree health care, already a primary target of industry cost-cutters. Improving vehicle gas mileage could cost as much as $44 billion at GM alone, Wagoner said.
What are these guys smoking?
If trying to catch up to a profitable segment of the industry that is leaving Detroit increasingly behind, leads to calamitous factory closings, then Wagoner may as well cancel tomorrow’s tee-time and stop praying. If improving vehicle gas mileage, essentially downsizing cars, costs $44 billion, then it’s Katy-bar-the-door. Polls show that 75% of Americans favor higher mileage standards.
The obvious message from that poll is that Detroit either produces those cars, --or 75% of its potential customer base will buy them from someone who does.
Subaruhybridcars Toyota was there in Washington, standing shoulder to shoulder with Detroit, hoping they win their plea to get absolution from mileage standards. Toyota, Honda, Kia and Subaru have done very well riding in the wake of those SUV and pickup land yachts Detroit has been building.
But they have a different take on their reason for being, one that Detroit has yet to understand. Toyota, Honda, Kia and Subaru feel it is their mandate to listen to their buyers instead of pumping the quarterly money-well for their stockholders.
Amazingly, it works. Astonishingly, there’s a profit in better mousetraps.
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