Yeah, I'm just going to let the editors of the National Review Online take this one. Read the original here.
The Democrats’ GM Fiction
By The Editors of the National Review
SEPTEMBER 10, 2012 4:00 A.M.
The Democrats have decided to run in 2012 as the bailout party. It is an odd choice — the 2008–09 bailouts were deeply unpopular among the general public, and even their backers were notably conflicted about the precedent being set and the ensuing moral hazard. But Democrats have nonetheless made one of the most abusive episodes in the entire bailout era their economic cornerstone: the government takeover of General Motors.
The GM bailout was always an odd duck: The Troubled Asset Relief Program (TARP) was created in order to preserve liquidity in the financial markets by heading off the collapse of key financial institutions that had made catastrophically bad bets on real-estate securities — nothing at all to do with cars, really. GM’s financial arm, today known as Ally Financial, was in trouble, but GM’s fundamental problem was that its products were not profitable enough to support its work-force expenses. A single dominant factor — the United Auto Workers union’s extortionate contracts with GM — prevented the carmaker from either reducing its work-force costs or making its products more efficiently. And its hidebound management didn’t help.
Admirers of the GM bailout should bear in mind that it was the Bush administration that first decided to intervene at the firm, offering a bridge loan on the condition that it draw up a deeply revised business plan. President Obama’s unique contribution was effectively to nationalize the company, seeing to it that the federal government violated normal bankruptcy processes and legal precedent to protect the defective element at the heart of GM’s troubles: the financial interests of the UAW. It did this by strong-arming GM’s bondholders into taking haircuts in order to sweeten the pot for the UAW. The Obama administration also creatively construed tax law to relieve GM of tens of billions of dollars in obligations — at the same time that Barack Obama & Co. were caterwauling about the supposed lack of patriotism of firms that used legal means rather than political favoritism to reduce their tax bills.
Mitt Romney’s proposal for a structured bankruptcy would have necessitated considerable federal involvement, too, but with a key difference: The UAW contracts would have been renegotiated, and GM’s executive suites would have been cleaned out, placing the company on a path toward innovation and self-sufficiency rather than permanent life support. Which is to say, Obama did for GM what he is doing by un-reforming welfare: creating a dependent constituency.
The Democrats cling to the ridiculous claim that the bailout of GM and its now-Italian competitor, Chrysler, saved 1.5 million U.S. jobs. This preposterous figure is based on the assumption that if GM and Chrysler had gone into normal bankruptcy proceedings, the entire enterprise of automobile manufacturing in the United States would have collapsed — not only at GM and Chrysler but at Ford and foreign transplants such as Toyota and Honda. Not only that, the Democrats’ argument goes, but practically every parts maker, supplier, warehousing agency, and services firm dedicated to the car industry would have collapsed, too. In fact, it is unlikely that even GM or Chrysler would have stopped production during bankruptcy: The assembly lines would have continued rolling, interest and debt payments would have been cut, and — here’s the problem — union contracts would have been renegotiated. Far from having saved 1.5 million jobs, it is not clear that the GM bailout saved any — only that it preserved the UAW’s unsustainable arrangement.
Bill Clinton bizarrely tried to claim that the bailout has been responsible for the addition of 250,000 jobs to the automobile industry since the nadir of the financial crisis. Auto manufacturers and dealerships have indeed added about 236,000 jobs since then, but almost none are at GM, which has added only about 4,500 workers, a number not even close to offsetting the 63,000 workers that its dealerships had to let go when the terms of the bailout unilaterally shut them down.
Ugly as the bank bailouts were, the federal government appears set to make its money back on most of them, with the exception of some smaller regional banks and CIT. Even AIG, one of the worst of the financial basket cases, is set to end up being a break-even proposition for U.S. taxpayers. But tens of billions of dollars will be lost on GM. The federal government put up more for a 60 percent interest in the firm than GM is worth today.
At their convention, Democrats swore that GM is “thriving,” but the market doesn’t think so: GM shares have lost half their value since January 2011. And while the passing of the Great Recession has meant growing sales for all automakers, GM is seriously lagging behind its competitors: Its sales are up 10 percent, a fraction of the increases at Kia, Toyota, Volkswagen, and Porsche. With its sales weak, its share price crashing, and its business model still a mess, some analysts already are predicting that GM will return to bankruptcy — but not until after the election.
The Obama administration talks up all of the “jobs” it saved at GM — but jobs doing what? Manufacturing automobiles that are not competitive without a massive government subsidy? Propping up an economically unviable enterprise just long enough to get Barack Obama reelected? As much as it will pain the hardworking men and women of GM to hear it, it is not worthwhile to save jobs at enterprises that cannot compete on their own merits. So long as the federal government is massively subsidizing the operation, a job at GM is a welfare program with a fairly robust work requirement. (And we all know how the Obama administration feels about work requirements.)
We have bankruptcy laws and bankruptcy courts for a reason. It may make sense to expedite the proceedings for very large firms such as GM in order to prevent disruptions in the supply chain that would, as Ford’s executives argued, harm other, healthier firms. But bankrupt is what GM was, and bankrupt is what GM is, a fact that will become blisteringly apparent should the government ever attempt to sell off the shares it owns in the company.
The GM bailout was a bad deal for GM’s creditors, for U.S. taxpayers, and, in the long run, for the U.S. automobile industry and our overall national competitiveness. No wonder the Democrats are campaigning on a fictionalized account of it.
Showing posts with label auto industry. Show all posts
Showing posts with label auto industry. Show all posts
Monday, September 10, 2012
Thursday, April 19, 2012
Change
Well, no one said he was lying. I suppose it depends on whether you think this kind of change is good or bad. The way I see it, this change has: skyrocketed the debt, expanded government dependency, done nothing to help unemployment, alienation of traditional allies, frozen the US economy, and specifically in terms of the auto "bailout", wrested financial control of a private corporation through the power of government from it's legal shareholders and gifted it to the unions (aka, their cronies and lobbyists). While I disagree with some or many of the wartime decisions made by POTUS, I do not blame him for the US continued state of war. Read the original and see the video here.
Obama: "We've Begun To See What Change Looks Like"
Posted on April 19, 2012
RealClearPolitics.com
Touting the auto bailout at a fundraiser in Detroit, President Obama told supporters we are now seeing what change looks like.
"In just three years, because of what you did in 2008, we've begun to see what change looks like. We've begun to see it," Obama said. Transcript below.
OBAMA: When you decide to support a candidate named Barack Hussein Obama, you know the odds are not necessarily in your favor. You didn't need a poll to tell you that wasn't going to be a sure thing. But the point is, you didn't get involved in this campaign just because of me. You did it because you were making a commitment to each other. You had a shared vision for America.
It wasn't a vision where just a few were doing well and everybody else was left to fend for themselves and play by their own rules. It was a big, bold, generous vision of America where everybody who works hard has a chance to get ahead, not just those at the very top. That's the vision we share. That's the commitment you made to each other.
We knew it wasn't going to be easy. We knew the changes that we believed in wouldn't necessarily come quickly, but we understood that if we were determined that we could overcome any obstacle, that we could beat any challenge. And in just three years, because of what you did in 2008, we've begun to see what change looks like. We've begun to see it.
Think about it. Change is the decision we made to rescue the American auto industry from collapse when some politicians said let Detroit go bankrupt. There were one million jobs on the line and the fate of communities all across the Midwest was on the line and we weren't going to let it happen.
Obama: "We've Begun To See What Change Looks Like"
Posted on April 19, 2012
RealClearPolitics.com
Touting the auto bailout at a fundraiser in Detroit, President Obama told supporters we are now seeing what change looks like.
"In just three years, because of what you did in 2008, we've begun to see what change looks like. We've begun to see it," Obama said. Transcript below.
OBAMA: When you decide to support a candidate named Barack Hussein Obama, you know the odds are not necessarily in your favor. You didn't need a poll to tell you that wasn't going to be a sure thing. But the point is, you didn't get involved in this campaign just because of me. You did it because you were making a commitment to each other. You had a shared vision for America.
It wasn't a vision where just a few were doing well and everybody else was left to fend for themselves and play by their own rules. It was a big, bold, generous vision of America where everybody who works hard has a chance to get ahead, not just those at the very top. That's the vision we share. That's the commitment you made to each other.
We knew it wasn't going to be easy. We knew the changes that we believed in wouldn't necessarily come quickly, but we understood that if we were determined that we could overcome any obstacle, that we could beat any challenge. And in just three years, because of what you did in 2008, we've begun to see what change looks like. We've begun to see it.
Think about it. Change is the decision we made to rescue the American auto industry from collapse when some politicians said let Detroit go bankrupt. There were one million jobs on the line and the fate of communities all across the Midwest was on the line and we weren't going to let it happen.
Friday, March 2, 2012
GM temporarily lays off 1,300 workers
Not the most encouraging news about the economy. Combine this with gas prices climbing towards $6/gallon on the coasts... Read the original here.
GM laying off 1300 due to low Volt salesbyJoel Gehrke Commentary Staff Writer
GM laying off 1300 due to low Volt salesbyJoel Gehrke Commentary Staff Writer
General Motors Co. announced the temporary suspension of Chevrolet Volt production and the layoffs of 1300 employees, as the company is cutting Volt manufacturing to meet lower-than-expected demand for the electric cars.
"Even with sales up in February over January, we are still seeking to align our production with demand," GM spokesman Chris Lee said. The car company had hoped to sell 45,000 Chevy Volts in America this year, according to the Detrot News, but has only sold about 1,626 over the first two months of 2012.
"GM blamed the lack of sales in January on “exaggerated” media reports and the federal government's investigation into Volt batteries catching fire, which officially began in November and ended Jan. 21," the Ann Arbor (Mich.) News reported.
The laid-off employees will be rehired April 23rd, when GM resumes production of the Volt.
"Even with sales up in February over January, we are still seeking to align our production with demand," GM spokesman Chris Lee said. The car company had hoped to sell 45,000 Chevy Volts in America this year, according to the Detrot News, but has only sold about 1,626 over the first two months of 2012.
"GM blamed the lack of sales in January on “exaggerated” media reports and the federal government's investigation into Volt batteries catching fire, which officially began in November and ended Jan. 21," the Ann Arbor (Mich.) News reported.
The laid-off employees will be rehired April 23rd, when GM resumes production of the Volt.
Friday, November 18, 2011
That's probably not so good...
Read the original here.
Last Updated: November 14. 2011 7:22PM
U.S. boosts estimate of auto bailout losses to $23.6B
David Shepardson/ Detroit News Washington Bureau
The Treasury Department dramatically boosted its estimate of losses from its $85 billion auto industry bailout by more than $9 billion in the face of General Motors Co.’s steep stock decline.
In its monthly report to Congress, the Treasury Department now says it expects to lose $23.6 billion, up from its previous estimate of $14.33 billion.
The Treasury now pegs the cost of the bailout of GM, Chrysler Group LLC and the auto finance companies at $79.6 billion. It no longer includes $5 billion it set aside to guarantee payments to auto suppliers in 2009.
The big increase is a reflection of the sharp decline in the value of GM’s share price.
The current estimate of losses is based on GM’s Sept. 30 closing price of $20.18, down one-third over the previous quarterly price.
GM’s stock closed Monday at $22.99, up 2 percent. The government won’t reassess the estimate of the costs until Dec. 30.
The government has recovered $23.2 billion of its $49.5 billion GM bailout, and cut its stake in the company from 61 percent to 26.5 percent. But it has been forced to put on hold the sale of its remaining 500 million shares of stock.
The new estimate also hikes the overall cost of the $700 billion Troubled Asset Relief Program costs to taxpayers. TARP is the emergency program approved by Congress in late 2008 at the height of the financial crisis.
In total, the government used $425 billion to bailout banks,insurance companies and automakers, and provided $45 billion in housing program assistance.
The government now expects to lose $57.33 billion, including the full cost of the housing program, up from $36.7 billion. The new estimate means the government doesn’t believe it will make an overall profit on its bailouts.
Republican presidential candidates, including former Massachusetts Gov. Mitt Romney, have seized on the auto bailout losses estimates, as evidence that the Bush and Obama administrations “wasted” money.
Matt Anderson, a spokesman for the Treasury Department, said, “Both TARP and the auto industry rescue are still on track to cost a fraction of what was originally expected during the dark days of the financial crisis.”
In 2009, the government initially forecast it would lose $44 billion on its auto industry bailout. It revised it down to $30 billion, and later to as low as $13.9 billion earlier this year.The administration and President Barack Obama have argued that any losses on the auto bailout were worth the hundreds of thousands of jobs saved.
“The investment paid off. The hundreds of thousands of jobs that have been saved made it worth it,” he said at an appearance last month at GM’s Orion Assembly plant. “I want to especially thank the people of Detroit for proving that, despite all the work that lies ahead, this is a city where a great American industry is coming back to life and the industries of tomorrow are taking root, and a city where people are dreaming up ways to prove all the skeptics wrong and write the next proud chapter in the Motor City’s history.”
The new bailout forecast also represents an increase in the government’s forecast in its losses from its $17.2 billion bailout of Detroit-based auto and mortgage lender Ally Financial Inc. The government holds a 74 percent stake in Ally, which has been forced to put its planned initial public offering on hold because of market conditions.
dshepardson@detnews.com
(202) 662-8735
Last Updated: November 14. 2011 7:22PM
U.S. boosts estimate of auto bailout losses to $23.6B
David Shepardson/ Detroit News Washington Bureau
The Treasury Department dramatically boosted its estimate of losses from its $85 billion auto industry bailout by more than $9 billion in the face of General Motors Co.’s steep stock decline.
In its monthly report to Congress, the Treasury Department now says it expects to lose $23.6 billion, up from its previous estimate of $14.33 billion.
The Treasury now pegs the cost of the bailout of GM, Chrysler Group LLC and the auto finance companies at $79.6 billion. It no longer includes $5 billion it set aside to guarantee payments to auto suppliers in 2009.
The big increase is a reflection of the sharp decline in the value of GM’s share price.
The current estimate of losses is based on GM’s Sept. 30 closing price of $20.18, down one-third over the previous quarterly price.
GM’s stock closed Monday at $22.99, up 2 percent. The government won’t reassess the estimate of the costs until Dec. 30.
The government has recovered $23.2 billion of its $49.5 billion GM bailout, and cut its stake in the company from 61 percent to 26.5 percent. But it has been forced to put on hold the sale of its remaining 500 million shares of stock.
The new estimate also hikes the overall cost of the $700 billion Troubled Asset Relief Program costs to taxpayers. TARP is the emergency program approved by Congress in late 2008 at the height of the financial crisis.
In total, the government used $425 billion to bailout banks,insurance companies and automakers, and provided $45 billion in housing program assistance.
The government now expects to lose $57.33 billion, including the full cost of the housing program, up from $36.7 billion. The new estimate means the government doesn’t believe it will make an overall profit on its bailouts.
Republican presidential candidates, including former Massachusetts Gov. Mitt Romney, have seized on the auto bailout losses estimates, as evidence that the Bush and Obama administrations “wasted” money.
Matt Anderson, a spokesman for the Treasury Department, said, “Both TARP and the auto industry rescue are still on track to cost a fraction of what was originally expected during the dark days of the financial crisis.”
In 2009, the government initially forecast it would lose $44 billion on its auto industry bailout. It revised it down to $30 billion, and later to as low as $13.9 billion earlier this year.The administration and President Barack Obama have argued that any losses on the auto bailout were worth the hundreds of thousands of jobs saved.
“The investment paid off. The hundreds of thousands of jobs that have been saved made it worth it,” he said at an appearance last month at GM’s Orion Assembly plant. “I want to especially thank the people of Detroit for proving that, despite all the work that lies ahead, this is a city where a great American industry is coming back to life and the industries of tomorrow are taking root, and a city where people are dreaming up ways to prove all the skeptics wrong and write the next proud chapter in the Motor City’s history.”
The new bailout forecast also represents an increase in the government’s forecast in its losses from its $17.2 billion bailout of Detroit-based auto and mortgage lender Ally Financial Inc. The government holds a 74 percent stake in Ally, which has been forced to put its planned initial public offering on hold because of market conditions.
dshepardson@detnews.com
(202) 662-8735
Monday, December 3, 2007
The Final Betrayal
John Dingell has completed his sell-out of the American Auto Industry. The auto fuel economy standards will increase 40% over the next 13 years, which will cost the auto industry - and let's be honest, that means it will cost Michigan - $4 billion a year. Dingell has completely surrendered the entire battle without a fight, something I have been predicting for months. He wants to avoid a contentious debate in the House, he wants to avoid giving up the power he has in his party, and he has made it clear that his power and his party come before his constituents.
Lawmakers Reach Gas Mileage Boost Deal
Fox NewsWASHINGTON - An agreements among congressional Democrats - including those from auto industry states - to support a 40 percent increase in vehicle fuel efficiency is likely to be the tonic needed to push energy legislation through Congress before Christmas.
House Speaker Nancy Pelosi and Rep. John Dingell, D-Mich., a longtime protector of the auto industry, settled their differences in an agreement late Friday on the fuel economy, or CAFE, issue, clearing the way for a House vote on a broader energy bill, probably on Wednesday.
Automakers would be required to meet an industry wide average of 35 miles per gallon for cars and light trucks, including SUVs, by 2020, the first increase by Congress in car fuel efficiency in 32 years.
Senate Majority Leader Harry Reid of Nevada called the compromise "good news" and said he hoped to take up the legislation quickly after the House acts.
Friday, November 16, 2007
A new paradigm
An interesting article from The Detroit Free Press this morning points out an interesting twist to the new UAW agreements with Ford and GM. With the shift of retiree health care from being a corporate responsibility to being a responsibility of a trust being managed by the UAW, the two companies gave the UAW the ability to convert debt owned by Ford and GM to the trusts into stock in the company. This gives the UAW the potential to own 16% of GM and 15% of Ford.
The potential for this is staggering: instead of an adversarial relationship, this would turn GM and Ford into a company which is largely employee-owned; basically the world's two biggest co-op companies. This would help hasten the company towards the new paradigm they need for survival: cooperation between the Union and the companies in order to beat back the non-Union foreign automakers, the Democrats trying to give amnesty to illegals and dramatically increase CAFE standards, and to reach broadly into new foreign markets and take control of the North American market once again.
The potential for this is staggering: instead of an adversarial relationship, this would turn GM and Ford into a company which is largely employee-owned; basically the world's two biggest co-op companies. This would help hasten the company towards the new paradigm they need for survival: cooperation between the Union and the companies in order to beat back the non-Union foreign automakers, the Democrats trying to give amnesty to illegals and dramatically increase CAFE standards, and to reach broadly into new foreign markets and take control of the North American market once again.
UAW's new role: Shareholder
Health trust could own key chunks of Ford, GM
The Detroit Free PressThe UAW, traditionally a mighty force in the struggle of Labor against Capital, could be on the brink of a new role: Detroit's biggest stockholder.
New 4-year labor agreements that UAW members ratified with the Detroit automakers shift retiree health costs to an independent trust under the auspices of the union, which could take control of hundreds of millions of shares of General Motors Corp. and Ford Motor Co. The fact that the UAW could virtually be holding almost one-sixth of the equity in the nation's two biggest automakers could drive profound changes in the way the union thinks and acts, experts say.
"Equity as part of the VEBA does bring the UAW membership into being an investor group," said David Cole, chairman of the Center for Automotive Research in Ann Arbor.
"What we are witnessing is the transformation from a confrontational way of working to one of collaboration, which is absolutely necessary."
GM = "Green Motors?"
A Detroit Free Press article this morning reports that the Chevrolet Tahoe hybrid has won the Green Car of the Year award at the L.A. auto show. Of the five finalists, three were GM vehicles - the Tahoe, the Saturn Aura Hybrid, and the Chevrolet Malibu Hybrid. GM appears to be abandoning the small-car hybrid market to Toyota in order to concentrate on midsize cars, trucks, and SUVs. Being the first to market with a full-size hybrid SUV (the Tahoe) combined with their other hybrid products (the Saturn VUE, Aura, and Malibu) should help encourage consumers on the coasts to give GM a try once again. Here's to hoping that this helps the company's - and Michigan's - turnaround.
Green In A Big Way
Hybrid Tahoe's honor helps Chevy redo image
The Detroit Free PressLOS ANGELES - Chevrolet's new campaign to establish itself as an environmentally friendly brand got an early endorsement when its Tahoe hybrid full-size SUV was named Green Car of the Year at the Los Angeles Auto Show on Thursday.
The hybrid Tahoe is a revolutionary vehicle that combines the room and capabilities SUV owners need with a 50% increase in city fuel economy to 21 m.p.g., Green Car Journal editor and publisher Ron Cogan said. The hybrid is to go on sale early next year. No price has been set.
"This is a milestone in many respects", he said. "People don't think green when SUVs are concerned and generally for good reason. Chevrolet's Tahoe hybrid changes this dynamic."
The Tahoe's win capped a strong performance for General Motors, which also placed its Saturn Aura and Chevrolet Malibu hybrid midsize sedans among the five finalists. The Nissan Altima sedan and Mazda Tribute SUV were the other finalists for the award, which is given by the editors of Green Car Journal and a panel of outside judges that includes performance-car legend Carroll Shelby and undersea explorer Jean-Michel Cousteau.
Monday, September 24, 2007
A serious situation for Michigan
I can only hope that this will be short-lived. If they strike for more than maybe a week, I don't think that GM will recover. Imagine the effects to the state if the union causes GM to fold...it's a staggering though...
Union sets strike deadline at GM
CNNNEW YORK (CNNMoney.com) - The United Auto Workers union set an 11 a.m. ET Monday strike deadline for its 73,000 members at General Motors late Sunday night, although talks between the union and the company were still ongoing.
The union has kept its members on the job at the automaker on an hour-by-hour contract extension since the previous pact with GM expired Sept. 14. But Sunday, as talks were reportedly making progress, the union leadership felt the need to call for a strike.
The company said in a statement that it was still hopeful of reaching a deal to avoid a shutdown. A company official told CNNMoney.com at 5:20 a.m. ET that the talks were still continuing.
"The 2007 contract talks involved complex, difficult issues that affect the job security of our U.S. work force and the long-term viability of our company," said GM spokesman Dan Flores. "We are fully committed to working with the UAW to develop situations together to address the competitive challenges facing General Motors. We will continue focusing our efforts on reaching an agreement as soon as possible."
Shares of GM were up 0.4 percent in light trading in Franfurt early Monday on news of the strike deadline.
The strike call does not affect operations at Ford Motor or Chrysler Group. The union has granted these companies more formal extensions that require a three-day notice to end while they focused their efforts on reaching an agreement with GM.
Neither side would comment on the sticking point in the talks, although GM has been seeking to close its cost gap with nonunion automakers such as Toyota Motor and Honda Motor by shifting $51 billion in future retiree health care costs to a union-controlled trust fund.
Tuesday, September 18, 2007
CAFE is not the only option, nor even the best
In Gregg Easterbrook's TMQ today, in which he argues in favor of raising CAFE standards, unfortunately, misconstrued the position of the auto industry, made some statements which were not true, and left out some very important information.
Items where he is incorrect:
Reducing fossil fuel use, CO2 emissions, and oil use in particular are worthy goals. However, the focus has long been on the automotive industry, despite the fact that cars produce less than 20% of the nation's greenhouse gas emissions, being dwarfed by agriculture and energy production.
In looking at reductions of CO2 and fossil fuel use, we should do so with an eye towards doing so in the most economic methods possible. The big hole in CAFE increases is the cost it would apply to consumers and to the economy. Certainly, fuel economy can be easily increased by 1/3 by moving exclusively to diesel hybrids. Doing so, however, would add about $7,000 to the price of a new car. The FTC released a study suggesting that the total cost to the economy of CAFE increases would be approximately $3.6 billion a year.
Instead of taking aim at the auto industry, spending billions of dollars a year, and destroying tens of thousands of American jobs, we should first look at the areas where we can make a difference and do so in a net cost-savings approach. Replacing all incandescent light bulbs with compact fluorescent, for example, would reduce household electricity use by 7% and would pay for itself inside of two years. Mandating that all new thermostats sold be programmable and come pre-programmed to reduce energy usage could dramatically reduce the costs of heating and cooling and would quickly pay for themselves. Use of household geothermal heating/cooling and passive solar heating where appropriate can dramatically reduce the costs of heating and cooling and are net cost savers. Mandating carpools lanes on all of the nation's highways of 3 or more lanes would dramatically reduce the number of cars on the road and the total miles driven while saving money.
The $3.6 billion a year could easily be spent on a variety of alternatives: creating a hydrogen-power infrastructure to facilitate the move to fuel cells, researching carbon sequestion methods to pull carbon fro the atmosphere, creating battery research initiatives to make electric cars practical, purchasing enough private, approximately 300 MW worth of home solar panels installed each year (based on household costs of about $11,000 per kW), or approximately 1 GW worth of wind turbines (based on costs of approximately $9 million for a 2.5 MW turbine and applicable infrastructure) installed each year.
In short, the auto industry produces less than 20% of greenhouse gases but is expected to shoulder 100% of the burden for reducing greenhouse gas emissions. Instead of making the auto industry the bad-guy, common-sense and cost-savings solutions are available to dramatically cut the problem with no net cost to the American economy or to U.S. jobs.
Items where he is incorrect:
- "Now, the U.S. automakers claim a one-third improvement can't be done." The U.S. automakers do not claim this at all. His quote from Mr. Wagner was taken out of context. The automakers claim that it cannot be done without significant increases in the cost of a car or with significant decreases in another area that consumers value more highly.
- "It's not that Detroit cannot achieve better fuel economy - it's that Detroit doesn't want to." It's not U.S. automakers who do not want higher fuel economy; it's the consumers. Consumers consistently put fuel economy at the bottom of concerns, well below performance, perceived quality, perceived safety, price, and styling. Excluding the Toyota Prius, very few hybrids have been able to sell well in an open market. Even the Prius itself is not immune to this. When asked why they selected a Prius, more Prius drivers chose styling ("What it says about me") over fuel economy.
Reducing fossil fuel use, CO2 emissions, and oil use in particular are worthy goals. However, the focus has long been on the automotive industry, despite the fact that cars produce less than 20% of the nation's greenhouse gas emissions, being dwarfed by agriculture and energy production.
In looking at reductions of CO2 and fossil fuel use, we should do so with an eye towards doing so in the most economic methods possible. The big hole in CAFE increases is the cost it would apply to consumers and to the economy. Certainly, fuel economy can be easily increased by 1/3 by moving exclusively to diesel hybrids. Doing so, however, would add about $7,000 to the price of a new car. The FTC released a study suggesting that the total cost to the economy of CAFE increases would be approximately $3.6 billion a year.
Instead of taking aim at the auto industry, spending billions of dollars a year, and destroying tens of thousands of American jobs, we should first look at the areas where we can make a difference and do so in a net cost-savings approach. Replacing all incandescent light bulbs with compact fluorescent, for example, would reduce household electricity use by 7% and would pay for itself inside of two years. Mandating that all new thermostats sold be programmable and come pre-programmed to reduce energy usage could dramatically reduce the costs of heating and cooling and would quickly pay for themselves. Use of household geothermal heating/cooling and passive solar heating where appropriate can dramatically reduce the costs of heating and cooling and are net cost savers. Mandating carpools lanes on all of the nation's highways of 3 or more lanes would dramatically reduce the number of cars on the road and the total miles driven while saving money.
The $3.6 billion a year could easily be spent on a variety of alternatives: creating a hydrogen-power infrastructure to facilitate the move to fuel cells, researching carbon sequestion methods to pull carbon fro the atmosphere, creating battery research initiatives to make electric cars practical, purchasing enough private, approximately 300 MW worth of home solar panels installed each year (based on household costs of about $11,000 per kW), or approximately 1 GW worth of wind turbines (based on costs of approximately $9 million for a 2.5 MW turbine and applicable infrastructure) installed each year.
In short, the auto industry produces less than 20% of greenhouse gases but is expected to shoulder 100% of the burden for reducing greenhouse gas emissions. Instead of making the auto industry the bad-guy, common-sense and cost-savings solutions are available to dramatically cut the problem with no net cost to the American economy or to U.S. jobs.
Oh Ye of Little MPG
Tuesday Morning Quarterback for ESPNRecently, the CEOs of Chrysler, Ford and General Motors launched with Senate leaders, telling them the one-third vehicle mileage increase proposed by George W. Bush and Barack Obama - you heard that right, Bush and Obama have offered nearly identical fuel-efficiency plans - was impossible. Rick Wagoner, CEO of General Motors, said at a news conference after the lunch that a one-third mileage improvement "doesn't look achievable." This is exactly the kind of excuse-making that allowed Honda and Toyota to wrap their hands around the Big Three's necks in the first place! As the UAW-Detroit contracts talks heat up, the relationship between mpg and saving Chrysler, Ford and General Motors bears exploring.
The National Academy of Sciences said in 2002 that a one-third improvement in mpg is practical using existing technology, and without sacrifice of safety or passenger comfort. Now, the U.S. automakers claim a one-third improvement can't be done. It's not that Detroit cannot achieve better fuel economy - it's that Detroit doesn't want to. What the current executive-suite suits at the Big Three want is to maximize their bonuses and stock options during their short stays at the top, then let somebody else take the blame for the net round of decline of the U.S. auto industry that is inevitable if fuel economy does not improve. And that's setting aside the national-security implications. A one-third increase in car and SUV mpg is what's needed to break U.S. dependence on Persian Gulf oil. Wouldn't it be nice if Detroit CEOs acted as though they cared about national security!
Monday, September 10, 2007
Chris Dodd is still running?
Ummm - what is Chris Dodd on?
His plan for Iraq? Ethnic cleansing. At least that's a touch better than Obama's "I'm cool with genocide" plan.
His plan for energy reduction? 50 MPG average for cars in 2017. Why stop at 50? If you're going to start making up impossible engineering challenges, why not just dictate that all cars must run by turning household trash into neatly pressed twenty dollar bills? I do want to point out, though, that he personally drives a frickin' SUV. Why he needs a 25 MPG SUV when apparently the rest of us should be driving around in golf carts is beyond me. I also love that he says that they're "moving to the energy-efficient light bulbs." Say he has 30 bulbs in his house. They're about $3 each and take about 20 seconds to install. For $100 and a half hour's work, he could replace every bulb in his house. What's he mean by "moving to..."? Oh, and he has "storm windows". That's good of him. Good to see he's really taking the fight to the streets.
Things I'd like to see these guys who are preaching environmental consciousness to do:
His plan for Iraq? Ethnic cleansing. At least that's a touch better than Obama's "I'm cool with genocide" plan.
His plan for energy reduction? 50 MPG average for cars in 2017. Why stop at 50? If you're going to start making up impossible engineering challenges, why not just dictate that all cars must run by turning household trash into neatly pressed twenty dollar bills? I do want to point out, though, that he personally drives a frickin' SUV. Why he needs a 25 MPG SUV when apparently the rest of us should be driving around in golf carts is beyond me. I also love that he says that they're "moving to the energy-efficient light bulbs." Say he has 30 bulbs in his house. They're about $3 each and take about 20 seconds to install. For $100 and a half hour's work, he could replace every bulb in his house. What's he mean by "moving to..."? Oh, and he has "storm windows". That's good of him. Good to see he's really taking the fight to the streets.
Things I'd like to see these guys who are preaching environmental consciousness to do:
- Swap out every light bulb possible at home with a compact fluorescent, LED, or other low-wattage light bulb.
- Drive an American-made, union-built car which gets over 30 miles per gallon.
- Install energy efficient furnaces, programmable thermostats, and high-quality insulated walls, doors, and windows.
- Use more energy efficient lawn care equipment such as push mowers and engines which comply with the most recent EPA standards.
- Live in a modestly sized home.
These items don't cost much money and, in fact, are usually more cost effective than the alternative. Dodd is trying to cripple the auto industry and put hundreds of thousands, perhaps, millions, of Americans out of jobs with his ridiculous 50 MPG desire. If he's going to destroy that many lives, is it too much to ask that he spend $100 and a half an hour to replace all of his light bulbs.
Chris Dodd pushes the energy envelope
SalonChris Dodd hasn't been out front on environmental issues during his 32 years in Congress, but he's clearly aiming to outgreen his competitors in the 2008 presidential campaign. He has earned props in environmental circles for being the only candidate with the political cojones to call for a corporate carbon tax as a way to fight global warming, and for endorsing a strict fuel-economy standard that would require new cars and trucks to get 50 miles per gallon by 2017, Dodd even ran what was billed as the first presidential candidate ad focused on global warming.
This senator from Connecticut isn't gaining a big boost in popularity from his aggressive environmental stances; he's hovering at 1 to 2 percent in the polls. But will he raise the bar for a strong green agenda in the 2008 presidential race? I called Dodd at his Senate office to find out how much substance there is behind his bold proposals.
Everybody's got the goals right: We're all for energy independence, for dealing with global warming, for increasing job opportunities in the country. The difficulty breaks down in how do you get there. If you're going to be truly be effective in reaching those goals, you've got to be very candid about you how get there.
Thursday, September 6, 2007
VW leaving Michigan
Volkswagen has decided to move their North American operations from Metro Detroit to suburban Washington D.C. The ostensible reason is to attract more highly skilled, younger workers. Apparently, moving from an area which has several high-class engineering universities with strict concentrations on automotive engineering - specifically, The University of Michigan, Kettering University, and Lawrence Technological University - to an area which has several high-class law universities which concentrate on politics is going to attract the type of people who will turn the company around.
I'm sure it makes sense to move your automotive company from the world's heart of automotive design, where every major worldwide manufacturer has a design shop, to the world's heart of political lobbyists. I'm sure it makes sense to move from the center of all U.S. suppliers to the center of all U.S. lawmakers. It makes perfect sense to me.
Now, we're not talking about any factories here. Volkswagen does not make any cars in the U.S. While it could be understandable to move a factory from the Union-heavy, anti-corporate environment of Michigan to a corporate-friendly Southern state, moving your American automotive corporate offices from the heart of the American auto industry makes no sense.
It's no secret that Volkswagen is having problems. They sell European-styled cars in the United States. They are constantly at the bottom in overall quality. They're significantly more expensive than their competitors at Honda, Toyota, Hyundai, Kia, GM, or Ford. They have had only one single inspiring car in the entire history of the company. How can they expect to attract customers.
You need to have something special about your product to compete in today's auto industry. Honda and Toyota trade on top-notch quality. Kia and Hyundai trade on their ridiculously low prices. General Motors and Ford go with a broad-scope attack, but concentrate heavily on a customer-focus appeal and inspiring styling. Volkswagen has precious litle and now they're jettisoning that in order to inexplicably move south.
Either way, let's just chalk it up to yet another major company leaving the state. Dow, Sears-Kmart, Comerica, Volkswagen...how many other states are having four companies as well-known as these moving their headquarters from their state.? On of these days, people in the state are going to realize that you can't have oppressive, over-regulated business practices and high taxes and have any chance at attracting companies to stay.
I'm sure it makes sense to move your automotive company from the world's heart of automotive design, where every major worldwide manufacturer has a design shop, to the world's heart of political lobbyists. I'm sure it makes sense to move from the center of all U.S. suppliers to the center of all U.S. lawmakers. It makes perfect sense to me.
Now, we're not talking about any factories here. Volkswagen does not make any cars in the U.S. While it could be understandable to move a factory from the Union-heavy, anti-corporate environment of Michigan to a corporate-friendly Southern state, moving your American automotive corporate offices from the heart of the American auto industry makes no sense.
It's no secret that Volkswagen is having problems. They sell European-styled cars in the United States. They are constantly at the bottom in overall quality. They're significantly more expensive than their competitors at Honda, Toyota, Hyundai, Kia, GM, or Ford. They have had only one single inspiring car in the entire history of the company. How can they expect to attract customers.
You need to have something special about your product to compete in today's auto industry. Honda and Toyota trade on top-notch quality. Kia and Hyundai trade on their ridiculously low prices. General Motors and Ford go with a broad-scope attack, but concentrate heavily on a customer-focus appeal and inspiring styling. Volkswagen has precious litle and now they're jettisoning that in order to inexplicably move south.
Either way, let's just chalk it up to yet another major company leaving the state. Dow, Sears-Kmart, Comerica, Volkswagen...how many other states are having four companies as well-known as these moving their headquarters from their state.? On of these days, people in the state are going to realize that you can't have oppressive, over-regulated business practices and high taxes and have any chance at attracting companies to stay.
VW moving HQ out of Michigan
Detroit Free PressVolkswagen AG is moving its North American headquarters from Michigan to northern Virginia to attract a younger skilled workforce.
"There is going to be a move," said Steve Keyes, a spokesman for Volkswagen of America. "Some people, not all, will be relocated to Virginia. But we will still have a presence here in Auburn Hills.
Keyes confirmed there will be a press conference in Herdon, VA at 10 a.m. today to announce the details of the move.
The German automaker has 1,600 employees at its Volkswagen of America offices in Auburn Hills and Rochester Hills. The Washington Post reported Thursday that the company will move about 400 jobs and invest about $100 million in a move to Herdon, Va., a suburb of Washington, D.C. The paper also reported that about 400 Detroit-area jobs would be eliminated leave 600 positions in Southeast Michigan.
Gov. Jennifer Granholm, who meat with VW of America President and Chief Executive Officer Stefan Jacoby in Lansing Wednesday evening, will make a statement about the apparent move at around noon.
Wednesday, August 22, 2007
Non-story of the day
An International Herald Tribune story from the U.K. reports on what's obvious to anyone who's paying attention: the vast majority of hybrids are not economically feasible. A couple of errors in the story, though:
1) The Saturn Aura Greenline only costs about $1,500 more than the standard Saturn Aura and receives a $1,500 tax credit, making it an economically feasible vehicle and a full-sized sedan which has a 224 hp, V6 engine that gets 30 mpg.
2) The tax credit reported in the article ranges from $2,200 to $3,000. In actuality, it may be only a few hundred dollars for some vehicles.
1) The Saturn Aura Greenline only costs about $1,500 more than the standard Saturn Aura and receives a $1,500 tax credit, making it an economically feasible vehicle and a full-sized sedan which has a 224 hp, V6 engine that gets 30 mpg.
2) The tax credit reported in the article ranges from $2,200 to $3,000. In actuality, it may be only a few hundred dollars for some vehicles.
Hybrids better for the environment than for your wallet
The International Herald TribuneNEW YORK: All things being equal, who wouldn't prefer to own a hybrid vehicle?
The cars are cleaner and more efficient than their "fuel only" peers - not to mention that they are the global "it" car these days: California's green governor, Arnold Schwarzenegger, drives one, of course, as does Prince Charles of Britain. So do Brad Pitt, Cameron Diaz, and Jack Nicholson.
But their may be another reason why so many of the rich and famous are among the small but growing club of hybrid owners: hybrids cost more - sometimes a lot more - than regular cars.
The price of adopting hybrid technology came home to roost when I recently priced weekly rental cars from Hertz for a series of trips and a vacation.
Friday, August 17, 2007
Compressed Natural Gas cars
I'm torn. I really, desperately want a natural gas car. Unfortunately, I can't get one unless I'm willing to sell-out and buy a Honda. My options, apparently, are to stay true to my Buy-American mindset and buy a high-quality, union-built, American car (like the very nice, Saturn Aura hybrid) or travel to New York to buy a non-union-built, Japanese car (the Honda Civic GX). I'm incredibly impressed with the CNG technology: similar range, fuel economy, and power compared to a gasoline car but with fuel that's available at home at lass than half the cost. I guess I have to wait until the Volt comes out.
Friday, August 10, 2007
Volt's most pressing hurdle passed
The battery critical to the Chevrolet Volt looks to be close to testing. The Chevy Volt is General Motors' new plug-in hybrid that runs on an electric motor with a gasoline generator built-in for recharging during long distance driving. At the end of the 90's, GM had introduced the EV1 due to California's Zero Emissions Mandate. The repeal of the mandate, however, combined with an inability to bring price to a reasonable level and a vastly insufficient demand led to its demise, costing GM an estimated $500 million in the process.
The Volt uses what are, basically, giant laptop or cell phone batteries – much more efficient than the rechargeable batteries available in the late 90’s – to store enough energy to allow for a 40 mile trip without having to use the gasoline generator. The 40 mile limit was chosen intentionally as that is the average round-trip commute for American workers. With the generator, the Volt should be able to go over 600 miles on a 12 gallon tank of gas. If trips are kept short, the generator should never have to be used and the Volt can be powered much more efficiently by charging the battery with a connection to your house.
The problem is that the batteries on this scale needed for the Volt have, to this point, never been created. Now, it looks like the battery supplier, A123, is closing in on being ready with the batteries for full-scale testing. This would be a critical step forward, particularly as the main problem with the EV-1 was its ridiculously short battery life.
Still, we’re talking about a new vehicle which is based entirely on a technology which has yet to be proven out. They expect to start selling these some time in late 2010, but don’t be surprised if it is pushed back to 2011 or later. It’s great to see GM back out in front of alternative fuel technology once again. Here’s to hoping that it will work a touch better than last time.
The Volt uses what are, basically, giant laptop or cell phone batteries – much more efficient than the rechargeable batteries available in the late 90’s – to store enough energy to allow for a 40 mile trip without having to use the gasoline generator. The 40 mile limit was chosen intentionally as that is the average round-trip commute for American workers. With the generator, the Volt should be able to go over 600 miles on a 12 gallon tank of gas. If trips are kept short, the generator should never have to be used and the Volt can be powered much more efficiently by charging the battery with a connection to your house.
The problem is that the batteries on this scale needed for the Volt have, to this point, never been created. Now, it looks like the battery supplier, A123, is closing in on being ready with the batteries for full-scale testing. This would be a critical step forward, particularly as the main problem with the EV-1 was its ridiculously short battery life.
Still, we’re talking about a new vehicle which is based entirely on a technology which has yet to be proven out. They expect to start selling these some time in late 2010, but don’t be surprised if it is pushed back to 2011 or later. It’s great to see GM back out in front of alternative fuel technology once again. Here’s to hoping that it will work a touch better than last time.
GM: Battery on track for Chevy Volt
Detroit Free PressTRAVERSE CITY -- General Motors Corp. is growing increasingly confident that battery developers will be able to create a safe, durable and affordable power source that will allow it to begin selling its electrically driven Chevrolet Volt to consumers by the end of 2010.
Speaking before a crowd of more than 1,000 at the Management Briefing Seminars in Traverse City on Thursday, GM Vice Chairman Bob Lutz announced that the automaker will develop lithium-ion battery cells with A123Systems Inc. to power its electric-drive vehicles.
Lutz said GM and A123 hope to have the first full lithium-ion battery pack ready for testing in the Volt by mid-October and a battery ready for use in test vehicles -- called mules -- by the end of the year. GM plans to have batteries ready for road testing by next spring.
GM has billed the Volt as a vehicle that will be able to drive at least 40 miles on battery power alone. The version of the Volt shown at the Detroit auto show this year also would have an on-board gasoline-powered engine to recharge the battery for longer drives. Using an initial charge and the generator, GM's aim is to build a vehicle that can drive 640 miles on 12 gallons of gas.
But the battery cells are considered crucial to developing the plug-in electric vehicles and fuel-cell vehicles that GM, Ford Motor Co., Honda Motor Co. and Toyota Motor Corp. are working on. The big challenge, the automakers say, is developing batteries that are safe, durable and affordable, but also can absorb and deliver power quickly enough for automotive use.
"Breakthrough battery technology will drive future automotive propulsion, and the company that aligns with the best strategic partners will win," Lutz said. "Frankly, I think we're hooking up with the right crew."
Thursday, August 9, 2007
Gotta hurt to be a Japanese manufacturer...
New J.D. Powers reliability study for 3-year quality:
Ouch for the Toyota, Infinity, Acura, and all German nameplates… Although, apparently Mercedes is no longer dead last. Good to see that brand name improving their quality. It had to suck, though, for cars that expensive to be the absolutely worst quality cars on the road.(1) Buick (tie)
(2) Lexus (tie)
(3) Cadillac
(4) Mercury
(5) Honda
Buick, Lexus tie in dependability study
The Detroit NewsGeneral Motors Corp.'s Buick nameplate tied Toyota Motor Corp.'s luxury brand Lexus for first place for first place in a widely-watched survey of vehicle reliability released Thursday.
Buick's remarkable showing marks the first time in 12 years that Lexus has shared the top honors in J.D. Power and Associates' Vehicle Dependability Study, J.D. Power said.
Owners of three-year-old Buick and Lexus customers reported 145 problems per 100 vehicles, on average, compared with an industry average of 216.
Rounding out the top five for reliability are Cadillac, Ford Motor Co.'s Mercury brand, and Honda.
"With three non-premium nameplates -- Buick, Honda and Mercury -- ranking within the top five, consumers seeking a vehicle with strong dependability have good choices at various price levels," said Neal Oddes, director of product research and analysis at J.D. Power. "Consumers don't necessarily need to pay premium prices to obtain high quality and dependability."
The study's findings underscore a steady improvement in the quality and reliability of cars built by domestic manufacturers.
Many independent surveys show them narrowing, and in some instances, closing the gap with the leading Japanese carmakers.
Thursday, August 2, 2007
House "killing" CAFE increase is jujitsu
The House removed CAFE increases from the energy bill. While the natural inclination among the auto workers who would be harmed most by the CAFE increase is jubilance, a closer look at the issue would suggest a very strong note of caution. The CAFE increases still remain in the Senate bill and the Democratic leadership which will appoint the conference committee is still very strongly pro-CAFE. Most likely, this is the typical two-faced political jujitsu that Washington is famous for and disgusts Americans so deeply: this gives Democrats like Rep. Dingell who represent districts where auto workers live the opportunity to save face with their constituents while passing the CAFE increases they secretly support. Rep. Dingell won't have to commit to a public spectacle of standing up to the Democratic powers, he gets to claim victory in removing CAFE, and will still get the CAFE increases he's personally committed to seeing.
House puts off tougher fuel rules
The Detroit NewsWASHINGTON -- House leaders decided Wednesday to put off a potentially divisive fight over auto fuel-economy rules, leaving until September the debate over how high a hurdle they'll set for the embattled domestic carmakers.
House Speaker Nancy Pelosi said late Wednesday that the House will not consider competing proposals to change Corporate Average Fuel Economy standards when the House takes up a comprehensive energy bill this week. The House is expected to vote on the package this week.
The decision means the Big 3 automakers have dodged, for now, passage of a tough set of CAFE standards proposed by Rep. Ed Markey, D-Mass., which would have boosted vehicle mileage to 35 miles per gallon by 2019. It has wide support among House Democrats, including Pelosi.
Markey agreed to withdraw his proposal, offered as an amendment to the energy bill, as did Rep. Baron Hill, D-Ind., who had offered a weaker set of mileage standards favored by the auto industry.
Despite the reprieve, it is unclear whether Wednesday's decision to delay the debate is good news, in the long run, for the Big 3. It's possible the issue won't be resolved until a House-Senate conference committee meets to iron out differences between the competing versions of the bill. Democratic leaders in the House and Senate, who generally favor tougher standards, will appoint members of the conference committee.
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