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Saving US Auto Manufacturing

If people don't buy cars, there is no amount of bailout that will save the millions of US jobs in and related to car manufacturing. If they're not making cars, the manufacturers won't recall workers or order from their suppliers. It's as simple as that.

But there's a pretty simple solution as well. The US government should order a complete replacement for its vehicle fleet to be delivered over the next four years. The new vehicles must be either plugin electric hybrid, pure electric, or possibly natural gas. Obviously retooling both at the manufacturers and suppliers is required to deliver this order so the government should be willing to prepay a significant part of it as it does for new weapons systems. That gets money into the system fast and creates/saves jobs almost immediately. It lets the suppliers retool as well as the final assemblers.

Ideally all auto companies ought to be able to bid. Maybe we only offer prepayment when there is a certain percentage American content although I hate be even that protectionist. Certainly the companies with Japanese names that build cars using American labor in the US ought to be on an equal footing with Detroit. American jobs are American jobs whether unionized or not.

Some infrastructure money needs to go into recharging stations. Good project to be doing as well. Also the electric grid needs work.

The objective is not to assure that no auto company goes bankrupt; the objective IS to keep Americans working on making America a better place. The manufacturers and their suppliers that win the bids to supply the US government with a green, fuel-efficient fleet, will then be well-positioned and retooled so that they can sell these products to the rest of us and the rest of the world once we start buying cars again.

If we simply shovel money into the weakest companies like Chrysler and GM, we'll have to also bail out relatively strong Ford to keep it from being disadvantaged. If we subsidize our car industry, the rest of the world will respond with competitive subsidies. The net effect will be something less than zero, especially if no one is buying cars. But, if the rest of the governments emulate us and order new green fleets for themselves, the world'll be a better place.

Yes We Can is a debate over whether Americans can build cars to meet this goal is here.

A related post suggesting the government put money in the bottom of the car market by buying and junking cars over 10 years is here.

 

 

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Car buying tips

he US government should order a complete replacement for its vehicle fleet to be delivered over the next four years. The new vehicles must be either plugin electric hybrid, pure electric, or possibly natural gas.
http://www.royal-car.com

Jaqes

Why government not putting the money in a fund with which there will be a US standard for hydro or battery fuel created as well as the infrastructure. Within 5 years USA will lead the world in this area. Integrate the US car companies, reduce the number of brands and dealerships and give the one or two remaining companies loans on normal interest rates.
http://www.exclusiveoldcars.com

Account Deleted

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Cars For Sale

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Aarti

The automotive industry designs, develops, manufactures, markets, and sells the world's motor vehicles. More than 73 million motor vehicles, including cars and commercial vehicles are produced worldwide. Because of the market recession if the production is less then definitely, there will not be anymore work in auto industry. http://www.localcarsnow.com

Chief Enterprises | America's provider of Bosch Relays, Solenoids, Connectors, and Diodes

Buying windmills will employ autoworkers, reduce our dependence on foreign oil, give the government valuable assets for their money, shake up the rigid bureaucracy in the auto companies, and get the industry into a business that will flourish in a carbon constrained world

http://www.chiefenterprises.com

Erik Ostermueller

As part of this effort, we could also pioneer better technology to recycle old vehicles(it would be tough to sell the entire old fleet). We could also require that the new fleet be more recycle-able.

How will we decide which manufacturers win the bid? We could have a x-prize like contest. The winner gets 50% of the deal. The runner-up gets 30%, third place 15%, fourth place 10%, etc.... Energy efficiency, durability, price and cleanliness would all be judged.

Chris M.

Besides the obvious costs of redesign/retest/retooling along with the length of time it would take to do these, think of this from a purely economical standpoint. In the next 4 years the government would probably be replacing much its fleet regardless - how many government vehicles running around are 5+ year old beaters? My somewhat educated guess would be that a very large percentage of the vehicles being replaced are trucks (the Ford F150 didn't become the highest selling vehicle in the US because consumers were buying it). Trucks are high-margin vehicles for auto manufacturers. Taking away 4 years of high-margin sales and replacing them low-margin or worse car sales, which they would have to be in order to be competitive in the marketplace (and as a taxpayer I would demand), isn't going to do the auto industry any favors.

If you want to get greener vehicles on the road while also benefitting the automakers, I think you need to be replacing vehicles with similar margins or creating new markets that the auto industry doesn't already fully exploit. I would think having strict MPG and emissions requirements on things like rental fleets, commercial vehicles, taxis, public transportation, etc. would be a much better approach. This might also allow the general public to ease into the idea of an electric car. It would also allow the infrastructure to form at a reasonable pace - I think you have grossly underestimated the time and effort it will take to make electric vehicle viable on a large scale. As a parallel, consider how useful a laptop computer would be if it required WiFi just to function. In a densely populated area you might be able to get by, but head out to the sticks and you're screwed. Sell someone a purely electric car at this point and they would be in same boat. I am not saying this is a bad idea, but it will take a LONG time before that is truly viable.

Yes, if customers don't buy cars there is nothing the industry can do, but has the general public overwhelmingly said they want to buy hybrid or electric cars? I doubt they have, because if they did, I can promise you that Detroit would be selling them in the U.S. Auto companies aren't nearly as stupid or incompetent as most people think they are.


P.S. The commenter who claims that there are not enough skilled engineers who know how to build vehicles is dead wrong - thousands have been layed-off in the last couple years. Perhaps most automotive engineers don't graduate from MIT or Caltech, but that doesn't mean they aren't qualified or intelligent.

John

Although the author makes no mention of it, I would hope that military vehicles (hummers, tanks, supply vehicles, etc.) would be exempt from such a well intentioned endeavor... one that I cannot otherwise find fault with. If nothing else, all things considered, power requirements alone would make such vehicles rather impractical in warfare conditions.

And, if other nations followed us down this path, it could lead to the rather absurd and tragic situation of the world's soldiers killing one another in a "healthier environment."

Del P

Agree that auto companies cannot be handed a bunch of dough and left to continue their failed business model. An example of that model is GM's very recent vehicle release, the Chevy Traverse - a two and a half ton barge that gets 16.5 actual mpg around town (per AP road test). Behavior modification in the form of new tooling for green cars may be the answer.

macaddicted

That loud screeching noise you hear is the petroleum industry throwing on the brakes.

Julian

It's probably worth mentioning that while it doesn't include replacing the entire fleet of government vehicles with plug-ins, Obama's energy plan does include converting all White House vehicles to them as security permits within a year, and ensuring half of the cars purchased by the federal government are plug-ins by 2012.

http://www.barackobama.com/pdf/factsheet_energy_speech_080308.pdf

Dave

Why saddle the US government with inferior American cars? They should be buying Japanese or European. I don't think it's a good idea to keep the US auto industry alive. They should roll over those companies into something else - building windmills or solar panels, or something. If there's one thing we don't need, it's more American cars on the road, and the artificial propping up of these directionless manufacturers.

Philip (flip) Kromer

Also to consider: the ripple effect (on manufacturers and on the broader industry) of dumping that quantity of vehicles on the used-car market.

steve

The basic idea is neat, but the time scale doesn't work as designs aren't stable and re-tooling plants is very slow and enormously expensive. Doing it all at once would dramatically increase costs.

Another fly in the ointment is the US lacks enough seasoned engineers who can build cars. Friends at Caltech and MIT have been trying to do something about that, but there is a huge time lead.

martin

If all manufacturers were allowed bid for this tender, then the US auto industry is unlikely to win. And if it's only open to US companies, or to companies with a US manufacturing base, then the WTO will impose penalties for preventing competition.

If people aren't buying the cars, there's a reason. Why criple your govt fleet with vehicles that are less than the best?

You are either in the global market or you're not. And if an industry is broken, the solution is not to subsidise it. You gotta let the market correct the industry, otherwise you'll still be having this conversation in four years time.

Tom Evslin

Kevin:

Under normal circumstances you'd be right. But these aren't normal circumstances.

After the US entered WWII, we retooled the consumer goods factories to war material in a little more than year. Idle plants are easier to retool than busy ones. Modern machine tools can be reprogrammed for new uses without beig rebuilt.

Your point about design time is good but there are existing production vehices in all these classes whose designs can presumably be licensed. Also all the manufacturers claim to be ready to accept retooling aid for green vehicles.

kevin

a typical auto plant can manufacture 250,000-350,000 vehicles a years. GM's annual vehicle output is around 19 million vehicles a year. Retooling a single auto plant for a new vehicle line costs in the hundreds of millions of dollars and takes a a year to 18 months. The time to design and test a preproduction vehicle prior to approving it to be built is typically around 3 years. Your scenario is completely unrealistic.
The basic premise, though, that the government ought to take the lead in greening its fleet does make sense

Rob L

FCC chair? There must be something higher!

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