Do the automakers want salvation badly enough?

Okay, so the auto bailout bill died before going anywhere. But that’s not to say all is lost. Tom Friedman hit the nail on the head today, I think:

If [the Big Three] are ready to bring in some visionaries and totally restructure – inside or outside of bankruptcy – so they can make money selling cars that people will want to buy, then I say help them. I’d hate to see the Detroit auto industry go under. But if all we are doing is prolonging auto undertakers, then we have to let nature take its course.

How you think this auto-company saga should play out depends largely on whether you believe U.S. automakers can reform themselves. For my part, I think the Big Three want to survive badly enough that they’ll do anything for a bailout, even if it means tossing out all the old manuals and starting over with “visionaries” again. But I could be wrong.

Let the Big Three crash and burn? No thanks

I wanted to take a moment and weigh in on the current debate over what to do with America’s automotive companies. General Motors, Ford and Chrysler have all been practically begging Congress for a financial bailout package. Over at Slate, Daniel Gross is saying that the Big Three are already dead, so let them go. He’s got a point—there’s little sense throwing good money at them if they can’t get their act together. But Gross is looking at this issue on his knees where he really ought to be standing on a chair.

Gross is talking mainly about saving the auto industry. That’s fine; he’s allowed to be skeptical about that. I’ll even give him that there’s “no guarantee the Big Three will return to health, that they’ll be able to stay current on debt payments and raise capital from tough-minded investors.” What he’s missing, though, are the broader implications of Congressional action on the Big Three.

Source: http://www.canyonchasers.net/blog/uploads/general/car-crash.jpg

I’m as in favor of teaching these top executives a lesson as the next guy. Their failure to anticipate obvious market trends, diversify their product lineups, and avoid a crippling path dependency before it was all too late is shameful. But the consequences of standing idly by while these companies crash will be enormous. Together, the Big Three claim to employ around 250,000 in the United States alone. It hardly seems fair, in the interests of punishing a few key individuals, to force so many others into unemployment. It’s just not fair. Besides, mass unemployment brings a whole new set of economic problems. And let’s not even get into the shockwave that a U.S. auto industry crash would send around the globe. To simply write off the Big Three is to express a fundamental disregard for the way their problems relate to the broader economy. This isn’t just about the auto industry.

Call me an optimist, but I think there’s a golden opportunity for America here. The auto execs are clearly in need, and if Congress offers them a hand—you can bet your hat that they’ll take it, along with any conditions it comes with. Whether or not the bailout will work is a different story (as I said, Gross could very well be right on that count); but the important thing is that we’ll have tried not to leave thousands out in the cold and taught the auto industry how to conduct itself properly in the 21st century. Here’s what’s possible if we decide to act in the interests of the Big Three:

1. Slow the loss of American jobs.
2. Set (and enforce) even more aggressive goals for fuel efficiency standards, emissions outputs and the development of alternative technologies.
3. Show that the U.S. government is responsive to American concerns and that it is willing to help struggling (undeserving?) businesses recover—provided they make significant reforms like the Big Three will be required to do.

Ford has already pledged to accelerate development on its electric car programs in hopes of getting a bailout package. This is exactly the sort of thing we need. Let’s keep GM, Ford and Chrysler dangling for a little longer to see what else they’re willing to compromise on. But not too long.

No joy at THIS Fiesta

The lastest from Grist:

Source: http://www.autobloggreen.com/2008/07/23/british-motor-show-ford-fiesta-econetic-63-5-mpg-us/

The Ford Fiesta ECOnetic, a small, sporty five-seater that gets an impressive 65 miles per gallon, will the hit the road in November — but only in Europe. “We just don’t think North and South America would buy that many diesel cars,” says Ford America President Mark Fields.

That just seems silly to me. At a time when America is beginning to sort out which methods work best for fighting climate change, Ford is actually removing an option from the table? Wouldn’t unveiling a small, fuel-efficient alternative to the huge SUV actually help to change Ford’s image, thereby boosting sales in the end? Given how much the manufacturer’s market-share has slipped in recent years, it really has little to lose by introducing the Fiesta in the U.S. Sure, the high cost of diesel might turn some away ($4.12/gal as of Sept. 1, says the DOE) — but then they’ll remember that for 63.5 mpg and an average 13-15 gallon tank, they could drive up to 950 miles on a single fill. I don’t know about you, but my family currently racks up about 400 miles a week and spends around $50 at the pump. Filling up the Fiesta would be just $10 more expensive, and we’d be able to go a full week-and-a-half longer between trips to the gas station. Ford’s latest move is yet another example of a short-sighted American corporation letting its country down.