So today the Big 3 are beginning their pleas to the government for loans to keep them afloat until they can return to profitability. It seems most people aren’t in favor of a bailout, and even resent the automakers for even asking for a bailout after they spent years making cars no one wants.
Wait a minute. No one wants? They may not want them now, but they wanted them then!
I don’t know about where you live, but here in Milwaukee Escalades are not uncommon. Neither are H2’s, Suburbans, and all the rest of the giant vehicles. Large pickup trucks are also very common. Before the collapse, these vehicles were not cheap. I’m not thinking people bought them as a result of coercion or some kind of conspiracy. They bought them because gas was cheap. Gas is fine. It’s cheap, and why shouldn’t we drive larger, safer vehicles? I can’t tell you how many times I’ve been lectured to about how I’m almost being irresponsible by not having 4 wheel drive in the winter by someone who’s just fallen in love with their 4 wheel drive Canyonero.
Then gas gets more expensive. Way more expensive, and all of a sudden everyone regrets driving a gas guzzler. We all start wishing we could instantly buy cheap hybrids, or even better, electric cars! We should also think about energy independence – then a lot of this middle east nonsense would be irrelevant, and certainly the environment would improve. Gas is now bad. Can you believe all these people are still driving SUV’s. We need hybrids! Ethanol! Electric cars!
Then we have a collapse. Gas is cheap again. Our automakers are suffering, first because spiking gas prices made the vehicles we demanded for years unattractive, then because even though gas is cheap no one has the job or the credit to buy any kind of car. The B3 come to Washington, beg for money, and we’re outraged. How dare they, after all those years when they could have been making electric cars, which nobody wanted, and instead made tons of money on gas guzzling SUVs, which we loved, bought in droves, and happily paid high prices for?
Now the B3 are presenting plans stating they are going to embrace all things green, energy independence and full economy related. Hybrids. Alternative fuels. Electric cars. If only the government will give them the money, they will make the cars that will save the country.
God help us if we agree to this. The thing no one is asking is how many new, expensive, hybrid & electric vehicles newly recovering citizens are going to buy when gas is at $2 a gallon. The answer is not many. I’m no genius, but I do know enough about manufacturing business to know that demanding the expensive development of expensive products that have no market is not an effective way to rescue a struggling company. We may end up bailing them out, just to turn around and do it again in the form of subsidizing the purchase of vehicles American doesn’t really want to buy.
While I’m as offended as anyone about their flying to the meetings in their corporate jets, I don’t blame the automakers for making the cars customers wanted to buy. It takes years to get a car already developed into a manufacturing pipeline, and even if we could shorten that to only a year the automakers still wouldn’t have been fast enough to satisfy America’s fickle interests.
The real problem that must be solve for the B3 is their own internal inefficiencies and labor costs. Let’s worry about solving those problems, regardless of whether the best way is bankruptcy or bailout. Changes in these areas will help these companies no matter where gas ends up, or how American tastes change.
Energy efficiency & independence issues aren’t a B3 problem, or an oil company problem or a government problem. They are an American citizen making the wrong choice problem. Having efficiency and independence means making sacrifices in other areas – sacrifices America has not been willing to make. I don’t think there’s any evidence they will make them in the future.
If the American people are going to demand that development of speculative vehicle technologies is part of any bailout, how about we ask the American people to pre-order the vehicles as part of the bargain?