So I took my shot at a rational, logical treatment of the American Auto Manufacturers’ situation on Saturday. Given that this is a blog, I tried to keep the industry talking points in the noise, and make it more about my take than what the pundits and watchdogs are saying.
But there’s more story to tell than just my take. There’s plenty of legitimate criticism, but there’s also a lot of important fact to be conveyed – which is important when the rhetoric starts flying. Fortunately, Richard Williamson from Scripps News did a pretty darn good job setting the record straight and keeping things in perspective. I’ll try to keep this short, but I wanted to include few excerpts here that I particularly enjoyed…
In 2007, more than 9.3 million “nobodies” bought GM cars and trucks, keeping the brand in a dead heat with Toyota as the world’s largest automaker. It was the second-best sales year in GM’s 100-year history.
Were buyers just being charitable? Does “nobody” want a Corvette? Do the more than 600,000 potential buyers lining up for the new 2010 Camaro not really want one? Clearly, no one wants to buy the Cadillac CTS, Motor Trend magazine’s Car of the Year.
But the Detroit Three are not just paying for their past sins, they’re also paying for their past successes. The thousands upon thousands of retirees GM still supports were working on the line when factories were running overtime to keep up with demand. The plants they have closed were built for less competitive times.
In 2004, health care cost GM $1,525 per vehicle, compared to Toyota’s $201, according to the management consulting firm A.T. Kearney. And health care costs increase with age. Toyota had only 250 retirees in North America in 2004. GM covered about 340,000, including spouses. And those contract provisions were painstakingly negotiated in many a midnight mediation over the decades.
GM could be the beneficiary or the victim of government action, but the government has been deeply involved in the automotive business for most of its existence, from catalytic converters to air bags, which, by the way, GM pioneered.
Should the U.S. government lend taxpayer dollars to the Big Three? We’re talking about a loan, here, not an outright gift like the hundreds of billions of dollars we have poured into Iraq, including $9 billion in cash that simply disappeared.
Some respected economists argue that bankruptcy may be the only way for GM to hack the Gordian knot of contracts, laws, regulations and debts dating back to an era of black-and-white TV. But GM questions whether the world’s largest automaker could survive bankruptcy. Who would trust a warranty or parts supplies for a company that might not be around next year?
If you’re occupying an ivory tower or a talk-show microphone, you have the luxury of debating economic theory. If you are among the one out of 10 workers who depend on the auto industry for your daily bread, the question is a little more immediate.
One notable error in Williamson’s commentary is his characterization of the Chevy Volt, and we need to get this cleared up: it’s not a hybrid. I’m not talking about some obscure engineering distinction here, but a simple matter of the powertrain’s architecture. The Volt is an electric car, and it happens to have a built-in generator that can charge its battery pack. Terming it a hybrid would imply that either an electric motor or a gasoline engine could be used to put power to the wheels – and the Volt isn’t about just being a “me too” to Toyota’s prius.
I promise I’ve got some stuff in the pipeline to post here that’s pretty far from ranting about the auto industry, but for obvious reasons this topic is occupying a lot of space in my brain these days.