How to Fix a Flat
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return encodeURIComponent('Somebody ought to call Steve Jobs and ask
him if he’d like to run a car company for a year. It wouldn’t take him long to
come up with the G.M. iCar.');
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Reductions,Subprime Mortgage Crisis,General Motors Corp');
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return encodeURIComponent('By THOMAS L. FRIEDMAN');
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return encodeURIComponent('November 12, 2008');
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By THOMAS L. FRIEDMAN
Published: November 11, 2008
Last September, I was in a hotel room watching CNBC early one morning. They
were interviewing Bob Nardelli, the C.E.O. of Chrysler, and he was explaining
why the auto industry, at that time, needed $25 billion in loan guarantees. It
wasn’t a bailout, he said. It was a way to enable the car companies to retool
for innovation. I could not help but shout back at the TV screen: “We have to
subsidize Detroit so that it will innovate? What business were you people in
other than innovation?” If we give you another $25 billion, will you also do
accounting?
How could these companies be so bad for so long? Clearly the combination of a
very un-innovative business culture, visionless management and overly generous
labor contracts explains a lot of it. It led to a situation whereby General
Motors could make money only by selling big, gas-guzzling S.U.V.’s and trucks.
Therefore, instead of focusing on making money by innovating around fuel
efficiency, productivity and design, G.M. threw way too much energy into
lobbying and maneuvering to protect its gas guzzlers.
This included striking special deals with Congress that allowed the Detroit
automakers to count the mileage of gas guzzlers as being less than they really
were — provided they made some cars flex-fuel capable for ethanol. It included
special offers of $1.99-a-gallon gasoline for a year to any customer who
purchased a gas guzzler. And it included endless lobbying to block Congress
from raising the miles-per-gallon requirements. The result was an industry that
became brain dead.
Nothing typified this more than statements like those of Bob Lutz, G.M.’s vice
chairman. He has been quoted as saying that hybrids like the Toyota Prius “make
no economic sense.” And, in February, D Magazine of Dallas quoted him as saying
that global warming “is a total crock of [expletive].”
These are the guys taxpayers are being asked to bail out.
And please, spare me the alligator tears about G.M.’s health care costs. Sure,
they are outrageous. “But then why did G.M. refuse to lift a finger to support
a national health care program when Hillary Clinton was pushing for it?” asks
Dan Becker, a top environmental lobbyist.
Not every automaker is at death’s door. Look at this article that ran two weeks
ago on autochannel.com: “ALLISTON, Ontario, Canada — Honda of Canada Mfg.
officially opened its newest investment in Canada — a state-of-the art $154
million engine plant. The new facility will produce 200,000 fuel-efficient
four-cylinder engines annually for Civic production in response to growing
North American demand for vehicles that provide excellent fuel economy.”
The blame for this travesty not only belongs to the auto executives, but must
be shared equally with the entire Michigan delegation in the House and Senate,
virtually all of whom, year after year, voted however the Detroit automakers
and unions instructed them to vote. That shielded General Motors, Ford and
Chrysler from environmental concerns, mileage concerns and the full impact of
global competition that could have forced Detroit to adapt long ago.
Indeed, if and when they do have to bury Detroit, I hope that all the current
and past representatives and senators from Michigan have to serve as
pallbearers. And no one has earned the “honor” of chief pallbearer more than
the Michigan Representative John Dingell, the chairman of the House Energy and
Commerce Committee who is more responsible for protecting Detroit to death than
any single legislator.
O.K., now that I have all that off my chest, what do we do? I am as terrified
as anyone of the domino effect on industry and workers if G.M. were to
collapse. But if we are going to use taxpayer money to rescue Detroit, then it
should be done along the lines proposed in The Wall Street Journal on Monday by
Paul Ingrassia, a former Detroit bureau chief for that paper.
“In return for any direct government aid,” he wrote, “the board and the
management [of G.M.] should go. Shareholders should lose their paltry remaining
equity. And a government-appointed receiver — someone hard-nosed and
nonpolitical — should have broad power to revamp G.M. with a viable business
plan and return it to a private operation as soon as possible. That will mean
tearing up existing contracts with unions, dealers and suppliers, closing some
operations and selling others and downsizing the company ... Giving G.M. a
blank check — which the company and the United Auto Workers union badly want,
and which Washington will be tempted to grant — would be an enormous mistake.”
I would add other conditions: Any car company that gets taxpayer money must
demonstrate a plan for transforming every vehicle in its fleet to a
hybrid-electric engine with flex-fuel capability, so its entire fleet can also
run on next generation cellulosic ethanol.
Lastly, somebody ought to call Steve Jobs, who doesn’t need to be bribed to do
innovation, and ask him if he’d like to do national service and run a car
company for a year. I’d bet it wouldn’t take him much longer than that to come
up with the G.M. iCar.
