Orginally posted at The Seminal.
Three Points. We'll take them one at a time.
1. General Motors is unwilling or unable to make the sacrifices and changes necessary to re-establish its viability.
2. General Motors really is too big to just fail.
3. The failure of General Motors provides President-Elect Obama the perfect opportunity to begin the transition to a green collar economy.
GM wants $18 billion. But they are still essentially in denial. Here is the new Restructuring Plan for Long-Term Viability.
Tellingly, discussion of fuel economy doesn't begin in earnest until page 21. Once it begins the focus is on fatally flawed flex fuels.
6.4 Fuel Efficiency Improvements--General Motors today offers 20 models with 30 miles per gallon or more on the highway--more than any other manufacturer. General Motors is also the world leader in flex fuel technologies, with over 3 million flex fuel-equipped vehicles on U.S. roads today. Flex fuels represent the fastest way for the United States to reduce its dependence on imported oil.
Here is their plan for improving fuel efficiency (page 21):
Here they are admitting mistakes in one breath and passing the buck in the next.
While GM acknowledges that it has made mistakes in the past, the company has been pursuing a major transformation of its business model for the past several years, and accelerating its plans to produce more fuel-efficient vehicles. This transformation has consumed a substantial amount of resources and accounts for a major portion of GM's current financial leverage. At this juncture, the company would not require Government assistance were it not for the dramatic collapse of the U.S. economy, which has devastated the company's current revenues and liquidity.
GM has posted almost $73 billion in losses since the end of 2004. Via Emptywheel we also know that the mere possibility of a bankruptcy is costing the company significantly:
According to very recent market research (conducted by CNW Marketing Research), more than 30% of consumers who considered a GM vehicle and purchased a competitive product instead cited the possibility of GM bankruptcy as the top reason for not buying a GM product. This is more than double the percentage of the next highest reason.
Given their history of lying about climate change and fighting efficiency mandates at every opportunity, it is difficult to take this bit seriously.
General Motors will continue to support efforts to adopt consistent, long-term national policies to address energy security and climate change that help accelerate the adoption, by the consumer, of advanced vehicle technologies.
As I said, the bottom line: General Motors is unwilling or unable to make the sacrifices and changes necessary to re-establish its viability.
I'm not going to re-create the argument that General Motors is too big to fail. Regardless of the economic implications of a GM bankruptcy both Congressional leadership and the incoming administration seem intent on not letting it happen. Rather than just throwing money at this thing, I tend to agree with Ian Welsh:
The government needs to stop giving money without getting either control or a reasonable chance of repayment of the money. If it doesn't do so, it won't be able to fix the economy.
the simplest thing to do is just nationalize GM. Buy out the shareholders for the 3 billion their shares are worth, or hey, be generous and pay them double--6 billion. In the current context, that's not even real money. Get the best auto people in the world and have them go in and restructure GM. Spend the necessary money and make the necessary cuts. Restructure the company to serve America's interests--get the Volt working, increase mpg ratings, restructure the dealer network. Do it all. Fix the company and make it viable again. Then, once it's working again in a few years, start selling it back to the private sector. Do it right and the government will make a significant profit.
What's the best way to give Americans of all socioeconomic backgrounds a tangible stake in fighting for issues like global warming?
Easy: Make it their livelihood. Every day, about 135 million people go to work in the U.S. Imagine what would happen if millions of those jobs--plus new ones created for people who are currently unemployed--were in fields like renewable energy, sustainable agriculture, and green building.
The green recovery report lays out six key elements of a green recovery package. In addition to manufacturing and selling a small fleet of electric and hybrid vehicles, these are the types of projects a radically transformed General Motors should be undertaking.
- Retrofitting buildings to improve energy efficiency
- Expanding mass transit and freight rail
- Constructing smart electrical grid transmission systems
- Wind power
- Solar power
- Next-generation biofuels
Update: As I finished writing this Michael Moore showed up on Countdown and echoed what Ian said. He put on quite a performance. I'll update with video/transcript later but here are a few approximate quotes I caught.
"Any money given to the current management is money that is just going to be flushed down the tubes."
"They've been having this problem now for 30 years.""Why would we give them 18 billion when their total value is $3 billion."
"I'm sorry, but this car thing isn't working out, you've gotta build trains and subways and light rail."
Late update: Here is the Michael Moore transcript.
Read More:
Should the Government Bail Out the Big Three U.S. Automakers? HuffPost Bloggers Weigh In
Follow Josh Nelson on Twitter: www.twitter.com/enviroknow
However,
Flex fuel is critical to transitioning through natural gas to hydrogen.
It give consumer a choice and the pump, or even the choice to use the natural gas connection to your home. Which later, 10 years or so) becomes the hydrogen gas connection.
We should burn up all the existing large methane deposits to prevent another "Methane extinction" look it up.
The only near term long haul truck cleaner fuel is natural gas.
Passenger cars can take advantage of plug in hybrids, but it doesn't help trucks much.
Internal combustion has been developed over 100 years.
A good diesel can hit 45% efficiency. The theoretical maximum is around 60%.
Only huge gas turbine followed by a steam turbine reach these efficiencies.
The point here, is that each incremental improvement toward the ideal efficiency is many times more difficult to achieve, and will likely take much longer to achieve and may never be affordable.
Pickens plan is pretty good too. He's right to believe that natural gas is a major parts of the transition to greener energy. For homes, Heat and electricity co generators could give effective efficiencies of 90%,. (natural gas runs a generator, nice for backup too, and the cooling water from the generator is used to heat water and the air in your home. ) . We then nearly ready for hydrogen.
A total win-win-win, a choice the US did not have in years. And we are so blind that most people can't even see it.
Will this be hard? Sure. But we should have thought about that 20 years ago when there was still time. TODAY, the best option is to let GM expire. The rest of the market can then reorganize into healthy companies.
Hey, why don't we see how many cars this money would buy, and give the cars to the taxpayers......
As is, my taxes will go to the company, I will need to buy a car, and they still may fail because most others saw this coming. And if I could afford a new car it would be a Prius.
This is because GM's revenue for the last twelve months is 165.5 billion dollars. It's market capitalization does not translate to the cost of the company.
Also, please don't make the assumption that green cars = successful car company. Too many people seem to think that all Detroit has to do is made all hybrids or all electric cars and they'll be saved. The problem with that is as of yet, no hybrid or electric car has been profitable. Many automotive experts believe even the Prius is still losing money for Toyota. There seems to be evidence of that since Toyota actually sold fewer Prius in the US this year than last and that November sales of the Prius tanked by 48%.
The way to save an floundering auto company is not by forcing them to sell cars that do not make money.
But I agree... it would take ten years for any American hybrid to be as successful as the Prius. And that's just not enough by two orders of magnitude to save GM or anybody else.
They would scale up on them if the CAFE credit they get from the Prius helps offset the hit they were going to take from the 200,000-a-year truck plant they opened.
There is unfortunately a barrier to this. When GM shutter Oldsmobile a few years ago, it cost them billions of dollars, mainly because of laws to protect dealerships. (These are the same laws that prevent online shopping for new cars). These laws would need to be changed in order to shed brands, because GM certainly doesn't have the cash to settle the dealership problem.
Right.
The Focus should also get credo for it safety and fun driving corrollas and camrys are boring and an ole ladies ride!