Obama Should Use General Motors to Build the Green Collar Economy
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.
This is false. Driving less and ratcheting CAFE standards up would both work better in the short-term. Running our vehicles on the electric grid is the only sustainable long-term solution.
Here is their plan for improving fuel efficiency (page 21):
Improving by less than 10 miles per gallon over a 12 year period does not cut it. We don't want a 300% increase in models we want a 300% increase in fuel economy.
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.
After lamenting the mistakes in the Citibank deal, he continues:
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.
I agree wholeheartedly. I would go one step further and say President elect Obama should nationalize General Motors and use it as a vehicle for the green stimulus. Van Jones says it best:
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.
All signals point to Obama investing heavily in green collar jobs. The labor force and manufacturing capacity of GM provides a perfect springboard for a national green jobs initiative.
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."
Keith closed the segment by saying, "As always it makes great sense, let's see if it has any chance of happening."
Late update: Here is the Michael Moore transcript.
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I agree with Moore also: Buy them out and put in new managment and control.
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.
The logically correct thing is to let GM fail. It will make Ford immediately profitable because they will capture most of GM's business. Chrysler get's a fighting chance. The whole operation costs exactly nothing. And if GM goes through a bankruptcy, some of it might even emerge on the other side of that.
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.
What about the fact that Ford will most likely be unable to build cars because they share suppliers, and most of the suppliers could not continue to sat in business if they lost half their orders. It's a complicated situtation, and it might be cheaper to bail out GM then let them die.
Car companies usually have multiple suppliers for the same part. Suppliers can downsize and we can, with a much smaller tax payer effort, support the remaining suppliers, if needed. The argument that "as goes GM, so goes the nation" holds no water.
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.
I agree. Stop rewarding their irresponsibility. Give a loan to TESLA instead.
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.
To answer Mr. Moore's question as to ""Why would we give them 18 billion when their total value is $3 billion."
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.
The fact still remains that GM is a failed company running on fumes. If the management really wanted to be competitive they should have cut models, dealerships and while increasing mileage annually. They did none of these things. In fact when approached by members of the actors guilde to do free advertisments for green engergy cars GM said not interested. These men are not managers and if we keep giving them money it will keep being wasted. ENOUGH
The Prius is highly profitable, which you can see immediately when you take a look under the hood. There is nothing supercalif
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.
What evidence do you have that they are profitable, let alone "highly profitable"?
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.
T the very least GM should consolidate the number of models in a major way. There is so much overlap. Then they should green the entire offering that is left.
Amen!
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.
Talk about magical thinking here. So if we allow online new car sales GM's business will look better?
Right.
E-Street try this halo spark plugs, fitch fuel catalyzer, turbinator. 25% more mpg 20% more tourque, 15%more HP in a Focus.
The Focus should also get credo for it safety and fun driving corrollas and camrys are boring and an ole ladies ride!
I simply do not believe there is an American made vehicle that gets 31.6 mpg on a real road, unless it is driven down hill with the engine off most of the time. Most of our driving is 35 mph or less and we should take advantage of the Detroit bailout to makes large production runs of small EV cars like the Tango to targte making a zero-C car for commuting with a price point under $10,000. To achieve this you have to make 100,000 or more per year and use Detroit as a foundry to do it.
My 2008 Ford Focus gets 38 mpg at 70 mph, and averages 31 mpg for average city driving. Only in dense city traffic does it go below this.
38mpg is miserable given the fact that Toyota and Honda are releasing new hybrids next years that will get above 50mpg and China is threatening to sell a cheap plug-in hybrid this month. If Ford does not come out with a 50mpg Focus hybrid SOON, they will toast that line of cars just as well.
It would be a master stroke, but Obama doesn't seem to have the stomach for serious out-of-the-box action.... yet....
I beg to differ. I guess strategy is not a word in your dictionary. Laying out your plans prior to being in a position of power would only show that it an ineffectual leader. Check www.change
Sally, election is over. You lost.
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