Five Things Mr. Obama Must Say About Detroit -- and Fast

In all the excitement over the inauguration, it's important to keep in mind how serious are the trials and tribulations affecting the Detroit Three's hundreds of thousands of employees, including those of their supplier companies and dealerships.

The past few days brought the worst possible news: For nine years starting in 1999, the US car and truck sales market was almost 17 million vehicles a year. Now, General Motors has cut its 2009 U.S. industrywide sales estimates to 10.5 million vehicles amid "continued uncertainty over the timing of an industry rebound."

This downgraded change of 2009 sales estimates (carmakers had been estimating sales of 11 million or a bit more) means GM will have to restructure the company to break even at a lower level of sales, something nearly impossible given their current costs. If GM is right, this means Chrysler will almost certainly cease to exist by year's end, and Ford's position is made even more untenable.
(GM's South Korean division, Daewoo, engineered and is selling a model called Lacetti in that country, and the Chevrolet Cruze is due to be a high-mileage variant of the car for the US market; money woos have GM saying there are no real guarantees on any new products).

At this point, as far as congress is concerned, it seems the best car company is the one busy firing the most workers.

While General Motors and Chrysler both remain on life support (and Ford has also been talking with the government about a credit line or loan), the car and truck business around the world is not doing much better than Detroit.

Honda is extending factory-closings in Europe, Toyota and Nissan are both showing red ink, huge suppliers like Johnson Controls are showing their first losses in decades and a big German supplier company, Mitec, has done what's always been rare: gotten into a public fight with Ford over contracts cancelled by the Dearborn-based carmaker. GM announced today that their Saab division will be farmed-out as a separate company (don't look for it to last too long), Sweden says there's no government help coming for their two home carmakers, Volvo or Saab, and Chrysler Financial just got a $1.5 billion federal loan so it can finance any customers who might want to buy one of their cars; let me know if anyone hears of that actually happening.
(Things don't look good for Swedish carmaker Saab).

With all that as prologue, what follows are five things I want to hear Barack Obama say about the US auto industry this week, as he becomes the 44th President of the United States:

1-

"During World War II, the United States created the Manhattan Project, a cost-be-damned effort to develop the atomic bomb, and we were successful. In May, 1961, President John F. Kennedy declared, 'I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.' We did it in July, 1969, and two men landed on the moon, not just one. Based on these successes, this country must now commit itself to, before 2020, creating the world's first national infrastructure for hydrogen and natural gas fuels, and we determine to build the cars and trucks which will run on those fuels by using fuel cells - made efficient by JFK's space program - to turn hydrogen and natural gas into electricity. This will be a huge positive answer for global warming."

2-

"To help pay the enormous expense for this first of its kind transformation, from an economy which for over 100 years has depended on oil, we will immediately, by Executive Order, increase and greatly expand the tax rebates and other incentives for Americans to buy the highest mileage, cleanest cars and trucks now available. This will save all of us money, but will also pour money into Detroit as the kinds of cars we need now are developed and sold. And as the economy improves, we will then phase-in a $4-per-gallon federal gas tax, with those monies used only for this massive, critical and earth-saving energy and transportation revolution."

3-

"As is done in every other industrialized nation, our federal government will help and support American carmakers in any and every way possible. That's not protectionism; that's just smart and makes common sense. And Detroit automakers will also be closely involved in the development of the most modern types of high-speed rail lines to criss-cross the nation, and of efficient light rail systems for our towns and cities."
(Narita JR Station in Japan - Why should Europe and Asia have great public transit, but not the US?).

4-

"This week, I will sign an Executive Order which will hasten the most-recent government fuel mileage requirements. The latest rules require the Corporate Average Fuel Economy of the nation's new car and light truck fleet to begin increasing from present levels with the 2011 model year and to reach 35 mpg by the 2020 model year. I believe we can accomplish this in half that time, by model year 2015. Encouraging American carmakers to develop these high-mileage cars and trucks will get them and this country well on our way towards the coming hydrogen/natural gas economy."
(Ford's coming 2010 Fusion gas/electric hybrid is rated at 41mpg).

5-

"In this 21st-century, three separate carmakers in Detroit striving to reach the same important goals is a massive waste of money, time and effort. The struggling financial markets have seen many mergers in recent months, for those requiring help from the government and other companies in order to remain viable. Therefore, our government will be asking General Motors, Ford and Chrysler to merge into one great American-based carmaker and technology group. This will be the best way to guarantee a future for General Motors and Chrysler, especially, and Ford, as the world will beat a path to Detroit to license Detroit's newly-developed transportation technologies. This is the best use of taxpayer money to achieve the efficiencies of scale necessary to create the hydrogen and natural gas economy and its vehicles. We ask that only the US divisions of these companies merge; their overseas divisions can remain separate; after a pre-determined time, Detroit might again be ready to be home to three major carmaking companies."

Did we miss anything?

(Some photos by www.SteveParker.com).

Comments

[Truby]

1-Goodbye.
2-Auf Wiedersehen.
3-adiós.
4-arrivederci.
5-au revoir

[Steve Parker - Huffpost Blogger]

You forgot: Sayonara.
Steve

[paris15]

Nice commentary Mr Parker!
I'm not so sure about the CAFE change, though. If we go ahead with the Gas Tax, then I think the CAFE will take care of itself without intervention. Also, in regards to the Gas Tax, I'd rather see a floating tax that would adjust to crude prices. If gas shot back up again like it did last spring, I wouldn't want to see a four dollar gas tax bring the country to it's knees again. Also, as demand for gasoline dwindles it will cause supply (refinery closures) to drop, and my guess is gas prices to become more volatile (ten years down the road).

[Steve Parker - Huffpost Blogger]

Thanks for the comment and your kind words.
I heard of another gas tax possibility when someone said that rather than institute a high tax, let's instead set a base price for gasoline, a price it will never go under, whether it's $2 or $3 or more. This way everyone's paying their fair share and those crazy fluctuations could end. No matter how cheap a barrel of oil might be, everyone will know that gasoline is going to cost at least that mandated minimum per gallon.
It's certainly not the worst idea I've heard lately.
Steve

[RegularEinstein]

I agree with all of Parker's points except the last one, which is an invitation to a monopolistic domestic car market and resulting price-gouging. Instead, why not alter patent laws to require certain technologies vital to national security (read: energy independence) be shared or violators face stiff penalties or even prison. We should start by requiring oil companies to release any technologies related to better li-ion batteries for hybrids/electric vehicles.

[Steve Parker - Huffpost Blogger]

Thanks for the comment.
As we all know, there are already all sorts of laws on the books regarding technology which can't (officially) be exported, and often they don't work, anyway. How else to explain the "secret" nuclear bomb triggers sent to Taiwan by mistake last year? Oops.
Let's hope the oil companies can be "influenced" to retrofit their existing massive pipeline networks for hydrogen and natural gas rather than oil and gasoline. They built them and already know how to run them. Let them join the rest of us who understand we're no longer in the 20th century, nor with Dorothy and Toto in Kansas, anymore.
Steve

[DallasMike]

Blame the Unions who have employees sitting at home after being laid off and getting paid 95% of their salary.
plus the fact that now the Gov't is going to force the big 3 to make cars that nobody wants.

[pharm]

Not again! The jobs bank, a Japanese invention, offered to the Union by General Motors in 1984, is gone. Pick another dead horse to beat!

[Steve Parker - Huffpost Blogger]

Thanks, but no. I put blame where it belongs - management. No one held a gun to management's head and made them sign any contracts. Detroit managements' inability to read the future or even to learn from the Japanese and Germans resulted in their writing and signing deals which they would never be able to stick with; in a way, kind of like people who were snookered into taking-out mortgages they didn't know they'd never be able to afford.
Secondly, workers can only build as good a product given its engineering and design - again, management's job.
Steve

[clearthinker2008]

You are a stupid, and selfish American. Those folks work just like you do. They don't get paid salary, they are hourly workers. My mother gave GM 30 years, lives off a small pension, and you know what she on her last day before retirement, a heart attack. Screw you and your ilk. Always talking crap about stuff you don't know anything about. Factory workers are HARD workers who deserve fair pay and health care. Americans need to stop tossing each other under the bus. How are you siding with a major company over folks who get to together to demand, safe working environments, fair pay and health care? Who raised you?

[clearthinker2008]

You haven't a clue what you are talking about.

[paris15]

+1

[tcerami]

Any company that fails to listen to customers, fails to innovate and won't sock away money for a rainy day should expect difficult times. Palm is a great example of a company who sat back and watched their dominance in the mobile industry vanish.

For the auto industry, I think they have failed to innovate, hoping that we will continue to purchase products based on lazy behavior. Walk into a showroom today and try to find any significant engineering that sets a 2009 car apart from the same car made in 2004. 10 more horsepower, auto parking, fancy stereos and gps systems are NOT innovations.

We want answers to questions like: how can I make vehicles less expensive to purchase and maintain, how can I get 50mpg out of a gas powered 4cylinder engine, how can I increase interior room without changing the exterior dimensions, how can I make it easier for the consumer to keep their car looking and running well. It seems so easy, unless you're content with not listening to customers.

Let them go down in a barrage of sparks and explosions­...

[Steve Parker - Huffpost Blogger]

Check the defensive language and even arrogance in the comments from members of the journalist jury panel following my criticism about their North American Car and Truck of the Year award ("5 scariest things about the Detroit auto show"). They have learned well at the teat and knee of Detroit PR and communications people (and more than a few of these journalists have held those Detroit management jobs during their careers); that is, if someone complains about your product, whether it's a vehicle or an award, bitch, bitch bitch and bitch some more ... foment an attack on the writer to try to destroy their credibility.
The sad thing is that, in large part, Detroit PR people now take honest criticism seriously (they started about 30 years too late, though) and now it's the auto journalists, whose jobs and careers and all else are on the line, trying those same tired, old tricks.
Steve
Steve

[Otaku1031]

Add this to the list:
I would demand that Detroit suspend all new model year vehicle design efforts based on the current technology (gasoline engines). Focus on getting a viable bio-diesel and/or electric vehicle line on the market. Let current designs coast until the "greener" cars are de-bugged and ready to go. Get the design and product release schedules from the engineers, NOT from marketing.

Why do we need a new version of every product from the automakers each year? I understand that safety innovations should continue, but why spend huge amounts on what boils down to trivial appearance changes in a vehicle, just so everyone can see that you have a "new" car. These changes are costly; if you re-locate just one feature on a dashboard, you need a new mold. New body panel dies are needed for adding a small curve to a fender. Put the money into the new product lines.

Get single-payer healthcare off the ground. I've heard a lot of whining about how much it costs to maintain health insurance for the auto workers, but the only solution that gets any press involves cutting their benefits. Don't penalize the the people on the lines for the short-sighted profit motives of the CEO's. Our current health care system is expensive, doesn't work, and must change. Doing nothing is not an option.

[Steve Parker - Huffpost Blogger]

Agree with your comments. If Obama speeds-up the 2020 CAFE requirements, than Detroit will have no choice but to put most of their effort into high-mileage and alternative fuel cars and trucks.
Steve

[mikep]

In order to save the American car industry and protect the jobs of automobile workers, it is absolutely essential that we stop propping up and bailing out the broken-down obsolete companies that are directly responsible for this mess, let them collapse, and let new companies emerge from the ashes. Forcing GM and Chrysler into bankruptcy is the first step. And totalitarianism, the idea of the federal government creating one huge company, is about the worst possible thing to do. We need much, much, much smaller companies, each focused on particular markets, not bigger ones. There's absolutely no reason for the government to be involved except to set higher mileage rates. The market can take care of the rest perfectly well, and without squandering more billions of taxpayer dollars. If Mr. Parker or others wish to invest their money in these obsolete failed companies, they're welcome to do so. But keep my tax dollars away from them, please.

[Steve Parker - Huffpost Blogger]

Appreciate your comments. You make some good points. But our first Socialist President, George Bush and his toadie-in0chief, Henry Paulson, have put this country into a position where what you (and a lot of other people) propose just won't work - at least not yet. Let Detroit burn-out with help from DC in rebuilding and rebranding themselves. Maybe sometime in the future they can become smaller companies again.
Steve

[Overtone]

Unconventional energy conversion systems are under development that may prove to be tapping a never previously commercialized, renewable, abundant source of energy. These revolutionary new energy conversion devices are inherently cost-competitive. They can make practical cars, trucks and buses that need no engines, banks of batteries, or any variety of conventional fuel or recharge.

Advanced designs are capable of producing electricity on a self-sustaining basis. Some devices without moving parts are comparable to an inexhaustible battery. One Proof-of-Concept prototype is analogous to the early work on the transistor, which eventually led to a Nobel Prize and the creation of Silicon Valley.

A generator we are developing is expected to generate sufficient power to demonstrate replacement of the plug needed by a plug-in hybrid car. This will be a harbinger of automobiles that need no conventional fuel. With normal progress, a prototype new energy conversion system is anticipated to replace an automobile engine within three years. That goal might be achieved more rapidly if development involves four teams of engineers and technicians working on a 24/7 basis. The prototype will open a path to mass production of an entirely new variety of automotive power plant. Electric vehicles powered by these technologies will never require conventional fuel or recharge.

See: http://www.renewableenergyworld.com/rea/partner/story?id=54361&cid=7763

[Steve Parker - Huffpost Blogger]

Don't keep it a secret - please, share more specific information, if you have some!
Steve

[Arthur954]

Very well laid out Mr. Parker ! what we need, to achieve these goals, is :

--- a central office that coordinates all the government help to the auto sector, with something like a Secretary of Industrial Policy. This central office would make available to all auto companies the most advanced know - how from the aerospace, defense, etc sectors, and pool resources to develop new technologies and production methods that benefit all.
---. national health care and retirement, like in Europe. Until then, the US auto industry is going to be at a severe competitive disadvantage.

I hope Steve that you can make your outline available to the new administration

[Steve Parker - Huffpost Blogger]

Thanks for your kind words. I'm letting the administration know that if they want some background and history on Detroit and how these comanies have been run - and prospered for many decades - and why they're in their current state, I'd be happy to share it. Maybe someone will ask.
Steve

[KillTheMessenger]

Just why does everybody compare making nuclear weapons, which are devices the size of a bowling ball to the size of a sofa, to making 17 million cars annually? Doesn't that sound kind of ridiculous? All right, I give it to you, making a nuke sounds kind of hard... until you take a class in nuclear physics at which point it starts sounding dangerously easy.

And just because it takes a rocket scientist to get to the moon does not make it harder or more expensive than to replace the transportation infrastructure of a nation that inhabits one third of a continent.

One also wonders why technical loser solutions like hydrogen and natural gas appeal to people? Is it because we need a rallying cry to come together around, even if it is the wrong one?

And why, in comparison, does "gas tax" sound so wrong? Why can we not mention "electric freight rail" as a real option? Are these bad words that mother told us not to use?

One wonders...

[ImmanuelGoldstein]

Simple kill. Anything other than cars is intruding on America's real one true religion which is the worship of the automobile. The suggestion that the future holds anything but MORE AND MORE CARS is blasphemy and yes as such a dirty word.

[Steve Parker - Huffpost Blogger]

Thanks for the comments.
The basic engineering of all cars and trucks had been developed when Karl Benz patented his "motorwagen" in 1886 - and many say well before that date. Plans for steam-powered cars go back as far as 16th-century France.
Fuel cells, which had been around for well more than 150 years by 1961, were modernized and made efficient by the space program. Without that, we'd not be developing hydrogen-fueled EVs.
Until the Manhattan Project, nuclear power had been merely a theory. The Project made it reality. This is a lot more difficult than modernizing or actually having to create all-new products which have been familiar for decades.
Please stick around and contribute again.
Steve

[Peter007]

Sell the city of Detroit to Canada. Let them have the problems. We have enough cars here in the US. We don't need any more. I'm tired of hearing about Detroit and all their problems. Give the city to Canada.

[StrayCatzX5]

At what point are Americans going to realize that the Big Three,not their unionized workforce, created their own mess? In the pre-Roger Smith days,GM was quite well,as their largest customer base was THEIR EMPLOYEE base. We,and our families,kept the sales figures high. As ol' Rog started the decimation of the workforce,the sales went down,and the pleas of corporate poverty began. How easily it is forgotten that in 1982,when the UAW first granted concessions,Roger Smith put a 21+ million dollar salary(BEFORE stock options and other perks) in his already stretched pockets.

As far as the quality issues that will be spoken of;management was more concerned with quantity than quality,and it showed. The people on the factory floor desired to turn out a high-quality product,but were thwarted at virtually every turn by a foreman standing over their shoulder telling them "...if you don't want to run the parts/cars­/whatever,­someone on the street will". Hell of an attitude,eh? Yet,thanks to the media driven pogrom against a once-solid middle class,Unions and their membership are constantly blamed for the woes of a corporation. Any discussion about the criminals at the top siphoning massive amounts of money out of the budget to line their pockets? Can you say "Al Dunlap"?

[Steve Parker - Huffpost Blogger]

Hell of a comment - you clearly know what you're writing about.
One amazing outcome of this "crisis" is that Saturn, which had more than a bit of genius in it when Smith created it - with the permission of the company's board - is now in danger of disappearing forever. What the public didn't know is that the creation of Saturn cost GM a minimum of $10 billion, and insiders told us that the division would NEVER make a dime for the company.
As bad as Smith was, what he did with the Saturn union agreement (which no longer exists) and how the General forced Saturn dealers to treat their customers like actual human beings and not just another "up" (you car guys know what I'm writing about) --- were good things.
Ultimately, though, GM can no longer absorb the division's debt.
Steve

[Mildmannered]

"And Detroit automakers will also be closely involved in the development of the most modern types of high-speed rail lines to criss-cross the nation, and of efficient light rail systems for our towns and cities."

I like that!

[dbartenstein]

If the quality of the cars they turn out is any indicator, then I would prefer that Detroit not be given such a contract..­....

[Northernmom]

Have you actually gone to a showroom in the past year and driven one of the new models from the domestic auto makers?

[Steve Parker - Huffpost Blogger]

Thank you. Anyone who has traveled to Asia or Europe or the subcontinent knows the value of public rail at all levels, in-town and cross-country.
Americans on our east coast and in Chicago know about this, too.
West of the Mississippi, there is essentially no public transit, except for BART in San Francisco and some local systems in Portland and Seattle.
Of course, after WWII, Southern California was home to the Red Line, the world's largest mass-transit rail system. GM, Standard Oil and Firestone convinced the city and country fathers to rip it all up and use new "modern" busses - the wave of the future.
There's a book and movie there - and I'm hoping to write it.
Steve