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:
"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."
"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."
"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?).
"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).
"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).