Essay: Recharging Batteries - 1/14/09
Governor Granholm’s decision to do all she can to boost the electric battery industry in the state could be even better news.
And a lot of people are excited about a new Ann Arbor-based company called Sakti3, which just might be near a breakthrough in developing the next generation of lithium ion batteries.
I don’t want to throw cold water on any of this. Right now, a big chunk of what Michigan needs is hope. But I think we should be a little cautious about putting all our psychological eggs in one basket. We in this state have, after all, gone through many rounds of what I call the “Hudson’s Building” syndrome. Hudson’s, if you weren’t around, was Detroit’s signature department store, sort of like Macy’s in New York. Generations of people flocked to it, in the era before shopping malls. Women used to dress up in white gloves before shopping there. Then times changed.
The J.L. Hudson company, which no longer exists, shocked the city at the end of 1982 by announcing that the flagship downtown store would close. But everybody agreed the building itself was as much a part of the fabric of Detroit as General Motors.
Some new great thing had to be done with this building. So, periodically, there would be front-page headlines announcing that the Hudson’s building was going to become a luxury hotel. Or a casino.
Or this, or that. Nothing ever happened, and in 1998, they finally blew it up, accidentally taking a chunk of the People Mover with it. Now -- I realize this isn’t a perfect analogy.
Saving the past and creating the future are two different things. It’s just that it is easy to believe what we want to believe. My seventh-grade science teacher told us that the only real question is whether we would be driving cars that were electric, or powered by solar cells.
He may be right yet. But he told us that in 1963, and the technology hasn’t developed as fast as he expected. General Motors’ announcement that it intends to make the batteries for the Volt here is exciting news.That is exactly the right thing for this automaker to say and do at this time. But at the risk of being Cassandra, I must point out that this is a company whose very survival is in question. And GM almost certainly depends on the government lending them more billions later this year.
Announcing a plan to outsource battery production to India would not be a good idea right now. We should also bear in mind that we don’t know whether the Chevy Volt will in fact become this century’s Model T. We don’t know if it will be even a limited success.
Someday, some new venture somewhere in Michigan will, almost certainly, take off. But for now, putting all our hopes on one possibility could be a very risky thing to do.
I agree entirely with what Mr. Lessenberry has written today, but perhaps from an entirely different mindset. Or maybe not.
Yes, the future of "electric cars" is fuzzy. And yes, we need to be very, very cautious about investments in one particular notion of the future. The future might have different ideas.
But we should all recognize that part of what is "driving" these notions is the presumption that we have to reinvent the automobile in a way that is pleasing to someone like Al Gore. Instead of addressing the more practical and immediate question of why the North American automobile business is not profitable.
There are some simple reasons why the North American automotive market has not been profitable, for Toyota and Honda as well as Ford and General Motors: Over-production, wage scales, the most competitive consumer market in the world, etc. And there are reasons why the recent past has been even more unprofitable for General Motors, Chrysler and Ford than their foriegn-transplant competitors: CAFE standards, legacy costs, union work rules, etc.
With all of that on the table, it really does seem, as Mr. Lessenberry cautions, that "electic cars" and "Lithium battery factories" sound more like Jennifer Granholm's platform for a Senate run than serious automotive policy.
No one has answered, and Mr. Lessenberry hasn't asked, the basic question: How do we make the Detroit Three profitable by, say, 2011? There is a long list of possible answers, and I suspect that "Lithium ion battery power" is a long, long way down on that list.
Posted by: Anonymous | January 14, 2009 at 04:11 PM
I, too, am very skeptical when I hear yet another of Governor Granholm's 'grand schemes' for fixing Michigan's many problems. I would still like to know where all the 21'st century money was spent and how many NEW jobs it has really created. Granholm had promised that the first year's expenditure of $100M would create 3000 new jobs - did it? Perhaps Jack could call the Governor's office to inquire about this and get an updated accounting of how this money has been spent and what the pay-off has been. I think this would be an interesting follow-up to the question of how many 'battery jobs' will be created from all this hype about lithium batteries or the new 'lithium economy'. BY the way, most of the lithium and battery 'cells' will come from China and Korea and, at least in theory, these cells could be assembled into power packs by robots. So, I don't believe that it will take thousands of people to build these battery packs, or the cars that they will go into.
Posted by: The Truth Seeker | January 15, 2009 at 01:00 PM