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March 26, 2009

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A couple of quick points in response to Mr. Lessenberry.

First, nobody is buying cars now. That's a problem, not just for GM, but also for Toyota, VW, Nissan, Hyundai and BMW. A GM electric car like the Volt isn't much of an answer to anything this year, since even Priuses aren't selling.

It would be nice if GM could act like a normal, sensible business in response to a steep and sudden decline in demand, and lay off production workers. But the stranglehold of the UAW prevents GM from doing that in a cost-effective manner.

It would also be nice if Congress thought about doing the things that might make GM profitable sooner, without throwing billions in government money at the old business model. Congress could repeal the idiotic CAFE standards that punish GM, favor Toyota, and which are ignored by BMW.

The only real ingredient necessary to do those things would be the will to go against entrenched Democratic Party interests in Congress.

Our government has no choice but to continue to fund GM/Chrysler since we are funding the rebuilding of an entire nation ( Iraq)..

It would help if the CEO's of Ford, GM, Chrysler were fired ASAP. I find it amazing that slugs still post myths about unions who only are 10% of car costs..

The Volt is a dead end as is any electric car model..The world does not need more automobiles on the planet we need massive public transit vehicles..The notion that 13 million new cars are required every year is insane...

There is a hugh untapped market for public transit and of course the manufacturing capacity of US auto makers can be retooled for other industries( Please recall WWII for the uninformed)...

For a change, I agree with Thrasher (this time only?) on the need for much more and better public transit, including high-speed rail. As for Mr.Ovshinsky, while he is an impressive innovator, his biggest achievement may have been convincing the federal government to fund his efforts with millions of dollars, without any of his ventures being profitable for over 30 years! My hats off to that kind of chutzpah and lobbying prowess - I only wish I could get a measly $50-100K for my alternative energy R&D work! However, because of his shortcoming in the business area, we shouldn't compare Ovshinsky to a Bill Gates, Steve Jobs, or Sergey Brin (or Tesla or Edison for that matter). Then again, maybe Stan is the closest we'll ever come to having a superstar entrepreneur in Michigan (since Ford anyway).

As for the comment by "anonymous" about CAFE standards - that is a red-herring - since these increased standards haven't even kicked in yet and that's NOT why people aren't buying cars or why Detroit can't sell them! You could make all the giant SUV's and Hummer's you want and price them 30% less and they STILL wouldn't sell. But the lack of vision, innovation, preparation, a willingness to reduce wages and bonuses (both white collar and blue collar) has a lot to do with the current problems, while the lack of available credit has a LOT to do with the current crisis. That's also why Japanese cars aren't selling. NO, trying to build more fuel efficient cars has NOTHING to do with the current crisis with auto sales, but it is possible that people's car buying habits may have permanently changed and they may also demand better values in cars and lower operation costs in the future (well, at least for the next decade). If this is the case, there isn't much that Detroit automakers (or the government, for that matter) can do, but shrink the operations some more, or just give up.

As far as electric cars go, I think eventually they WILL be the way to go, but because we are about 10 years behind where we should be with them, I don't think they will be all that significant over the next few years and they still face some serious technical problems and cost hurtles. Also, I think mass transit really does offer some good alternatives even to electric cars. Never the less I am confident and optimistic that SCIENCE and SCIENTISTS (like Mr. Ovshinsky) will get us there, within the next decade. I just hope we don't become dependent on China for the lithium batteries we will need to power them - then we'll be right back where we are now with oil. We DO need to get back to manufacturing THINGS (rather than financial "instruments") in this country and the more of this we can do the better. With all due respect to Tom Friedman, I think the world "got flat" WAY too fast.

George attacks me for my criticism of CAFE standards.

Let me first stipulate that CAFE standards are probably not the number one item on Jack Wagoner's desk right now. Let me also stipulate that we haven't actually heard GM complain about CAFE standards lately. As to that latter point, however, we should recall that GM is now a ward of the federal government and as such is unlikely to bite the (Democratic Party) hand that is feeding it.

Now, back to the "merits" of CAFE. It is arguable that by ignoring the cost of fuel and instead mandating fleet economy, the federal government is doing very little to encourage the marketplace to conserve and innovate. CAFE standards simply transfer market share from domestic makers to transplant makers.

GM hasn't lost money because it made light trucks and large SUV's. GM made money on those platforms. In a normal market environment, those units did sell, and they would likely sell again. If an honest broker in the truth were to ask GM, "What can the government do to help you become profitable?", the honest answer would have to include, "Repeal CAFE."

The argument that incerasing CAFE standards "haven't kicked in yet" is a silly one. Right now, GM is planning product lines for 2012 and beyond. That is the time frame they must address. And Congress has treaditionally given the automakers just about the minimum amount of time to get to its standards, whatever they may be.

I still don't understand, "Anonymous" - if people want higher mileage and higher quality cars, how is requiring higher CAFE standards in opposition to that or harming that goal? Do you REALLY think people will go back to buying LOTS of big SUV's and trucks (that they use mainly to go to work and the mall by themselves)? Doesn't the cost of fuel matter to most people when considering a car purchase these days? I think the public is ahead of Detroit and that is the problem. Do you think everyone is STUPID for not wanting to keep buying high cost gas guzzlers? The world is changing (and getting hotter) - accept it and get used to it! We need people who can innovate and provide solutions to these problems, not just wanting us to maintain the failed status quo. We bought our prosperity (and SUV's) over the last decade with borrowed money - now we have to pay it back. It's always a lot more fun buying stuff than having to pay for. That goes for energy gotten at the cost of increased CO2 emissions too - we now have to pay for that as well.
As Obama has said - its time to be adults and face the facts. Detroit dragged its feet (and fought new technologies that could increase mileage for years) and now it has to face the consequences - its as simple as that. Repealing CAFE (which will NEVER happen) wouldn't make any difference now - people will still demand higher mileage cars, particularly if gas goes back over $3 a gallon.

People will demand higher-mileage vehicles if the price of gasoline is higher. They do that in Japan and Europe already.

My point is this. Either back up your personal feelings about 'climate change' with the political will to tax gasoline (and to take the consequent political fallout at the ballot box), or not.

But nobody -- not Japan, not Europe -- nobody has been so stupid as to regulate "Corporate Average Fuel Economy." The United States Congress is the only institution that has been foolish enough, and so desperate to avoid any accountability, to enact something as ludicrous as CAFE.

I'm happy stand by what the marketplace decides; so far, what the marketplace has said is that barring a financial/credit crisis, Americans like to buy Corvettes, Mustangs, Chargers, Escalades and Expeditions. The market has told us that for years.

The marketplace also has told us that people are indeed sensitive to gasoline usage when the price spikes, and that they are not sensitive to gasoline usage when the prices are low and flat.

George, you should quit listening to NPR, and perhaps the little voices in your head, as to "what people want," and instead talk to a Chevy dealer.

Chevy dealers will be out of business (or moving on to sell Toyotas) if GM goes under. By the way, many foreign cars are now made here in the US and most US cars have lots of foreign content. Yeah, raising gas taxes would be more politically dangerous, but the effect would be different too. If gas prices are forced up using taxes, then people would be FORCED to to buy more fuel efficient cars, to save money. If CAFE standards are increased, the cost of cars would likely actually go down (because many would be smaller) and nobody would be forced to buy any particular vehicle (SUV's and Trucks would still be available). That way, if gas prices don't go up, people would save a lot of money on gas, without being forced to buy anything they don't want. If GM still wanted to make Hummers and people, like you, wanted to buy one, you could. Increasing fuel economy is painless for the public (even if it might be more expensive for the car companies). You could make an electric Hummer that gets the equivalent of 40mpg and costs the same. What? You'll miss your VROooom - VROooom sound?! We can put some nice loud speakers in it for you.

As far as what people want, I can't speak for EVERYONE else (just the majority), but I won't talk to a dealer wanting to sell me what he/she has on the floor, I'll shop around the world for what I want to buy and it will have to be innovative and environmentally friendly - not just nostalgic. I don't need 400HP to get to work or buy some milk (and I don't own a boat or trailer).

I must not be the only one listening to NPR - since you are too. As far as I am concerned, NPR has become too conservative and "wimpy" for my tastes. They should have reported on global warming, mortgage fraud, the mortgage bubble, the internet bubble, Bernie Madoff and a lot of other things, more than a decade ago.

Of course. NPR and Michigan Radio. Radio by the liberals, for the liberals.

Here's a radical idea, George:

Let's se what we can do to foster some "profitable" domestic automakers. That's all. Let people buy the kinds of cars they want to buy. And let automakers build those cars that people want to buy.

The more I see and hear from Democratic Party supporters, the more I think their vision of an automotive industry consists of the kinds of square, black, practical sedans we saw in Eastern Europe and China during the Cold War.

The Democratic Party is incapable of running a profitable domestic automaker. And we see the beginnings of that just today. The President, demanding the resignation of GM's CEO as a sacrificial political lamb, to apparently make his friends on the left feel better about necessary (and long overdue) concessions to be demanded of the UAW and other stakeholders.

Where, in all of this, is "profitability"? What will Rick Wagoner's departure do to enhance "profitability." Can there be any possible explanation why Congress wouldn't have gone to GM's management and consultants to say, "What do we need to do for you for you to be profitable?"

Gentlemen, even the most recent increase in cafe standards will be attainable by a hybrid Escalade in the next 3 years. You can buy one now that does 21/20 city highway, same for the Tahoe. The auto industry is still lying and still dictating cafe standards.
Of importance and unfortunately missing from Jack's show is the fact that Dr. Ovshinsky's battery gave the EV-1 a range of about 120 miles on a charge. With lithium polymers and ultracapacitors, a cafe standard of 50 MPG is attainable, a 300+ mile range, and a 20 minute or less recharge time.

The obstacle IS the auto companies, and the oil companies and they buy our government every day. They buy our voice in government, and more, they mute our voice in government. Its what rich pigs do.

Right; rather than build profitable (?) electric cars with a bright future for the world (?), General Motors decide that it would just go out of business. All in order to, what, preserve the secret deal they have cut with "the oil companies."

Is this what passes for serious debate in the minds of public radio's listenership?

I don't doubt, for a moment, that Hybrid Escalades/Tahoes/Yukons will comply with CAFE. Moreover, I don't suggest that the atuomakers' problems begin or end with CAFE.

My only point is that CAFE standards are, in and of themselves, essentially meaningless and pointless except from a purely political point of view -- to make Democrats feel like they are dong something, without having to pay any price themselves for doing it. And that CAFE serves as a tax on the domestic Detroit Three automakers. At a time when they can ill afford it. BMW and Prsche most assuredly don't comply with CAFE. But because they aren't beholden to Democrats in Congress, they just pay their fines and go about the business of building the best cars they know how to build to serve their customers.

I haven't even debated the science or the economic utility of "global warming." I don't mind at all if that is your belief and conviction. But please, if that is your motivating force, do something that is meaningful, like enacting a steep rise in gasoline taxes.

And then accept the consequences if voters turn against you.

GM and Chrysler can still live to see another day - it just won't look the same.

The problem with conservatives in general and most Republicans in particular is that they choose only 1-2 issues to OBSESS about (i.e. taxes, abortion, evolution, NON-global warming, more taxes, prayer in schools, guns, more taxes, tax cuts, capital gains, money, more money, still more money, their lawns, etc. - PICK ONLY 2!). It seems they don't do well being able to keep more than a couple of things in their mind at any one time - hence the term "conservative", as in, 'easier to just keep things the same as they have always been', such as Rick Wagoner, obsolete auto technologies, banks, oil companies, electric utilities, Bush (even AFTER Iraq), etc. Obama knows everything he is proposing is VERY risky and he is prepared to take those risks - that's more than you can say for most politicians. I am sure if he felt that the only way to get us off foreign oil and switch to alternative forms of energy was to increase gas taxes - he'd propose that as well - he does not seem to act out of a sense of fear. I have full confidence that, at least he is trying his best, to CHANGE things from what they have been for the last three decades. Don't worry, the unions are going to feel plenty of pain too and Mr. Gettlefinger might just choose to resign if he refuses to make any more concessions. Obama seems to be an equal opportunity punisher - except for the AIG & the banks. I hope he revisits them as well and applies a little "tough love' there too, not just in Detroit.

Let's give President Obama at least one full year to see what he can do (I can't believe there are people who expect him to do this in 2-3 months). We gave Bush 8 years to totally wreck this country and he already did a pretty good job the first 4. So, we can't be all that bright now, can we? Let's hope Obama and his people are smarter than we were back then. At least he can talk (our prior President couldn't talk and walk at the same time - strike that - he couldn't even talk WITHOUT walking).

Interesting how the white house agreed with me about how the VOLT is not the future for GM or the auto industry..

I don't think GM ever claimed that it was placing ALL its bets on the Volt. It was also doing very forward looking work on fuel cell powered cars (which may never be feasible - but we will have to wait and see). If GM does go under lets hope the Volt and fuel cell technology can be transferred to another company.

Fuel call cars will never emerged to make a difference...We need massive public transit all over the globe..

We can have full employment with an industry and nation that targets mass public transit not expensive fuel cell units/vehicles..

The planet does not need million more auto vehicles regardles of how they are fueled..We must have a global view of the world not a view based upon a single industry recovery..

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