How To Save The Auto Industry
– by David Matthews 2
The automobile is considered one of the hallmarks of American invention and innovation. Americans didn’t invent the automobile, but it was Henry Ford that invented the method of mass-production, and to do so with high volume and make them cheap enough for as many people as possible to get one.
In fact that was the big secret behind the success of the automobile industry back then. They made them in high volume, but they also made them affordable. And the business world and local governments help provide for this by improving the roads, paving them over, making them smoother, opening the door for mechanics and auto parts stores and gas stations to be put up.
Whole communities were built up and supported by the mass-production of American automobiles. Their very lives were dependant on the viability of the automakers.
Now the American automakers are dying. They’ve been dying for quite some time now… they’ve just been able to deny it for this long. They masked their symptoms, blamed them on other factors, minimized the scope of their condition, and led people to believe that nothing was wrong.
To be certain, the automobile industry itself is NOT dying. The automobile is far from endangered. But American automakers are struggling, and in fact two of the three companies that make up the “Big Three” are on the verge of going the way of the Tucker. Chrysler has recently declared bankruptcy and will have to scavenge most of its assets and facilities just to pay creditors. General Motors is struggling to keep from joining them. Ford is the only one that is surviving, and they may be the only ones left in America if things keep on going they way they have been.
There are plenty of fingers being pointed for the reasons behind this. Bad economy, failing banks, instability in the price of gas, inept management of America’s energy policy… and of course unions get the most heat.
But if you want the REAL source of the problem, you just have to look at what the “Big Three” were trying to do for the past decade.
For the longest time, the automakers have been shoveling high-cost high-powered vehicles, often with really low gas mileage. In the 1990’s those things were possible because gas prices were kept artificially low thanks to increased dependency on foreign oil. The federal government also helped tremendously by giving these vehicles waivers from fuel mileage standards and giving tax breaks for businesses to buy them. And of course there was plenty of financing for these vehicles.
In short, the social and economic environment was artificially maintained so these vehicles could be sold!
Unfortunately these conditions didn’t last. And rather than change and adapt, these automakers kept on churning the vehicles out and expecting the conditions to fix themselves. They ignored the warnings and dismissed them as wealth envy or jealousy or environmentalist hysteria.
Now those days of excuses are over with. The economy is in decline. The sins of the past have caught up with them, and like a bulimic model in denial, the automakers are scavenging everything they have just to survive. They’re shutting down plants, laying-off countless thousands of hard-working Americans, and in the process killing whole communities that have been built-up and sustained by the jobs they provided.
Sure the government has tried to help. They have been bailing out the Big Three off-and-on for years. They’re the needy addict-friend that calls up when they need money. Each time they PROMISE to change, and they PROMISE to improve, but the overall problems still exist.
So are they destined to fail? Are they beyond hope and beyond help?
The American automakers CAN bounce back. But only if they do things right.
Step one is to BURY the sport-utility vehicle. That needs to go away. The idea that you can create a mini-van from a truck was dependent way too much on the price of gas. The reason why the original mini-vans sold in the 1980’s was because they were fuel-efficient. Trucks are not, because they are heavier and rely on too much power, which consumes more fuel. If the automakers stuck with mini-vans, then they probably would not be in this situation today.
But fuel-efficiency is only part of the problem. The gas-powered vehicle has no future! It is a finite fuel and unless there are infinite pockets of oil that have intentionally gone untapped, then we have pretty much reached a saturation point with the resources we have. Even making a hybrid vehicle or using additives like ethanol only postpones the inevitable. It is destined to END. It is only a matter of figuring out under whose terms that it will come to an end, but make no mistake, it WILL come to an end.
The next step is to take several pages out of the history books. If Henry Ford made cars almost a century ago the same way his company does today, then he probably would have been out of business in a year. Likewise, the German automaker Volkswagen probably would have folded after World War II if they patterned their vehicles like their American counterparts of the time.
Their secrets? Affordable vehicles! They didn’t create an expensive car and then artificially create the means to afford it. They made the car affordable.
Cripes, the secret of the original Volkswagen Beetle was that it was powered by the same kind of engine used in lawn mowers! How complicated is that?
The other big thing is fuel. As I just said, and as I have continued to say for years now, the gas-powered vehicle is on borrowed time. It WILL be disappearing; it’s just a matter of when and under what conditions.
Forget gas-powered vehicles. There are plenty of alternatives out there today. They have been discovered and invented and tested and put on dog-and-pony displays for the media and for the White House for years! Pick ONE of them and use it!
So here is the challenge to the automakers… this is how you save yourselves: invent and mass-produce an alterative-powered vehicle for the average American, and do so for under $10,000.
The means to make the vehicles would not be an issue. The automakers would have plenty of eager workers and plenty of prime locations here in this country for the manufacture of an alternative-powered vehicle. You’d have plenty of hungry dealers looking to sell those vehicles. And given the liberal lean of the current White House, you would probably find them to be extremely open to an environmentally-friendly vehicle.
Not only that, but it would necessitate creating the means to support this alternative-powered vehicle, which would mean a whole new batch of businesses and jobs. That also would be a boon for the economy!
So why sell them for under $10,000 you ask? Simple. It’s to generate the DEMAND. Yes, people would LIKE to buy an alternative-powered vehicle, but if you tell them that it’ll cost $50,000 then they’re not going to be in a hurry to get one, especially in a bad economy.
But put the sticker price at less than $10,000, and factor in the depreciation of trade-in vehicles, you’ll find those same people being MORE than willing to make the jump. And then once you HAVE that demand and you can gradually raise the price to match the overhead costs.
Let’s get brutally honest here… it is WELL WITHIN the means of the American automakers to bring themselves back from the brink of oblivion. They were the ones that put themselves into this freefall and they are the ones that can change it. But they have to WANT to change first.
The “Big Three” have to be willing to make some SERIOUS and fundamental changes to their operations. Granted, they wouldn’t be the only ones that would have to. The unions have made plenty of concessions in the past, and while they are jaded by those decisions and how that trust has been systematically abused, they probably would be open to make one more concession if it means a brighter future for their members. Same with the government. It’s hard for environmentalists to say no to an alternative-powered vehicle. Cripes, they’re pushing lightbulbs on us that are classified as hazardous waste if they ever crack or shatter!
The dawn of a new day in automobiles does not have to be the dream of science-fiction writers. Not now. Not when the means of that day have been here and have only lacked the will to make it happen. The executives at Ford, Chrysler, and General Motors need to take the lead on this, and they need to do it RIGHT NOW, lest some European or Asian company beat them to it, because the ones that do it will set the stage for the others. If they sit on their hands on this, then they WILL be sounding the death-knell for the American automotive industry, as well as the death-knell for a HUGE faction of America.