September 17, 2008, - 6:36 am

Will GM (or Ford or Chrysler) Have Another 100 Years?

By Debbie Schlussel
Yesterday was the 100th birthday of General Motors, a big deal here in the Motor City, but not as big a deal as it would have been 20 or even 10 years ago.
A local newspaper asked four auto industry experts and economists what kinds of innovations and new products are in store for GM in the next century. I laughed because it’s beyond foolish optimism to believe that GM will actually have another century.
But I didn’t laugh with glee. I live in Detroit and am sad that our once-great industry is crumbling, and much of Michigan is going with it. My fortunes and that of my father and other family members were very closely tied to the automotive industry–many of my Dad’s patients were autoworkers. When they lost, he lost, and so did we. Many were good people with class Reagan Democrat values and a good work ethic, despite the many stories we’d read about UAW shenanigans.

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I’m sad we’ve lost so many manufacturing jobs. But Michigan was fifty times more dependent on this one industry than any other state in the Union is on any other industry. Never smart to put all your eggs in one basket. The Golden Goose eventually dies or retires.
Right now, the top three American auto industry execs are asking Congress for a $25 billion bailout, while they and their top minions continue to collect gazillions for poor performance. The auto industry is failing, and I really don’t believe any of the big three will be around–in their current configurations–fifty years from now.
It’s hard to imagine Americans continuing to subsidize $1,500 per car in bloated healthcare plans that pay for Viagra and Cialis ($17 million in GM auto sales pays for Viagra). Although the salad days of the automotive America are gone, the salad days’ benefits are still livin’ large for autoworker retirees.
And although GM and the other big auto companies are selling growing numbers of cars elsewhere (China, India, etc.), their market share will continue to decline here as gas prices go up and the economy continues its tailspin. People are going to hold onto their cars longer, too.
Fifty years from now, we might have electric cars like Tesla Motors’ product at a more economical price, complete battery power cars, or some other way of getting around that we don’t even dream of now. The guy who changes my oil believes there will be 11 smaller companies selling a few models each and none of the big three will still be around. He may be right.
What do you think? What is in store for our automotive future? Will any of the (formerly) Big Three be around?
***
Read my related piece: Is it Patriotic to Buy American?

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12 Responses

Hard to say. In the short term they will be around since they will get taxpayer money for bailouts in the near future the same as we are giving handouts to AIG and the rest of these outfits that know they can do whatever they want & the Government, & McObama as well will bail them out.
In the long term probably not. In addition to excessive welfare benefits to employees, they don’t keep up with the Japanese in production techniques, economy and innovations.

c f on September 17, 2008 at 7:22 am

In general, companies which have been leaders at one stage of a technology are not the leaders–and often, not even the survivors–at a later stage of the technology. See Christensen & Raynor for an analysis of this process.
my review here:http://photoncourier.blogspot.com/2004_05_01_photoncourier_archive.html#108533291035399783
If the future of automotive turns out to be largely electric, there is no particular reason to expect the “big 3″ to lead in this. More likely, the key elements of the propulsion system will be developed by a start-up or perhaps by a large existing company with signficant electrical expertise and research capability (ie, GE or Siemens)

photoncourier.blogspot.com on September 17, 2008 at 9:42 am

#1 “Everyday Survival” by Laurence Gonzales. Recounts any number of bad decisions by smart people, and the consequences. #2 “Things Change”, by David Mamet, starring Don Ameche and Joe Mantegna. The story of a humble shoe shiner caught up in Mob hit, with entitled people who are sure they’re in charge making bad decisions, and the Doctrine of Unintended Consequences fully played out. Beautiful.
#3 My brother, who regularly testifies before Congress and sits on several national security committees says “Freedom is messy”. That damn sure applies to markets.
You can have Law, or you can have Order. But you’ll never have both at the same time.
With Merrill now belonging to Bank of Asshats, Lehman’s being piecemealed at fire sale prices, and AIG proving that smart people regularly make stupid decisions, I’d hazard that it’s nearly impossible that any of the Big Three as we know them will be around in ten years. Amalgams, blended family, takeover, absorption, asset sell off .. whatever … but its nearly impossible they will still be what we call the Big Three.

Johnny Yuma on September 17, 2008 at 9:58 am

Tesla Motors definitely has the lead in electric vehicle powerplant development. I believe their design will become more prevalent in automobiles. We should see viable commercial electric cars 5 years from now. Michigan better get busy building some generating stations!
On another note, GM has taken a leading position in flex fuel vehicles. These vehicles burn any combination of Ethanol and gasoline. My 2008 Chevy Impala uses less petroleum than a Toyota Prius and at 6′-3″ I don’t have to fold myself like a pretzel to fit in it.
Moreover, there’s no reason flex fuel vehicles can’t run on methanol. America has limitless sources of feedstock for methanol production. In short, alcohol fuels provide excellent vehicle performance. Brazil no longer imports petroleum. OPEC can be broken and GM offers more flex fuel vehicles than any other manufacturer.
We can do more. By passing a flex fuel vehicle mandate (requiring all cars to run on ethanol, methanol and gasoline in any combination) we can have 50 million vehicles on the road in 3 years which need not by fuel from OPEC. Such a mandate is on the floor of the Congress right now. I urge you and all your readers to support the Open Fuels Standard Act of 2008. Write your congressman today!
For more information:
http://www.energyvictory.net/images/Summary_of_the_Open_Fuel_Standard_Act.PDF
I also encourage readers to visit the ENERGY VICTORY web site at:
http://www.energyvictory.net/
Regards,
There is NO Santa Claus (aka TINSC)

There is NO Santa Claus on September 17, 2008 at 10:11 am

The big 3 is collapsing and this is because of the culmination of free trade deals that have been enacted since the early 90s. The massive outsourcing of our jobs have hollowed out our economy. NAFTA, GATT, WTO and Most Favored Nation with China are reasons why people dont have the manufacturing jobs we once had. Others factors are we dont have the engineering and cant keep up with Japan in quality. This is due in part of the cultural shift in America. Education no longer is as important to family as it once was. Video games and MTV are what consumes children. Parents cant control their children and therefore we dont have enough children going in these fields. Other countries such as Japan, India, and China have more children in essential fields of engineering and science. Labor unions also have just been taking and taking and never considered that it was bad for the bottom line for the Big 3. Now the day of reckoning has come. Along with “insourcing” of illegal alien labor the American worker is being squeezed from both sides.
Unfortunately the Big 3 will be bought out by Japanese carmakers and the Big 3 will be just a marketing arm of any buyout.
Also any new electric car innovations will only be beat by cheap Chinese labor. Any start up companies here in America will just have it mass produced in China. Because of these free trade deals there is no future for manufacturing.
Until America changes it policy toward free trade “buying America” is a concept not a reality.

californiascreaming on September 17, 2008 at 11:11 am

“there will be 11 smaller companies”
I disagree. Unless it becomes real cheap to manufacture a car this simply cannot be. Fixed costs, as well as economies of scale and scope will result in consolidation to only a handful of companies.

I_am_me on September 17, 2008 at 2:24 pm

I sure as hell hope so. I have never owned an import and never will. GM and/or Ford should be around long enough to see me through to that great tri-oval in the sky. My Dad currently owns two Yukons and an old ’92 Jimmy with extreme miles. Over 300K each for the Yukons and over 200K for the Jimmy. I don’t keep my cars long enough to put any miles on them but I thrash the living hell out of them and they hold up fine. I believe that our strength as a country, the strength of our military is totally reliant on the domestic manufacturing base. It appears we will be turning to Cat and John Deere for those purposes in the not too distant future. I also hold a huge grudge for the death of my Mother’s brother at Normandy and for the blood and guts another brother left at Guadacanal during WWII. While Uncle Robert died long before I was born, I knew Uncle Chuck until his death a couple of years ago. I’m Scots-Irish and will not forget and reward a country for murdering Americans.

iowavette on September 17, 2008 at 3:00 pm

Like GM’s 100th birthday, another forgotten event is CONSTITUTION DAY which is today, September 17th.
The first link below is for an article by Chuck Baldwin, the Presidential candidate for the Constitution Party. The second link is an article by Darrel Castle – the Constitution Party’s Vice-Presidential candidate. Both articles commemorate a very important document that is responsible directly or indirectly for all the blessings and comforts that we have enjoyed since the birth of our nation:
http://www.baldwin08.com/ARTICLE-Baldwin_A_Salute_To_Our_US_Constitution.cfm
http://www.baldwin08.com/ARTICLE-Castle_Constitution_Day_2008.cfm
VOTE CHUCK BALDWIN FOR PRESIDENT!!

ramjordan on September 18, 2008 at 12:12 am

The Federal government should see that it is in their best interests to support loans for the Domestic Auto Manufacturers. What seems to get lost in the shuffle of Automotive facts is the fact that the Asian governments helped their industries financially and by protecting their home markets. It is in the best interest of our Federal government to provide support and a financial hand to those who employ hundreds of thousands of American Workers and their subsidiaries in the dwindling US Manufacturing Industries. Sure there are excesses in compensation for Hard-Working Auto Execs, I mean, they are Not Rock Stars, or Entertainers. Hey, the Auto Execs are actually responsible for producing products. Well, what do you know… American Workers support our Tax base, FICA, and a host of other necessities. The tragic loss of jobs will not be confined to the “Rust belt”; no, the ripple effect will be far and wide. One aspect of the Domestic Auto Industry that no one wants to seem to talk about is that among the Elite, and those who have no patriotic loyalty to America, there is an almost anti-American sentiment in this country against ANYTHING DOMESTIC. Whether it is Domestic beer, cheese or cars, the Left is having none of it. And they’re denigrating your right to “choose” American, with their rabid anti-domestic policies. This is an American Travesty. If you love your country and want American businesses to thrive, you are called “xenophobic”. How about self-preservation. The Most Basic Instinct? P.S. The “downside” with energy intensive Electric Vehicles is, you can GET TO WORK, but you CANNOT GET BACK HOME. Oops! Serious glitch…lol

Roads Skolar on September 18, 2008 at 7:12 am

THIS–So now we’re mixing PRIVATIZED PROFITS with SOCIALIZED LOSSES to fix the economy?–from Lisa Chapman Karbowniczak in yesterday’s a NY *Daily News* letter to the editor.
ALL the limbaughnista Republicans are responsible for the meltdown…in the face of the gas crunch from the Seventies all of y’all said, “WE need big cars and SUVs and fuck the mileage,” just as the stockbrokers said, “Hey, these sub-prime mortgages are BETTER than dot.coms” and NOW you want to blame the victims?
Yeah, the UAW got greedy too…but all that is fueled by the Reaganomic cult of GREED, and now the chickens are coming home to roost!

EminemsRevenge on September 18, 2008 at 7:35 am

What’s up with all of the Barnyard animal references? Is this “Brave New World” meats “Animal Farm”? “Lipstick on a Pig”? “Chickens come home to roost”? Admittedly, no one wants to buy a Pig-in-a-Poke or cast their Pearls before Swine, but I know a guy who bought the Farm, and he doesn’t like it. It’s not like you can turn a Sow’s ear into a silk purse or anything? Which brings me to the question: What is the difference between a Chicken and a Pig in Bacon and Eggs? The Chicken is involved, the Pig is committed… Cluck, cluck. Oink oink.

Roads Skolar on September 18, 2008 at 8:52 am

The biggest reason The big three are going down the tubes is our own Federal Government. Where in the Constitution does it say the Federal Government has the right to dictate how Detroit builds automobiles.
That is exactly what is happening with CAFE standards and other standards imposed on the big three.In addition,foreign car makers do not pay the VAT tax because of our idiotic Congress. They do not compete on a level playing field.American car makers have to pay the VAT on all foreign exports.
And like another poster wrote, it is the free trade deals hatched in Congress that are destroying the middle class and the manufacturing base in the USA. NAFTA,CAFTA,and the FTA are all unconstitutional trade deals that will destroy our middle class in America.
IMHO-It is treason that we are being destroyed by our own elected representatives.
What amazes me is that Japanese would rather buy a Ford or GM but the cars are not built there with the same Idiotic Federal mandates we have here. Ford has a Diesel Automobile that sells in Asia that gets 65mpg and there is a waiting list of months to get one.
Ford is not allowed to sell that car in the USA because it does not meet Federal Auto Standards.
All Three Automakers sales are just fine worldwide but are down in America because of the
Federal Motor Vehicles standards here enacted by our own CONGRESS and President GWB.
Time to vote the Anti American Elites out of Office and replace them with America First Candidates.
VOTE CHUCK BALDWIN FOR PRESIDENT 2008- The only Conservative that is running and is America First.

ScottyDog on September 18, 2008 at 7:55 pm

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