Bailout, Part Three

Over the past week or two I've written a couple of posts on the bailout (ok, "loan") that the Detroit Three automakers are asking from Congress.  The D-3 claim it will help them invest in efficient and green technologies, but I have a slightly different take:

• The "loans" are in effect a bailout of pathetic leadership that didn't have the vision to invest in such technologies when the likes of Toyota, Honda, and even Nissan were doing so.
• U.S. companies often complain about their foreign competitors being directly or indirectly subsidized by their governments... but how is that different from what is being considered here?

These "loans" are also a subject of some consternation over here in Europe, with articles last Friday in the local editions of three different newspapers. 

The "loans" will probably pass, and the Detroit Three will get to access $25 billion to supposedly fund the retooling of factories and the investment into new efficient technologies.  Something they should have been doing all along, but were too busy trying to figure out how to shed knowledge workers and develop new RAM trucks.  I guess that's what got my gall up this time.  Here's Jim Press of Chrysler:

“It’s a way for us to accelerate technology so you can get it in the hands of people faster and so they can afford it,” Chrysler’s vice chairman, James E. Press, said at an industry event.

And in a different article the same day:

Now, with the auto maker's sales in a deep slump, Cerberus's best chance for salvaging the bet is riding on a single vehicle: the new Dodge Ram pickup.  Chrysler Vice Chairman Jim Press acknowledged the new pickup is a key product and its most important launch this year.

Come on, Jim, isn't that just a bit disingenuous?  I have tremendous respect for you from your Toyota days, so this is disappointing.  What type of vehicle typifies the disaster of the Detroit Three?  The truck.  What do you want your "loans" for?  To develop new efficient small cars and technology.  What are you betting your future on?  A truck.

Yes, Jim inherited the Ram program.  But in this case a loan is still a bailout of pathetic leadership.  Putting lipstick on a pig doesn't change the fact that it's a pig. Oops... I guess that metaphor has been a bit over-used in the past week.  Sorry.  Not that I'm comparing Chrysler's Jim Press to a pig. But perhaps GM's Wagoner is.

Comments

[Andy Wagner]

Perfume on a pig! It's perfume on a pig! Much better aliteration that way.

[Gary Gathen]

My question is: Will the loans be used to purchase tooling for the new furl-efficient cars in the US or will they be outsourced to Asia?

[david foster]

A fundamental assumption of the political classes seems to be that any *new* technology must be produced by the same companies that were leaders with the *old* technologies. Had this approach been applied to the Internet (remember the "national information infrastructure"?) we would have given huge subsidies to AT&T and IBM so that they could develop some Frankenstein monster of a telecommunications technology.

In reality, the old-technology leaders are almost never the new-technology leaders. Innovations in vehicle propulsion are likely to come either from startups or from established companies in different businesses.

Why should we subsidize GM instead of GE to develop electric cars? GE knows quite a bit more about things electrical, especially since GM mindlessly disposed of the locomotive division.