So Sunday, I happen to catch a little of C-SPAN’s coverage of Detroit’s loan application process from this past Tuesday, aka, senators pitching the softballs CEOs love. Bailout. Loan. Corporate welfare. Whatever you want to call it, public perception is that here we go again: Company has financial trouble, then goes looking for the government to write a check.Seeing auto execs explain why they need their share of the current Loanapoolza reminded me of big tobacco a decade ago. Although no CEO in this case tried to say that 11 mpg was excellent, (the big tobacco testilying equivalent of saying nicotine wasn’t addictive), it was clear they’re pinning a lot of their hopes for the industry on, well, hope.
I’ve found that while going in to apply for a loan, it’s okay to have it, it’s just really not such a good idea to use the word out loud.
Watching the proceedings though, two things jumped out: A) Nobody really answers questions directly, and B) The $25 billion being requested doesn’t at all seem close enough to what they’ll need ultimately. Even though I was a career C+ math student, the collective quarterly debt projected through next year plus what they need to break even will be at least three times the initial figure asked for.
Looking specifically at Ford’s efforts and a very in-depth breakdown of the current situation from Ford’s social media director Scott Monty, seems like they’re on the right track. (I worked on the Jaguar and Land Rover brands when Ford owned them, and it was good to see those two finally sold off. Jaguar and Land Rover definitely got the better part of the initial deal—their reliability improved thanks to improvements from Ford’s production capabilities. For its part, Ford got the benefit of losing focus on their core brands because they were spread too thin.)
Thing is, is it too late to see a lot of these efforts come to fruition. Especially when you can question why the electric car now heralded as one possible savior to the industry was killed well over a decade ago. Then you hear about production costs, which, according to all, may now be more in line with Toyota. Buyouts for early retirements of workers is another issue, something Toyota doesn’t have to deal with.
Factoring all that in, seems like there are really only two issues at work: Should automakers get a loan, and if so, from who?
Before you say “Screw Detroit!,” consider that you don’t just take three million jobs and all the sectors supporting that entire industry out of the equation without significantly hurting the country, especially now.
(Forget the CEOs. They’ll land somewhere because they always do. And forget ad pukes like us who can work on different categories whenever we want to. Auto. Pharma. Food. Whatever. We’ll adapt. The workers are the ones who will take the brunt of this, which in turn affects local communities and their economies. For them, transitioning to new careers isn’t so easy after 20+ years at one job.)
If you agree that yes, they should get money to keep them going, then it becomes a question of where do you get it from? It’s not like the government has spare cash laying around. Maybe last year, not now. Wall Street got there first. (Well, actually, Iraq got there first).
Soooo... why not just have Big Oil™ step in and front the cash? They sure do seem to have the profits each quarter—Drudge tells me so in screen-size headlines.
Before you say why would oil companies help fund their own demise by helping to build alternative energy vehicles? They shouldn’t. But, they too have to recognize that eventually, the increasing popularity of hybrid and alternative fuels will reduce their role in this thing. Why not do more now, lest they become as useful as travel agents. (Look people, dinosaurs aren’t going to be around forever. We need to explore Jurassic Park technology now so that one day millions of years in the future, there will still be something left. Do it... for the kids.)
Besides, the talk anyway in most oil companies centers around alternative fuels and the wonderful work they’re doing to help the environment, so why not partner with the one industry that depends on them the most and make their own edition? How many automakers already partner with other global car companies to make different vehicle components?
For starters, Mobile dumps $20 billion into Ford’s bank account. Then, just swap out a badge on any vehicle. (See awesome pic.) Done. If Ford can do an Eddie Bauer edition, why not team up with Mobil or Shell? People wouldn’t buy a hybrid Exxon if it meant Mobil bailed out the industry and saved taxpayers money? We already ‘fund’ oil companies every single time we fill up. This is just the next logical step, no?
Or is Detroit already headed the way of those dinosaurs?
Tags: Detroit bailout
4 comments:
You are brilliant.
Seems like all this gov't subsidizing stuff is turning big business into farming.
And look what happened to all the farms in the US - they're all growing corn.
If cars were built and sold that would run on corn,
then we'd really have something ... and then we could say screw oil.
How clean does corn burn?
hank you. I try.
I agree. Work to replace oil. Oil companies should work to do this because they already have a distributor network in place at every corner. ;-p
As for corn, dunno. Haven’t burned it in my car recently. But, problem there is prices will eventually go back up because demand for fuel will compete with demand for both feed grain for cattle and corn for people. Good if you’re a farmer. Not so much as a consumer.
I think people would flip out in fear of the Auto industry making less efficient autos to sell more fuel.
I would much rather see them make a deal with the auto industry than thieve money from the American people.
@em - I'm not saying make less efficient to sell more fuel, but more efficient with the support of gas companies who will eventually convert from oil at some point. They develop a 'clean' car together. Gas Co's get a percentage and Detroit gets to keep making cars.
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