The Road Less Traveled

With apologies to Robert Frost, I believe the title to one of his finer works applies to General Motors in June 2009.  Perhaps it would be even more accurate to state the bankrupt corporation will actually be embarking on a road never traveled.  We shall see.

The breakneck speed of recent developments — GM’s round-the-clock negotiations with bondholders; the UAW’s agreement to further concessions; the Obama administration’s unveiling of stringent CAFE standards; the auto task force-influenced decisions on which dealerships will be closed and which survive; and the announcement of scores of GM plant closings — make for a rocky road ahead.  A road that leads to who knows where.

One thing’s for sure, to paraphrase that cute Oldsmobile commercial featuring Ringo Starr (ca. 1990): This is not your father’s General Motors.  Pontiac will cease operations; Hummer, Saab and Saturn all will be sold or spun off.  Many, many plants will be idled, dealerships closed, and workers both blue- and white-collar pink slipped.

The auto industry and GM’s problems are almost as tangled a web as health care, and thus cannot be covered in one blog. 

But a few key points need to be addressed.

First, the ignorant senators who pompously grilled the Big Three auto execs are dead wrong when they slam Detroit’s lack of quality.  It’s true the American car companies produced a lot of crap in the 1970s and 1980s, and this alienated literally millions of customers (turning them into embittered ex-customers).  But quality from the domestic auto producers has been excellent for several years now.

The arrogant pols also were wrong when they said, “Detroit needs to make cars people want to buy.”

Umm ..... before gasoline prices spiked in the spring and summer of 2008, the Big Three were selling SUVs and pickup trucks like hotcakes, and making pretty good money. Clown cars like the Toyota Prius did and still do make up a minuscule share of the market, and are quite costly considering their compact size and modest power plants.

The Henry Waxmans of the world and other coastal elitists may think Americans want to buy little potato peelers that get 50 mpg. But they’re dead wrong.

Many Americans live a long way from where they work, and also shuttle kids around to school, piano lessons, soccer games, etc. They want larger vehicles because they are safer and provide more room and comfort.

Many folks like to hitch a boat & trailer up to their Explorer.  Or load up the Suburban with paint, lumber and other Home Depot materials to do some work around the house.  Or give the labrador retriever a ride in the mini-van along with the kids.  You just can’t do these things with clown cars.

This is not meant to disparage hybrid vehicles or other alternative type vehicles such as those powered by electricity or natural gas (although much more infrastructure needs to be put in place for those to be viable).

But it is to point out that the market is much smarter, more nimble, and more flexible than the bureaucrats in Washington, D.C., most of whom have never worked for a car company.  It would be an outrage if Washington dictated to the auto producers what types and volume of each model to produce, and this capricious formula failed miserably to meet the needs of we the taxpayers, the people who bailed out GM.

President Obama has said he doesn’t want to be in the car business, but it’s inevitable that since $50 billion or so of taxpayers’ dollars have been invested in GM, Washington will be calling the shots for the foreseeable future.

This makes for an uncertain and disconcerting future for GM and the UAW.  And the conflicts of interest for Uncle Sam are so blatant and numerous, we’ll just have to save them for another day.  (Yes, that’s an invitation to return to Posse Incitatus!  As Frank Bartles & Ed Jaymes used to say in their 1980s wine cooler commercials, “Thank you for your support.”)

Comments

[Brent]

We also have more children than Europeans, who sometimes couldn't be bothered to breed. When one is still living at home at 35, one doesn't want the responsibility.

Mark Steyn has called Europeans the world's oldest teenagers, regardless of age.

I'm worried that this socialist move, the take-over of GM by the federal gov't, will mean we'll be forced into the small put-puts. This is really difficult when my minivan is bursting at the seams with four children.

This will help drive down the birth rate, which is so desperately needed in industrial nations, pace Philip Longman's The Empty Cradle and Mark Steyn's America Alone.