Scaledown-esque
Recently, I watched an episode of Larry King Live, in which Michael Moore, documentary filmmaker and son of a GM worker was asked to relay his opinion on the recent troubles of the auto industry. Personally, I really enjoy Michael Moore and his films. I cannot watch “Roger and Me” without shuddering and it is through this film, and by Mr. Moore being from Flint Michigan that I know he feels our fear and our pain.
I visited his website after seeing his appearance and I came across this letter, an open letter to the CEOs of the big three. In it I found many Scaledown-esque themes and concepts that we have been discussing since Pike’s Peak was a pimple and found his logic compelling…
“Saving the Big 3 For You and Me”
Friends,
I drive an American car. It’s a Chrysler. That’s not an endorsement. It’s more like a cry for pity. And now for a decades-old story, retold ad infinitum by tens of millions of Americans, a third of whom have had to desert their country to simply find a damn way to get to work in something that won’t break down:
My Chrysler is four years old. I bought it because of its smooth and comfortable ride. Daimler-Benz owned the company then and had the good grace to place the Chrysler chassis on a Mercedes axle and, man, was that a sweet ride!
When it would start.
More than a dozen times in these years, the car has simply died. Batteries have been replaced, but that wasn’t the problem. My dad drives the same model. His car has died many times, too. Just won’t start, for no reason at all.
A few weeks ago, I took my Chrysler in to the Chrysler dealer here in northern Michigan — and the latest fixes cost me $1,400. The next day, the vehicle wouldn’t start. When I got it going, the brake warning light came on. And on and on.
You might assume from this that I couldn’t give a rat’s ass about these miserably inept crapmobile makers down the road in Detroit city. But I do care. I care about the millions whose lives and livelihoods depend on these car companies. I care about the security and defense of this country because the world is running out of oil — and when it runs out, the calamity and collapse that will take place will make the current recession/depression look like a Tommy Tune musical.
And I care about what happens with the Big 3 because they are more responsible than almost anyone for the destruction of our fragile atmosphere and the daily melting of our polar ice caps.
Congress must save the industrial infrastructure that these companies control and the jobs they create. And it must save the world from the internal combustion engine. This great, vast manufacturing network can redeem itself by building mass transit and electric/hybrid cars, and the kind of transportation we need for the 21st century.
And Congress must do all this by NOT giving GM, Ford and Chrysler the $34 billion they are asking for in “loans” (a few days ago they only wanted $25 billion; that’s how stupid they are — they don’t even know how much they really need to make this month’s payroll. If you or I tried to get a loan from the bank this way, not only would we be thrown out on our ear, the bank would place us on some sort of credit rating blacklist).
Two weeks ago, the CEOs of the Big 3 were tarred and feathered before a Congressional committee who sneered at them in a way far different than when the heads of the financial industry showed up two months earlier. At that time, the politicians tripped over each other in their swoon for Wall Street and its Ponzi schemers who had concocted Byzantine ways to bet other people’s money on unregulated credit default swaps, known in the common vernacular as unicorns and fairies.
But the Detroit boys were from the Midwest, the Rust (yuk!) Belt, where they made real things that consumers needed and could touch and buy, and that continually recycled money into the economy (shocking!), produced unions that created the middle class, and fixed my teeth for free when I was ten.
For all of that, the auto heads had to sit there in November and be ridiculed about how they traveled to D.C. Yes, they flew on their corporate jets, just like the bankers and Wall Street thieves did in October. But, hey, THAT was OK! They’re the Masters of the Universe! Nothing but the best chariots for Big Finance as they set about to loot our nation’s treasury.
Of course, the auto magnates used to be the Masters who ruled the world. They were the pulsating hub that all other industries — steel, oil, cement contractors — served. Fifty-five years ago, the president of GM sat on that same Capitol Hill and bluntly told Congress, what’s good for General Motors is good for the country. Because, you see, in their minds, GM WAS the country.
What a long, sad fall from grace we witnessed on November 19th when the three blind mice had their knuckles slapped and then were sent back home to write an essay called, “Why You Should Give Me Billions of Dollars of Free Cash.” They were also asked if they would work for a dollar a year. Take that! What a big, brave Congress they are! Requesting indentured servitude from (still) three of the most powerful men in the world. This from a spineless body that won’t dare stand up to a disgraced president nor turn down a single funding request for a war that neither they nor the American public support. Amazing.
Let me just state the obvious: Every single dollar Congress gives these three companies will be flushed right down the toilet. There is nothing the management teams of the Big 3 are going to do to convince people to go out during a recession and buy their big, gas-guzzling, inferior products. Just forget it. And, as sure as I am that the Ford family-owned Detroit Lions are not going to the Super Bowl — ever — I can guarantee you, after they burn through this $34 billion, they’ll be back for another $34 billion next summer.
So what to do? Members of Congress, here’s what I propose:
1. Transporting Americans is and should be one of the most important functions our government must address. And because we are facing a massive economic, energy and environmental crisis, the new president and Congress must do what Franklin Roosevelt did when he was faced with a crisis (and ordered the auto industry to stop building cars and instead build tanks and planes): The Big 3 are, from this point forward, to build only cars that are not primarily dependent on oil and, more importantly to build trains, buses, subways and light rail (a corresponding public works project across the country will build the rail lines and tracks). This will not only save jobs, but create millions of new ones.
2. You could buy ALL the common shares of stock in General Motors for less than $3 billion. Why should we give GM $18 billion or $25 billion or anything? Take the money and buy the company! (You’re going to demand collateral anyway if you give them the “loan,” and because we know they will default on that loan, you’re going to own the company in the end as it is. So why wait? Just buy them out now.)
3. None of us want government officials running a car company, but there are some very smart transportation geniuses who could be hired to do this. We need a Marshall Plan to switch us off oil-dependent vehicles and get us into the 21st century.
This proposal is not radical or rocket science. It just takes one of the smartest people ever to run for the presidency to pull it off. What I’m proposing has worked before. The national rail system was in shambles in the ’70s. The government took it over. A decade later it was turning a profit, so the government returned it to private/public hands, and got a couple billion dollars put back in the treasury.
This proposal will save our industrial infrastructure — and millions of jobs. More importantly, it will create millions more. It literally could pull us out of this recession.
In contrast, yesterday General Motors presented its restructuring proposal to Congress. They promised, if Congress gave them $18 billion now, they would, in turn, eliminate around 20,000 jobs. You read that right. We give them billions so they can throw more Americans out of work. That’s been their Big Idea for the last 30 years — layoff thousands in order to protect profits. But no one ever stopped to ask this question: If you throw everyone out of work, who’s going to have the money to go out and buy a car?
These idiots don’t deserve a dime. Fire all of them, and take over the industry for the good of the workers, the country and the planet.
What’s good for General Motors IS good for the country. Once the country is calling the shots.
Yours,
Michael Moore
Interesting, isn’t it?…
See you all back here on Friday : )
Post Feedback
In the current financial crisis what is not urgent but really important? If we had an energy crisis before the financial crisis and the financial crisis is reducing the needed investment in energy production and fueling huge investment in roads and bridges won’t the energy crisis we face be even worst? So, shouldn’t we look to prepare for this future crisis now - while we still can? If the financial system has collapsed and massive government money is needed to fill the huge hole in the private financial system than shouldn’t we use these huge sums of our money to create national champions? This sounds like a good way to take advantage of our superior financial situation. If Canada is investing huge sums of our money in the auto sector shouldn’t the government have some influence?
Creating national champions and investing in sustainable industrial jobs, Canadian plan!
1. Government, magna (best auto parts manufacture) and bombardier (best public transit manufacture) buy and reorganize an auto manufacture (manufacturing capacity). Creating a new heavyweight national champion in transportation. Chrysler might be a good candidate, has a large foot print in Canada, has a full line-up of plug-in electric vehicles and moving corporate headquarters and r&d to Canada is easy to do.
http://www.topix.com/forum/autos/chrysler/TN2RQ41J74FTNDD07
2. Move headquarters and r&d to Canada, Windsor and Oshawa are good candidates. Then focus on sustainable transportation to prepare for the next crisis (energy).
3. A Canadian commitment to building a national public transit system (anchor customer for the new national champion). If we need to invest in infrastructure to stimulate the economy, let’s invest in sustainable infrastructure. Why throw good money after bad?
Edwin.. I agree!! .this idea is almost genius in its simplicity!! It’s like a no-brainer… !! What IS Magna and Bombardier saying in all of this bailout business? their comments would be very interesting!!…
I agree, Sporto, that is a fantastic idea from Edwin : )
Usually, the best ideas are the simplest ones. In the coming months, ideas and concepts that once seemed foreign and far-fetched will now have the chance to be explored. So, in some way, this crisis may have a silver lining…
What is not urgent but most important - the future energy crisis!
If you dare, look at the graph on the bottom half of page 6 on this presentation. If you do, like me, you might have nightmares. This graph is the scariest thing I have ever seen. At night, I toss and turn unable to sleep with this graph burned into my thoughts like a bad tattoo to flesh. I often awake in a panic imagining the carnage it represents. The graph is on page 6 bottom half – but only if you dare. http://www.iea.org/textbase/speech/2008/Birol_WEO2008_PressConf.pdf
So, just what is so scary?
1.Notice the decline in currently producing fields (wow, what a hole this decline produces).
2.Notice the growth in natural gas liquids and non-conventional oil that is supposed to cushion the fall. Not happening now in the current financial crisis.
3.Notice the importance of the fanciful OIL YET TO BE DEVELOPED OR FOUND.
4.Not on the graph but, the financial crisis is making the medium and long-term demand and supply picture even worse. Reduced supply - investments canceled or delayed! Demand increased - almost every country from China to the US is investing in more roads and bridges!
WARNING, ENERGY CRISIS AHEAD.
The North American energy picture, scary or can we still change our ways?
http://www.simmonsco-intl.com/files/MAIDC-CGHP%20Lunch.pdf
Has per capita vehicle ownership and miles traveled reached a nature peak too - thus, making the switch to alternative transportation even more important for Canada’s future success?
The Future Isn’t What It Used To Be
Changing Trends And Their Implications For Transport Planning
http://www.vtpi.org/future.pdf
Yay! Thank you Windsor Star for carrying this story. Maybe the decision makers in Ottawa, Toronto and Windsor will listen and start focusing on what is not urgent but most important.
Low gas prices like Sirens’ call
http://www.windsorstar.com/Business/prices+like+Sirens+call/1094182/story.html
If only we could get Canada’s most stubborn ideologue to think progressively. If only Flaherty and Harper could do some forward thinking on this issue. There is a practical way for Canada to act alone, for Canada to use this crisis to move ahead and prepare for the next crisis, for Canada to help the parts sector of this country, and for Canada to create sustainable jobs in cities like Windsor and Oshawa it is spelled out above. But it requires we abandon ideology and focus on what is not urgent but most important and commit to create a national public transit system.
Flaherty ‘open’ to auto help as stocks tumble
http://www.windsorstar.com/Flaherty+open+auto+help+stocks+tumble/1067103/story.html
Welcome to scaledown Gord.
We will Survive-
http://www.windsorstar.com/opinion/letters/will+survive/1070727/story.html
Mathematically it is impossible to solve a city’s transportation needs using cars. If everyone drove everywhere you would have gridlock and nothing but parking lots. Build a new arena where everyone must drive to get to it and you have to wish that it’s a mediocre success only or else gridlock. Lesson learned.
Arena traffic troubles ‘a learning experience’
http://www.windsorstar.com/Rink+bottleneck+learning+experience/1075675/story.html
IS MAGNA THINKING OF MAKING A MOVE ON CHRYSLER?
FROM:
Former Chrysler, Volkswagen exec advising Magna
Toronto Canada, January 13, 2009
http://fresh.bnn.ca/reuters_story.aspx?story=2009-01-13T231126Z_01_TRE50C6E4_RTROPTT_0_CBUSINESS-US-MAGNA-BERNHARD.XML
TORONTO (Reuters) - Magna International Inc has taken on ex-Chrysler and Volkswagen AG official Wolfgang Bernhard as a private consultant, the auto-parts maker said on Tuesday.
“Wolfgang Bernhard is consulting Magna,” said Magna spokeswoman Tracy Fuerst. “That started around late last year,” she said, but was unable to give any other details.
Bernhard was chief operating officer at DaimlerChrysler AG between 2000 and 2004 before moving on to Volkswagen from 2005 to 2007, where he was chairman of the Volkswagen brand group.
He resurfaced at Cerberus Capital Management LP as an adviser in the lead-up to the private equity group’s purchase of Chrysler.
Here is another opportunity for a Canadian solution! The US is building national champions yet we are happy with having no influence why?
GM turns down $3B gov’t bailout
By Andrew Mayeda,
Canwest News Service January 23, 2009
http://www.windsorstar.com/Cars/turns+down+bailout/1212077/story.html
Creating national champions and investing in sustainable industrial jobs, Canadian plan!
1. Government, magna (best auto parts manufacture) and bombardier (best public transit manufacture) buy and reorganize an auto manufacture (manufacturing capacity). Creating a new heavyweight national champion in transportation. Chrysler might be a good candidate, has a large foot print in Canada, has a full line-up of plug-in electric vehicles and moving corporate headquarters and r&d to Canada is easy to do.
2. Move headquarters and r&d to Canada, Windsor and Oshawa are good candidates. Then focus on sustainable transportation smaller cars plug-in electric and public transit vehicles to prepare for the next crisis (energy).
3. A Canadian commitment to building a national public transit system and aggressive fuel economy standards (anchor customer for the new national champion). If we need to invest in infrastructure to stimulate the economy, let’s invest in sustainable infrastructure. Why throw good money after bad?
Back in the spring of 2007 Magna was looking at spending 5 billion dollars for 50% of Chrysler. The plan behind this huge gamble was to reorganize Chrysler, leverage the Chrysler brands and technology, and use Magna’s relationships in Russia to open new markets for Chrysler. They lost-out to Cerberus! But, what has changed?
Magna and Chrysler news recap.
-Over the next four years, Ford plans to introduce a new battery-powered electric commercial van in 2010, a new battery-operated electric small car — jointly developed with Magna — in 2011 and a next generation hybrid, including a plug-in version by 2012 (remember chrysler has a full line-up of plug-in electric vehicles) [Ford makes hybrid push, By Dave Hall, Windsor Star, Jan 12th 2009]
-Magna International Inc has taken on ex-Chrysler and Volkswagen AG official Wolfgang Bernhard as a private consultant, the auto-parts maker said on Tuesday. “Wolfgang Bernhard is consulting Magna,” said Magna spokeswoman Tracy Fuerst. “That started around late last year,” she said, but was unable to give any other details. Bernhard was chief operating officer at DaimlerChrysler AG between 2000 and 2004 before moving on to Volkswagen from 2005 to 2007, where he was chairman of the Volkswagen brand group. He resurfaced at Cerberus Capital Management LP as an adviser in the lead-up to the private equity group’s purchase of Chrysler. [Former Chrysler Volkswagen exec advising Magna, Reuters, Jan 13th 2009]
-Magna International Inc. is eyeing new business with Oleg Deripaska in the former Soviet Union following the Russian billionaire’s forced exit from the Canadian auto supplier last October, Magna co-chief executive Don Walker says. “We still have a very good relationship with him [and his companies], support him as a customer,” Mr. Walker said. “I think they could even still be a partner in a lot of our ventures over there.” [Magna still keen on Oleg Deripaska, by Nicolas Van Praet, Financial Post, Jan 14th 2009]
-Fiat will get a 35 percent equity interest in Chrysler and a way for the Italian automaker to re-enter the American market incognito by lending Chrysler the small, efficient cars it’s sorely lacking. The partnership will go the other way, as well, with Chrysler vehicles gaining access to other markets through Fiat’s distribution muscle. [Chrysler and Fiat announce partnership, by Dan Roth, AutoBlog, Jan 20th 2009]
-Chrysler LLC’s deal with Fiat depends on the U.S. automaker receiving an additional $3 billion emergency loan from the U.S. government, the company’s product development chief said Wednesday. [$3B key to Chrysler deal, Reuters, Jan 22nd 2009]
-General Motors of Canada has turned down an offer by the federal and Ontario governments of emergency short-term aid, a move that has stunned some analysts and left negotiations on a highly touted auto bailout in limbo…GM Canada was to receive up to $3 billion of the Canadian loans, while Chrysler Canada was to get up to $1 billion. [GM turns down $3B gov’t bailout, By Andrew Mayeda, Canwest News Service, Jan 23rd 2009]
-Chrysler Vice Chairman Jim Press said the automaker and Fiat were working through the details of a proposed alliance that leaves open the possibility that Chrysler also could link up with other partners. [Chrysler viability hinges on more aid concessions, By Soyoung Kim and David Bailey, Reuters, January 23rd 2009]
I was wrong on peak oil
It takes courage to face reality and admit being wrong. It’s not easy to eat crow. But hey, we are all human and we all make mistakes - right?
I’ve been proven wrong by the financial crisis. I was wrong in suggesting that peak oil was three to ten years away. Wrong in characterizing the challenge as: what’s not urgent but most important. Wrong in implying that an aggressive effort to improve transit, cycling, and pedestrian infrastructure; along with a shift in our development pattern; and energy efficiency at home was needed to avoid an energy crisis.
A recently released IEA oil demand report forecasts energy demand worldwide will shrink by 2.8% this year. Energy demand is falling - hit hard by the economic crisis.
However, oil supply is also falling. The economics of oil and the decline rates of major oilfields suggest that if the current situation continues oil supply could fall by 40% over the next few years. Whoops!!!
So, oil production probably peaked in 2005. Preparing for peak oil is not only what is most important but also the singularly most urgent issue we face. Even with an aggressive effort to improve transit, cycling, and pedestrian infrastructure; along with a united all-out war on reversing our development patterns; and a tireless effort on squeezing every last drop of energy efficiency from everything we do - we will likely still face the occasional energy shortage and general energy chaos. We are 14 years too late in preparing for peak oil.
Watch the reality check presentation: “The Worlds Biggest Bet” by Matt Simmons.
http://www.financialsense.com/
Okay, so I’m looking to be a little provocative with the above. It is dishonest of me to suggest that such extreme supply demand imbalances could occur.
Obviously, at some point, the differing rates of medium to long-term demand and supply destruction will become evident and energy prices will skyrocket. But that’s my point, I guess, expect much higher energy prices in the not to distant future.
To be totally objective we must answer the critical questions of:
-Is Matt Simmons’ and to some extent the IEA’s analysis of the oil industry accurate?
-Is the current price collapse and the medium to long-term supply destruction it creates basically assuring we will never again be able to produce at 2005 levels?
-Do we really need to be lucky and spend tens and tens of trillions of dollars to prevent energy production from free falling?
-If so, can we afford such a high price to maintain an unsustainable system?
-How do we in Windsor best prepare for this?
-You know my opinion, what’s yours?
Interesting reading all of the comments on this slightly older article. I’ve been saying forever that bombardier should try their hand in the electric car business, they already own lots of IP related to electric drive systems, etc.
If the world were to run out of oil, I fear we would be far from ready to cope with it. I’d move back to Japan right away were Electric trains are the backbone of every city - even cities the size of Windsor and smaller!
*sigh* Why are we so far behind here
Come on Tim! Stop being naïve. Stop being a dreamer. Think about what you are suggesting.
What?!? Using the world’s best transit manufacture and North America’s best manufacturing economy to create a kick-ass, robust, efficient transportation system to propel Canada into the 21st – get real kid.
I think that if we make the right choices now, Windsor will actually do well under a constrained energy world. If you imagine that there will be only a few globally connected cities in a constrained energy world. Then considering the fact that our region is a natural crossroads for North America, we have more than a realistic chance to become one of them.
I think, that considering we are facing these twin storms of peak oil and the economy we need to all work together. We need to optimize every moment, every dollar, and every decision. Every Windsorite must become constructively involved.
We need every hand on deck to weather these storms. This is no time for mutiny.
Another Reality Check Video
Matt Simmons - Energy Planning In An Uncertain Environment
http://www.financialsense.com/