In Defense of Detroit | Green Energy News

November 23, 2008 – Vol.13 No.36

IN DEFENSE OF DETROIT.

The problems of Detroit’s Big Three - Ford, GM, Chrysler - are not necessarily of their own making. The companies have been taking a beating of late in the press and in the voices of the general public for their hat-in-hand trip to the nation’s capital for a taxpayer-paid $25 billion bailout. But there’s a shared blame for Detroit’s problems that goes all the way from Washington to Wall Street to Main Street, My Street and to Your Street.

The problems started years ago and go to the core of our nation:

1) There isn’t a business school in the land that doesn’t preach the goal: Maximize Profits. Wall Street shares this goal as do businesses on Main Street and every stockholder and stake holder across the land from institutional investors to your stockholding grandmother. GM, Ford and Chrysler found a way to maximize profits – earning the most with the least effort – with SUVs, vans and light trucks. When times were good, gas prices low, they were revered for their efforts.

Car companies are not do-gooding organizations, dot orgs, out to change the world. They’re there to make money, as much of it as possible. Executives at auto companies are trying to do exactly what they were taught in school: make money, lots of it. It’s the American way. A big piece of the pie is as American and apple pie.

2) There isn’t a business school in the land that doesn’t preach “sell the dream” in marketing class. Detroit marketers are the best in the business of marketing. They’ve been selling the dream of America for decades. It’s the same dream that Americans see in our houses and just about everything else we buy. We are the land of plenty. Detroit has been saying along with every other industry: Big is OK. Big houses are OK. Big TVs are OK as are big shopping sprees in supermarkets and malls. Even our hamburgers are big. Detroit is no different than anyone else selling anything in the U.S.

3) Politicos in Washington have been telling us for decades that fuel economy can be ignored. Even though oil imports have been steadily rising and prices volatile since the 1970’s, Congress and the White House have been saying this OK, go ahead automakers build the all the fuel hogs you like, we won’t enact meaningful fuel economy standards. Washington has been giving the green light to poor fuel economy for decades. Why should automakers do anything different than to build what Washington approved of?

Sure, the automakers complained about meaningful fuel economy increases, but isn’t Washington supposed to know better? Isn’t Washington supposed to make decisions in the best interest of all? If Washington knew from thirty years experience that oil was becoming problematic – a bad thing in the long run for the nation’s car makers – why didn’t they set high fuel economy standards despite industry wishes?

4) The success of highly fuel efficient cars from abroad, such as hybrids, is not because of the wonders of market economics. For decades much of the world outside the United States has had heavily taxed motor fuels. High fuel fuel costs at the pumps forced car makers overseas to build efficient cars. The U.S. by keeping taxes low – and prices at the pump tiny by comparison – encouraged fuel consumption and the sale of inefficient cars and trucks.

Much of the world, too, has set goals to cut greenhouse gas emissions from cars – something Washington has refused to do in a major way. The successful hybrids from Japan weren’t developed just to cut fuel consumption, but were built under government goals to cut greenhouse gases. Hybrid technology allows larger cars Americans like to get the fuel economy of mini cars we won’t drive. Bravo for Japan for cutting emissions while encouraging the development of products which their companies can sell abroad. Shame on the U.S. for not jumping on the greenhouse gas cutting bandwagon that would create export opportunities for Detroit.

5) It has been said, and it is obvious for anyone who has travel beyond our borders, that that there are two different worlds of cars: what the rest of the world drives and what Americans drive. But try bringing a highly fuel efficient, not-sold-here, car from overseas into our country. Our laws prevent this. Our laws make criminals of those who try.

Emissions and crash test laws that keep cars and trucks from being imported – probably drawn up with the help of Detroit – reek of protectionism. But if the U.S. joined the rest of world to make a one-world car market Detroit would have more models to sell overseas while reducing development costs needed to build two sets of cars.

Oddly some of GM’s and Ford’s most acclaimed and most efficient models are built for other markets and not sold here. Can’t EU, Japanese and U.S. emission and crash standards all be the same? Washington could do this.

6) How long has it been known that the cost of health care to employees and retirees been has been a burden to Detroit? A decade? Longer? Knowing that car companies in competing nations don’t have the burden of healthcare on their books, since they have some form of national health care, Washington has steadfastly refused to give us this.

7) Nearly half the voters in November agreed with the McCain camp that “Drill, Baby, Drill” should be in our national energy policy. Detroit knows this DBD market. It’s, well, half of America if elections can be considered an opinion poll. Is Detroit supposed to ignore this market that wants more oil not more fuel efficient cars and trucks?

True, it is the marketers than determine the markets: People buy what they are convinced they need to buy. The Big Three are convincers, marketers, not just auto makers.

But for years Washington has been sending the signal to Americans and American companies that they don’t need to conserve energy, that global warming isn’t a concern, that the problems of high health costs aren’t damaging to the economy let alone some of the nation’s companies and that we can always drill for more oil.

Against all the above Detroit was supposed to say NO, we’ll buck what Washington says is OK for the country and we’ll only sell you efficient cars.

No marketer can beat what Washington has to say.

Does Detroit have some problems? Sure. But Detroit’s problems are, in part, our own making: All need to take some of the blame.