What If We Didn't Bail Out the Automakers?
...and remembering the time in 2004 that I visited GM's R&D headquarters and listened to their execs diss the potential of hybrid technology. From the piece:
"You always have your early adopters," said Alan Taub, GM's executive director for R&D, about today's hybrid buyers. "Toyota sells as many Priuses as we sell Pontiac Aztecs. Is that a success?" Earlier this year, at the Detroit International Auto Show, Bob Lutz, GM's vice chairman of product development, had said that the company's decision not to make a hybrid car "was a mistake from one aspect, and that's public relations and catering to the environmental movement."
Now, Toyota alone has sold more than one million hybrids, and our indigenous car-makers want a taxpayer hand-out.
I know it'd cause major pain in Michigan (and beyond) if one, two, or three of these companies went under.
But could it also give rise to new kinds of car-makers and parts-makers? If GM went bankrupt, would some private equity firms buy the Chevy Volt project, keep it alive, and do a better job of bringing it to market than GM? Would other manufacturing companies spring up in old Ford plants, hiring former Ford workers? Would more companies like Tesla Motors spring up, and take advantage of some of that existing infrastructure and worker expertise?
I tend to think they would.
But maybe that's because I was at the Bedford, MA headquarters of ZINK yesterday morning.
This is a company that bought all of its intellectual property from Polaroid (and then continued to develop it). Zink bought most of its prototyping and manufacturing equipment from Polaroid (for 50 cents on the dollar). They bought an old Konica-Minolta plant in North Carolina to make their product. (ZINK designs ink-less mobile printers, and they produce the paper used in those printers.) The bulk of their employees once worked at Polaroid.
Would ZINK have ever happened if the government had bailed out Polaroid and kept it on life-support?
Labels: automobiles, Chrysler, Ford, GM, Zink Imaging
5 Comments:
Dead on! This area would benefit far more from letting the market do its work in this case.
No, I don't think new companies would be able to secure enough capital to take the place of our current automakers. People just aren't buying new vehicles right now. People really aren't buying anything right now. This is just the beginning of the economic crisis, and things are going to get much worse.
I still don't think we should bail out the auto industry anyways. There has been virtually no innovation in the auto industry in the past 30 years. We've had the technology for hybrids and EVs for at least 50 years. These automakers are big dinosaurs of companies unable to adapt and they will fail, bailouts or not. A lot of companies will fail in the coming years.
I think sustainability is at the core of the problem. Almost every aspect of Western culture is unsustainable. From finance to agriculture. The economy (and our culture) will have rearrange itself, and I think that things will be very different 10 years from now.
You raise some interesting points. As an American I would like for our auto makers to be competitive and vibrant. Bailing them out saves Detroit for the short term but what kind of investment is this? Bail out with governance is better but I am not sure how much. The US auto makers have made themselves uncompetitive.
Scott, I've been thinking along the same lines. One wonders what impact could be made if funds on the order of magnitude contemplated for the auto-maker bailout were dedicated to stimulating new business creation.
Here are some concrete things we could do with the funds:
- Re-establish Federal funding for the SBA's excellent SBIC program, which helps launch truly early-stage venture funds. Note, this is an investment, not a grant, and historically the funds have often come back with interest.
- Fund the R&D tax credit
- Provide funding for entrepreneurship education programs at universities
- Provide funding universities to develop their technology licensing and out-licensing promotion capabilities
- Buy land next to universities, and rent it out cheap to private groups committing to configure it for use by startups
- Offer an interest-payment holiday on student loans for graduates who go to work for startups
Agree. It's hard for me to see how GM, Ford, or Chrysler pose a systemic risk to our economy. Even if all three disappeared, there would still be plenty of options for Americans buying cars. And in fact virtually all of the "foreign" auto makers produce many of their cars here in the US including Toyota, Honda, Nissan, BMW, Mercedes, et al.
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