Sinkhole!
No, not the TARP. The "domestic" auto industry.
Highlights:
A) Barry wants $50 billion for "The Big Three".
B) He's figuring GM will go bust by January if it doesn't get it's share. (Quite probable, I'd say.)
C) Nariman Behravesh, chief economist at IHS Global Insight Inc., claims that a GM BK could drive the unemployment rate to 9.5%. (Possible but unlikely, I'd say. I'm willing to bet that debtor-in-possession financing would appear once the union contracts were vacated. But possible if GM ended up in liquidation.)
D) BO needs Shrub's help to push it through the lame-duck Congress and before the handover. Larry Summers, Volcker & Granholm are pushing the deal.
I have my opinions on this, but I'm gonna keep mum. What are your thoughts?
1) Do the Big 3 really need it?
2) Is $50 billion enough? Without getting rid of the union contracts?
3) Does it matter to the economy as a whole? Enough for $50 billion?
4) Who should be on the oversight board?
5) Is Barry making a mistake by jumping into this prior to the switch-over? What about "one President at a time?"
6) Will it get done?
7) What will be the effect?
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UPDATE: Nardelli & Feinberg say Cerberus will not try to profit from the deal if the government coughs up a bailout for Chrysler. Mighty big of them! ;^)
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Peanut Gallery:
Megan McArdle chimes. Starts talking about the Big 3 and the UAW, but it ends up being much bigger. Interesting.
Jim Manzi, grabbed from the comments.
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- Bernard Guerrero's blog
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Here goes ...V
--"Man in never satisfied"-RDR
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)your takeoff is sputtering
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| parent )no country on this big, cuckoo-crazy planet of ours will let their domestic car industry die. Consolidation-yes, lay-offs -certainly, but they will never say goodbye.
Oh, and to those who don't favor a bailout, two words (F@#k you JK! :))-no seriously, Harley-Davidson. They received a bailout in the early eighties as America's last Motorcycle Manufacturer (at that time), went under new management (and ownership) and are selling every bike they build. They even invested in the future with a complete new bike-the V-rod. So when all the old bikers die off they'll have at least something to fall back on and with the recent acquisition of these guys http://www.mvagustausa.com/web-mvagusta/models_current.html they have a entire new lineup!*
*although keeping Castiglioni in charge might prove fatal.
--I had discovered a great secret. That everyone loves themselves more than they love anybody else. And if I wanted them to love me, I better be like THEM!... Ken Nordine
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| parent )No country, in their right mind, will let their ...
--I had discovered a great secret. That everyone loves themselves more than they love anybody else. And if I wanted them to love me, I better be like THEM!... Ken Nordine
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| parent )Brits drink black tea almost exclusively, and everyone knows black tea is the spoiled leftovers the Chinese don't want to drink.
--The other day I heard that ignorance and apathy are sweeping the country. I didn't know that, but I don't really care.
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| parent )but it was assisted suicide.
--Its just a model, you wouldn't want to bank on it.
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| parent )- Login or register to post comments
| parent )compared to the amount of money we're sinking into the financial sector. Why bail them out but not the auto sector? Thats the question I would like to hear answered by both those who are for the idea and those who are against it.
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)I can, however, think of one specific difference.
The banks are receiving capital injections in the form of preferred shares. Now, the reason the banks are in trouble is not that they're losing money on loans they make today. They're not making as many, and they've tightened up credit quality quite a bit. Those loans, ceteris paribus, will make them money. Their problem is that they have to write off old loans that are unlikely to be paid back and that are backed by dodgy (Dodge!) assets. Congress wants more loans, ergo, loans riskier (and less profitable) customers. Congress puts in new capital, Chris Dodd pounds his shoe on the table and they make more loans than they otherwise would have. The business model itself is profitable, with Congress' capital injection meant to shore up confidence and get more loans made. Again, ceteris paribus.
The domestic auto industry's model appears to be terminal, though. They weren't making much, if any, money before the economy went south, and they have high legacy costs and a need to retool once they can manage to figure out what to retool for. A capital injection there wouldn't be one into a "going concern", at least not without a number of other changes.
Of course, some of the "bailout" candidates aren't really going concerns, either. Bank of America probably doesn't need the money, but AIG looks like it not just dug itself into such a hole but has a terminal model to boot. (Having a large net position in CDS "insurance", I mean.)
--The ultimate result of shielding man from the effects of folly is to people the world with fools. -Herbert Spencer
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| parent )the banks, the autos, the airlines, the insurance companies, and the people who took out mortgages they couldn't afford.
--"That Sam-I-am! That Sam-I-am! I do not like that Sam-I-am!"- Dr. Seuss
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| parent )After years of robbing Peter to pay Paul the insanely shortsighted business practices of a few investment banks caught up with them and threatened to put them under, so the government bails them out to mitigate the possible side effects them going under might have on the economy. Now, lo and behold, our auto industry is suddenly running out of cash and dangles several thousand jobs out there to grab some headlines. Granted, autos haven't exactly been the most dynamic sector of our economy for the past 40 years, but the timing here seem rather fortuitous, so much so I get the impression that they are crying wolf in order to get in on the current government cash extravaganza. I think it's a bluff and I'd like to see both the President and the President-elect call it.
--"That Sam-I-am! That Sam-I-am! I do not like that Sam-I-am!"- Dr. Seuss
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)they were already making expensive noises before the big bailout-thus my smugness (heh).
--I had discovered a great secret. That everyone loves themselves more than they love anybody else. And if I wanted them to love me, I better be like THEM!... Ken Nordine
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| parent )President-elect Obama's decision to start early gets us up from zero to one, so no worries there.
--It's impossible to debate if people simply hold beliefs that have no grounding in reality.
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)I think that's fair, and would like to agree on that date before laying out the benchmarks themselves.
--Even a dead midget is far from light. - Confucius
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| parent )I think 12/1 is a better choice, just because he is getting ramped up. But we certainly have had zero leadership on this issue until Obama got elected. Guess Shrub got bored, as he always seems to.
--It's impossible to debate if people simply hold beliefs that have no grounding in reality.
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| parent )He's here all the time folks. Try the veal!
--The ultimate result of shielding man from the effects of folly is to people the world with fools. -Herbert Spencer
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| parent )just like we're buying the banks. Then we can fire the idiots in charge and put those plants to useful work.
--It's impossible to debate if people simply hold beliefs that have no grounding in reality.
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)....currently tooled for making, say, a Chevy Aveo5?
--The ultimate result of shielding man from the effects of folly is to people the world with fools. -Herbert Spencer
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| parent )It's not like the workers aren't skilled and the robots aren't programmable.
--It's impossible to debate if people simply hold beliefs that have no grounding in reality.
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| parent )Where's the cash for that coming from?
It also implies a productive market research and R&D effort before putting it into production. Where are the people for that coming from, if you count them as part of "the idiots in charge"? If not, where's the money coming from for new such efforts? Hmmnn.
Wait, I know! We can set up a central committee of the best & the brightest from the auto, design & resource industries, and add some labor participation. This group will design said effort & said car, and then we pay for them and the retooling with some tax dollars. Such a committee will guarantee that waste is minimized, all stakeholders' views are taken into account and the public's interest in the auto industry is preserved.
In honor of this idea, I'd like it called Bernard's Planning Committee, or BERNPLAN for short.
--The ultimate result of shielding man from the effects of folly is to people the world with fools. -Herbert Spencer
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| parent )Opel is GM's German subsidiary, and does its own design (the Brits know Opel products as Vauxhall, in other countries they are mostly sold under the Chevrolet name).
Retooling for a new model isn't what it used to be. Well, it shouldn't be. If GM still has a high cost for that, its just another reason to kick the management out.
All this to say that GM should get no federal money. GM's US assets should be bought by the US government and a finance package put together for GM suppliers. Foreign assets should be sold (with an IP deal for the Opel subsidiary).
So who would buy these foreign assets in this market? Well, probably, other governments. If Opel shuts down it's just as bad for the Germans as it is for us if GM shuts down. The German government can do whatever it wants with it. I would guess they would hold it till things stabilize and then let it go private.
GM subsidiaries in places like Australia Mexico and Brazil would meet the same fate.
Ford and Chrysler are in somewhat different situations. Ford has suffered less from "not invented here" disease, and has often used European designs such as the Focus. Ford is not insisting on keeping a failed, visionless CEO such as Richard Wagoner, now in his eight year sinking the company, at the helm. Ford brought in Alan Mulally from Boeing just two years ago and he's made some good moves, though of course the timing of his arrival was bad.
Chrysler went private altogether.
I'd be willing to cut Ford and Chrysler some slack, but not GM. It's the least deserving, truly dreadful, and a useful principle can be established: If you managed your company only somewhat incompetently, we'll help you. If you insist on running it into the ground and refuse to adapt to the times, goodbye.
--Of course not!
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| parent )Good marketing strategy, great products.
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| parent )He seems to have a good record in this area.
--It's impossible to debate if people simply hold beliefs that have no grounding in reality.
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| parent )He lucked out on his first bail out but 10 years later drove Chrysler into the ground again. He is exactly what they don't need-an old fogey who took credit for everything-"hey! I designed the Ford Mustang all by myself!" and laid the blame for all his failures on someone else. Why, if they chose him he might just reintroduce the "Landau Roof"again!
--I had discovered a great secret. That everyone loves themselves more than they love anybody else. And if I wanted them to love me, I better be like THEM!... Ken Nordine
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| parent )Real Corinthian leather. Anti-lock brakes. etc.
Wasn't he the dimwit behind the "Chrysler-Maserati" unintended joke of a crap car?
--Even a dead midget is far from light. - Confucius
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| parent )Why people don't play to their strengths. The skills and temperament required to swoop in and fix an ailing organization are really different from those required to consistently manage a reasonably successful organization. I've never understood guys who come in, get things going, and then don't plan a gigantic retirement party for themselves so that they can only be remembered positively.
--It's impossible to debate if people simply hold beliefs that have no grounding in reality.
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| parent )there would be slightly more intelligent idiots to take their place. But certainly the Marketing Dept would be gutted - that's where all the big money's goin' anyway and I'm quite certain the R&D Dept already has/had something drawn up and maybe even was preciously close to production only to be shelved at the last minute because some high mucky-muck (probably in the Marketing Dept) didn't like it because it wasn't "his project".
--I had discovered a great secret. That everyone loves themselves more than they love anybody else. And if I wanted them to love me, I better be like THEM!... Ken Nordine
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| parent )1) Yes. I'd prefer they get it from their customers, but that hasn't been going so well lately.
2a) $50 billion? I doubt it, for no other reason than the historical tendency to use a lowball figure as bait to get a commitment, and then pull a fast switch and claim that uncontrollable/unforseen circumstances necessitate a much higher (2x-5x) cost.
2b) Not a snowball's chance in hell.
3a) In the long term, besides creating a moral hazard and a dangerous precedent which could have long-lasting economic and political consequences? No. In the short term, there is a strong possibility that allowing one or all three of the Big Three to fail could trigger a panic and turn a recession into a depression. That being said, there is also a strong possibility that bailing out the Big Three, no matter the cost, will do nothing to stop or shorten the inevitable recession/depression. A bailout of the auto industry (and the current bailout of the financial industry) may very well worsen and lengthen the economic downturn by enticing other industries to hop onto the bandwagon, creating a political atmosphere for ill-concieved structural changes to the economy, and further undermining the U.S.A.'s financial footing to the point where additional unforseen domestic or international crises could concievably cause not just a depression, but an economic and political collapse.
3b) Is it worth $50 billion? What about $250 billion? In my opinion, it's not worth anything at all. Sometimes it's better to do nothing than to do something. This is one of those times. The sooner the economy is allowed to hit bottom, the better. Are there measures that could soften the fall and speed up the recovery? Absolutely. Several have been proposed in this thread and elsewhere. Bailouts are not a good solution. Actually, bailout = dig a deeper hole. And we all know what the 1st Rule of Holes is.
4) I hope there isn't another bailout, but if there is, I hope the oversight board has the use of a shark tank.
5) There is a danger of sending mixed signals, but if the current President has no objections, who am I to gripe?
6) Almost certainly. Unfortunately, there is no one at or near the top, (besides P.E. Obama, who won't do it) who has the eloquence and the credibility to convince the American people that the best course of action in this situation is NOT to bailout the Big Three.
7) It's going to make a bad situation worse. How much worse? I don't know. But we're going to find out the hard way.
--"In large states public education will always be mediocre, for the same reason that in large kitchens the cooking is usually bad."~Nietzsche
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)anybody who thinks that a (non-suicidal) politician or a (non-suicidal) political party will just sit by while 1 - 3 million jobs disappear doesn't understand much about politics. George "25% approval" Bush can do or not do whatever he wants, but whether Obama or McCain got elected there would be a bailout of some sort.
--I blame it all on the Internet
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)...says he won't do it under the current legislation and he's punting it back to Congress. On your theory, Pelosi's gotta be hoping GM goes belly up, like, tomorrow. If they make it through January, BO will ask and she and Reid will have to deliver.
Or perhaps they'll put up a doomed effort right now, trusting that the lame-duck Congress won't pass it? :^)
--The ultimate result of shielding man from the effects of folly is to people the world with fools. -Herbert Spencer
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| parent )especially going into a recession, no one's going to intentionally add several hundred thousand to several million to the unemployment rolls. There will be noises from congressmen far removed from the rustbelt, just like there's noises from urban representatives about farm bills, but it will pass.
Besides, Reagan proved that deficits don't matter, so what's the downside?
--I blame it all on the Internet
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| parent )1) Probably not. No company needs it. What they need are buyers. Those are getting harder to come by as our economy noses over.
--2) $50 billion would probably be enough to maintain short-term ops (6 -10 months per company?). Not enough to save them. Don't get the union tie-in, unless you can show me where the UAW designed the frackin' Chevy HHR.
3) I think so. Too many ancillary industries and companies to fully comprehend.
4) Some serious folks, accountable to taxpayers.
5) Maybe...that's a POV thang. How about "one President at a time" per major issue...
6) Nope.
7) See 6.
Excess on occasion is exhilarating. It prevents moderation from acquiring the deadening effect of a habit. - W. Somerset Maugham
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)1) Yes, but I would wait things out a little longer. Some company may make an eleventh hour save and if not, the gov can pick it up for cheap!
2) probably not, with or without.
3) Yes! Go out and sit in your Ferrari(heh!)and pretend it's an American car. See the steering wheel. It's made by an outside OEM company. The label ON the steering wheel. That too! The foam shroud around the steering wheel-another company. The Airbag. The switches. The turn indicators. The speedo, doorhandles, the glass for the windows, the pump for the AC, the valves for the engine, the springs for the valves, the camshaft, the clutch, the tranny, the brakes, the wheels, the tires-heh, this just off the top of my head but I think you can see where this is going.
4) somebody responsible!
5) Yes, I think he should wait (kinda related to #1). It's bad form.
6) probably
7) A healthy and AMERICAN auto industry!!
Edit: I forgot to add with smug satisfaction-Eat It, you libertarians! Now, how does it taste?!
--I had discovered a great secret. That everyone loves themselves more than they love anybody else. And if I wanted them to love me, I better be like THEM!... Ken Nordine
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)Waste not, want not, Mama used to say. Or she would have, if it sounded better in Spanish.
--The ultimate result of shielding man from the effects of folly is to people the world with fools. -Herbert Spencer
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| parent )... used to say "want not, waste not". And there are actually are about 9,000 google hits for that. About 20 times more for your version though. I suppose they both makes some sense.
--More Wagster!
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| parent )(sorry...you accidentally triggered an Iko-Iko moment)
--Excess on occasion is exhilarating. It prevents moderation from acquiring the deadening effect of a habit. - W. Somerset Maugham
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| parent )Was a pretty good show.
-----
I will not be pushed, filed, stamped, indexed, briefed, debriefed, or numbered. My life is my own.
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| parent )**sits back in his chair, chuckles to himself and begins to smoke one of MSE's fine Cuban cigars.**(*)
*If, indeed, Elagabalus was actually in possession of one of MSE's fine Cuban cigars and was a smoker.
Hey! Look on the bright side. Now you can blame it all on the Defeatocrats even though it's strictly a bipartisan issue. :)
--I had discovered a great secret. That everyone loves themselves more than they love anybody else. And if I wanted them to love me, I better be like THEM!... Ken Nordine
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)... is worth a read on the subject.
My barely-informed position is this: bankruptcy is probably better than a bailout; better to devote some of that money to ameliorating the situation of those who will be out of work, or who will see their pensions disappear, and let good old 'creative destruction' do its work on the dessicated husk of GM.
--Brevis esse laboro, obscurus fio.
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)Although I'm still open to persuasion.
--More Wagster!
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| parent )They paid back their loans the last time they got into trouble, which is probably more than the banking industry can say. And $50 billion is chump change compared to TARP et al.
At some point, I suppose, the government has to draw a line and decide which industries are too big to fail. I think the auto industry probably is.
--They couldn't hit an elephant at this dist...
-- General John B. Sedgwick, 1864
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)I can't add much. Which is probably a good thing.
--To think is not enough; you must think of something -- Jules Renard
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)One of the best college/pro running backs. Ever. He could change directions in midair. The Michael Jordan of the position.
--Even a dead midget is far from light. - Confucius
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| parent )adopt EU safety standards and ditch the separate FMVSS nonsense. The Chinese are going that route, and we should, too. That would allow Ford to bring over the European Focus, the Fiesta and other competitive small cars now without the expense of retooling to meet FMVSS requirements.
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)If there's an industry that's screwed up more than the domestic auto industry, I'd like to know what it is. What a bunch of short-sighted incompetent buffoons. If they'd spent half of the time and energy on product development that they'd spent lobbying against CAFE standards, they wouldn't be in this mess.
And yet... estimates I've read predict 1,000,000 unemployed if GM goes under (from bankrupt suppliers, decimated communities, etc.) No president wants that guano sandwich handed to him on his first day in office, and no politician worth the name wants to be tagged as "the guy who lost Detroit." If John McCain had won on November 4, I bet he'd be pushing for a similar bill.
I think GM needs to go bankrupt. The demand supporting a six-marque business just isn't there. If they come out as a smaller company selling Chevy's for basic transportation, and Caddies as luxury cars, they might survive, assuming the right product mix.
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)What I don't get is why two of the three (GM and Ford) are unable to translate the success they have overseas back here. Health costs are part of it, perhaps(European governments take care of that), but otherwise labor costs must be comparable. The real difference is in the products they offer over there versus the products they offer here.
One example: the Ford Focus RS. The kids who buy Subaru WRXes or Honda Civic SIs or Mitsu Evos and so on would surely add the Focus RS to their shopping lists. It's legendary among that crowd. The car would enhance the company's image in the right demographic, and it would start planting the seeds of brand loyalty. When those boys get their girls pregnant, they can move up to Fusions or Focus wagons. And if they avoid that fate, when they graduate from law school, they can step into Lincolns.
So why are they able to produce and market cars to a foreign market, but they are unable to do the same for the domestic market?
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)Hourly rate at Toyota Japan for the same assembly line work: $40.
--Even a dead midget is far from light. - Confucius
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| parent )Says something similar:
Average Labor Cost per U.S. Hourly Worker:
GM: $73.73
Toyota: $48.00
However,
Average Hourly Salary for Non-Skilled, Assembly Line Worker:
GM: $31.35
Toyota: $27.00
Hourly salaries aren't far apart. Hourly labor costs are. The labor costs figure includes legacy health care and pension expenses. The figure you heard on the radio probably includes those costs, too.
The NPR comparison above predates the transfer of health and pension funds and obligations from GM to the UAW. The gap in per car labor costs between GM and Toyota has narrowed considerably since (from $2-4K to about $800.00). Ford and Chrysler have negotiated similar deals.
I'd be interested in the source of the figure you heard on the radio. I'd bet that it's out of date.
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| parent )I didn't hear any source on the radio, just the number on the news. But this breakdown (warning: MS Word document) shows a big increase in the last year, not a decrease.
Again, I'm not in favor of union-busting as part of Detroit salvage efforts, but both sides are going to have to give up something to make a bailout work. And again, the UAL example could be instructive regarding what happens if they don't. (Sparti, can you give a pilot's perspective on that latter point?)
--Even a dead midget is far from light. - Confucius
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| parent )ends in 2006 -- prior to the cost offload (which occurred in 2007 for all three automakers, AFAICT).
A quick google didn't turn up updated hourly figures, but this brief news item tells us that GMs per car labor costs shrank considerably after the 2007 GM/UAW negotiation.
The UAW has shown remarkable flexibility the last few years and I expect they will continue to do so. Union intransigence has not pushed the big three into the current crisis.
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| parent )Somehow that doesn't seem true.
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| parent )not just salary.
--"That Sam-I-am! That Sam-I-am! I do not like that Sam-I-am!"- Dr. Seuss
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| parent )retired worker health coverage, and a host of other expenses that don't accrue to actual, currently employed workers. Average salary/benefits in Detroit was around $57,000 in 2006.
http://www.usatoday.com/money/autos/2006-03-28-buyout-packages_x.htm
Those numbers, in other words, are completely bogus.
--Before you criticize someone, you should walk a mile in their shoes. That way when you criticize them, you're a mile away and you have their shoes. -JH
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| parent )$73.20 figure, feel free to tear it apart if you like. I don’t fell like making the effort myself.
--"That Sam-I-am! That Sam-I-am! I do not like that Sam-I-am!"- Dr. Seuss
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| parent )It says $73.20 is average hourly "compensation." That figure is actually average hourly "cost." There's a big difference between compensation and labor costs. Especially when the automakers factor pension costs and healthcare costs for retired workers into that number, or at least they used to.
Actual line worker compensation is in the $40-$60k/year range, benefits included. See tomsyl's chart and Username's link above.
--Before you criticize someone, you should walk a mile in their shoes. That way when you criticize them, you're a mile away and you have their shoes. -JH
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| parent )tomsyl's chart, so if you accept that chart then the only thing he got wrong was how he worded it.
--"That Sam-I-am! That Sam-I-am! I do not like that Sam-I-am!"- Dr. Seuss
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| parent )makes all the difference.
--Before you criticize someone, you should walk a mile in their shoes. That way when you criticize them, you're a mile away and you have their shoes. -JH
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| parent )"That Sam-I-am! That Sam-I-am! I do not like that Sam-I-am!"- Dr. Seuss
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| parent )Here are the numbers broken down in considerable detail: Link. (Requires MS Word to open)
I'm not criticizing anyone as being overpaid; a large part of the American Dream is doing less work for more money. But the questions here centered on what has to be done to salvage Detroit, and I think union concessions are an important factor there.
The WSJ on the mess in Detroit: Link.
--Even a dead midget is far from light. - Confucius
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| parent ).
--Before you criticize someone, you should walk a mile in their shoes. That way when you criticize them, you're a mile away and you have their shoes. -JH
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| parent )The last American-built car I owned was a '78 Escort, which defined the term "POS." (I had a very fast V-6 Capri once, but it was made by Ford of Germany.) Since then every car has been stick-shift and Japanese, though I'm eyeballing this gorgeous, high performance French masterpiece even as we speak.
--Even a dead midget is far from light. - Confucius
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| parent )I love my little Japanese econobox, but there are still some American cars that are worth having.
--Guard, protect and cherish your land, for there is no afterlife for a place that started out as Heaven.
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| parent )Even within the Mustang line, the bottom end is junk and the top end, with the Shelby marketing badge, is a $50K POS with terrible track manners.
Cadillac (yep, that one) is about to market a new CTS with a 550 HP DOHC engine with an integral supercharger built into the intake manifold, so it doesn't even need a hood bulge. Claimed 0-60 time is 3.9 seconds, which should translate into about 11.2 in the quarter. I'm extremely dubious about those numbers (a Ferrari 430 weighs less, makes almost 500 HP from a normally aspirated engine, and is much lighter, yet doesn't break into the threes. nor does a 599 irrc. A Cadillac sedan that can keep up with a Porsche GT2??). As you know, Detroit has a long history of sending tuned ringers to magazines for testing, so I'll wait for an actual road test of a car bought from a dealer, but target price is $60K for a car that will out-accelerate just about everything but the new 100K Vette.
--Even a dead midget is far from light. - Confucius
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| parent )http://www.seriouswheels.com/1950-1959/1957-BMW-Isetta-300-Red-FA.htm
--GW Bush, leading contender for worst President ever.
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| parent )Link. I'm a pretty simple guy, as you know. But if forced to choose, I'd prefer a Messerschmitt KR200 to that Isetta. More class.
--Even a dead midget is far from light. - Confucius
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| parent )1964 Messerschmitt KR-200 Roadster
My browser had trouble with the hfer tag, but View Page Source saved the day, heh.
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| parent )---
--Even a dead midget is far from light. - Confucius
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| parent )and cow bars. They will prove invaluable to keeping a watchful eye on the hordes of teenagers on skateboards bent on making your every trip down the high street a living hell.
But then if it's a station wagon you want:
--GW Bush, leading contender for worst President ever.
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| parent )Kool. With a logo for a company apparently specializing in pigs' feet, too. The pig is in the tunnel.
--Even a dead midget is far from light. - Confucius
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| parent )want to damn the CEO's, I have to say the American car market is tough. Americans tend to say they want one thing but what they really want is something else. But you're right. They have everything they need, even some small powerful engines, they just need to get rid of all the top tier management and weather the storm.
--I had discovered a great secret. That everyone loves themselves more than they love anybody else. And if I wanted them to love me, I better be like THEM!... Ken Nordine
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| parent )out of a story I read last week about SUV sales perking back up when the gas prices dipped.
It was a very sad, hopeless chuckle...the kind a chuckle I respond with when I read about irretrievable junkies, but a chuckle nonetheless.
--Excess on occasion is exhilarating. It prevents moderation from acquiring the deadening effect of a habit. - W. Somerset Maugham
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| parent )Didn't this happen in the 70s too?
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| parent )Government healthcare =/= free healthcare. It's coming out of their pockets, or their shareholders', one way or another. There might be efficiency & rationing gains, but still.
--The ultimate result of shielding man from the effects of folly is to people the world with fools. -Herbert Spencer
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| parent )European socialist system. "Efficiency & rationing gains" is putting it mildly. Did I mention their quality of care/life expectancy numbers all look better too?
--Before you criticize someone, you should walk a mile in their shoes. That way when you criticize them, you're a mile away and you have their shoes. -JH
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| parent )but it seems to me that where the healthcare dollars come from impacts the company's ability to allocate its resources.
If shareholders (along with everybody else, shareholder or not) are paying the healthcare costs out of their pockets (or dividends or share price), the car company can allocate the margin it would have spent on healthcare to R&D or marketing or tighter margins.
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| parent )I'm just saying that the healthcare doesn't magically appear from nowhere. Either the tax burden on the corporation has to be higher (reducing the impulse to invest) or the tax burden on the consumer has to be higher, impacting disposable income & demand.
--The ultimate result of shielding man from the effects of folly is to people the world with fools. -Herbert Spencer
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| parent )If my health care is paid by my taxes, then I don't pay out my contribution towards my premium. Who knows? That might be a wash. Similarly, if Ford can sell cars for less (or make more money selling at current prices) because they aren't buying health insurance for a huge workforce, who's to say they wouldn't be better off, even if their taxes are higher?
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| parent )The Devil's in the details. It might, on net, be better or worse. I just don't see that it can explain the huge gap in performance all by itself.
--The ultimate result of shielding man from the effects of folly is to people the world with fools. -Herbert Spencer
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| parent )If I took a long term view I would think that something worthwhile might arise from the ashes of the big three. GM, Ford & Chyrsler have proven they don't have what it takes to compete in a global market. $50 billion won't change that. IMO, they are doomed to failure.
The real question is, can we stand the short term pain this would cause? I don't think so. The big 3 are just too big to fail at this point. We are going to have to spend a sh!tload of money no matter what happens. What is the best way to spend it? I don't know.
Also, all the Union bashing from the starboard side over this is a joke.
--But she's a queen, and such are queens
that your laughter is sucked in their brains. -D. Bowie
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)That something is called Tesla Motors:
http://www.teslamotors.com/
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| parent )They haven't been able to build cars people want to buy for decades. Take all that money and spend it on retraining and assistance for former employees.
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I will not be pushed, filed, stamped, indexed, briefed, debriefed, or numbered. My life is my own.
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)all of the other businesses that would fail if GM tanked, including parts suppliers. Apparently if part suppliers go down, so do factories for other makers like toyota?
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| parent )Two things come to mind. If we bail out GM, what happens when no one wants to buy their crummy cars anyway? It just makes a bigger boom fueled by a lot of taxpayer money. Alternatively we can assume that the market share that once went to GM will be picked up by the other automakers keeping the parts suppliers in business. On some level the small vindictive part of me wants to see the management of GM living in cardboard boxes for all the crap they've inflicted on the American car buyer all these years.
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I will not be pushed, filed, stamped, indexed, briefed, debriefed, or numbered. My life is my own.
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| parent )Every time I get blinded by on the freeway by the double headlights of the monstrous SUV behind me I'm reminded that the typical consumer is the problem.
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| parent )GM actually builds half decent trucks and SUV's. When the economics for them worked out, people bought them in droves. I don't personally like them, but GM sold lots of them. My anger at GM is that they never saw the writing on the wall. They are not flexible enough to build small cars, and the cars they do make are crap. It annoys me that I will end up paying for their incompetence and inability to plan beyond the next quarter. The decline of GM now that SUV's aren't feasible shows that the average consumer isn't completely stupid.
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I will not be pushed, filed, stamped, indexed, briefed, debriefed, or numbered. My life is my own.
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| parent )I'd fire all the GM execs and put the GM pension funds into safe, interest-bearing bonds. Just raise the CAFE standards and the problem solves itself. If GM produced an electric car worthy of the name, they'd sell product again.
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| parent )As a company they are incapable of building a car that isn't crap. They lag well behind the Japanese automakers in reliability and behind the Germans in performance. Cheap interiors, poor performance and bad reliability will not be solved by an improvement in mileage.
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I will not be pushed, filed, stamped, indexed, briefed, debriefed, or numbered. My life is my own.
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| parent )the technology of the internal combustion engine and its built-in inefficiencies instead of just picking an arbitrary number and assuming Detroit can hit it and still make money. I'm not sure the answer is hornswaggling the Big Three into electric cars. Why not first give Tesla Motors 1/100 of the bailout $$$ Detroit is asking for as a low-interest loan, and see what that company can do with it?
Absent a dedicated 220 or 440-volt, three-phase system, electric cars can't be fully recharged overnight; either pay an electrician and hope your nearby pole-pig can handle the increased demand from you and your neighbors, or hope for a majaor breakthrough in electric powertrain efficiency. The energy density of the batteries is not an issue here because watts in always equals watts out, regardless of how those watts are stored. Look at the energy used by an electric car on a typical 30-mile commute, multiply that by 1/2 of the number of customers your utility now has, and then compare the result to the total output of existing generators and you will find a 50 to 75% shortfall at a minimum. That shortfall also extends to transmission line capacity. Full conversion to electric is simply impossible in the short term, meaning less than 25 years.
I'm not sure the GM pension funds exist somewhere as a lump sum that can be taken away and put into a lockbox. My impression is that those pension obligations are so huge that they are treated like our Social Security system, with obligations paid from receipts. Meaning that if the Big Three's lenders, stockholders and the UAW don't cooperate, the corner will never be turned. Nor am I willing as a taxpayer to have the Pension Benefit Guarantee Corp. foot the bill if GM et al go bankrupt. UAW pensioners should get the same treatment as anyone else if the company they work for goes into bankruptcy.
The bankruptcy of United Airlines and the subsequent treatment of pilots' pensions is something worth studying.
Though O/T, the Obama Administration's apparent intent to do away with secret voting on unionization is completely indefensible on any level except as a payoff to union management.
--Even a dead midget is far from light. - Confucius
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| parent )The last time I looked, the grid distribution system was designed to handle peak load. Depending on where you live, that's between 11AM-8PM in the summer plus or minus a couple of hours. Off peak is usually a very small fraction of that. Automobile batteries would presumably be recharged during off-peak hours.
Additionally, the grid's generating capacity was scaled to meet peak loads. If recharging begins in earnest then they can very easily restart their generators to produce peak output at night.
However as you say recharging batteries is a problem, as are the batteries themselves. But this problem can be solved several ways from installing Aerovironment's burst rechargers at every Starbucks so that people can get their coffee while they recharge for 10 minutes to having recharging systems for homes that have large batteries themselves with small rectifiers. Imagine buying the recharger with the car as you do a drill/driver.
The real solution is to have a 10KW (13HP) or so range extender on board for range extension. If you are driving a long distance or need the AC then turn it on immediately. If where you park for the day doesn't have a hook up then leave the generator running until it tops itself off.
The viability of the internal combustion engine for this purpose should be debated. While it is power dense, it is a maintenance hassle--several hundred parts, many of them moving with bearing surfaces. The reason we use them is that we have an installed maintenance and manufacturing base that can handle it relatively cheaply.
Try imagining Kamen's new take on EVs that have a Stirling engine as the range extender (although his is pretty wimpy)
http://www.greencarcongress.com/2008/11/dean-kamen-unve.html
These new generation Stirling engines have been developed recently for several military and NASA needs. NASA has them supply power to their space craft powered by hunks of plutonium for their heat source. The military has at least 6 of these units also powered by plutonium. The specs for the project led us to believe that these power sources are tucked on a mountain somewhere in Central Asia powering black devices. Can't be sure. The Chinese seem to have installed Stirlings for their AIP submarines and have surprised the US Navy with their silence
http://www.dailymail.co.uk/news/article-492804/The-uninvited-guest-Chinese-sub-pops-middle-U-S-Navy-exercise-leaving-military-chiefs-red-faced.html
The nice thing about these Stirling range extenders is that they can run on any furnace. Therefore you can feed it any kind of fuel, even the sun.
http://www.infiniacorp.com/applications/solar/iss_index.html
http://www.infiniacorp.com/technology/how_stirling_works.php
Last time I checked Infinia had $50M venture funding. Don't confuse these talented engineers who have real products to those SES shysters in Phoenix trying to sell power to CA to meet their green energy requirements using old Kokum engines.
No need for clean fuel anymore---feed those engines wood pellets
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| parent )My point on generation and transmission capacities being exceeded by demand if electric cars are widely used was based on some numbers penciled on the back of a cocktail napkin, but I'm sticking with them:
-Assume average daily commute consumption of 12 kWh for a pure electric vehicle traveling 25 miles round trip over moderately hilly terrain. Doable if you don't mind a car that takes 15 seconds to go from 0 to 60 mph on level ground.
-If the vehicle is used only twenty days/month for commutes, that is 240 kWh/month. Which is 2.88 MWh/year per car, or 5.76 MWh/year for a typical two-car family.
-An average family of three's household in California currently uses about 6.0 MWh of electricity per year. If that family uses two pure electric cars, their electricity consumption is almost doubled. I don't believe the existing grid can possibly supply that, even on an intermittent basis. But maybe I'm wrong or I've dropped a decimal point somewhere.
--Even a dead midget is far from light. - Confucius
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| parent )stop and count how many stacks are spewing vapor on a hot August afternoon. Probably 5 out of 5 stacks will be running hot. At 2AM, that same power plant will only be working one stack. The capacity is available in most areas.
However, so many power districts now satisfy peak demand with NG turbines that upping off peak demand may be rather costly compared to old coal.
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| parent )deciding that's the direction to go in. The last numbers I found on the DOE website showed a 32% increase in LNG imports from 2006 to 2007. (As an aside, LNG transport emits far more greenhouse gasses than if the NG goes from wellhead to end user only in gaseous form.)
Below BlaiseP posted a map showing the very extensive amounts of untapped NG in this country - note the huge volume in the Gulf of Mexico, where the Chinese already are drilling just outside our territorial limits. then consider how unlikely it is that those resources will be explored and exploited under a Dem administration, particularly one where a raving loon like Robert Kennedy is being considered for EPA chief.
Conclusion: the Obama Administration has not the slightest clue about the dangers of increasing the country's reliance on imported fossil fuels. Or if they do, they don't give a sh!t.
--Even a dead midget is far from light. - Confucius
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| parent )Yes, LNG is wasteful because of the compression/expansion steps. However, there are technologies now available to capture the energy released during expansion.
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| parent )and gasification processes?
--Even a dead midget is far from light. - Confucius
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| parent )I was just referring to the energy required to compress the NG and then being able to capture that Potential energy at the spigot as the LNG is expanded for pipeline distribution.
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| parent )although a little optimistic on the efficiency side. The problem with your analysis is in assuming that the electric car recharging is additive to the current electrical use, it's almost certainly complementary by recharging during off-peak hours. The problem with electric cars will not be grid capacity.
EDIT: Oops, I was wrong about your efficiency figures, they're OK for a hybrid but are actually pessimistic for a pure electric. That would cut your final figure of 5.76 MWh in half to about 3 MWh.
--I blame it all on the Internet
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| parent )and prototypes - there are no actual regular daily use efficiency data available that I know of because there are no real-world regular use electric vehicles around in enough numbers to give a representative sample. And steep hills make a huge difference to electric motors; I have a 7-800 foot hill to go over between work and home.
But let's take your number: that's still a 50% increase in energy use. I'm not talking about simultaneous loads versus load-sharing; I'm talking about annual generation capacity, which can't simply be increased by 50% by running all generator units all the time. There are issues like planned maintenance downtime, using reserve capacity for emergencies only, fuel supply and storage etc. that would prevent any public utility I know of from suddenly supplying half again as much power on a 24/7/365 basis.
I'm not saying any of this isn't achievable; my comment originally was in response to the claim that plug-in electrics were available and practical without any residential or utility-based adjustments. Example: a typical home branch-line maxes out at about 12 amps, meaning it would take you 10 straight hours (assuming no voltage sag at that current) to put 12 kWh of electrical energy into a car, regardless of the battery system used. Double that for two cars of a typical family. I don't know about you, but my car rarely sits in the same place for ten hours. Again, the point being a dedicated 220-volt line would be the way to go. No biggie (I'll do yours for free long as you agree not to turn it on until after I've left the premises), but not "plug-in".
--Even a dead midget is far from light. - Confucius