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Thursday, July 10, 2008

The American auto industry dies

Jul 10 2008 3:55PM | Permalink |Comments (56) |

The delightful if somewhat stuffy Knowledge at Wharton newsletter has a good article on the decline and challenges facing the domestic auto companies. See, the title of this blog is a bit of a misnomer. Honda, Toyota and even Hyundai build cars in the US and are doing very fine indeed. No, it is only GM, Ford, and Chrysler that are reeling. In way it makes me happy I left the auto industry and moved to Silicon Valley 20 years ago. But it also makes me very sad because all the technical people in the auto industry have always known what they should be doing. It was the finance-industry management of the auto companies that destroyed them. I guess the whiz-kids are not so whizzy after all. You can imagine my astonishment at this sentence:

GM, which maintains a narrow and shrinking lead over Toyota for the most sales in the U.S. market, has said it may be interested in selling its Hummer division, and is reportedly considering the sale of its Saab, Buick and Pontiac divisions.

Boy, I guess they are implementing their “growth by attrition” strategy. Leave it to the whiz kids to destroy a great bunch of companies. Now the thing I really like about the article was the comments by readers at the end. One that really struck me was from Justin Benson:

Hybrids: I struggle with why hybrids are the short term answer? How many are sold in Europe where gas is much higher? Very few - because Diesel is really the smartest short term solution. Recent changes for VW and Mercedes will see more diesels here. I for one would buy a Diesel over a Hybrid for a number of reasons. My point here though is that the whole "Let's race to create hybrids in 3 - 5 years" seems odd to me given that 50% + of all cars sold in Europe are Diesel and get 40 - 60 MPG's etc. Diesel isn't sexy - "new" technology like Hybrids are. I can't wait for 10 years when all the articles are written about what we do with all these batteries?

I really agree that everybody seems to think we need some whizzy new technology like electric cars and fuel cells and hybrids when all we have to do is conserve and encourage diesel and natural gas as alternative fuels. Solving the storage and distribution problems of natural gas are trivial compared to the problems of storing and distributing hydrogen. A key technology that should be developed in a few years is the design of supertankers for LNG. Even if we don’t get foreign natural gas our domestic reserves are out 100 years or so. I once saw a statement that there is 1000 years of natural gas still in the ground worldwide.

In another comment in the Wharton article, Jason O'Connell said:

Toyota has achieved one of the greatest PR triumphs of the last 30 years: The Prius and other toyota hybrids are still a small fraction of T's overall sales. In the last 5-6 years they introduced the new full sized Tundra and other low-MPG gasoline vehicles while using the Prius as a public relations diversion. Has anyone noticed Toyota's sales being killed (down 12% June 2008) recently along with GM and F?

The previous commenter is correct: Plug in electrics like the Volt are a coin flip, and fuel cell vehicles are are much lower mass-market probability than that.

The most likely scenario for the US are small, common-rail turbocharged diesels, i.e., what we see en masse in Europe where diesel prices are still much higher than the US. These engines are highly fuel efficient while turbocharging provides the performance that consumers desire.

I couldn’t agree more. I have already mentioned a Ward’s Auto World article that pointed out that Americans drive too many highway miles for hybrids to work out. The added weight of the batteries and motor hurts your highway mileage more than the braking regeneration helps your city mileage. Even plug-in hybrids don’t make a lot of sense. I know everyone will rail about how new technology will change everything and high-volume manufacturing will bring the costs so far down everything will be OK. Don’t bet on it. Battery technology has improved at about 8% a year. In that means in 9 years battery capacity will double. But we need a decade improvement, not an octave. So in maybe in 40 years we will see all-electric cars. This is based on today’s oil prices, but we know oil is going through the roof, so expect the practical family-sedan electric car in about 20 years.

Related entries in: Analog |

Reader Comments

at 7/10/2008 9:33:26 PM, Dave Raffa said:
I cann0t understand why there is very little discussion about the use of liquified coal. The US has an over abundance of coal which could be used to power our motor vehicles.

at 7/10/2008 10:03:55 PM, PHIL said:
LOL WHAT ABOUT THE BROKE AND BANKRUPT WALLSTREET BANKS ?? ONE TRILLION LOSS IN A QTR LOL LOL AND YOU IDIOTS TALK ABOUT THE BIG THREE?? lol lol lol

at 7/10/2008 10:06:47 PM, Joel Sassalee said:
All corporations have a responsibility to maximize shareholder equity. GM needs to do this by cutting payroll as well as cutting all expenses. That means GM needs to cut upper level management jobs - especially those that duplicate one another. GM also needs to cut lobbying spending, advertising and public relation agency fees, paying for contractor salaries, and cutting offices throughout the country. Also, everyone who makes $100,000 or more at GM should be required to take a 20% pay cut.

at 7/10/2008 10:12:20 PM, PHIL said:
SCREW THE SHAREHOLDERS ENOUGH ON THE BIG THREE WHAT ABOUT THEM BROKE WALLSTREET BANKS PULLING DOWN THE DOW .. THE FINANICALS HAVE LOST OVER ONE TRILLION DOLLARS SINCE OCTOBER OF LAST YEAR...AND HAS LAID OFF OVER 300,000 PEOPLE SINCE OCT OF LAST YEAR... AND THE ANALYST TALK ABOUT THE BIG THREE ?? THE ANAL-YST BETTER START LOOKING IN THEIR OWN BACK YARD!!!!!

at 7/10/2008 10:18:35 PM, PHIL said:
AND THE WELFARE BAILOUT OF WALLSTREET WAS USELESS.. ALL IT DID WAS DEVALUE THE U.S. DOLLAR AND INCREASE THE PRICE OF OIL AND INFLATION THANKS BEN YOU IDIOT YOUR JOB IS TO CONTROL INFLATION NOT BAILOUT WALLSTREET!WHAT AN IDIOT...MAIN STREET AMERICA THANKS YOU YOU IDIOT !!!

at 7/10/2008 10:31:53 PM, PHIL said:
WALLSTREET NEEDS TO DIE AND WE NEED BANK FAILURES NOW..... TO CORRECT THE BANKING INSTUTIONS ENOUGH WITH THE BIG THREE .... THEY HAVE MORE MONEY THAN WALLSTREET BANKS ??? SO I SAY TO THE SO CALLED ANALYST ... THE FIRST FOUR LETTERS OF ANAL-YST SAYS IT ALL....SO LOOK IN YOUR OWN BACK YARD CLEAN UP YOUR MESS !!! THEN TALK ABOUT THE BIG THREE..

at 7/11/2008 6:42:42 AM, mlhm5 said:
Most people drive less than 65 miles a day so you are dead wrong when you say a PHEV or BEV will not work.

In a PHEV the engine could be either diesel or LNG.

Don't hold your breath for Detroit to market either a diesel or an LNG passenger car or PHEV.

They don't have to, others will.

at 7/11/2008 12:42:52 PM, Tony said:
mlhm5: Paul is correct. A diesel is more expensive, but also lasts longer (unlike hybrid). A hybrid + diesel would cost way too much (extra diesel engine cost + extra battery cost). Many people do drive > 65 mi (work + going to store + ....). Finally, the Prius is the car for limousine liberals -- makes them feel good, shows everything else that "they care", but doesn't help at all.

at 7/11/2008 1:07:32 PM, NoOneImportant said:
--"Finally, the Prius is the car for limousine liberals -- makes them feel good, shows everything else that "they care", but doesn't help at all."--

We get 50 mpg summer, 45 mpg winter. No other car gets better mileage. Beyond doubt 'conservatives' will continue to hemorrhage money as they blast past us. It’s a free country.

Google 'Prius Sales Europe' and draw your own conclusions.

Liquefied coal as fuel. The best short-term solution is to generate electricity with it, and use electricity to charge batteries. One of the fundamental flaws with hydrogen as a fuel - distribution costs.

at 7/11/2008 2:34:55 PM, slap_the_pony said:
I'm not sure, but I don't think the diesel proposition in the US is all that simple. Diesel isn't as widely available, and I believe the US still has tougher emissions requirements than Europe (at least for passenger cars). Having driven turbo-diesels in Europe, I'd be happy to see them offered side-by-side in the US, provided they'd meet US emissions standards. Also, Detroit did experiment with diesel in the '70s, but IIRC, they were just warmed-over gas designs which didn't last very long.

at 7/11/2008 2:49:20 PM, Quincy said:
I don't understand the hate on hybrids. Hybrid technology can be applied to diesel cars to make them even better, allowing them to recover energy that would otherwise be wasted by friction braking and enabling them to idle with the engine off to save even more fuel.

VW is set to introduce hybrid diesels.

Mercedes is coming out with Bluetec Diesel Hybrids including an S300 luxury sedan.

As far as all the misinformation on the batteries go, THEY ARE RECYCLABLE. Toyota will actually pay you a $200 bounty to return a hybrid battery if you are going to junk your Prius at the end of its service life.

Hybrids are here to stay, like it or not.

at 7/11/2008 2:50:32 PM, jb said:
the real reason the US auto makers can make money is because they have too many models and too many options. manufacturing and cost control 101.

at 7/11/2008 2:56:36 PM, W17053 said:
There is a shortsightedness in believing there is 1000 or even 100 years of Natural Gas. That would be using current consumption, not using it to displace petroleum. You could then say we have 1000 years before oil runs now out, and then we could switch back, etc. We should be attacking energy on all fronts, because none can ramp-up fast enough, or be the end all - Breeder Reactor + Nuclear, coal gasification + bio-fuels, wind + PV. Everything helps, and reduces foreign dependence. How about all the oil we export??? Alaskan oil to Japan or China? As long as the Oil Companies can profit, it won't stay internal.
My commute is now 44 miles 1 way. I took a lower paying job closer because 74 miles would bankrupt me, even though the further company had better benefits and growth path. It is too expensive to move closer to the big city, and not enough jobs in my field at home. I need an electric with a boost (Volt), or extended range. I thought of a generator in the 'city car' back in the mid 70's.
OPEC or Big oil killed PV, conservation, and dropping the cost so low most companies bankrupted or stopped research. Not a conspiracy theory, just healthy suspicion.

at 7/11/2008 3:14:23 PM, Hardtruth said:
Lot of scenic chat. Did anyone countenance the fundamentals that the US economy is in scarily serious trouble and that the GM and indigenous US cars are garbage? The perfect storm is forming...

at 7/11/2008 3:30:29 PM, JackC said:
In the end it all has to be about incremental change and lowering implementation costs for the vehicles we drive. My bet would be on electric motor and drive research to improve efficiency and diesel or petrol generators as a good starting point. If you make the electric drive train and electronics available you enable battery, hybrid, solar augmentation and diesel or petrol generators. The manufacturers need to stop looking for single configuration solutions, there can’t be a single solution that “wins” we need to use all available resources in the medium term.

at 7/11/2008 3:40:53 PM, Policebox said:
What I don't understand in this conversation is why nobody is accounting for carbon footprint. Most of the comments trade one fossil fuel (oil/gas) for another (natural gas, coal) and diesel isn't even a different fossil fuel (it is a petroleum derivative, just like gasoline). Global Warming aside, all the fossil fuels together won't meet our rapidly growing energy needs for more than a handful of decades. We need to get into something else BIG TIME!

at 7/11/2008 4:33:17 PM, Meredith Poor said:
Anyone interested in alternative fuels could go through a whole list of novel fuel generating technologies: Acetylene from calcium carbide, methane from lithium carbide, hydrogen from an aluminum/gallium mixture, methods for synthesizing ammonia (other than Haber-Bosch), FT Synthesis, effects of hydrogen iodide on cellulose, and so on. These are all 'green' processes, most of which can be done on a back-yard scale. Not cheaply, necessarily, but if the 10% or 20% of the wealthiest people installed these the price of gas would abate quite a bit.

at 7/11/2008 6:20:37 PM, pareto said:
What we have is a pareto distribution. 20% of the cars are using 80% of the fuel. If we just ban the big SUVs and make the owners bicycle to the grocery store, they will be healthier and gas prices will drop like crazy. it is really that simple.

and by the way Meredith, it was the Bourne-Haber process (Germany 1903) that fixed nitrogen from the air, allowing the theoretical carrying capacity of the earth to increase from 1.8 billion. Robert Bosch is in the auto parts business.

at 7/11/2008 7:09:58 PM, CodeWarrior1241 said:
The talk of 45-50MPG for hybrids is plain silly. The Mercedes C300 diesel gets 46MPG with a V6 and more performance than a prius could ever have. The diesel E-class is comparable in economy while being as roomy as most US consumers would want it. Vehicles such as these, in a wagon configuration especially, have the room and power of any big american car, while delivering more power than any hybrid could ever hope to have. Diesel engines eat anything, from liquefied coal, to natural gas, to regular kerosene fuel. Today's catalytic converters will scrub emissions from a diesel to match ULEV gasoline engines. This is the way to go, the debate about hybrids simply wastes good resources that could be used elsewhere.

at 7/12/2008 7:08:11 PM, Darren Holdstock, UK said:
An unmodified diesel engine will run quite happily on mildly-processed used cooking oil, with the added bonus of the exhaust smoke smelling of whatever restaurant the oil came from. Raw used cooking oil won't damage the engine, but will clog the fuel filter. Home processing plant for making biodiesel from waste cooking oil are now available from a number of companies, or those with an engineering bent can make their own.

at 7/14/2008 1:56:16 AM, JohnStyles said:
Here is an interesting article about a journey from London to Geneva. One journalist in a Toyota Prius and the other in a BMW 520d. The BMW had better fuel economy... Diesels are the way forward. <//driving.timesonline.co.uk/tol/life_and_style/driving/used_car_reviews/article3552994.ece>. John

at 7/14/2008 5:58:48 AM, Steve Jones said:
Having watched things for years and reviewing the articals and comments I have come to one major conclusion. The bottom line of the problems is GREED. on the part of all... The shareholders wanted to maximize THEIR PROFITS, the CEO wanted to maximize THEIR PROFITS, the banks wanted to maximize THEIR... Right now it''s the oil companies and the oil producing conteries that are maximizing THEIR PROFITS... Guess what... all these "PROFITS" come from somewhere... Us, the consumer of these products. When we change the way we live and work and close the door on our dependance on any one produce or source then maybe we''ll have a chance of being able to get out from under this mess.
It''s also about time "we the people" start holding our "leaders" ACCOUNTABLE for their actions and decisions.
Goverment and socicity need to work from the bottom up, not from the top down, contrary to popular belief. If you look that''s the way this contery was origionally intended to function, problem is it does''nt and look at the mess we''re in...
We have allowed the goverment the power to tell us what we can or can''t do and set the policies and laws rather than having the goverment represent the majoriy of the people it represents. Is''nt that what we call a "Democratic" form of goverment.
So when you add all the GREEDY, selfish, short sighted profitable decisions made by our leader up it no wonder our industry and economy are so screwed up.

at 7/14/2008 12:10:17 PM, W17053 said:
To mlhm5, GM already builds an adapter for automobiles to use CNG. I saw both cars and Pick-ups. One drives in to Chicago everyday (you can see the sticker on the rear bumper). The problem is refueling. you can buy a compressor to use at home. It uses about 1.2 Therms to equal a gallon of gas. I believe you can also get it adapted for LPN, which is available at most RV Resorts.

at 7/14/2008 12:44:21 PM, DMW said:
I am not sure why you made this statement: "A key technology that should be developed in a few years is the design of supertankers for LNG" when LNG tankers have been around for some years. LNG terminals are being built in the US, such as the one in Freeport, Texas. It''s heat exchanger looks large enough to air condition the entire city of Freeport.

at 7/14/2008 1:37:51 PM, Jonathon Hanlon said:
Okay, we need to square this one out: hybrids are not necessarily better versions of the same thing that is not a hybrid. If you took a hybrid on the highway I guarantee you it will be worse because you will RARELY brake on the HWY and you won''t see any of the added benefits of such, yet now you have all the weight of those extra electrical components and the battery weighing your car down and severely reducing your fuel economy. They are GREAT for stop-and-go city driving and that is it.

Furthermore, there is more energy in Diesel (38.7 MJ/L) than in gasoline (34.6 MJ/L) and the processes we currently use to turn that mechanical energy into heat and then convert it into either electrical or locomotive power are more efficient for diesel than for gasoline, which means you just get more out of diesel, period. A lot of people still think that diesel is a dirtier fuel than gas because the diesel fuels that existed for decades in America were sulphur-ridden and diesel cars stunk and produced black smoke. In reality diesel burns cleaner than gasoline, even at the same volumetric consumption rate, especially now that our diesel standards are pretty close to Europe''s.

As a side note: Ethanol production needs to stop. It does not produce any appreciable cleaner air and it makes everything related to the corn industry more expensive including milk, cheese, beef, corn, etc. Not to mention Ethanol is very harmful to seals and fuel lines... leaking gasoline I suppose is very bad for the environment, worse than the exhaust fumes and it is VERY dangerous to all.

at 7/15/2008 7:40:07 AM, W17053 said:
So many misconceptions. Someone once told me to "do your homework".
Hybrids were originally designed and optimized for city use (pollution), not highway optimization. My understanding is that regenerative braking is used when coasting too fast downhills, so you do get some recovery on the highway, not to mention off ramps or the slow driver(s) in the left lane. Still, hybrids achieve higher MPG than non-hybrids on the highway (although they may achieve greater MPG in-town than highway). The Prius has better mileage than the Echo, which it was built from. Some Hybrids use electric to assist in acceleration or passing, which will decrease fuel useage compared to non-hybrids.
Diesel is still dirtier, that is why they have particle catchers and burn-offs. Compare the emissions, Diesel is still higher than Gasoline. The exhaust does looks better than the '80s.
Ethanol contains less carbon atoms than Gasoline, and burns cleaner. "Appreciable" is one of those words used to hide the fact that something is better by those who want to maximize their side of the story. Milk, Cheese, Beef, Corn, etc. are higher due to transportation costs (diesel fuel for trucks), only slightly (not "appreciable"), $0.03 - $0.04 due to corn cost from Ethanol useage. Corn useage is regulated by the Government by how much they can use, not the richest can purchase all. I noticed that Biodiesel, which uses (feed) crops, was not mentioned, but is a cleaner 'Diesel' than Diesel. Fuel lines are affected because they were optimized for Petroleum (Gasoline), but you can purchase Ethanol (or Methanol) friendly seals and gaskets (Flex-fuel vehicles use E85 without seal or line problems). Most vehicles since the mid 70 will tolerate a 30% mix of Ethanol (or 5% Methanol). Leaking 'gasoline' "is" bad for the environment, but leaking Ethanol is less harmful. Check the MSDS for Ethanol vs. Gasoline to determine which is "VERY" dangerous.

at 7/15/2008 1:54:14 PM, Peter said:
Ugh. I would be happy never to see another car of pickup truck commercial. Ever. The advertising budget of GM must be horrendous... and apparently, they need to URGE people to buy their crap or it won't sell. The big 3 have sooooo missed the boat they deserve to go under, except for all of the workers who build the things. No, actually, all of management and marketing deserve to lose their jobs because they screwed up. I can't believe that engineers and factory folks wouldn't do a better job if left to their own. "Like a rock" ... sinking to the bottom, and fast.

at 7/15/2008 1:58:42 PM, Mik said:
Prius Hybrid technology allows me to drive solo in carpool lane. No other car can fill up at a gas station and allow carpool use. I plan to recoup the cost of my Prius in 5 years in saved time alone, and gas savings is just bonus. Diesel (or others readily available fuel technology) would have to get over 100,000 miles to the gallon for me to recoup the cost in same time.

Now only if they would leave the speed limit to nature (186,000 miles per hour), I can save even more time (aka, money).

at 7/15/2008 2:35:25 PM, try again said:
The natural speed limit is 186,000 miles per SECOND, but it's very hard on the brakes and transmission.

at 7/15/2008 2:45:37 PM, BAS said:
Any thoughts on doing like the freight trains do? Run a (bio)diesel (maybe turbo it in the car version) to drive an all electric drivetrain. Have a small, but useful Li battery pack (or super capacitors) for slow speed use and then have the diesel kick in at a constant RPM so we can dial in the emissions and efficiency, etc. You have an electric vehicle, especially if you make the battery pack plug-in rechargeable, too.

at 7/15/2008 4:39:02 PM, CodeWarrior1241 said:
2 Mik:
yu say that you need 5 years to recoup the pious' higher cost to get your money back, as compared to a sentra, crolla, or civic. Fine. That's about 70K miles at least. A small diesel car can be made at the cost of a civic without problems. Diesel can be refined from coal, which is plentiful. And not every highway has HOV lanes... Basically, we can cease importing oil for vehicle fuel for decades with the tech we have now, and make vehicles whose LIFETIME operational cost is way less than any complex auto, like the prius, could ever be. The hybrids are a PR stunt by toyota.

PS
how often do prius batteries need replacing, and how much is that?

at 7/15/2008 9:10:59 PM, kurtlin said:
Get real, electric car not possible?!! That''s the ONLY solution!! The problem is only how does the goverment and the big companies make the money, that''s why they scream. Think about it.... the technology is there. Wht about if everybody has got a solar panel on the roof and charges their own cars a nightmare for the big boys. and eventually the downfall of the western world, because in asia, once they get their hands on it they would not use anything else

at 7/16/2008 8:03:20 AM, Gator Pator said:
The only difference between the foreign manufacturers and the US ones is that the US ones are providing insurance for their retirees. Add that costs to the others and they would be in even worse shape. Buy American dummies

at 7/16/2008 1:06:38 PM, bye-bye love said:
I can.t help but feel that every comment made was to protect a particular industry.So here goes bye-bye detroit and it''s three monkeys one can not see, the other can not hear, and the total can not speak the truth. In 100+ years they screwed us royally and rejected everything that could have been benificial to society and the ecology. May you go down in flames. Are you wearing red shades or is that the red ink reflecting on your glasses.

at 7/17/2008 12:33:49 PM, LeRoy said:
This is a test comment.

at 7/18/2008 3:48:07 PM, afirouz said:
If you want to really talk about the next immediate step vehicle

at 7/28/2008 8:46:22 AM, Jan said:
Not only the big three, but also (some of) the European car manufacturers suffer from a major lack of longer term vision... Some are still promoting big cars, huge sedans. For whom?

at 7/28/2008 11:16:23 AM, Darren Holdstock, UK said:
Diesel update (1) - The Citroen Cactus, due out in 2010, will do 100 mpg. No hybrid nonsense, just good design. (2) Don't stir your home-made biodiesel with an electric drill, like some unfortunate did recently, giving himself 20% burns when a spark ignited vapours and blew up him and his garage.

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at 1/27/2009 6:59:41 AM, Frank said:
A few years back, I had a class in Information Management in which GM was used as a case study. The study revolved around a white paper written by some GM business specialists in which they actually argued that improving quality would only take them so far and that a better return beyond that could only be achieved by establishing ''relationships'' with select niche customers and providing them with ''user friendly, easy websites'' to help them resolve simple, bone-headed problems while extracting more personal marketing data from them and peddling additional products and ''services''. A totally corporate MBA approach to sell cars! Left a bad impression on me on how they run Detroit and helps explain why Toyota now is #1.

at 2/18/2009 11:50:37 PM, Meredith Poor said:
For purposes of discussion, lets say that the 'essentials' for sustainence in the US economy are food, water, energy (electricity, gasoline, and natural gas), an adequate house or apartment, and sufficient clothing. Farmers make up less than 1% of the US workforce. Water, for the most part, is provided by municipal utilities and again makes up perhaps .5% of the workforce. Energy is somewhere between 5% and 10% of our budgets and of the labor pool. Home construction is one of the most volatile occupations, but never exeeded 8% of all economic activity. Where clothing manufacturing 'brought home' to the domestic USA, it might make up 1% to 2% of the workforce. In short, the collection of 'essential' goods and services is less than 1/8th of everything we do. All the rest of it is, in varying degrees, discretionary. ~~~ If the US labor force is 140 million, and we import $50 billion a month in goods, then we have offshored some of our 'essential' economic activity: particularly energy extraction, food production, and clothing. What's left is water, electricity, natural gas, and home construction: jobs that don't move overseas very easily. Our production of these elements is less than 5% of our workforce. In this respect the severity of the downturn becomes more understandable: with 95% of our people in activities like retail, food service, hospitality, business services (accounting, programming, marketing, human resources), government, and transportation, demand reduction anywhere can shift through the economy with lightning speed. Given that much of our discretionary activity was amplified by credit availability, a credit crunch guarantees recession. ~~~ Given that those who still work are likely to focus on paying down debt, one would expect that discretionary purchases will follow a parabolic path: as interest expenses are reduced, people will have more to spend on non-essential items. The workforce reduction will reflect the amount of credit withdrawn, so if the credit downsizing is $1 trillion then one divides by $100,000 (per year of business gross revenues per employee) to get 10 million people thrown out of work. Right now the number is closer to 6 million, so we would expect a further 4 million job losses at most. ~~~ Realistically, there is another definition of 'essential': that amount of effort required to maintain network infrastructure. While we don't have to have Internet access to continue eating and breathing, few people will let go of it, even if (or in particular if) they're out of work and are seeking a job. Same goes for cell phones. Railroads are not going to limit maintenance on bridges and right-of-way just because volume has been reduced by 30%. Quite a bit of our 'discretionary' efforts are spent in infrastructure maintenance, and a critical core of these people will remain employed. 'Infrastructure' includes, in particular, education and health care, such that we don't close schools for a month in order to save wages, and the same goes for hospitals and emergency clinics. ~~~ Economic recovery is going to occur as auto workers become network techs, medical technicians, or road crew workers. The globally discretionary products that are highly unique to the United States are aircraft, computer chips, system software (Windows and the Macintosh operating systems), etc. India and China do not have the wherewithal to build such industries in the timeframe appropriate for their immediate economic development, so the path of least resistance is to buy this stuff from us. Their discretionary spending isn't limited by credit availability, it's limited by airports, roads, and available generation capacity. As these come on-line and people get used to using them, their discretionary expenditures will grow to match ours.

at 4/3/2009 7:30:27 PM, AST said:
They say that car commercials are mostly to reassure those who have already bought that car. I bought a Toyota HiHy last year after extensive research on road noise, safety, expected reliability. Efficiency was not the most important consideration. And sc**w GM, Ford and the rest

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at 6/18/2009 3:19:31 PM, Frank said:
Was at a Pontiac dealership last weekend for recall repairs & looked at their show room models while waiting. They had nothing but severely overpriced gas guzzlers & muscle cars, not even a Vibe! Some of these cost more than my 401K was worth! No wonder they're going broke! I left thinking Obama should really try to get our money back from these birds!

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Thursday, July 10, 2008

The American auto industry dies

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