Debating The GM BailoutDebating The GM Bailout

I, like many Americans, am sick of the bailouts, but do not see how we can weather losing the Big 3. The trickle down of unemployment and the affects it would have on every other industry would be devastating. Bailout or bridge though bankruptcy/reconstruction may be the only solutions. Congress is partially to blame for this - they should still go back and put new terms on the money they have spent including freeing up funds for business-as-usual loans so people can actually buy cars.

Neither of us [David and his wife] wants to see GM go bankrupt; I think the ripple effect on suppliers would just be devastating. Most are operating on razor-thin margins already, so it won't take much to push many over the edge. While you may argue that "thinning the herd" is good, many of these suppliers are out in remote, small areas. Many small towns are entirely dependent upon a single plant, and employment alternatives are few & far between. Those laid-off factory workers aren't going to be buying any expensive high-tech vehicles.

I reluctantly support the bailout, but I absolutely agree that the Big Three need to present and work to an intelligent plan.

I have to agree with everything you said about green cars, but you didn't mention the quality of the vehicles produced by the Big Three. Until 1998, I only purchased American-made cars. I've owned several Chevrolet, Ford, Dodge, and Plymouth vehicles and my experience is that the quality is lower. Ford didn't get the nicknames "Fix Or Repair Daily" and "Found On Road Dead" by accident. Even in 2006, the Big 3 products have a much higher rate-of-repair than the Toyota and Honda products. Why would I knowingly purchase a product that I expected to be inferior and more expensive over the life of the product than the competition?

Before they get any money from Washington, I would like to hear how they are going to become competitive. They can make all the advances in technology, but if they still produce junk, how can they expect to sell their products?

One change I would recommend...number 3 should include natural gas (Pickens Plan!): Hydrogen and Compressed Natural Gas stations, too.

You should suggest that Americans that buy imports only get a $1000 back rather than the $5K.That way Americans will be induced to purchase US made cars first. That would help Detroit the best. Forget the crap about protectionism, we are fighting for our lives!

My quandary with hydrogen fueled cars being touted as the wave of the future is this; hydrogen is not natively available on this planet in a combustible form. There's probably a bit in the atmosphere, and perhaps you can chemically rip it from some molecule, but the easiest and most logical way would be separate water into its two parts, hydrogen and oxygen. Unfortunately, that's done with electricity, and I would expect commercial endeavors to do this would place additional demands on an already stretched electrical grid, which, of course, is powered either by oil or coal. And yes, nuclear as the electrical is always an option, but we as a country seem to have discounted that entirely. I remain open minded about it.

The first thing the American government tells other countries when their industries start to fail is do not bail them out. Why can we not take our own advice? The country will not collapse because financial institutions and car makers go out of business. Our economic system will collapse when we chase good money after bad. The autoworkers will not starve because the surviving companies would hire them as they expand to take over the failed companies niches. THAT is what capitalism is all about- not throwing money down an empty gas tank.

Better yet put that $34 billion into mass transit. Build more tracks, buy more trains and buses and light rail systems.

Capitalism works, but only if we let it.

My next car will be the same as my last purchase, a GMC 2500 HD pickup. I hope the mileage will be a little better but in the rural area I live and work in this is what is needed to do the job. None of the green vehicles can yet do the job. Electric? Joke time. 40 mile range tootling alone at 35 mph. Turn on the A/C put in 4 passengers and bring the speed up to 80 and the range drops to about 10 miles. In the winter, the range is effectively zero as the battery output is about 10% of the rating. Ditto for fuel cells. It was a big breakthrough to get them to light at 0C. No one will even talk about when they will be able make one light up at -40. I agree that a hydrogen based vehicle is probably the long term solution but the real issue is not making an electric vehicle but the energy density of the power source and the cost of said source. I think that work into ultra capacitors may be valuable and also work on solar cells on plastic substrates. Both of these technologies are poised for a breakthrough that could be a game changer for energy generation and use.

Your last item [Ask Exxon Mobil to pony up some R&D dollars] was excellent. The oil companies believe that they have a lock on the US and auto makers so they don't need to diversify. But organizations like Philip Morris were smart, saw the handwriting on the wall, and diversified their products. It would not make me sad in the least to see the oil companies go the way of the dinosaur. For what they have done to this country by making themselves filthy rich, causing wars, providing nothing back to the poor people of the world, they can drop dead.

The Volt goes more than 40 miles, it just uses an onboard gas-powered generator to do it. The concept is that many people only drive 15-25 miles per day and so the battery power would be enough. What worries me is what if the gas engine isn't used for 9-10 months and then suddenly you need it. The gasoline may have gone "stale" by then. As for your Item 3 [Hydrogen filling stations], well maybe someday. Item 4 [Give Americans tax credits to buy hybrid and electric vehicles.] is a non-starter for me. The tax system is already a social engineering nightmare, let's not add yet another distortion. And item 5 [Ask Exxon Mobil to pony up some R&D dollars] is also a poor idea. It's up to the oil companies to decide what to do about their future, not some politicians.

Don't bail out American automakers. They have had a broken model for doing business that begins with the unions and ends with not re-investing in their product when they had fat profits. They are in the same position as the steel companies in the late 70s and 80s. It is foolish to think that all these people will get tossed out of work. People will still buy cars, just from someone else. The suppliers will follow the surviving manufacturers as they produce more cars.

Hydrogen cell is a far off technology. There are motor alterations available today that can boost the mileage per gallon of fuel, whether carbon or waste-based. Put money into credits to pay the total cost of engine upgrades. Helps the environment and will help suppliers,

Exxon is in the business of making money for its shareholders. When it becomes profitable to move to an alternate source, they will do it on their own.

Interesting article and I agree with several of your points. A typical day for me consists of a 200+ mile "road-trip". I am either in a car or an airplane nearly every day and cover an 8 state territory. I do not want to be searching for a place to swap-out a battery, nor do I want to be the person responsible for doing it (especially in a rental car. It is difficult enough just to find the gas door release in the car as it seems every make and model hides them in different locations. As a country, we do not have the infrastructure built to support anything other than a gasoline engine. Even vehicles with Diesel are not able to find fuel at 100% of all stations. Those with CNG for fuel are few and far between, especially when you get out into "rural areas". Building the infrastructure to support whatever the fuel source needs to be a priority.

While it is true that the gasoline prices have dropped considerably in recent months, I suspect we will see them push back towards a $3.00 per gallon level again. I am a proud owner of a Chevy Tahoe. While it "hurts" a little more at the pump, it fits my family's needs of a larger vehicle to haul kids, a dog and our trailer for weekend excursions. Until there is a an engine with enough power to support "Weekend Warriors" (as well as commercial trucking), we will only placing a small band-aid on the situation. In short, there is not a single solution that will meet everyone's needs. Some will be fine with a smart car that has a 40 mile limitation (as long as only one person goes to the grocery store as there is not room for 2 people and a sack of groceries in there). Others need (or want) the larger vehicle. This is not a single solution problem and it will take years to find resolutions to fit everyone's needs. I am not a fan of the Bail-out for any of the Big-3. Union wages have driven the cost of US made vehicles through the roof! I have known several people in the auto industry (including my father who worked for GM far more years than I can count). When people are paid excessive amount ($70k plus) of money with annual salary increases to do a job a High School student could do (at minimum wage) we are incenting people not to strive for more. I agree that we need to have jobs for everyone, but those that work the hardest and those that contribute more deserve more. Otherwise, we are minimizing our own potential and dis-incenting those that have (or had) the ability to achieve more at the cost of everyone else. You may have guessed, I am not a huge fan of tax credits for much of anything. The market price of gasoline should drive sales of whatever vehicle the consumer wants to purchase. I would instead be in favor of a lower tax rate for all and provide the consumer with the increased spending power to make their own purchase decisions (economical "new" car or larger car that uses more fuel). Question: Does everyone "deserve" to be considered Middle-class or better yet, wealthy? The answer should be yes*. Yes they deserve to be there, but it is up them to do it. Statistically, it is not possible for everyone to be considered middle class. You cannot have a middle without a bottom or top. Everyone wants to be on top or at least have the same luxuries. The question each person should ask (and answer) is what are they (specifically that individual) willing to do to get there? This is the question every business needs to answer (in short order) as well.

I like a usage tax, like cigarettes. Fix the gas price at the pump at $3.25, the difference goes to supporting and converting to alternative energy.

I'm going for the Ford Escape Hybrid. Best industry fuel mileage for a small SUV of any of the manufacturers. Then trade up to the new, Ford Fusion Hybrid, due out in 2010. It can run at 47mph on battery using the air conditioner. Don't know how far, but it does have a small gas engine. Way to go Ford.

Your article is an excellent example for the Bankruptcy Code.GM needs to shed hundreds of billions of fixed costs that have nothing to do with making and selling cars. Whole one can argue about what GM's product line should look like, its existing product line can generate sufficient cash for the company to be profitable. But when it is reduced to political calculus, EVERYBODY becomes a car designer or marketer. Henry Waxman would become the de facto "decider" for future auto designs (but of course, he will disavow any role in the inevitable failure of his notions).

Addressing the specifics of each of your recommendations:

1)[ Acquire Tesla Motors] Combining failing companies to gain "synergy" never works.

2) [Use some of the bailout money to build roadside charging stations.] GM isn't in the business of energy distribution, and would probably do a lousy job if it invested the trillions of dollars it would take to get into it. Besides, what are folks going to do while their cars are charging, take a nap? That's why "plug-in" hybrids make sense--so folks that have to drive more than 40 miles can go on their ways without having a relationship with a really bad version of a gas & go on steroids.

3) Why build hydrogen stations when there won't be any hydrogen? Hydrogen is just a more costly form of natural gas with a huge CO2 plume at the (coal-burning) steam-reform plant that converts natural gas to hydrogen.

4) This [Give Americans tax credits to buy hybrid and electric vehicles] is just another tax code abuse for political expediency.

5) [Ask Exxon Mobil to pony up some R&D dollars] Your arguments are familiar (and tiresome). But what does Exxon have to do with Auto industry bailout again?

My next car will likely be an Escalade hybrid.

I do not want to see workers laid off and that horrible feeling of unemployment given to anyone. I didn't want to see it in the airline industry or the Telecommunications industry (the real AT&T). But the facts are when a company fails another company with a better business plan always steps in. As long as there was a demand for Air Travel the rise of a Jet Blue; smaller and more efficient (at least at the time of its inception) was possible. When Lucent Technologies went down free fall there was a company Alcatel there to catch them. Not without layoff of course. ATT was caught before hitting the bottom by SBC. Not without layoffs but then look at all the little startup companies that emerged.

If you let the companies fail, the demand for automobiles will still be there. Honda has opened new plants hiring American workers It's called Capitalism!

I like your points but it is tech-heavy. How about these: 1) Impose an import tax on foreign oil. Make it a "floating" tax so the effective price is $110 a barrel. No tax on domestic oil since we will need it for a while. 2) As part of the bailout, impose a rule that the highest paid employee at GM gets no more than 10 times the lowest paid worker. 3) Provide "buy back" money if people trade in their big SUVs for hybrids.

Make electric cars plug into my 15-amp outlet in my house. Why do I have to rewire my house to charge my car? I have to pay $40, 000 for a new electric car and then pay an electrician to come an rewire my house as well? And is the plug a proprietary plug that only works for that model car? At least the current fuel filler fittings are all standard.

Why does everyone thing they have a right to confiscate Exxon profits? Why does no one talk about Exxon paying more in taxes than they make in income. Also, dividends to stockholders are also taxed at some rate so this is double taxation.

Interested to know why GM is not trying to bring back their EV1 technology (which they developed in 1996) and improve on that? They could have been ahead of the game if they hadn't destroyed it.

The EV1 could do all the distance and speed required for people in urban settings.

From your article and descriptions of what is thought to be the technology problems, it is clear that you are not a car guy. Having been born and raised in Michigan, not from a union household, I have lived and breathed this stuff forever.

Tesla motors, while a very cool company with some exceptional technology, has nothing that GM has not already considered. The car cost over $100,000. Who can afford to buy that?

The fact is that GM and Ford have had all the technology to produce hydrogen and electric cars for many years. The two big problems are affordability and mass production. If Tesla Motors started producing, let us say, 200K units a year, the price of their car would actually go up! The very rare materials and complex nature of their assembly are not conducive to creating 5 million units a year. Let me make this perfectly clear, 5 to 10 million units a year need to be made in order to obsolete gas-based products. Secondly, under current hybrid and electric vehicle product available today, combined, all world autos couldn't come close to producing 5 million units for at least six to seven years from now.

On points two and three, I have the only way to fix this problem. Cut off campaign contributions. Fact, there are today more Democrats in Big Oil's pockets than Republicans. When corporations can simply start donating to the winner, Democrat or Republican, in order to get what they want, as long as they are able to pay, they will. And when they pay, the politicians bend, no matter who they are. Human nature and survival of the fittest kicks in every time. In politics, the fittest is the one with the most money. Maybe centralizing campaign contributions is not the solution, but it is a start in the right direction.

Also, how committed to greener living is Al Gore and the world? He just wants to tax it.

One solution which goes to the point you were making is R&D. I believe if we created a fund for green technology, much like the Federal programs during the depression, this would fix the problem, infrastructure and technology wise. All companies, not just Big Oil, commit 5% of all profit to the fund. This is a problem for everyone, everyone needs to commit to the solution. Dry cleaners, book stores, electronics firms, etc. Legislation would have to be that any company doing business in the US will be required to pay for this fund. Foreign interests would have tariffs to accommodate them to put their share in as well. Level playing field, no favoritism, based solely on US economy sales so it doesn't impact your foreign sales, hits every company equally.

Tax credits are a mute point. If the alternative car costs $10k more than a regular gas car, and you are going to own it for five years, and the government gives you a $2k tax break, in five years you don't save the money in gas!

Everyone likes to make this problem simple. It is not.

Biggest obstacles is the politicians in Washington and big business needing to see how they can make money on this. Look at T. Boone Pickens. He has a plan and has started it and all the people can do is say he is a crook. It doesn't pay to save the world.