The Future of the Big Three – Part Two
GM, Ford and Chrysler represent to a large degree the Industrial Age legacy of manufacturing in the U.S. “What was good for General Motors was good for the United States” was, for decades in the 20th century a very true statement. The manufacturing might of America post WWII was an economic miracle and the apotheosis of the Industrial Age. Supported by the explosive growth of television and the American advertising business, the consumer market of wondrous new goods exploded. The Big Three auto companies rode this wave to unprecedented success.
Every year, there were the exciting new model introductions of all the auto makes in the Fall. Families became conditioned to buying new cars every few years just to keep up with the styling – and their neighbors.. Planned obsolescence was part of the business plan of the U.S. auto industry. The oil embargo of 1973-74 was a major hiccup and it provided a market opportunity for Japanese auto makers to enter the market with small cars that provided higher MPG than those provided by the Big Three. Once the price of oil collapsed after the Iranian revolution the next two decades of cheap oil allowed the Big Three to manufacture ever bigger SUVs and trucks which they sold the American public with their powerful marketing efforts.
The problem was that the leadership of the Big Three never adjusted to the post-9/11 world. Oil has increased in price by 1400% since 1998 and 700% since 2001, yet the Detroit auto makers continued to focus on the profits to be made from ever larger gas guzzling vehicles. This helped to increase the dependency on foreign oil, which of course for geopolitical and financial reasons was not a good thing for the country. What was good for the Big Three was no longer good for America.
What can the Big Three do? How can that phrase “What is good for General Motors (and Ford and Chrysler) is good for America” again become true? What is the real business the Detroit automakers need to be in now that we are closing in on the end of the first decade of this century? How can these companies avoid bankruptcy and again become profitable and become aligned with the future of America?
The Big Three need to make a complete transition from planned obsolescence and new model thinking to sustainability.
Redefine the word â€˜performance’ from speed and acceleration and horsepower to fuel efficiency and cost of operation. Concept cars should no longer be like race cars but rather cars that support this new definition of performance such as cars covered with solar panels
The Big Three need to fully understand that the world is now starting to pass through Peak Oil and therefore the price of oil will remain above $100 a barrel for the foreseeable future. This forecaster thinks that $200 barrel oil will be a reality occasionally, if not permanently in the years ahead. The â€˜good old days’ of the car business, powered by cheap gas are over – forever!
The goal should be a fleet average of 50 MPG within 5 years. This means two things immediately: an immediate retooling of gasoline/hybrid autos to dramatically increase fuel efficiency and making the electric car a mass product. For example, if the Chevrolet Volt were available for sale today, and at a relatively affordable price, dealers could not keep it in stock. Aim for a million electric vehicle sales per year as soon as possible
Small is the new big. This will be true until electric and hydrogen powered cars become so cheap to drive that size creep may kick back in. The Smart Car is basically sold out in 2008, its first year of sales in the U.S. Learn from this and compete against it.
Change not only the fuel source but the materials. Move from â€˜big iron’ to â€˜light graphite’ and other new composite materials that are both lighter and stronger than steel and aluminum.
Develop partnerships with power companies and high tech companies to recast the American transportation landscape. In the 20th century oil companies supported Detroit automakers with filling stations across the country. Now, and in the decades ahead there needs to be recharging stations that can rapidly recharge electric batteries and hydrogen fuel cells. This is the vast new market that will provide unparalleled wealth for the companies and individuals that help make this happen.
What is good for America is energy independence. What is good for America is again setting an example for the world to follow in terms of transportation for this century. What is good for America and humanity is lowering greenhouse emissions by 50-75% as soon as possible and the dramatic decrease in use of fossil fuels. What will be good for the Big Three is to align with what is good for America. Alignment and leadership or bankruptcy and failure. The fork in the road is now. Or rather drive on the freeway to the future or take the next exit and get off.