Automakers should show they deserve, not need, bailout

Buying gas is a lot easier these days (now about $1.60 per gallon in my neighborhood), but the hard part may be in getting a car to hold all that cheap gas.

From the way things look in the car world, nobody's buying. All of the Big Three automakers (GM, Ford, Chrysler) report jumbo losses over the past 12 months, and the smaller manufacturers are likewise hurting. But with the three big companies, there's talk of bankruptcy if the government doesn't hurry up and scrape up more than a few billion dollars to bail them out.

Blame the gas prices, which topped $4 over the summer. Blame tight money; what with the current fiscal crisis, it's not being lent out with the same blind trust as it had over the past decade or so. Blame the CEO's, the Arabs, the autoworkers' union, the Demopublicans. Blame anyone you please.

But much of the blame should go to the culture of the auto industry, which holds that what worked in the past will always work, that progress is only allowed in baby steps if at all. The culture that profits from the status quo.

Right now it's nearly impossible to separate the oil from the auto; they're like evil twins. When gas was on its record-breaking run, truckers -- especially owner-operators -- were wondering if they could make enough to fill up. But at least in the trucking industry a fuel-cost surcharge is tacked onto shipping bills. That surcharge was as high as 34 percent; now it's around 15 percent. (This surcharge, by the way, is eventually picked up by the consumer at the end of the line, which is part of why you were paying more for a box of Kraft Macaroni & Cheese.)

But now I have to laugh when I hear folks talk about how cheap gas is. Cheap compared to what? And how long will it stay at this level? Has the price bottomed out? Will the price go up to new levels if some head dude in Saudi Arabia, Kuwait, Venezuela, or Mexico breaks wind? And since we've already shattered the $4 barrier once, a hike to $5 or even $6 per gallon doesn't sound so outrageous. That price barrier does tend to warp public perception of how expensive gas could get.

Now hear this: Fossil fuel as energy should have been rendered obsolete at least a generation ago, and the internal-combustion engine should have been thrown onto the scrap heap with the 8-track players, dial telephones, and electric typewriters.

A little over a week ago, the Big Three tried to beg for some of that suddenly-available bailout money in Washington. In a rare act of common sense, the folks at Capitol Hill determined that without a real plan to get the industry's stuff together, there will be no bailout. Didn't help that the heads of the auto companies each went to D.C. in their own private corporate jets; it's a little hard to plead poverty unless the CEO's are taking the Greyhound to Washington. As I write thisthe CEO's are back at The Hill, hats in hand, perhaps taken down a peg, and trying to show how badly they need the money. Maybe they should try explaining how badly they deserve the money instead.

Gee, and why shouldn't the government bail out an obsolete industry, I ask with more than just a little sarcasm.
Better to let one of the companies go bankrupt. If nothing else, it'll send a message to the other automakers that they'd better get serious about the future. OK, you can blame the union wage rates -- and they are ridiculous -- but with the current product line an automaker would be hard pressed to make the right kind of money pushing the same old product line, even if they went completely to foreign help at a buck an hour.

Now, I'm kind of interested in GM's proposed Volt car (providing it stays alive long enough). Allegedly, it's a step up from the hybrid. Gee, I hope it's about four or five steps up from the hybrid. You compare miles-per-gallon numbers between a hybrid and the standard Detroit rolling iron, and the difference is not that great. Plus, I understand the hybrid's special battery is so expensive that it's not worth replacing. Kind of like swapping out batteries in a laptop computer -- you might as well just get yourself another computer. If the Volt is merely an incremental improvement over the old stuff, then the industry probably deserves to go into the tank.

Unfortunately, here's the usual script for a company teetering on the brink: Make cuts, by laying off whatever workers they can get away with, and cutting Research and Development right between the eyes. I can understand that logic -- better to show some short-term gains and keep the stockholders happy while anything long-term takes a hike. Good engineers cost a ton of money, they're highly impractical, a bunch of dreamers. The company line holds that they don't do any actual work (read: They don't generate anything that will help the short-term profits).

I see Ford's recovery plan involves investment toward the future, while GM and Chrysler are looking at the old menu of cutbacks. OK. One of the problems with deep R&D is that profits are not immediately apparent. Maybe use the money to build a loan program to help companies over the hump when developing products with a long lead time, for example.

If government money must be pitched to industries and companies, why not package it for companies that are growing, developing, researching ... showing a pulse ... instead of those that are at death's door?
This is a critical time on a number of fronts, and the company or organization that stays hidebound may -- and should -- fall by the wayside. Just like real life.