You know times have changed when a German solar company is offering to throw General Motors a bone, and shell out $1.26 billion for one of its subsidiaries.
German solar powerhouse SolarWorld (FRA:SWV) issued a press release yesterday, stating that the company plans to bid on four German production facilities and Opel's Ruesselsheim development center and headquarters. (Opel is a German automaker that was acquired by GM in 1929, and continues to operate as a subsidiary.)
SolarWorld wants to make this Europe's first true "green" auto company.
Here's what SolarWorld representatives had to say about their plans:
"With the restructuring of the product pallet, the traditional German auto builder would offer in future especially electric and hybrid automobiles and the newest technology combining extended-range electric and combustion motors highly efficiently."
Had GM just gone this route a decade ago, the company would likely be able to weather today's market meltdown. Even with all those costs attributed to higher wages (in comparison to their Japanese counterparts) and bloated benefits packages the company had to contend with, they still would've had cars to sell - instead of trucks and SUVs sitting on dealership lots, collecting dust.
But instead, the overpaid suits in Detroit sat in their boardrooms, forcing gas guzzlers down our throats, refusing to offer vehicles with better fuel economy. And now they have the stones to ask the taxpayers to shell out $25 billion so they don't go under.
If we truly believe that a free market should dictate winners and losers, than clearly, letting them fail should only be seen as nothing more than survival of the fittest. However, if the US automakers do fail, then we're looking at massive economic devastation, and the loss of roughly 1.4 million jobs. With unemployment already at 6.5 percent, this doesn't help matters.
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Either choice is a tough pill to swallow. And I certainly don't have the answer. But it does look like Congress is not going to throw Detroit a lifeline.
Of course, nothing is set in stone. And certainly we've seen Detroit get what they've wanted in the past. So, if they somehow pull this off at the last minute - I wouldn't be surprised. Let's just hope that if this does happen, our elected officials have the good sense to attach some teeth to the deal. In fact, if they hand over that money, at least two conditions should absolutely be met:
The automakers have three years to retool their facilities to produce nothing but fuel efficient vehicles with a minimum fuel economy requirement of 60 miles per gallon. Don't care how they do it. Whether its hybrid, plug-in hybrids, lightweight materials, better aerodynamics, etc. - not a single vehicle coming out of those factories should be inefficient. And no exceptions either. If your SUV can't deliver it, then you can't sell it. I guarantee you, the market will find a contender that'll deliver that kind of fuel economy if they can't. Don't kid yourself on that one. That's the beauty of competition. It forces progress.
Every single penny of that $25 billion is paid back to the tax payer.
When I threw this idea out to my colleagues, they laughed at the 60 mpg minimum. But this is not a laughing matter, and 60 mpg is not out of the question. Not when we're already seeing small start-ups pumping out all-electric sport utility trucks and sports cars delivering between 100 to 230 miles on one electric charge. Not when high school students at the 2008 Eco-marathon build a vehicle that can get 2,843 mpg. Yes, you read that correctly - 2,843 mpg.
And definitely not when we continue to send billions overseas to continue our dangerous reliance on oil.
Listen, there can be no more excuses. These automakers need to get their acts together now. Enough with the lobbying efforts, enough with the complacency, enough with the handouts!
And by the way, since we'll require the US automakers to produce nothing but 60 mpg vehicles, we should make this a mandatory requirement for all automakers. You want to do business in this country? Fine. Do it by our rules. They'll have no choice. Without the US hardly any of these automakers could survive. It's time we start making demands instead of excuses.
Jeff
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I don't know what your background is, but I am guessing you haven't spent any time in the business world. To require that within 3 years, GM or any other company accepting government aid, to only sell cars that run on better than 60 mpg, would cost much more capital than GMs share of the $25 billion, expected to be around $10-12 Billion. GM currently spends $8 Billion/year on R&D. Retooling factories to enable them to produce 5 Million cars per year for the US market, their current sales volume, at 60 mpg, which would require plug-ins like their Chevy Volt, would likely require about $100 M in capital. To do it in three years, would require human resources, in addition to capital, that they don't have. The basis of your argument I agree with but don't expect the rules of capitalism to be bypassed just because GM gets a loan from the public.
You said it just right. It's time we set the standards for efficiency instead of the lobbyists, instead of trailing behind other nations. We should take the lead or get out of the way. No more whiney baby boo hoo bull hockey! If it's not efficient, scrap it. The same goes for all products. Get rid of the old grey haried gas bags and the less than impressive engineers and hire smarter engineers.
Also it was suspected that the major car mfg. companies quickly bought it and that was the last heard about it.
Why not dig some of those up & produce them today. I think they were rated using gasoline.
But what I woke up to this morning really gave me a chill. With lower gas prices people were driving more. Yes, that cheap gas has given them a new lease to drive their SUVs or low mileage cars and trucks. The talk about alternative energy has been replaced with the crashing stock market, deflation, dropping housing markets, etc. The solar market that had been going strong is now in turmoil. Nobody wants to part with their cash or take out loans to pay for electricity, even if they can save money in the long run. It doesn’t make sense, but when people are scared about losing their jobs and the balance in their checking accounts, sense never adds up.
If Americans revert back to their old ways — consume and consume some more — then we all deserve what we get which will be cheap gas and its affects…more coal burning power plants and lots of pollution. If ever there was a time for the government to put a big fat tax on gas, this is it. We need to stabilize what gas costs us and use that tax money on research and development for alternative fuels. Believe it or not, cheap gas is the worst possible thing for us and our economy, but most of all, our future.
The conditions you presented are reasonable.
I would add: Dismiss all the current CEO's, etc, They have always been the problem. Not the unions. The unions took what they could. The stupid CEO's gave them what they wanted!
Your comment with the two 'conditions' for bailing out those crooks from Detroit -- finally someone says something that makes sense.
I can state, as a sceintist with several hundred published papers, and one working in energy, that 60MPG autos are ENTIRELY possible in a 3-year time frame, but they have every incentive to fail, once again. What you said is absolutely correct. Make it an ironclad requirement for survival.
No need to reinvent the wheel to get this done. We are facing new technologies but have the tools to manage them from decades of prior history.
No need to reinvent the wheel to get this done. We are facing new technologies but have the tools to manage them from decades of prior history.
A Ford F-450 towing a 24,500 pound trailer is not going to meet your requirements. Nor will any other tow vehicle. among other things, this means that there will be no deliveries of food to grocery stores.
Fuel efficiency is important, but reason must be retained.
You are displaying a pig-headded lack of reason.
You could try to get the federal government to accept European safety standards though. Ford already sells a Fiesta over there that meets your requirements for efficiency but it can not be imported because it only meets the equally successful European safety standards.
How many hybrid vehicles do the big three currently have on the market? I asked a local Chrysler dealer if a hybrid model was available and the answer was no.
The way forward maybe to stand back and let Detroit self destruct but in the meantime put a lot of effort into getting many acedemics, politicians and money men to agree a way forward.
This present situation needs a high level of skillful diplomacy to make a difference.
You made a comment in your article that GM has been forcing gas guzzlers down our throats. You also stated that you believe that the government should attach a requirement to any loan that is offered requiring future vehicles to get a minimum of 60 mpg.
First, they haven't been forcing anything down our throats. America loves big vehicles and we have been buying them by choice. The big three were simply giving America what it wanted. If people wanted tiny, fuel efficient vehicles, they would simply buy them from foreign manufacturers. Some have done that, but most have not.
Second, even in our current condition, the majority of Americans are not yet looking for cars that get 60 mpg. So manufacturing such a vehicle would not help GM's bottom line. Most of the cars on the road today are still medium to large vehicles (including SUVs). This is likely because people still enjoy the comfort and safety of a large vehicle, and don't understand our global oil situation.
I will say that the American manufacturers should have been planning for the future by desiging and building the next generation vehicle (smaller and more fuel efficient) while they were selling SUVs. They certainly had the capital to do both simultaneously. There is currently a small market for these vehicles and they could have been taking advantage of that before our economy tanked. However, that is not why they are facing bankrupsy. Rather, it's because of poor overall management of their companies, an extremely over compensated union workforce, and a crumbling economy.
Thanks for letting me add my two cents.
To take any more government bailouts the company must be accountable for dramatic effeciency improvements and these should be legislated. It also goes for my country Australia, where a bail out package occuring.
Thanks for many great hard hitting truths and insights.
Kind regards
Ewan
The car manufacturers have not retooled their manu. plants since before Regan. US manu. have been making Gas Guzzlers for the last 30 years! What were they thinking?
My 12 year old 850-Volva Station Wagon gets 32 miles/gallon on I-5, And 27-30 on the BACK roads.
And while we'er at it, why not CAP the CEOs' salaries @ $350,000?
That would be a start.
I work in a plant that makes the chevy Impala and even today, at the worst of the economic slump, wer'e producing them on 3 shifts, all sold. People simply won't go from a truck to a small car and since our Impala is a big car that does close to 30mpg, it's an obvious choice. And if someone gives GM a chance to continue on, it's future looks bright with lots of innovations coming, realistic ones that is. It's something to build a prototype that will do 60mpg, it's something else to mass build them, at a reasonable price, with the power requirements that people force on us.
By the way, the bail-out money is not for the top executives flying in their private jets, it's for the workers, retirees, spouses, children and all the other people who we buy from, people making a living building or selling houses, boats, fishing gear, golf equipment, vacations, air line tickets, theatre tickets, and of course, the tax collectors.
Robert
Let us forget, for the moment, the complete lapse in judgement of these executives; by flying "Business as Usual" to their hearing in DC. They went there without a plan!! The CEO of GM couldn't even tell the panel how much money he needed! "Hey boys, just give us the dough to keep us afloat or we will have to lay off many thousands of employees! If a small business practiced this lack of knowledge about his/her business, they would be closing their doors in a matter of months. Me thinketh, that they should have thought about this a bit more succinctly 3 decades ago when they had a real opportunity and the capital to move in the right direction.
Vaya con Dios, me amigos and do svedonya! Change, Mr.President Elect? Yes, the wholesale variety! I know Christmas and Chanukah are fast approaching, but stop the gift giving NOW!
The oil interest buried the technology that would have benefitted the automakers,not to mention the rest of us.
Has greed reached the status of a religion?????????
What a scam $4.00 per gallon is! Hard working Americans deserve more.
It is interesting that Henry Ford wanted to make a car his workers could afford. Obviously, Ford and the others had to pay employees that much more to maintain Henry's legacy.
Carol Pipkorn
Rod
Another point...you need to address the usage of "then" and "than".
Good luck
Let them self destruct and force a restructure and that means those ridiculous salary packages the work force goes away - that means the unions, too. They were once good now they have little to no place in our system. I'd like to see how they would react to working in the real corporate world. You perform or your gone.