Electric Vehicles

Friday, December 19, 2008

Congress Must Do, Successful Auto Bailout & Insuring an Energy Future

The situation in the US auto industry is bad but the Detroit 3 need more than just money. Internally they need leadership with vision and understanding of the product and manufacturing side of their business, not just the financial side. But more importantly they need Congress to have the courage to put in place policy that fosters their talk about the energy future of the United States.

What Congress and the President must do:
1. The country needs an immediate $2 per gallon gas tax with the policy to increase the tax 50 cents each year for 6 years. This will be painful for everyone, but no more painful than it was this summer. We can’t have the automakers building small fuel efficient cars unless the public wants them. This summer when gas was $4 a gallon people wanted small cars, now gas is $1.60 and small cars are sitting on the dealer’s lots and pickups and SUV’s are selling like hot cakes. This is fact and it is suicidal for this Nation to accept this.
2. Congress needs to implement trade policy that levels the playing field with all nations we trade with. We should be able to trade as easily and freely with other nations as they are with us. If we decide that some countries are not doing enough with atmospheric emissions, child labor, product quality or safety, currency exchange, then stop trading with them until they put in place a plan to correct. Any country that can produce something at a lower cost delivered should be able to do so. We should be able to flood the Japanese rice market with lower cost American rice and be able to put the Japanese rice producers into some other kind of industry, just like Japan has done with electronics in the US. Why should the US be limited in importing vehicles into Korea? The answer is make the situation equal to all. China produces huge quantities of goods in conditions that are appalling to the environment and their workers. China must fix and until they do, we limit what they can import. Sorry Walmart shoppers, but buy American (if it is not too late.)
3. Congress needs to implement economic stimulus plans based on buying American made products. With item 2 & 3 together, we need to restart building American products again. Manufacturing is a key occupation for many average Americans. Half of the world is below average intelligence and they are not equipped to be leaders in the Information Age. They need unskilled labor jobs that pay a decent wage building products the others in America need and want. Make economic stimulus tied to buying American made goods.
4. Congress needs to carefully look at all the issues American business faces setting up manufacturing in this country and eliminate the huddles, the legal battles, product liability threats, the complicated business taxes, control the rising health care costs, the massive environmental impact hurdles required to put in a new business, and all the items that are causing American companies to build their products overseas because it is lower cost , less hassle, and simply easier.
5. Congress needs to set energy policy that directly includes the American consumer in both the environmental and energy costs. The American public is responsible for 75% of the energy consumed in this country some directly and some indirectly. The private citizen consumes energy driving vehicles, running all the appliances, furnaces and air conditioners in their homes (direct use), they demand products be created that use energy and services be provided that consume energy. They directly need to be made financially responsible for their choices.
6.) Congress needs to put in place “tough love” for alternative energy. Legislating energy businesses to use more expensive alternative energy is putting the cart in front of the horse. Use a carbon tax on oil, coal or natural gas used in electricity generation. If the consumer sees his bill is going to go down with alternative energy sources for his electricity, they will demand it and the utilities will have to provide it. When the price of alternative energy is lower than traditional energy, it will happen naturally. Congress needs to put in place these policies.
7.) Congress needs to put in policy to reduce our dependence on foreign oil. Making gasoline more expensive is one step. Switching the nation to E25 (gasoline that is 25% ethanol) as the standard gas available reduces our need immediately by 25%; all 250M cars and trucks will have to use this fuel (standard gas will no longer be available) The ethanol produced needs to be second generation ethanol, cellulosic ethanol. Since the oil companies will lose 25% of their revenue, they will put huge R & D dollars into perfecting 2nd generation ethanol production, they will have no alternative and this is good.

8.) Electric vehicles are going to happen and the US must not trade importing oil for importing batteries. This needs a major policy decision to manufacture batteries in this country. Congress must take the lead and make Government support, money and priority happen. The items above will help American manufacturers be more competitive but massive amounts of money and leadership are required.

Now back to the US automobile industries that lack of vision. Personally speaking I do not believe financial people should be running manufacturing companies. They typically do not run the successful companies in Asia or Europe. Only in the US do we have financial people running manufacturing companies. Ford is in the best shape today and in fact told Congress they don’t need taxpayer money unless the economy turns even worse. They have a plan and it is working. GM and Chrysler are in bad shape and both are run by financial people.
I worked at GM for 25 years and saw what happened when Roger Smith took over and when he left, the company was in terrible shape, so he got Bob Stempel put in as CEO to set him up for failure. This arrangement resulted in Stempel being pushed out and then they brought in another financial guy, Jack Smith. Smith had “earned his stripes” by cutting GM’s German Opel engineering from outstanding to barely functional, but saved GM lots of cash short term. Only a financial guy sees people as liabilities and R&D as expenses without return, when in fact people are the greatest assets and R&D is critical to long term success. But when Jack Smith retired he got buddy Rick Wagoner appointed to CEO. All these guys are financial “wizards” and people without product vision. GM’s market share under their watch has dropped dramatically, but more importantly, GM’s engineering knowledge has dropped dramatically too. GM was never organized properly to begin with. GM never developed a “culture” internally to share knowledge, train that knowledge into new people, or even captures knowledge. The company developed a ladder climbing mentality and everyone knew that it was more important to look good and climb the ladder than doing a good job and training the people under you, so you never took a step backwards.

This will be an interesting story to watch, but we all need to be concerned because they want to take our tax dollars, too. Write your Congressman and tell them put a tax on gas and put a tax on carbon! Now are you having second thoughts about the environment and energy independence? It will not come cheap. Are you ready?

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