Tag Archives: Bailout

You’ve had it, Pontiac!

From Debatableand
Mock Ad for Detroit

It is true that there is some confusion amid the swirling mix of perception and reality surrounding Domestic American cars. Overall it has never been harder to buy a bad car than it is now. Think of the shittiest car on the market today. Okay, got that in memory? Now compare it to average or good cars available now. Obviously there is a gap but, then try thinking back 10, 20, 30 years ago. Maybe even take a look at the small car segment that Detroit has failed to fully embrace. Can you buy a car as bad as the Chevy Cavalier or Dodge Omni or Ford Pinto today? Made by anyone?

Where Detroit has failed is not at a level of build quality. You can’t blame lazy American workers. Lazy American workers seem to be able to build Hondas and BMWs just fine. And while the long term pension and benefits obligations are an issue for the big three, the $73 an hour rivethead is an urban legend.

Detroit has not failed at a level of technology or design. Look at how many Japanese car companies have handed major design roles to US operations. Look at how across the board things have got cleaner, safer, more powerful, and longer lasting.

No where they have failed is turning Engineering, Design, Technology and Build Quality into a range of cars that people want. Some of this is laziness. When SUVs became the rage in the 1990s (I blame OJ and his low speed Bronco chase) Detroit has an easy, quick and cheap exploitation: build a ton of these things on existing low cost truck chassis and jack up the price. When suckers would pay anything for these tanks and GM was making $12,000 margin on a Suburban it could almost make sense for them to continue selling piece of shit Cavaliers at a $2000 per unit loss just to maintain market share. Which they did. For about 20 years.

Here is another idea. Keep selling that Suburban for outrageous money. Just don’t count on it lasting. Use some of the windfall to put aside your arrogance and design a car that could actually compete with a Honda Civic.

The problem is – and GM has been worse than any with this – the right people are not making the decisions. I don’t work in the car industry but I am used to decisions being made by the wrong people, the proverbial bean counters. But at least my brain dead, business destroying bean counters have not killed the company yet. And we still make a profit every quarter. I would contend that we would make more money if half of them were put to death, but it is hard to stage a revolution when everything is fine. But I would think after 25 years of consistent driving the business into the ground GM might think about changing drivers.

Like many North Americans, my primary exposure to actually driving Detroit product is the rental market (I like to refer to it using the British term “hire car” as in “Oy Guv’nor, I can’t get me hire car past the articulated lorry on the high street and into the lift!”). And while we reached a point about 10 years ago where even the worst was drivable, the domestic product is not close to the “import”. And it is not a lot cheaper. So yes, i guess the Chevy Cobalt is a better car than the Cavalier. But I can get a Honda Civic for the same or less money.

This is not about design and implementation. It is about intent and it comes from the top. Instead of introducing cars that people wanted they lobbied to keep sneaking in an increasing number of SUVs as “Light trucks” under fuel economy rules. How about making something that doesn’t handle like a pig? We know they can do it, look at the Corvette or the Solstice? Maybe realize that just adding an OnStar button to a cheap wallowing shitmobile will not make people say “Wow”. After the first time the woman in the OnStar call center greets you by name it loses effect. And then you notice that rattle and the crappy brakes, and those shitty plastic wheel covers, and the “bucket seats” that sacrifice any support for Obesity-Friendliness” and….



Filed under Economy

Mad Men

I started watching Mad Men with the first episode and was hooked. It was kind of by accident but really in response to an excellent and intriguing marketing campaign. I was susceptible because the AMC Channel had recently been added to my cable package and I had been watching The Hunt for Red October about 700 billion times…

Which co-incidentally is the number of dollars the American taxpayers are now forecast to pay out to protect the entire international finance system from greed of a couple of sets of people. On the one hand you can blame the people who bought the houses they could not possibly really afford using the sub-prime mortgages being offered. But frankly, responsible people who are seeing their home values fall are harder hit.

What is more black and white is the role of the Wall Street investment bankers, who facilitated this lending, pumped the derivatives and investment products based on mortgage backed securities and leveraged the whole Ponzi scheme to the point of inevitable collapse. And collected commissions and incentives and huge bonuses at each step of the way.

Apart from the horror at the shock to the financial system and the slack jawed astonishment of the sheer brazenness of the “Privatize the Profits; Socialize the Losses” two-step I am struck by nostalgia for the days when Investment Bankers did …well ummm… investment banking and not running scams that would make a Mob run keno game look like a good bet.

Mad Men takes place in a window that is so culturally specific, the period between the 50s and the 60s. But it was also a transition point for the advertising industry, traditionally dominated by genteel WASPs in grey suits running straight ahead print campaigns. Ten or 15 years later the game would be dominated by television and the more assertive “ethnic” admen.

For a hundred years the Investment Banks were a source of quiet capital and a career path for the lesser sons of the gentry. Show up at 9:00, leave at 4:30 for White Plains or Darien and in between enjoy a three martini lunch with friends from Yale. A comfortable living, not too much pressure, and a betty in the burbs.

When the business moved from being a soft landing for the C students of the Ivy League and became the destination for the hot-shit Type A, Gordon Gecko wannabe Harvard Biz School who expected a seven figure bonus in a shitty year and demanded that the letters VP appear on his cards (along with the 4000 other “VPs” in the firm) the die was cast.

And like a ponzi scheme, there has been so much collusion in letting this happen. Maybe because as with a Ponzi scheme, even those who know it is a scam are just hoping they can cash out before the suckers get stomped.

So fine, bail them out. But don’t just throw hundreds of billions of dollars at an industry that showed itself to be too greedy to even protect it’s own self interest. At least get something out of it. A stake in the potential profits if these assets turn around. A coherent regulatory environment. Or at least some public floggings.

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Filed under Economy, Media Coverage