Post Tagged with: "Auto Industry"

Brookings Musings: Driving the Auto Industry to a New Place

March 31, 2009 at 4:45 pm

(Source:  Howard Wial, The Brookings Institution)

In announcing restructuring hurdles for the struggling auto industry, President Obama said that he wants General Motors to create “a credible model for how not only to survive, but to succeed in this competitive global market.” The steps that he announced—such as requiring GM to cut the number of brands and reduce its debt if it is to receive further federal assistance, providing federal backing for car warranties, and providing new incentives for car purchases—will help GM survive… in the short term.

So will other steps that the president’s auto task force recommended, such as cutting the number of dealerships.

However, the president’s announcement simply does not go far enough to help GM succeed in the long run. As Susan Helper and I pointed out in a previous Brookings commentary, GM’s long-run problems are primarily problems of quality and innovation, not problems of cost. Neither the president’s statement nor his task force’s analysis addresses those long-run problems.

Improving quality requires adopting world-class production and design methods that tap the knowledge of suppliers and production workers. The federal government should condition further aid to GM and its suppliers on the company’s agreement to implement—in cooperation with the United Auto Workers and suppliers—the recommendations of a federal auto industry manufacturing assistance program patterned after the existing Manufacturing Extension Partnership Program.

Spurring innovation requires doing the necessary research to develop the next generation of alternative-powered cars. Part of any additional federal aid to automakers and suppliers should go to support their participation in a consortium that would perform that research.

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Obama Auto Task Force heads back to DC to decide what to do about Detroit

March 12, 2009 at 12:45 pm

(Source: Detroit News via Autobloggreen)

 After driving the Chevy Volt prototype and sitting down for a number of discussions, the members of the president’s task force on the auto industry have returned to Washington. While the team was in Michiganover the past few days, they had a chance to see GM’s latest technology, look at what Chrysler has brewing, and spent time reviewing the viability plans of the automakers.
Detroit News says  “The administration official would not comment on when the administration might pass judgment on the companies’ restructuring plans or their requests for up to $21 billion in new aid.

“We have been and will continue to work as hard and tirelessly as we can,” the official said. “This is obviously a very substantial undertaking and we want to move with all deliberate haste.”

The group spent most of the day in Detroit, visiting UAW President Ron Gettelfinger and other union officials in the morning before heading to Warren for meetings with GM and Chrysler.

Advisers to the task force visited Chrysler’s Warren truck assembly plant, meeting Chairman and CEO Robert Nardelli and other top executives, the company said in a written statement.

“In addition to meeting, the group toured the assembly plant and reviewed Chrysler current and future products, including electric and hybrid vehicles,” the company said. The meeting also included Chrysler Vice Chairmen Tom LaSorda and Jim Press and Chief Financial Officer Ron Kolka.

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Obama administration works on U.S. fuel rule

March 5, 2009 at 12:57 pm

State standards could be supplanted

(Source: Freep.com, Detriot Free Press)

WASHINGTON — Even as his administration moves toward allowing California and other states to set limits on vehicle fuel economy, President Barack Obama has begun crafting a new national standard that will likely supplant the states’ efforts.Hello again, cheap gas

The moves would allow the president to fulfill a campaign promise to let the California limits take effect while addressing the chorus of concerns from a financially beleaguered U.S. auto industry about meeting a so-called patchwork of state-level greenhouse gas controls, in addition to federal fuel economy rules.

The rules are different but the effect is similar — greater fuel efficiency from vehicles leads to reduced emissions.

The administration has raised the idea for a national limit as part of its talks with Detroit automakers and suppliers for additional aid, an administration official said Wednesday.

“The president believes that one national policy for autos would provide the industry with certainty while achieving our environmental and energy independence goals,” the official said, speaking on condition of anonymity.

The California rules would have little immediate effect on automakers if adopted, but the standards would toughen annually through 2020.It´s the economy, stupid!

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Putting U.S. Cars on the High Road to Recovery

March 5, 2009 at 12:44 pm

(Source:  The Brookings Institution)

Chrysler and General Motors have now presented their recovery plans to Washington. The plans, like the public debate about the future of the industry, focus mainly on short-term issues such as financial restructuring.

However, it is crucial that the automakers and the government also address the underlying impediments to their long-term viability. 

During the grilling the automakers received on Capitol Hill in November and December, commentators on both the right and the left misdiagnosed these impediments. 

To some on the right, the Detroit firms’ biggest problem is labor costs. But these labor costs are less than 10 percent of vehicle cost. In any case, the companies and the United Autoworkers Union are already addressing retiree health care and pension costs, the major source of the labor cost difference between the Detroit Three and Japanese manufacturers. 

Some on the left assert that the major problem is the firms’ failure to make fuel-efficient cars. During the long era of cheap gasoline, though, it was wrong to blame the companies for making the SUVs consumers desired. 

Instead, the Detroit automakers’ long-term problems lie in two areas that have rarely entered the public debate: uneven product quality and lagging innovation. 

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