Detroit Burns, CEOs Fiddle
It’s hard to write about car tech when the Big Three are pretty much crawling on their knees to Washington asking for a bailout. Well, wait. They actually crawled on their private jets and flew down to D.C. Is it really any wonder that the Senate banking committee wasn’t all that impressed with all the talk about their restructuring and cost-saving efforts?
GM’s Rick Wagoner spins a real good, scary yarn about the potential effects of an auto industry collapse. “The societal costs would be catastrophic — three million jobs lost within the first year, U.S. personal income reduced by $150 billion and a government tax loss of more than $156 billion over three years.”
And guess what? People are saying let it happen. In an opinion piece for the New York Times today, Mitt Romney wrote:
It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the embedded tax penalties that favor foreign carmakers.
But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.
Ouch! So who’s right, Mitt or Rick? Probably they both are. If one or all go under, it’s going to hurt. Can something good come out of it? Yes. I get a sense of Nero fiddling while Rome burns when I listen to these Detroit bigwigs. We can’t leave behind the age of fossil fuel dependency without the old ways going down — and if we listen to the fellows in Detroit, they don’t plan to go quietly into that good night. But you know what? I think they’re going anyway.