tom Matlack
Reformed Venture Capitalist, now writer
With the economic cancer quickly moving from homes to cars, the first
test of what our new President really means by "hope" will be
determined by how he responds to the crisis in Detroit. Electric and
hybrid cars are certainly part of the answer but improved engine
technology is just the tip of the iceberg. With GM stealing from the
it's employee pension plan last week to make debt payments on its
headquarters building, no smart car is going to save them now.
The
auto industry in America is a dinosaur propped up by government
invention. The 1979 bailout of Chrysler, the same one that made Lee
Iacocca a household word, hurt our country because it prolonged the
agony. Those chickens are now coming home to roost. Nothing less than a
21st century approach to car manufacturing can save the auto industry,
save our economy, save our environment, and free us from the dependence
on foreign oil which has led us, at least in part, into two wars in the
Middle East.
· If you took all the cars produced in America
built but not sold, what economists would call the "structural
inventory" of our current system, those cars would fill a parking lot
the size of the state of Rhode Island. Michael Dell perfected a
flexible system of manufacturing called "Just-In-Time," which means you
only build what a customer has already purchased. This is harder to do
with a product as complex as a car, but it most certainly can be done
if we are willing to go smaller micro-factories that produce cars in a
flexible manner.
· The Rocky Mountain Institute has proven
beyond a shadow of a doubt that the safest cars are the biggest and
lightest ones. Heavy cars only help in head-on-head collisions, which
are a tiny fraction of highway fatalities. If you hit another car on an
angle or if you hit a tree, you want a car that bounces. What is most
important is size, since the critical factor in highway safety is the
amount of time your brain has to decelerate. The fact that lighter cars
are safer is hugely positive news from an environmental standpoint
since lighter cars are, by definition, more fuel-efficient.
·
Detroit is addicted to producing steel cars. Each plant costs $1.5
billion and is locked into place by the powerful steel worker's union,
which obviously supported our new President. To build light cars, we
have to move away from steel frames and towards existing plastic and
carbon-fiber technologies. This will require facing down the unions and
shutting down large numbers of antiquated plants. But the goal has to
be sustainable jobs, not steelworker jobs at any costs. Those outdated
plants are at the very heart of the problem we have to face squarely.
·
It currently takes Detroit over five years to design a new model. Five
years ago everyone was rich and gas was cheap. So huge plants were
erected to build gas guzzling SUVs and trucks. Last week Ford
introduced its newest automobile, the 150 pick-up, to great fanfare.
The thing gets 15 miles to the gallon. Flexible manufacturing requires
that model design occur in real time. Think about the difference
between the cycle time from Steve Jobs to put out a new iPhone and for
Detroit to put out a new car. Micro factories producing plastic cars
would eliminate the retooling of massive steel plants. Stringent
crash-test guidelines are another obstacle. But in the end it will
require a different intellectual approach to the design problem.
·
There is no reason that 100% of plastic or carbon-fiber cars can't be
recycled just like the ink cartridge for your printer. Battery powered
cars are great, but has anyone thought about what we are going to do
with all those batteries at end of life? Batteries generally get thrown
out and are one of the worse kinds of trash. Our new auto industry has
to be designed so that we invest the earth's physical assets once to
build the new fleet of cars and that plastic gets melted down and
reused over and over again.
A government solution to the
auto industry crisis that maintains the status quo will jeopardize
nothing less than our national security and our fragile world
environment. Placating the CEOs who got us into this mess or the unions
who have fought tooth and nail to maintain the current system will not
solve our economic plight. There is both huge risk and huge opportunity
in Detroit. It's our President's chance to show the world why we
elected him. But to do so he has to completely change the auto industry
paradigm, setting our sight firmly on the future rather than grasping
at the few remaining straws of the past.
test of what our new President really means by "hope" will be
determined by how he responds to the crisis in Detroit. Electric and
hybrid cars are certainly part of the answer but improved engine
technology is just the tip of the iceberg. With GM stealing from the
it's employee pension plan last week to make debt payments on its
headquarters building, no smart car is going to save them now.
The
auto industry in America is a dinosaur propped up by government
invention. The 1979 bailout of Chrysler, the same one that made Lee
Iacocca a household word, hurt our country because it prolonged the
agony. Those chickens are now coming home to roost. Nothing less than a
21st century approach to car manufacturing can save the auto industry,
save our economy, save our environment, and free us from the dependence
on foreign oil which has led us, at least in part, into two wars in the
Middle East.
· If you took all the cars produced in America
built but not sold, what economists would call the "structural
inventory" of our current system, those cars would fill a parking lot
the size of the state of Rhode Island. Michael Dell perfected a
flexible system of manufacturing called "Just-In-Time," which means you
only build what a customer has already purchased. This is harder to do
with a product as complex as a car, but it most certainly can be done
if we are willing to go smaller micro-factories that produce cars in a
flexible manner.
· The Rocky Mountain Institute has proven
beyond a shadow of a doubt that the safest cars are the biggest and
lightest ones. Heavy cars only help in head-on-head collisions, which
are a tiny fraction of highway fatalities. If you hit another car on an
angle or if you hit a tree, you want a car that bounces. What is most
important is size, since the critical factor in highway safety is the
amount of time your brain has to decelerate. The fact that lighter cars
are safer is hugely positive news from an environmental standpoint
since lighter cars are, by definition, more fuel-efficient.
·
Detroit is addicted to producing steel cars. Each plant costs $1.5
billion and is locked into place by the powerful steel worker's union,
which obviously supported our new President. To build light cars, we
have to move away from steel frames and towards existing plastic and
carbon-fiber technologies. This will require facing down the unions and
shutting down large numbers of antiquated plants. But the goal has to
be sustainable jobs, not steelworker jobs at any costs. Those outdated
plants are at the very heart of the problem we have to face squarely.
·
It currently takes Detroit over five years to design a new model. Five
years ago everyone was rich and gas was cheap. So huge plants were
erected to build gas guzzling SUVs and trucks. Last week Ford
introduced its newest automobile, the 150 pick-up, to great fanfare.
The thing gets 15 miles to the gallon. Flexible manufacturing requires
that model design occur in real time. Think about the difference
between the cycle time from Steve Jobs to put out a new iPhone and for
Detroit to put out a new car. Micro factories producing plastic cars
would eliminate the retooling of massive steel plants. Stringent
crash-test guidelines are another obstacle. But in the end it will
require a different intellectual approach to the design problem.
·
There is no reason that 100% of plastic or carbon-fiber cars can't be
recycled just like the ink cartridge for your printer. Battery powered
cars are great, but has anyone thought about what we are going to do
with all those batteries at end of life? Batteries generally get thrown
out and are one of the worse kinds of trash. Our new auto industry has
to be designed so that we invest the earth's physical assets once to
build the new fleet of cars and that plastic gets melted down and
reused over and over again.
A government solution to the
auto industry crisis that maintains the status quo will jeopardize
nothing less than our national security and our fragile world
environment. Placating the CEOs who got us into this mess or the unions
who have fought tooth and nail to maintain the current system will not
solve our economic plight. There is both huge risk and huge opportunity
in Detroit. It's our President's chance to show the world why we
elected him. But to do so he has to completely change the auto industry
paradigm, setting our sight firmly on the future rather than grasping
at the few remaining straws of the past.
