Everyone it seems has an opinion on the viability of a bailout for Detroit these days.
Me, you (well I'm guessing you, as you're reading this - perhaps your merely intrigued, but, I digress). Economists have an opinion, politicians have an opinion, Union Leaders have an opinion, our President-elect certainly has an opinion.
And, Rock Music icons, like Neil Young, also have an opinion. One which you might find a little surprising, especially if your view of Neil Young is based on the fruits of his excellent, ground-breaking musical career.
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Before I get to Young's view on Detroit, it is worth remembering that he was one of the first to suggest Barack Obama as our nation's new leader - putting his views into verse and song. (HuffPo) Yes, he did! So hat-tip for being a really early promoter of Obama Mr. Young!
Neil Young's Prescription for Detroit
Very simply Young's notion is as follows:
The big three must reduce models to basics. a truck, an SUV, a large family sedan, an economy sedan, and a sports car. Use existing tooling.
Nice intro - clean and simple, no frills eliminate complexity and brand vs. brand competition.
But, what about Obama's idea that any aid to Detroit be tied to efforts to make the next generation of automobiles? YOung has an idea how to make that happen as well.
Keep building these models to keep the workforce employed but build them without engines and transmissions. These new vehicles, called Transition Rollers, are ready for a re-power. No new tooling is required at this stage. The adapters are part of the kits described next.
Eh? Neil, what about getting these things sold? Won't they need - you know - engines, transmissions and the like? Neil agrees - and this is how he would handle that transition.
At the same time as the new Transition Rollers are being built, keeping the work force working, utilize existing technology now, create re-power kits to retrofit the Transition Rollers to SCEVs (self charging electric vehicles) for long range capability up to and over 100mpg. If you don't think this technology is realistic or available, check out the Progressive Insurance Automotive X prize. Alternatively, check out Lincvolt.com or other examples.
A bailed out Auto manufacturer must open or re-purpose one or more factories and dedicate them to do the re-power/retrofit assembly.
Altogether an intriguing set of idea. But, should we take the notions of an aging damned hippy punk, folk, hard rock musician as anything more than mere flights of fancy?
Neil Young's Creative and Engineering Side
Why, I think we should. Neil Young has a seriously creative and inventive bent to him - one that isn't entirely satisfied by music. That Lincvolt he mentions above for instance, it is a really neat piece of work. Even if it isn't what everyone would want as their family sedan - it is very sweet looking as a ride.
Here it is midway through construction - Neil Young standing in the engine compartment.
The finished article is even better - as you can see by opening this link in another tab or window. Like I said, sweet ride, and there are plenty of folk at the new Lincvolt site who share how they want to see their ride Lincvolted. So serious is Neil about the Lincvolt that it is his entry for the Automotive X prize of a 100 MPG or better vehicle.
In truth, tinkering around with mechanical things isn't a new endeavor to Young, as this earlier piece in the NY Times makes clear.
NEIL YOUNG wants fuel-efficient cars, and as a politically active rock star, he wants everyone else to have them, too. But Mr. Young is not ready to give up his love of big cars, and he doesn’t think many other drivers are, either.
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So Mr. Young, the iconoclastic godfather of grunge, has assembled a team to turn a nearly 20-foot-long, 5,000-pound 1959 Lincoln Continental into a vehicle that will run on natural gas, electricity or some other form of clean energy. His aim is to win the Progressive Insurance Automotive X Prize, a $10 million challenge to develop a vehicle that can get 100 miles per gallon or better by 2009.
On his long history of being a mechanical and engineering tinkerer and inventor.
Mr. Young, 62, is a longtime tinkerer. He holds several patents, mostly having to do with model trains, and he once owned part of the model train maker Lionel. "I’m a transportation freak," he said. "I like transportation devices. I like mechanical devices."
Now, no snickering there in the back - remember the airplane industry began in the shed of a couple of fellows whose main job was making and repairing bicycles. Why not a Lionel train enthusiast to help bring big back into green cars? Anyway - I trust the judgment of someone who says this about Java.
"Music and mathematics, they go together," he said. "It’s all harmonic, really."
Given that, why not lend an ear to Young's plan? Does his notion of totally diverting an existing plant, making hollowed-out versions of a limited line of vehicles, and then retrofitting them with the kit needed to be, say plug-in hybrids have merit? To answer that we should agree upon what Young's vision of things means.
How I See Young's Prescription
The manner in which I see Young's vision of things is as one way to get to the end-game. It does this without causing significant disruption if it is viewed as a component part of the answer, rather than as the only way in which Detroit Question is undone.
Taken alone, as the only method, the only path, it is shockingly like cutting through the Gordian Knot.
Taken in the context of other efforts, it is still radical, but also less risky. Now, if only there were another company or two who already had an idea of how to get to that 100 MPG+ range with a hybrid. Or better yet, what about a company offering to that with a plug-in hybrid SUV, netting 150 MPG?
What It Might Cost to Put The Plan Into Action
A 150 MPG Plug-In Hybrid. True. From AFSTrinity.
Know what they would like to have?
An automobile line on which to build a fully green version of the Saturn Vue.
Know how much they would like to have in funding to make that happen?
$2.5 Billion- which they'd gladly (cough, who wouldn't gladly take $2.5 Billion) take from the DOE, or from any auto bailout money, after all 80% of what AFS gets would get paid to a partnering automaker.
AFS TRINITY TO SEEK $2.5 BILLION TO RETOOL FOR MASS PRODUCTION OF ITS 150 MPG
SUV USING AN EXISTING FACTORY AND THE WORKERS OF A MAJOR AMERICAN CAR MAKER
Will ask US DOE to allocate to AFS Trinity funding from $25 billion
Auto Industry "green retooling" fund established by Congress
LOS ANGELES, CA, November 18, 2008 . . . AFS Trinity Power Corporation today announced it intends to file for $2.5 billion of funding from the $25 billion "green retooling" fund just established by Congress, with up to $2 Billion of the funding to be used for retooling an existing factory of a major American car maker whose assembly line employees will be retrained to produce plug in hybrid SUV’s that utilize AFS Trinity’s 150 mile per gallon "Extreme Hybrid" technology.
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Selection of the car maker, factory and SUV models into which AFS Trinity’s breakthrough technology will be incorporated would be conducted by AFS Trinity with the support of Ricardo, Inc, the world’s leading automotive engineering firm and a preferred supplier of AFS Trinity. Ricardo will also, acting as a subcontractor to AFS Trinity, assist with technology transfer and integration of the redesign, retooling and retraining programs to be conducted in cooperation with the car maker whose manufacturing assets will be utilized in the program.
Sounds an awful lot like the second stage of Young's Prescription for Detroit to me, wouldn't you agree?
The AFS approach is particularly interesting as they would convert at least one factory for about a tenth of the full bail-out Detroit is requesting. Using a mix of Lithium-Ion batteries, ultracapacitors and a new power control mechanism enables their technology.
The Other Pieces of The Puzzle
Looking at what Neil Young wrote, along with AFS Trinity's plans seems we have everything solved, but, truthfully matters are much more complex. There are some difficult issues to address. Young glides right past them, I have not looked at them, still they exist.
Let's call the Young plan and that of AFS Trinity examples of forward paths. Costly to be sure, but I've always believed you've got to spend money to make new money. Still what are the difficult pieces of the puzzle which remain?
Health-Care
One huge elephant in the room are the benfit costs that are presently a huge burden on Detroit. Health-care being one of those (pensions the other).
I do not pretend to have a clear answer on that front, but perhaps it is this simple: If Automakers Won't Say It, I Will: UNIVERSAL HEALTHCARE NOW!!!!!! (Go read and rep that diary by SuperSonic Dog).
As noted in that diary health-care costs are not merely weighing down Detroit, they also have resulted in foreign automakers moving new manufacturing outside of the U.S. in North America. (NY Times 2005) Our favorite Nobel Prize Winner Krugman opined:
But education is only one reason Toyota chose Ontario. Canada's other big selling point is its national health insurance system, which saves auto manufacturers large sums in benefit payments compared with their costs in the United States.
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For now, let me just point out that treating people decently is sometimes a competitive advantage. In America, basic health insurance is a privilege; in Canada, it's a right. And in the auto industry, at least, the good jobs are heading north.
Perhaps we should make this deal with Detroit - Big Three, you come out in favor of Universal, single-payer health-care, and we will write up that $25 Billion stat. Works for me.
On pensions, this is actually the biggest card the Unions have to play in their favor - that they are taking on ownership and management of the Pension funds beginning in 2010. Can a deal be made to bridge the time twixt now and then, and if it can, will it make the Union position on other issues (wages, work practices) somewhat less intractable. Right now, the Unions are signaling little movement.
I know Unions have given much movement in the past, but signaling zero movement now looks to me as if it is purely a negotiating stance.
The alternative to all this, preferred by the (repudiated) Right-wing, is to let the animal die, or go through Chapter 11. However, as Johnathan Cohn argues in The New Republic, Chapter 11 isn't a realistic option.
One reason for the casual support for letting GM fail is the assumption that bankruptcy would be no big deal: As USA Today editorialized recently, "Bankruptcy need not mean that the company disappears." But, while it's worked out that way for the airlines, among others, it's unlikely a GM business failure would play out in the same fashion. In order to seek so-called Chapter 11 status, a distressed company must find some way to operate while the bankruptcy court keeps creditors at bay. But GM can't build cars without parts, and it can't get parts without credit. Chapter 11 companies typically get that sort of credit from something called Debtor-in-Possession (DIP) loans. But the same Wall Street meltdown that has dragged down the economy and GM sales has also dried up the DIP money GM would need to operate.
That's why many analysts and scholars believe GM would likely end up in Chapter 7 bankruptcy, which would entail total liquidation. The company would close its doors, immediately throwing more than 100,000 people out of work. And, according to experts, the damage would spread quickly. Automobile parts suppliers in the United States rely disproportionately on GM's business to stay afloat. If GM shut down, many if not all of the suppliers would soon follow. Without parts, Chrysler, Ford, and eventually foreign-owned factories in the United States would have to cease operations. From Toledo to Tuscaloosa, the nation's assembly lines could go silent, sending a chill through their local economies as the idled workers stopped spending money.
Nobody, surely, wants to throw out baby, bath-water and bath-tub - well, unless they're truly loony. In fact, though it may be true that the idiot remnants of the Bush administration will resist these changes, there seems to be a growing swell of support for something positive to be done with Detroit. Not only from the US and it's Business Pages, but also by examining the example of the support being offered by other countries to their manufacturers. Germany will certainly stand by their cathedral industries.
One other thing to consider, we would as taxpayers, once again be in a position to acquire an interest in these companies in exchange for our largesse. Given the low price-point the publicly available stock of GM and Ford currently suffers the potential for significant returns cannot be looked at as anything other than an opportunity. (The situation with Chrysler is complicated by Cerberus, which privately holds 80% of the ailing minor member of the Big 3).
It seems to me the likeliest outcome is this: The Bush administration or a lame duck Congress will block what is needed; then immediately after January 20th a viable plan of action will be put in place by an Obama Administration. Would that it could be done more quickly. But, honestly, how can you shame the blind and deaf to see and hear our collective needs?
The question before us isn't really whether or not to help Detroit. The question is how to do so in a smart, economic and effective manner.