There's been a lot of commentary on Detroit's troubles. Most of us are torn, we see the economic impact of failure, but then again, we know the arrogance of the industry. We wan to help, but we get that money-down-the toilet feeling. The key to success is use our money to break up the industry in just the right way...
GM, Ford and Chrysler are substantially vertically integrated. While they depend on a parts industry, they are primarily responsible for research and development, design of new vehicles, assembly and marketing.
The problem with a Umpty-billion dollar bailout is it leaves these vertically integrated behemoths smug and in place, and inceasingly skilled in asking for yet more bailouts.
What we need in this country is more competition in Research, development and design. We need the market to look into electric, and alternate fuel vehicles. we need to look everywhere for next generation transportation ideas. The problems is, this is really really capital intensive. What to do? We need to make it cost less to start an auto company. and insist we are out of the assembly subsidy business in three years. letting the chips fall where they may.
At the same time, the biggest disgrace is the poor design of the Big 3's auto assembly plants. They've not embraced flexible manufacturing. They've made lousy decisions about assembly -- the kind of decisions that send jobs overseas
The basis of a solution is simple.
- Strip the automakers of their assembly plans. Form several competing companies that will assemble cars for anyone including the big three, but also for other companies entering the domestic auto design busness (think Tesla, for example). Subsidize those UAW contracts, insist in re-tooling with flexible manufacturing tooling.
- Leave GM, FORD and Chrysler as R&D design and marketing houses. Place no barriers to entry to new companies, who can use the now independent assembly houses to bring new idea to the market.
- It increased the importance of the domestic parts industry - there's lots of jobs there.
We'll get a more "silicon valley" auto industry, -- more of an auto ecosystem really. We'll preserve manufacturing jobs. and detroit will stand on its ability to produce good cars -- or be replaced.
Detroit's had their incentives in the wrong place - its time to fix that.