Comments

13 responses to “The Stealth, e2, and the mess in Detroit”

1. 

   Paolo

   November 21, 2008

   Yep, I couldn’t agree more. Car company execs don’t seem to get it.

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2. 

   Anonymous

   November 22, 2008

   Seems odd that you couldn't find a way to post e², since I can think of at least 2 ways to do it! 🙂

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3. 

   B. Nicholson

   November 22, 2008

   The ‘economic crisis’ is just a simple currency deflation, easily remedied by exchanging currency for undervalued stocks, bonds and durable commodities. We can’t put three million plus workers out of their jobs because the boss forgot to bring the tent and everyone got wet at the picnic. Once everybody dries off, we can still have the picnic.

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4. 

   Petro

   November 22, 2008

   In the “If you have a hammer, every thing looks like a nail” category:

   “Not to oversimplify the management problems in Detroit, but if the two companies had been focused on designing and producing viable products several years ago, they wouldn’t be in the current situation.”
   
   This is a DRAMATIC oversimplification of the problem, but Detroit DID build a product that many consumers REALLY wanted–the large SUV. Yes, many of “us” don’t care for them, but take a ride through residential areas in any middle to lower middle class suburb or town and every other house will have a SUV or pickup truck in front of it. Most people *like* big. Big isn’t popular in Manhattan and San Francisco, but in San Jose and St. Louis? Oh yeah.

   Detroit’s problems included not having being perceived as having small energy efficient cars–or maybe not having well made small efficient cars (they make plenty of them in Europe apparently)

   I think the latter is as much a problem. I know quite a few people that when looking for anything other than a full sized truck won’t even think of the “Big Three” because of perceived lack of qualith.

   I certainly wouldn’t–except for the Ford Ranger (aka “Mazada”).

   Instead, the bigwigs at both companies were focused on short-term profits, while completely ignoring the foreseeable future.

   It was really tough to see oil *doubling* in price over a 6 month timeframe (Again for lots of complicated reasons including demand, the Bejing Olympics, production problems speculation etc.).

   However when you’re in a disaster long term planning tends to be discarded. If you’re starving you tend to be less picky about trans-fats. If you’re freezing to death it’s really hard to complain about a fur coat.

   Detroit’s problems are not the result of short term planning, the short term planning is the result of really bad long term planning by both Management AND the Unions. I read somewhere today that the *average* Detroit auto worker makes $71 and hour (which I believe is the fully loaded cost (includes benefits and pension)) while the non-union (Japanese automakers in the US) come in about $41. There are additional restrictions on the Big Three as to how fast they can modernize their production etc–all the result of union collective bargaining. I’m not out to slam the unions here, but Detroit CANNOT modernize some of it’s manufacturing because of union rules–this limits what they can do design wise.

   I say let them fail and put that federal money into bicycle infrastructure instead. A New Deal like program of bike lane and path building could create new jobs right here in the U.S, right? While we are at it, why not create a federal program to build, in addition to the transit oriented cycling projects, more velodromes and mountain bike trails all across the country. Those projects could create even more jobs here in America. OK, I admit, I am not completely serious about that idea
   (not the second part at least)
   

   I think most people NOT in the supply chain for GM/Ford/Chevy would agree with the first sentence.

   However “New Deal” style projects tend to be a drag on the economy rather than producers.

   I’m also VERY skeptical that spending more on commuter oriented infrastructure will pay for itself in extra commuters.

   but I do think that giving federal dollars to businesses that are failing due to gross mismanagement is a really, really bad idea.
   

   I agree with you, but in this country we bail out everyone from banks to individuals who indulge in gross mismanagement.

   “… The fact that Ford re-opened their F-150 plant as soon as gas prices came down is reason enough to send management their walking papers.”

   The F-150 was a (relatively) high margin vehicle for Ford. They *make* money on each one sold.

   They *lose* money on each Focus they sell.

   Selling more F-150s is the only way they can keep in business.

   I like Seth Godin’s idea–Let the big three collapse, and in their stead use the 7/25/100 billion dollars to create 50 or 500 different car companies and turn loose American Creativity and competitiveness.

   It won’t happen, largely because of Union campaign donations.

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5. 

   Anonymous

   November 24, 2008

   “Magic Motorcycle” was a brand in the mid-90’s that (AFAIK) was the first to produce outboard-bearing cranksets.

   They were purchased by Cannondale.

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6. 

   Anonymous

   November 24, 2008

   I think the only reason so many people/sheep “wanted” big SUVs and trucks is because the manufacturers pushed the public to “want” them via persuasive advertising. They made consumers feel safe and important in a big gas guzzler.

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7. 

   James

   November 24, 2008

   I probably should clarify. I certainly am not happy to see so many people lose jobs, but I think that is going to happen anyway unless there is a serious change in the way the US automakers do business. I believe that a big infusion of cash will only delay the inevitable.

   I am not placing all the blame on executives in Detroit though. In some ways, you can say the federal government is to blame for the situation that US automakers find themselves in. While much of the rest of the world has been paying higher fuel taxes, we have kept prices at the pump artificially low because of the low gas taxes in this country. That just means we are subsidizing the cost of our automobile infrastructure with other taxes like property and income. Personally, I would rather the gas tax be the sole source of revenue for road building projects, but that is simply not the case and never has been. Some people cry foul over talk of subsidizing passenger rail, but in reality our highway system is much more heavily subsidized than any transportation system in the world. If you compare the system costs, a person paying to ride public transit in any major US city is paying a higher percentage of the true cost of the trip than a person driving to work alone in a car. Neither person pays 100 percent of the trip cost, but most people don’t realize of the true cost of driving.

   It may seem like I am getting off on a tangent by bringing that up, but I think it is very relevant to the current situation. As to whether or not Ford and GM should have foreseen the high fuel prices of earlier this year, I think it was fairly easy to predict. All you have to do is look at rising consumption patterns in other parts of the world. I also think it is pretty easy to predict that oil prices will be back up in a year or so, but time will tell on that. If a company wants to just sell a product that has sold well in the past and not worry about future trends, they certainly have that option. I just don’t think anyone should bail them out though if that shortsighted approach doesn’t serve them well over time. Certainly it will hurt some people in the short term, but we need for new companies to come along and replace those jobs (which is why Seth’s idea is probably not a bad one).

   The way I see it, spending more money on, not just alternative fuels and energy sources, but rail, pedestrian, and cycling infrastructure makes sense at this point. Throwing cash at a couple of underperforming businesses that show no sign of changing makes very little sense at all.

   …and anon 11:41, I am familiar with Magic Motorcycle and the work that Alex and Skooks Pong did for C’dale in the 90s. I just didn’t see how the reference applied to this particular bike design. Do a search in my archives and you will find a reference or two to those cranks that you mention.

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8. 

   Ron

   November 25, 2008

   You’re thinking well, James.

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9. 

   Ned C

   November 26, 2008

   Ford re-opened the F-150 plant not because “gas prices dropped” but because the closure had really gone on long enough and the plant is producing a new model that gets better fuel economy than the previous model. I’m a Detroiter, and I get really sick of the Detroit bashing from all sides, from the right wing libertarian loonies, the left wing greener than thou folk on the coasts. I’m also a cyclist, and a walker and when I was able, a public transportation user.

   The problems facing the Detroit auto industry are only partly of its own making, they have been compounded by ridiculous media fantasies. e.g. Who Killed the Electric Car? and ridiculous reports of absurdly high UAW compensation vis a vis their competition, failing to account for contractual legacy costs dating back more than 50 years, (Just how many retirees do Honda and Toyota have in the US? They’ve only been building cars here since the 80s by which time defined benefit pension plans were disappearing in most places) by absurd CAFE regulations , not that I’m against building higher mileage cars but CAFE does absolutely nothing to address the mileage of cars that are already on the road, the behaviour of drivers, and patterns of urban/suburban development that shape transportation usage. Furthermore CAFE standards have distorted the product portfolios of ALL the major automakers in this country, Nissan’s and Toyota’s SUVS are every bit as gas guzzly as their Detroit counterparts if not more-so and if the Ford and GM were to fail Toyota would only be too happy to pick up the slack and re-open their big truck plant in Texas.
   If Japanese and German competitors have generally had “greener” product portfolios it mostly because the much higher fuel taxes in their domestic markets have pushed them in that direction, not some inherently grater foresight or benign spirit. And the sales figures for Toyota, Nissan, Honda et al. aren’t looking so good now either, much of the sales collapse, which is global in scope is due to the credit crisis. The problem is that American politicians haven’t had the cojones to tell the American public what it needs to hear and tax transportation fuel and the American public, including too many “greenies” is happy to have all the work of solving our transportation related carbon emission reduction problems addressed by automakers without having to make any sacrifices, without slowing down, without demanding public transport, or bike lanes or a halt to urban sprawl which devastate our farmlands, bankrupt our core cities, and leaves us stuck with ridiculously long commute times.

   The Detroit automakers will have to face a future that is smaller, and perhaps see their industry be repurposed in other more sustainable endeavours but now isn’t that time, and it’s a ridiculous to think that money spent on bridge loans to Detroit’s automakers will instead to be put into bicycle infrastructure, but what will happen if the automakers are allowed to fall is that Detroit which has been dealing with a recession for the past several years, but where a major redevelopment of its long neglected city core spurred largely by General Motors, will be devastated, the recession will get worse, and with hundreds of thousands of more people unemployed in Michigan, Ohio, Illinois, and Ontario there will almost certainly be a wave of municipal, and state and provincial bankruptcies.

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10. 

    Captain

    November 26, 2008

    Your thoughts on the auto companies are in the right direction. Of course all of these companies went through the 70’s so they knew what an oil crisis was. During the last few years of the SUV heyday the big 3 were locked in rebate wars with each other to the point where they were no longer making profits. In the meantime Toyota and Honda were developing hybrids, VW and Saab were coming out with very high mileage diesels (mostly for the euro market), and the rest of the world was busy implementing measures to meet the Kyoto protocol. To say nobody could see this coming is folly. The car manufacturers themselves had been dealing with rising steel and plastics prices due to Chinese consumption for years.

    Why not start with the idea of putting the money into bike paths and keep going from there? How about light rail and other public transport? The U.S. auto industry is seeing a bit of a renaissance lately, with a handful of start-up electric car companies. Fund them. They are much closer to what the future will be. We can do all that across the nation for half the cost of the auto bailout.

    The big three are messed up from top to bottom. Nothing short of bankruptcy and restructuring will result in creative, competitive thinking at the top and market value wages at the bottom. And without that any fix is only a temporary fix.

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11. 

    canoelover

    November 26, 2008

    Bail them out.

    Caveat: No one currently on the board should be allowed to work in the auto industry for five years. Or longer. They should live off the fat they’ve accumulated and work for a non-prof. Or take them out of the business world forever.

    I both agree and disagree with Petro. We do need to keep this industry alive if only for the sake of the thousands of jobs that trickle money into the rest of the economy, unless you want a dozen Flint Michiganesque cities.

    I do not, however, buy that the consumers drove the need. It is a complicated dance, and I am more inclined to think like Noam Chomsky in this one — the Big 3 manufactured consent that this was the car you needed. All the advertising was geared toward bigger equals better. No sexy babes hoping out of a Focus, just manly men dropping engine blocks into the bed of their monster truck. Indeed, the only reason they made Focuses is to make their average mileage fall within the so-called standards set by the gov’t.

    So we are, as a culture, greedy and consumptive, and our cars are more like clothing…we use them to make a statement, not for simple transportation. Once it becomes unfashionable to drive an SUV, and we’re getting there, they’ll disappear as fast as platform shoes and polyester leisure suits. I hope.

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12. 

    Benjamin

    January 29, 2009

    Okay, there is alot I can say that is good about this product, but there also alot I can say that is negative. I will focus on being constructive through one main point.

    I believe this product is solely designed from an engineering and product styling focus, instead of really considering the real driving force about what a bicycle is supposed to do. I believe this product lacks a certain human-centered approach which forces the bicycle design to negate qualities riders look for in a bicycle. I clearly see that this bicycle is designed for the “enthusiast”, but how does it branch out and bring new offerings to the bicycle marketplace if its success is the same driving force that bicycle manufactures have kept with for some time now. I believe that the appropriate insights would have lead to a bicycle design that propagates stronger connection to all riders, than a selected few. Bicycle design, no product design as whole is an opportunity to challenge the current state of what is in the present and what really is to lie ahead, I don’t feel that this design speaks to a larger audience as it should. I feel the concept is a second year design project that ultimately needs more thought.

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13. 

    Benjamin

    January 29, 2009

    develop rich understanding through insights, develop strong viability in business model, and tackle the feasibility of the technical components, and then you will have something that is valuable to people.

    consider the example listed.

    http://www.ideo.com/work/featured/shimano/

    Reply