Not long ago, we were told GM was too big to fail and Chrysler was too big to fail. Yet they failed even after receiving billions of dollars in TARP bail-out money. Ford survived the bankruptcies without taking money from the federal government, but the automaker is not on sure footing yet. The future of the big three automakers has been assured, at least in the short term, by the US government. Can the companies survive and thrive long term?
The US has embarked on a mission to cut carbon emissions and Congress is working on a cap and trade bill that will tax violators. Automakers, coal industries, and other energy sources will feel the weight of the bill if it passes both houses of Congress. Automakers will be required to tow the line in order to remain in compliance. They will need to retool for green car production.
Automakers aren't the only industries that will have to retool. Auto suppliers who make parts for the manufacturers will also engage in retooling to meet new specifications. Though GM and Chrysler received bail outs to continue manufacturing autos, suppliers have not been given the same options and must pass the costs along to the auto industries. Foreign suppliers will have similar roadblocks with their production of certain auto parts.
Reasons to question the future of US automakers:
The big three automakers have unionized labor and have not contained costs as well as the auto manufacturers in the southern states that operate under right to work laws. Labor unions periodically negotiate contracts with higher salaries, premium health care, and retirement funds. The salaries and benefits must be factored into the total cost of producing an automobile thus driving up the price.
US automakers are in trouble, in large part, because they've refused to fore go the love affair with gasoline powered cars. Lobbyists buy influence in Washington DC over the types of cars the US produces and that has kept a lid on new technology.
In addition, US automakers have not kept pace with foreign and private auto industries in producing cars and trucks that give both good mpg and reduction of carbon emissions. The UK advertises a new hydrogen car with an at home fuel pump available. Guy Negre, the engineer who worked on the Formula I car has produced a car that runs on compressed air and gasoline. It gets about 106 miles per gallon of gasoline. It's in mass production in India.
In1978, Jack Nicholson drove a solar powered hydrogen car. The US auto industry ignored the technology and continued to make ICEs (internal combustion engines) with powerful engines with lots of horsepower. Wouldn't it have been advantageous to develop hydrogen technology or other efficient technology such as electric cars back then when we were talking green machines? The technology was available but not developed by US automakers.
Tesla Motors has produced an electric car that has a range of 220 miles before recharging with a top speed of 125 mph. Tesla says it provides100 percent torque at all times, something traditional ICEs cannot deliver. The problem: the Tesla Motors car is costly and electricity costs are expected to skyrocket with the cap and trade bill since coal produces about 48 percent of electricity in the US. The costs will be handed down to consumers until coal is replace with energy alternatives.
To date, hybrid cars made by the big three automakers do not compete as well as Toyota and other foreign hybrids. None come close to the air compressed car by Negre.
The future of the US automakers should be questioned. How long will it be before our nation catches up with the latest technology and how long will it be before we can compete in the market on a global scale? The good news is, the technology is available and it is up to the auto industries to mass produce cars that the market will bear.
Can US automakers rise to the challenges of cost and technology? It would be logical to entertain the thought that there are designs on the drawing board that will allow the US to produce a car that is affordable and has the best features in mpg, driving range, and safety. These factors will determine the future of the US auto industry. As of today, those questions remain.