The Motor Industry Malaise

by Storm International December 17, 2008

So what about the US government trying to put together a package to bail out the US motor industry?

Personally I think it is a huge and costly mistake to offer any financial support to these archaic business behemoths. They should be left to fend for themselves, and let the strongest and smartest survive.

For too long these dinosaurs have  displayed complacency and arrogance that got in the way of advancement and development of replacements for the internal combustion. The internal combustion engine is the most inefficient mode of powering a vehicle and it has been known for years. Even today they design and develop models like the Hummer, the Escalade and numerous other gas guzzling monsters that are totally out of sync with what is happening in the world today. They alongside the oil giants have lobbied the US government over the years to disincentivize new methods of powering transportation.

Their business model is flawed and against the Japanese car giants their cost base is too high. The unions have too much of a stranglehold on them to allow any advancement in working practices and freedom amongst the employees. Is it any wonder the motor city (Detroit) is a crime ridden, run-down and barren city.

This type of propping up inefficient businesses not only in the motor industry but also within the finance sector is storing up trouble for years to come. The sooner economists and governments wake up to this and realise that the free-market economy should be left to sort out the chaff from the true value based companies, the sooner the world economy can recover and move towards growth.

In my view both the US, UK and to a lesser degree the other Western world economies are going to be second class citizens in the global economy. The time will come when these economies will go with a begging bowl to the economies of the east to prop their 'house of sand' economies. This has already happened when Gordon Brown of the UK went on a whirlwond tour of the mid-east begging the Arab states to release their capital into the financial mess created by UK and US banks.

Their is a lot of trouble brewing ahead and many in power have got their heads in the sand

 

Shah Alam

Comments

2/9/2009 1:24:58 PM #

This is a very sharp analysis based on a specific paradigm.

Even if I can widely share this paradigm and expect improvement in this way, I must observe that not everybody is sharing this paradigm. At least, not everybody has the same hierarchy in their goals or values.

Most probably people driving companies taken in example has other priorities. Most probably, the highest one is profitability.

As far as I can see, US companies, and to a certain extend western companies, are not spontaneously interested in sustainable development. If European Companies are considering this aspect this is because "Europe" has enforced by the law. In some companies, that could be also because their employees are passionately defending ecology.

Probably can people be interested in sustainable development, not companies!

But who are companies ? I like to say that I have never shacked the hand of any company, but I have often shacked hand of people working for them.

On the other hand, I often define a company as a group of person gathered around a common goal. Of course, it is possible to work from home. And so will probably partly be the future. But will that no weaken the company strength? the company spirit? the company reactivity? the company creativity? Working from home in network through the WWW isn't easy. It is a brand new culture, a brand new type a relationship, a brand new type of society. Are we all ready for that revolution? If not (as I suspect it is), how do we prepare our societies for this next step in their evolution? By the way, is this evolution desirable? What will be the consequence of such an evolution? Will we still be "human being"? Will we still live in "society" or will we be a sum of individuals living apart of each other with less and less direct human contact with other "human being"? In what kind of society do we prepare to live? Will the fence between educated and less educated people not be more accurate? Will the fence between rich an poor people not be more impressive? What part of the society will be left behind without hope and future?

If Europe has legislated, it is mainly under the citizen pressure. Citizen has wished another ecologic future for their children. Most of these citizen are involved in companies too. In some of them, these employee-citizen have had enough influence to move their company goals forward.

In countries like US, it seems that high profitability is too deeply anchored. The top management of companies, that is paid to preserve and develop this profitability, will never willingly do anything to invest in ecology. Using an old technology, producing "old fashion" products, making them desirable in order to sell a lot of them, makes profit. No investment (in new technology, but also on ecology impact studies...), no paradigm shift to operate at high costs on their customer, no risk and high profits. High profits leads to leader position on markets. At the end, a rich leader can kill competition or merge competitors. The leader is rich, he has the power, he is right.

In theses countries again, this is the citizen, but in his consumer role, that could enforce the companies to move forward. How ? By true citizenship and not buying anymore products from companies that, from their point of view, are damaging earth. Today, the question is : is there enough people willing to act as responsible citizen to be able to significantly influence companies' decisions.


The analysis made by Shah Alam is opening another question: when companies will be weakened by citizen behavior of their customers, what will happen to them, and therefore to their employees? Bankruptcy and misery? This is not a acceptable social choice.

We are reaching here the paradoxical point. Some wisdom person could see there the natural consequence of inattentive management, or the consequence of manager unable to anticipate consequence of their choices, or a default in our management system(indeed, the rising of consequence takes time, and most of the time the manager who has taken a decision is not in charge anymore when consequence arise; awfully enough, he was seen and considered as a great manager with hight results; nobody seems to take care of consequences that can arise after his mandate). Let us look at that for what it is: action - reaction. Death is as natural as Born. Immortality is abnormal. Companies and societies are increasing and dying because of the sum of their choices and sometime (often?) because of the arrogance of their management. Who can stop death when it comes to someone? Ours societies as we know them will sooner or later disappear. It is just normal. This is what history is teaching us. Transition, as any transition, will probably be very hard to live. But this is also the needed context to learn, grow and improve.

The question that remains open is: will have the next dominant region in the world more wisdom than its predecessors ?

I am stopping here, because I am aware that this thinking is going too far and logical consequences seems to be a bit "dark". Other options or scenarios are possible. But it is too complex.

Anyway, anticipation can be the first step to problem solving.

In this comment, we have slightly moved forward from economics to philosophy an/or ethic. This last word sounds to me important.

The only conclusion I can underline now is that this is a wide topic and that he must probably be considered holistically.

Philippe Beaujean Morocco

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