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Automotive/Aerospace Industries Systemic Intelligence
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Automotive Industry Analysis 2008
Martha Hindes: Main Street Holds Key to
American Auto Companies' Health

eMOTION! REPORTS.com
Automotive/Aerospace Industries Systemic Intelligence
www.emotionreports.com
Automotive Industry Analysis 2008
Main Street Holds Key to
American Auto Companies' Health
Despite historic \"Bridge Loan\" actions, the fortunes of the U.S. auto
companies will be made or broken by average Americans who
unknowingly depend on their survival.
DETROIT, December 11, 2008 -- If there is a truly bright spot emerging from the
hearings on Capitol Hill in Washington, D.C., it won't be about money being sought,
with stringent conditions, for America's home grown auto companies.
It won't be the spectacle of a contrite Rick Wagoner, CEO of General Motors Corp.,
trying to fend off the hostility of empowered legislators.
It won't be the smirk of a congressional representative or senator from the Deep
South enjoying the deliciously satisfying ability to make the head of one of the
world's largest corporations try to construct answers to questions designed to be
unanswerable.

“The drumbeat of cynical, ill-informed judgment has resounded
repeatedly, fed by negative comments iterated so often that even ironclad
proofs of their falsehood can't neutralize the impact. What hasn't helped
either is the perception that upstart, loosely regulated \"idea\" companies
infused with government grant money and \"angel investor\" or other
private capital funding can develop super, fuel-efficient future cars that
American companies can't. The presumption of course is that these
fledgling entrepreneurs understand needed vehicle technology fixes while
the American auto companies don't.”
Chevrolet Volt Chaparral Racing Concept Image: GM
Unanswerable, of course, because the answers are so complex. They take a lifetime
of industry acumen to begin to comprehend what is being explained. Unanswerable
because sorting out an answer assumes a perception of the vastly intertwined areas
involved in automotive technology and development. That includes physics,
advanced engineering, electronics, marketing, environmental concerns, consumer
fickleness, usage needs, contradictory laws and regulations, and financing and
developmental money among them that go into the design, development, creation
and purchase of just one mass produced automobile.
FEW LISTEN
The bright spot will, in fact, be the full realization of a rancher in Wyoming or a
food processor in Miami or a sales representative in Rhode Island that toppling an
automotive chief executive and taking down with him the company he was there to
defend will be taking the keystone out of the structure of the country we all call
home. Those workers won't represent everyone. It's more likely they won't even
represent a substantial minority of their working colleagues around the country
who get up in the morning, drive themselves to work and -- beyond filling up their
vehicles with gasoline -- probably give little thought about what it took to travel
there.

But for those immersed in the day-to-day business of participating in the auto
industry or following its every step, such a realization would have to be a victory.
For many, a sliver of light appeared in the last few days when surveys showed that
GM and its compatriot companies Ford and Chrysler actually gained some credible
approval for financial help from beyond their home or manufacturing bases. It
suggested that some can visualize that the domestic auto industry is not just a small
\"nuts and bolts\" corner of the American economy, but the country's lifeblood.
2009 Lincoln MKS Image: ER
It isn't that the American auto industry hasn't tried, despite the headwinds.
Neil Macdonald, a reporter from the Toronto, Ontario, Canada-based The National
report on CBC gave a stand up commentary shortly after auto financing talks
began. He summed up the feeling of many outside of the Midwest’s rust belt
territory. Ignoring the impact on his own country's dependence on the American
auto industry, he wrapped up his televised Washington report on the U.S. Big
Three, stating: what do you expect when you make junk. Beyond exposing his innate
lack of knowledge and understanding, he rather succinctly summed up the
longstanding feeling of many Americans across the country that American cars
\"...are junk.\" \"...don't have any technology.\" \"...get lousy mileage,\" \"...fall apart.\"
Many of these perceptions are from people who haven't been near an American-
made car in years.

Peugeot e-motion concept Image: Peugeot
OMINOUS ECHOES
The drumbeat of cynical, ill-informed judgment has resounded repeatedly, fed by
negative comments iterated so often that even ironclad proofs of their falsehood
can't neutralize the impact. What hasn't helped either is the perception that upstart,
loosely regulated \"idea\" companies infused with government grant money and
\"angel investor\" or other private capital funding can develop super, fuel-efficient
future cars that American companies can't. The presumption of course is that these
fledgling entrepreneurs understand needed vehicle technology fixes while the
American auto companies don't.
But maybe some fallout of the capitol fiasco can change perceptions. After what
seems like forever, with a dismal U.S. jobs report staring back at them, slightly
larger numbers of Americans who responded to recent surveys have recognized that
an American auto industry needs some help. There's an indication that the prospect
of a failure by one or all of those companies would be akin to shoving a boulder over
the edge of a cliff, with no way to slow its momentum, or get out of its way, or haul it
back up over the rim. Instead, it would take everything with it as it descended. That
would devastate direct industry supplier companies, lunch counter proprietors,
create a loss of property taxes that support local schools as a result of continuing
home foreclosures, and a myriad of seemingly unrelated business entities as the
collapse began to crush those with even remote connections. It would be stark
evidence of the validity of the \"six degrees of separation\" theory -- that everything is
related, it's just a question of the degree of distance.

Maybe those who \"get it\" see that the result of domestic auto industry failure would
be unimaginable, for the small western town, the overpopulated California city, the
struggling Midwestern metropolis fighting to keep its municipal head above water.
PRESERVING THE HOME FRONT
Consolidated B-24Js being produced at Ford Willow Run Plant 1944 Image: Ford
“Foreign companies with manufacturing facilities in Alabama and other
non-traditional auto states may have been provided with lucrative tax
incentives and other deals on the table as a lure that couldn't be ignored.
They certainly have provided lots of well-paid jobs. But if a national
emergency ever occurred where an auto plant needed to convert to work
on advanced defense equipment, it wouldn't be done at Toyota at
Georgetown, Kentucky or Honda in Marysville, Ohio, or through the ports
of Baltimore or Los Angeles. Those entities would take direction
from their home bases in Germany, Japan, Korea, even China, where the
money goes at the end of the day before small bits of it trickle back in the
form of shareholder dividends. Even the geniuses at Homeland Security
wouldn't be able to make up for such a lack of homegrown manufacturing
capability.”
Those individuals who finally \"get it\" must have been appalled at the realization of
the importance of the nation's waning manufacturing capability not owned by a
vague, unidentifiable and distant corporate boss. They are the ones who finally dug
deep enough to understand that a country that can't make a sedan without foreign
help also can't be called upon to make the massive amounts of soldiers' transport

vehicles, tanks or other heavy duty equipment needed for self defense if a
militarized conflict emergency demanded them. They also might realize that while
Congress was cutting a switch to give American car companies a thrashing behind
the garage, that by administering such overt justice they were injuring the very
ability of those same companies to continue the corrections being demanded and
gutting the main street perception of their worth.
Those who \"get it\" might even have listened long enough to learn that the U.S. Big
Three -- General Motors, Ford and Chrysler -- have spent decades improving their
products, refining quality on a previously unknown scale, worked cooperatively in
pre-competitive partnerships to create the advanced technologies needed for a new
century. They might understand those three American companies build millions of
fuel efficient autos and trucks, including a dozen gas-electric hybrid vehicle models,
and ecologically-friendly alternative fuel vehicles that can run on wood alcohol --
ethanol -- that can be made from wood chips, swamp grass, or garbage. Even junk
corn crops converted to ethanol, with nothing wasted, can leave leftover mash for
easily digestible animal feed that -- as a sidebar -- would eliminate the problem of
bovine creation of methane gas that contributes to global warming. All these could
quickly help replace U.S. dependence on oil from the ground being parceled out by
foreign governments.
GOING IT ALONE
Ford CEO Alan Mulally and Executive Chairman Bill Ford Image: Ford
They might \"get it\" that all this is achievable without the massive, ongoing
financing routinely accorded to Toyota, Honda, Nissan, Hyundai and more by
Japan and other offshore companies by their respective governments. All this is
achievable without American ports taking in unlimited supplies of foreign cars and
trucks along with other consumer goods. And all this despite the bulk of the
mainline newspapers, magazines, radio and television broadcasters crowing about
the inferior products from American companies and their indoctrination that the
only quality alternative is a vehicle from a foreign-owned competitor.

Maybe these people who \"get it\" understand the message that it takes an income to
have money to buy things, and without cash or credit earned at a job nothing is
likely to change except a lengthening of unemployment lines and more \"foreclosed\"
signs on American homes.
For years, as foreign-based automakers fed from their governments' financial
troughs, the North American \"Big Three\" could not. With the exception of such
efforts as the 16-year-old Freedom and Fuel Partnership collaboration of those
firms with the U.S. Department of Energy, there hasn't been desire at the federal
level to consider such a supportive role. Trade bills that could have alleviated the
imbalance of a wide open door coming into the country but barely cracked open
going out might have made up for some of that lack. But they weren't on the federal
agenda, and that could have created dissension among America's valued trading
partners.
Foreign companies with manufacturing facilities in Alabama and other non-
traditional auto states may have been provided with lucrative tax incentives and
other deals on the table as a lure that couldn't be ignored. They certainly have
provided lots of well-paid jobs. But if a national emergency ever occurred where an
auto plant needed to convert to work on advanced defense equipment, it wouldn't
be done at Toyota at Georgetown, Kentucky or Honda in Marysville, Ohio, or
through the ports of Baltimore or Los Angeles. Those entities would take direction
from their home bases in Germany, Japan, Korea, even China, where the money
goes at the end of the day before small bits of it trickle back in the form of
shareholder dividends. Even the geniuses at Homeland Security wouldn't be able to
make up for such a lack of homegrown manufacturing capability.

REVERSING THE SLIDE
So if there is any redemption from the brutal Washington hearings designed to beat
the American auto industry into submission and into a self-fulfilling prophecy of
destruction, it is the possibility that even a handful of those persons previously
uninitiated in the reality of the vehicle world will start to understand. And when
someone realizes that it is his or her actions, even to a small degree, that could be
the faint beginnings of a tidal wave of positive impact, then it's a start. It's a start
that
actually can change a country's direction and its fortunes the way a few people
surfing online grew into the kind of unstoppable surge that recently swept in
unprecedented political change. It starts with only a few steps. And as with the
historic 2008 national election in November, Americans again can prove that when
they really \"get it\" they will act. Who's to say a realistic viewpoint about the auto
industry couldn't foster a similar kind of direction.
How the whole scenario of auto hearings, the dangling carrot of a financial savior,
the threat of a neophyte automotive czar controlling an industry impossible to
understand short term without being an insider, will play out is a huge question at
this point. The days, weeks and months ahead will sort out whether those three
companies remain viable or are forced into bankruptcies that almost assuredly
would result in dissolution and a fire sale of assets to those with the money to
purchase them, particularly China.
The difference will be whether the everyday men and women who work in the local
hair salons, or law offices, or movie production houses will be willing to look at and
purchase the American badged vehicles with as much style, quality, value, and long-
term worth as those from sanctified foreign-owned competitors. If they do, it might
even be the start of a second main street tsunami.
-- Martha Hindes, Executive Editor
###
Publisher’s note: The conspicuous lack of reference to Chrysler, LLC is an extension
of our understanding that owing to significant off-shore based financing associated
with its acquisition, it is not American owned or controlled. Until clear evidence
emerges that this state of affairs has been reversed, Chrysler should not be allowed to
participate in any loan guarantees or other federally originating resources brought to
bear to preserve, perpetuate and revitalize the critical U.S. industrial base.
1953 Corvette Image: GM

Report compiled by eMOTION! REPORTS.com staff and its consultants.
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Copyright 2008, All Rights Reserved
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