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Northwest Voices

Seattle Times letters to the editor

November 13, 2008 at 3:50 PM

Auto-industry bailout

Michael Fein / Bloomberg News

A lot attendant shines the front ends of General Motors Corp. Hummer SUVs at Long Hummer Saab in Southborough, Mass.

The turkey trio

Editor, The Times:

General Motors, Ford and Chrysler are in dire straits because of inept executives, bloodsucking unions and their shameful government enablers [“Why might auto industry get federal bailout? Jobs,” Times, Business, Nov. 8].

Detroit’s trio of turkeys should not have their bumbles and stumbles rewarded by handing them $25 to $50 billion in funds taken from hardworking taxpayers.

The Republican Party will not recapture the White House in four years without the enthusiastic support of the right wing of the political spectrum. To the extent the party supports “spreading the wealth” by confiscating money from the folks who have earned it, and giving it to corporations who did not earn it, the party can expect to stay in the political wilderness — and deservedly so.

— Mark Kalinowski, New York, N.Y.

Take your symbol of overconsumption elsewhere

Had the auto industry started down the road they should have 34 years ago, when they got their first shot over the bow by the oil cartel and their embargo, they wouldn’t need bailing out. There were always urban legends of how alternative-fuel transportation discoveries were waylaid by having the patents bought out by the industry biggies in order to keep things status quo.

The co-conspirators in the industry’s inertia has to be the consumers who held up the demand side of the equation by patronizing the purchase of behemoth gas guzzlers, rather than pushing for more fuel-efficient or alternative-fuel vehicles.

Let those irresponsible ones who kept up the demand for the SUVs and Humvees be the ones to foot the bill for bailing out the big three. Let the rest of us off the hook.

I have finally figured out why the Humvees have such dark-tinted windows — I wouldn’t want to be seen driving one of those symbols of overconsumption, either.

— Tom Munyon, Marysville

Bring back the wow

In discussing the current plight of the U.S. auto industry with my 25-year-old daughter, I realized that never in her lifetime had an affordable Detroit product inspired any significant consumer demand. I had to hearken all the way back to the original Ford Mustang of the mid ’60s to find the car that we all wanted to buy with our first real paychecks.

The government will surely intervene to prevent what would be a disastrous collapse of General Motors and friends, but hopefully with the stipulation that they again create vehicles of superior design, performance and fuel economy.

We will forsake our Hondas and Toyotas only when Detroit gives us a competitive car with both a “green” and “wow” factor — and we need it now.

–Gretchen Hawley, Seattle

This benefits no one

To illustrate that companies operating in their self-interest are not acting in the interest of the country, I will use the example provided by General Motors.

In the 1990s, GM built a prototype of their in-production EV1 electric car as a series-electric hybrid using a turbine engine to recharge the batteries. The 1990s Volvo ECC concept car was also a series-electric hybrid using a gas-turbine engine to recharge the batteries. In a series-electric hybrid the vehicle is always powered by the electric motor and the engine is only used to recharge the batteries.

A turbine engine has the advantage of being able to burn many different kinds of fuel. The same engine could use ethanol, biodiesel, E85, diesel, gasoline or something else. Chrysler’s 1962 Dodge car with a turbine engine could even use vegetable oil.

Had GM produced a series-electric hybrid using a turbine engine, consumers today would have been able to switch to ethanol, biodiesel or another fuel when gasoline became too expensive. GM car sales would not have been affected by the increase in gasoline prices.

Even the limited flex-fuel vehicles being offered by U.S. automakers that operate on gasoline and ethanol mixtures would have provided some small amount of protection from the increase in gasoline prices. The Ford Model T (1908 to 1927) could run on ethanol, gasoline or a mixture of both.

Instead of creating a market for existing alternative fuels by making all of their models flexible-fuel vehicles, they are waiting for filling stations to sell E85 or ethanol. A flexible-fuel vehicle can use gasoline. You do not need to wait for a filling station to sell ethanol or E85 to build a vehicle that can run on gasoline, E85 or ethanol.

Using a turbine engine in a plug-in series-electric vehicle allows you to use fuels from renewable sources to extend the vehicle’s range. However, GM plans on using a small gasoline engine in their Chevy Volt.

GM and the other automobile makers share the responsibility of the crippling effects of the increase in the price of crude oil on the economy and on their sales.

Rod Lache, an analyst at Deutsche Bank, has rated General Motors stock “sell” with a target price of $0.

Carmakers are not acting in the country’s best interest and apparently not theirs, either.

— Rene Sugar, Kirkland

Use oil profits

Oil prices went up so car prices went down.

Why use taxpayer money to bail out car manufacturers?

Use the oil profits.

Increase taxes on oil companies 1,000 percent, then allow a tax credit for any loans to GM, Ford or Chrysler that later default.

Don’t loan tax dollars to the auto manufacturers. Buy from them. Buy 50,000 electric vehicles from each of the big three. Pay now with delivery in four years. Specify vehicle and battery performance that will liberate us from oil dependence.

The big three got a government subsidy to go electric and they didn’t do it. We can make it happen now if we buy e-vehicles rather than just loan money and let the boardrooms decide how to spend it.

— Nathan Kirk, Auburn

Beware the rat hole

A bankruptcy (“restructuring”) of Ford and GM would not mean the end of jobs. It would mean the end of some jobs. It would mean the end of “gold-plated” health benefits for workers and a reduction in pay.

If Toyota can manufacture cars successfully in Kentucky, why shouldn’t we expect the “big three” to find a way to do the same? U.S. companies must get their costs in line with competitors in order to profitably compete. A cash infusion from the federal government will not solve the problem if these companies do not get their costs down.

Our bankruptcy laws are designed to allow for the fundamental restructuring that these companies must undergo. Suppliers will be hurt by lower sales, but how did they not see this coming? This is an industry that must adapt, very much as the airlines have had to adapt. Anyone who studied economics 101 should be clear on this.

With regard to concern that consumers would be unwilling to buy a car from a company operating under bankruptcy protection, I would say that the purchase of a car — by most people — is anything but rational. If it were a rational decision, we would all be driving a Toyota Yaris.

A car purchase is an emotional decision. People buy cars for the image they want to project and for the way the car makes them feel. Many buyers ignore repair-history reports, gas-mileage info and even crash-safety results. You know why I believe this? Because of all of the SUVs being driven to the supermarket; because so many late-model cars are traded in well before they should be; because GM still exists at all.

Detroit purveyed inferior product for many years, only recently beginning to make cars that seem to be of acceptable quality. Detroit would lose some sales under bankruptcy, but not enough to support an argument that taxpayers should protect them.

I believe that Ford and GM are too big to fail under reorganization — so long as they do so rationally. Competitors would have difficulty ramping up sufficiently to meet demand if Detroit were to fold.

Federal assistance for these companies without a major reorganization would amount to large-scale welfare for employed workers and money down a rat hole.

— R. Brian Wright, Seattle

Reality check

The only thing worse than the U.S. auto industry’s outstretched hand is the unseemly haste with which the Democratic leadership has lined up to satisfy its unjustified demands and pay back the support of the unions at the expense of millions of “un-bailed-out” taxpayers.

While the investment in the financial industry is also distasteful, it can be justified as a potentially profitable intervention over the long term and one necessary to provide the credit essential to getting the entire economy back on a stable footing.

The auto industry can claim no such status. It is no different to any other industry equally “justified” in seeking protection from the current economic realities. Why not bail out Circuit City or dozens of other retailers facing a disastrous sales season? What about the hundreds of thousands of small businesses hit equally hard?

From 2005 to 2007, General Motors lost a staggering $56 billion while Ford lost a “mere” $14 billion.

By any stretch of the imagination, this is an industry that is in dire need, not of more funds to hemorrhage through unsustainable employee benefits and poor strategic decisions, but rather of a rapid and unavoidably painful adjustment to reality.

— Gary Cowan, Issaquah

What are you driving?

Which came first — the consumer or the vehicle?

Automakers build what sells. Yes, they have lots of ads to tell us what to buy. But it’s up the each of us to decide whether we want to buy a gas guzzler or something more practical.

I have dealt with a number of car salesmen. While they push the profit vehicle, none of them has ever held a gun to my head and forced me to buy a gas guzzler. If individuals won’t make reasonable choices, why should we expect corporations to do any less?

As individual Americans, we can make a huge difference, or whine that it’s someone else’s fault.

What are you driving?

— Douglas Daily, Seattle

We beg you

Dear Congress,

Just because you have some money in your pocket, don’t do it [“Big Three’s drive to survive in auto industry,” Business, Oct. 29].

Save us from another bailout for a company that destroyed its last hope for redemption when it absorbed the entrepreneurial Saturn division and smothered its innovative spirit with same old same old GM [General Motors] culture.

Executives who drive their company into the ground don’t deserve to be rescued. Take the money and use it to support new car manufacturers that can bring some energy and vitality to our auto industry and for retraining dislocated employees (or infrastructure projects to put them to work.)

Meanwhile, let GM go into bankruptcy, and let new companies — or more effective companies like Toyota and Honda — take over their factories and inject new thinking and new ideas into the largest and saddest of a moribund trio of failing companies.

— Mark Nassutti, Kirkland

Not going to happen

For two decades, the “big three” American automakers have been making a fortune building and selling gas-guzzling SUVs while Toyota and Honda were developing energy-efficient, well-designed, long-lasting cars. They were able to profit so mightily because their SUVs were exempted from the Corporate Average Fuel Efficiency (CAFE) standards, due to their lobbying of Congress.

Now the crybabies want a bailout?

I say, “Heck no.” Let these companies wither or get bought up by companies who know how to make good and useful cars for the 21st century.

— Bruce Joffe, Piedmont, Calif.

Comments | More in Economy, Politics, Transportation

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