Going “green” will destroy Detroit
Today's Financial News - Posted December 8, 2008
The federal government is making a costly mistake bailing out the Big Three. Political pressure has forced the automakers to propose a horrific business plan that will ultimately ensure the automakers’ demise. Detroit is going green with the absolutely worst timing.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): With all of this talk about saving Detroit and bailing out the American manufacturing industry, I am stunned that more people are not seeing the fallacy smack dab in the middle of this debate. Take a look at the proposed business plans the Big Three handed Congress last week and you will quickly see “green” technology is at the heart of their plan.
If this were a strategy submitted a decade ago, it would be understandable. Instead, it shows the utter lack of executive insight at General Motors (NYSE:GM), Ford (NYSE:F) and Chrysler. Once again, fuel prices are going one way and Detroit is heading the other. If I recall, this has happened several times before.
Granted, the proposals were submitted under a cloud of incredible political pressure, but that is no excuse for the horrific plans submitted by the Big Three. What concerns me the most is their caving to the “green” crowd. Mark my word. It will be the touch of death for Detroit.
It will cost much more than $15 billion, $25 billion or even $35 billion in government funding to get Detroit producing high-demand green vehicles. For proof, all we have to do is head to another section of Washington.
Won’t somebody please pay attention to us
Last week, the Electric Drive Transportation Association held an expo at the Washington Convention Center. Walk around the floor of the show and you will see booths from operations as small as mom-and-pop shops to as large as the folks pleading to Washington.
The theme throughout the exhibition hall is unified; the industry will not survive without the help of Washington. The industry association is calling for increased tax incentives and government assistance programs. Most of all, it wants the federal government to lead the charge by converting its more than half a million vehicles to green models.
In other words, the free market will not allow the industry to grow and expand, so Uncle Sam should intervene. We all know that line of thought will only lead to trouble.
As investors, there is a strong tendency to want to invest in the “greening” of America. But time and time again, the market has knocked the industry to its knees.
For long-term buy-and-hold investors, the industry is an absolute death trap. For speculative investors with the stomach to stand incredible undulations, there is some profit opportunity, but you had better sleep with a buy and sell button under your pillow.
The fact that Detroit is caving to the government’s pressure is a surefire sign of desperation. Detroit will get its money this week, but it will be a mere pittance of what the industry needs if it wants to succeed.
If the nation wants a green economy, let the free market dictate the winners. Trying to transform General Motors into a producer of “green” technology is the equivalent of asking Exxon Mobil (NYSE:XOM) to start drilling for spring water. It is not going to happen.
Uncle Sam needs to sit down and let the free markets take charge. If he doesn’t, I have a feeling somebody will knock him down.
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3 Responses to “Going “green” will destroy Detroit”
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December 8th, 2008 at 11:41 am
GM has been in the process of transforming for a while now. They can and will be more “green”. They really don't have a choice if they want to sell any vehicles.
“Trying to transform General Motors into a producer of “green” technology is the equivalent of asking Exxon Mobil (NYSE:XOM) to start drilling for spring water. It is not going to happen.”
That is a retarded comparison.
Overall a pretty dumb article.
December 9th, 2008 at 1:12 am
Oil prices may be down now, but are guaranteed to increase again soon–so looking towards the future and planning to use less oil is still a good economic as well as environmental goal. That being said, I would also agree that GM, Ford and Chrysler will not be good leaders of green technology. Why? Because E85, flex fuel vehicles, hybrids and even electric vehicles all have a lot of problems which are being completely ignored in these discussion. Our electrical grid gets more than 50% of its energy from coal-fired plants while wind farms often must shut down because the grid cannot handle the load or store the energy being created. If the government helped rebuild the infrastructure and develop flywheel technologies for easily storing energy without chemical batteries and large percentage losses then we would all be better off, including automotive manufacturers who could then use the technology to power a new generation of REAL green vehicles. The government should never become an investor in individual corporations built to maximize profit, but pushing relevant technologies forward and keeping our infrastructure viable sounds like a much better way to spend our hard-earned tax dollars.
March 2nd, 2009 at 6:04 pm
Is there not a law called “THE TAFT- HEARTLY LAW” ? I am a Canadian ,but I remember this law being applied to every large USA business before it could be sold to another Competitor may years ago, but I have not heard of it for many years. In other words the Country could not have very few Gigantic Businesses without competition. It has got to a point where only the Government has the ability to print enough money to operate such large businesses, when they go into the red ink. The next step is the Government running everything. I remember Russian President Kruscheiv pounding his shoe on the podium stating ,”We will take you over without fireing a Shot”. Could this be what he was suggesting many decades ago?
“HOW TO CORRECT IT”
Simply break up the large inefficient Corporations and allow the smaller Succsessful ones to take them over and allow the growth to be Nurtured.
Being Small is not a bad sign, if your customers come first. If customers are used as if they were family one does not even have to advertize. Your customer does your advertizing for you by word of Mouth. **Noel**