Time To Get With It Big Three

The greening of Detroit? Only if the green refers to money. What a fantastic scenario Daniel Akst paints in his article from the Sunday Times.

Imagine that you are running a domestic automaker. Rising gasoline prices threaten your lucrative S.U.V. sales, a glut of car-making capacity promises ever more competition, and burdensome union contracts limit your ability to cut costs. Then there are the Chinese. They're beginning to put together the parts they've been making for years, and sooner rather than later, whole cars from China will arrive at scarily low prices.

What do you do? The easy answer is to follow the path that Detroit has taken for years. Grind out well-made but ho-hum vehicles and offer them at huge discounts. Let your debt rating fall below investment grade. And when California tries to impose mandatory reductions in greenhouse gases, you sue, even if some other states want the same stricter standards - and even if some consumers are lining up to pay hefty premiums for energy-saving hybrid vehicles that run on both gasoline and electricity.

Now I'm the first to acknowledge that without a C.E.O.-sized paycheck, I am far from qualified to run a major manufacturing business. But isn't it possible that Ford and General Motors are on the wrong path?

As long as the big domestic automakers focus on short term gains and meeting earnings projections, I doubt that any of the big three will become "green" soon. But it does seem likely that the local automakers are on the wrong path. Michigan's governor, Jennifer Granholm, seeing the competitive advantage that companies like Toyota have in the hybrid car market, is travelling to Japan this week to try to convince Toyota to locate their next North American plant in Michigan. She may be tired of seeing Toyota choose her native country Canada over her current state Michigan, as the next great place to locate manufacturing operations. Canada does have its benefits, but more on that in another post.