December 2, 2005


Dreaming Big to Keep America Rolling (David Ignatius, December 2, 2005, Washington Post)

Economist Philip Verleger was traveling in Asia last month when the news broke that General Motors was slashing 30,000 jobs to try to reverse its death spiral. A Japanese economist he had known for many years asked him a stark question: "What great nation will allow its major manufacturing company to fail?"

Which is why Japan failed to become a great nation. The germane question is: what sort of nation defines its greatness by the number of its people doing parts assembly jobs?

Posted by Orrin Judd at December 2, 2005 12:00 AM

Ha! What sort of nation allows its banking system to carry billions and billions and billions of dollars in non-performing loans, virtually in perpetuity?

Posted by: jim hamlen at December 2, 2005 9:21 AM

Remember when Clinton lectured us to take Japan and Germany as our economic models.

Posted by: erp at December 2, 2005 10:02 AM

Yet strangley enough Toyota can make the world's best cars in both Japan and the United States and be profitable. It is a technological leader in its field, and it has the best management and quality practices. Why can they do it, but we can't?

The hollowing of American industrial prowess is extremely worrisome. Once lost, it takes a lot of work to get that expertise back.

Posted by: Chris Durnell at December 2, 2005 10:49 AM

They opened robotized shops in our Third World--the South. But the Koreans have already caught up to if not passed them and the Chinese and Indians and whoever else will catch up to both. It's a losing battle.

If the Big Three simply broke the UAW they could hang on awhile, but why bother?

Posted by: oj at December 2, 2005 11:05 AM

American industrial prowess isn't being hollowed.

The problems besetting the American auto industry have little to do with technical skill at engineering, or ability to manufacture - they're problems of management, superficial design, politics, and to some extent they're structural problems, inherent to the American economy.

GM, for instance, would be making an operating profit from manufacturing right now if America had gov't provided universal health care.

Look at the U.S. steel industry.
They went from being a basket case to profitable and technologically cutting-edge, and the U.S. auto industry will do the same, if they have to.

Pace oj, there's no reason (yet) NOT to manufacture vehicles in America.

Posted by: Michael Herdegen at December 2, 2005 1:28 PM

Here's another example: Americans invented carbonated ice cream earlier this year, not the Japanese or Germans, and certainly not the Chinese.

After reading the entire article, I have concluded that Master Ignatius is an economic imbecile.

However, Orrin ought to love this part:

This strategy for revitalization was proposed last year in a study by Amory Lovins called "Winning the Oil Endgame: Innovation for Profits, Jobs and Security." [...] Lovins argues that by radically transforming the materials used in cars, trucks, airplanes, office buildings and factories -- substituting carbon-fiber composites and other lightweight products -- the United States could cut its oil use by 29 percent in 2025 and an additional 23 percent soon thereafter.

These ultra-light vehicles would be nearly twice as efficient as today's hybrid-electric cars, with better performance and safety, Lovins argues. Fuel savings would pay for the extra cost of the vehicles in about three years. Meanwhile, Lovins proposes using biotechnology and other new techniques to replace hydrocarbons with biofuels -- cutting 25 percent more from U.S. oil consumption.

To stimulate the transition to this new industrial paradigm, Lovins proposes revenue-neutral "feebates" that would apply fees for inefficient vehicles and rebates for lightweight ones; he suggests a subsidized government program to lease or sell efficient cars to low-income Americans. To foster the new technologies, he proposes government measures that have worked well in the past: Pentagon procurement policies that drive innovation; federal loan guarantees to encourage retooling by automakers and others, and similar loan guarantees for the purchasers of new fleets of airplanes and trucks...

I like it too, but find the thought of the Feds choosing which technologies will be "winners", and leasing a massive fleet of autos to millions of American households, to be beyond the pale.

Maybe just a few billion for research into cheaper methods for manufacturing composite materials, then let the market do the rest.

One thing that could be done immediately, and nearly without cost, is to encourage Boeing engineers to meet with auto industry engineers, to explore whether Boeing's bleeding-edge process for manufacturing composite-fiber aircraft could be useful in the auto industry.

Posted by: Michael Herdegen at December 2, 2005 1:51 PM

airbus is working on a car, but they have problems with the doors falling off un-expectedly.

Posted by: eu go at December 2, 2005 2:58 PM

OJ just doesn't like manual labor.

Posted by: Robert Duquette at December 2, 2005 9:37 PM