Response: Melena Thomas

Let's face it the Big Three are basically out (with the possibility that Ford may be able to keep afloat). The last time the auto companies faced a "die off" of this scale was back when FDR was President. Only then, it wasn't the President or Congress that kept them alive. What happened was a strategic attack on the auto's largest competitor-mass transit. GM along with several other companies managed to buy out both the supporting politicians of transit as well as the companies and dismantle them. (Check out the documentary "Taken For A Ride")

You raise a great question, one that needed asking so thanks. It's not an easy answer either. However, it is possible GM has dealt with transit before, after they bought out all the electric railways they introduced the diesel buses that are pretty much the focal point of our transit system today. And because people hated the bus, transit crashed and auto sales flourished. The real problem is that we don't have much of an infrastructure at all for public transit. The Big Three are the closest thing we have as a convertible (no pun) mechanism to establish a large scale transit system. Its tough yes, but not impossible, in WWII the President had the car companies making weapons to help the war effort. Well, today we have a new war-climate change-and it is again time that we demand the car companies do more to help us fight it.

As I said, Honda and Toyota are going to keep making leaps and bounds in hybrid technologies, something that the Big Three haven't even attempted, so let them have public transit. If Congress is going to have a bailout the money is not going free and clear, it will have contingencies. So, if taxpayer money is going to help them, make it contingent upon a substantial effort to restructure towards transit.

I was driving by one of the new hyrbid buses that they've put into the Cleveland public transportation mix the other day and thought this exact same thing.

Nuanced agree/disagree here:

I thought Toyota's competitive advantage lay with it's manufacturing process, it's Kaizen business model, and it's good business-labor relationship. This is important, so let me say it again: I think it's Toyota's process, not its products, that have made it what it is today. And it was evolutionary, not revolutionary, process improvement. That's what makes them so hard to catch up to. They didn't have a 2-year plan. They had a 20-year, gradual, doable plan. It worked.

Now, in this I agree with the post author: playing catch-up is a loser's game. But I don't agree with his solution. Switching the focus to public transit doesn't flex the Big 3's main core competencies: 100 years of automotive engineering experience and fierce brand loyalty in the red states, esp to trucks. If they made me the car czar, this is what I'd do:

Remember, the only market the Big 3 still has is trucks. And if you've lived anywhere between the coasts, excepting university towns, you'll see trucks everywhere, and they're mostly American made. It's what our carpenters, plumbers, farmers, steelworkers, heating-and-cooling guys, cable guys, kitchen-install guys all drive, for work and for private use. Now, think about truck ads over the last 3-5 years. A whole lot of Nissan and Toyota trying to enter the truck market, and a whole lot of Ford, GM, Chrysler trying to keep them out.

The first principle of investing is "guard your gold." For the Big 3 to abandon trucks to focus on small cars (or public transit) is crazy. They'd be just "handing over" their only market. I think the best thing they can do is re-focus, and then think Kaizen. Leverage that engineering talent and get cheap, reliable diesels into trucks for buyers in flyover country. Focus on generating torque from diesel (torque is what you need in trucks and electric generators), then couple your new torque-y, innovative diesels to electrical motors, and beat the Japanese and Europeans to market with diesel-hybrids in trucks. Sell a bunch of trucks to China, and a bunch of engines/motors to Europe and Japan. Spin off Pontiac and Buick, let them focus on sport and luxury. Give up the compact-car and family-car markets.

I agree that transit needs a re-think. I also agree that public transit is damned important (I take it to work everyday). I would like to see more city-to-suburb commuter trains (like chicago's Metra train), and better/faster/cleaner intermediate distance train routes (up the E Coast, down the W Coast, up the Mississippi Corridor, across the Southwest) because the rail rights-of-way already exist, and that's half the battle. And once the rails are down, adding more trains is easy. So rail is scalable. A big plus.

Here is where it gets good: by building/incentivizing public transit, you've reduced demand for the compact/family car. But that's ok, because in my plan, Detroit quit making those cars anyways.

Now, 15 years later, Detroit's profitable but smaller, public transit and short distance rail is reducing our environmental impact, and everybody's happy. There's an opportunity to increase refining capacity for diesel fuel, and we can focus on making cleaner refineries.

While I love renewable energy, I also favor slow, gradual approaches instead of a shoot-the-moon flurry of tech investment. We can do diesel, we can do rails, we can do cleaner refineries. We can do all this now. And if we do this, we can expect a decent, but not huge, reduction in energy use and pollution emission. We can invest in wind/solar/nuclear, but I don't think we can expect it to be effecient on a medium-term time horizon; those are important long-term investments. Pragmatism over Idealism, I suppose.

Jason