Principles for the Principals

The principals of the U.S. domestic automotive industry are, at long last, meeting on Tuesday, Nov. 14, with President Bush to discuss the challenges the industry faces, and (we assume) how Federal leadership can play a role in overcoming them. In the spirit of acting as an honest broker, we offer the following short list of principles that might help the President and the principals.

Recognize the urgency. The domestic automotive industry is undergoing a very painful restructuring due in large part to their over-reliance on fuel inefficient SUV and pickup trucks. We all hope they will emerge a stronger industry and we will emerge a more secure America, but such favorable final outcomes are far from certain.

Focus on energy. The automobiles produced by the industry do not operate without fuel, and today that fuel comes from oil. Changing this makes business sense. The less dependent on oil our cars can be made through the use of new technologies, the less vulnerable the car companies are to volatility in oil prices. Changing this makes geo-political sense—our addiction to oil compromises our national security, as we send billions to terrorist regimes who own the oil and spend billions protecting our access to the oil.

Focus on technology. America has a great advantage globally in human and intellectual resources. Our science and engineering colleges dominate most, if not all, international ranking, giving our industries access to the best and the brightest of tomorrow’s technology. The world’s other global automotive manufacturers clearly recognize this American strength, and already have or are creating research centers here.

Focus on jobs. The trend of moving more and more manufacturing jobs to places like China and India may be inexorable in the long run. But American workers are the most productive in the world, and with the right products and the right technologies (in the products and in the manufacturing plants) manufacturing jobs will be a critical part of our economy for a long time to come.

Focus on working together with all stakeholders. The auto industry has a broad set of stakeholders that ought to be brought together under Federal leadership to formulate solutions to address the industry’s problems and meet America’s needs. Stakeholders include labor, management, non-profits, academics, consumers, and citizens.

Walter is the Director of the Automotive Analysis Division of the University of Michigan Transportation Research Institute (UMTRI). He studies the adoption by consumers and automakers of new powertrain (electric, hybrid, clean diesel, fuel cell, alternative fuels), safety, and telematics technologies. Walter worked for General Motors for 9 years in sales forecasting, product development, marketing, and manufacturing (1993 found him on the floor of one of GM’s component factories). Prior to joining the University, he was Executive Director of Forecasting and Analytics for J.D. Power and Associates. He earned his doctorate in Economics from UCLA in 1983.

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  • Charles Fischer

    We must recognize that the US is part of the global market. We need to bring our requirements on manufactures inline with the rest of the industrialized world. This involves making sure that all manufacturing plants in the world meet or exceed our safety and environmental standards, or that a tariff is added to products from plants that do not. This may cause trouble with the WTO, but I think we can get the EU, Japan and South Korea to go along. In the US the manufactures are responsible for the health care of their workers. To be competitive the old line US companies will need help in shifting this cost. Some way must be found to reduce the incredibly high cost of health care in the US. I know there is no hope of this for the next two years, but it will be a big campaign issue in 2008.

  • John Acheson

    According to an estimate based on Porsche’s 83% efficient hybrid built around 1900 vs. the Prius at 37% built 100 years after, I calculated that each percentage point improvement in efficiency has been worth about $500,000,000.00 in U.S hybrid marketshare over the past five years. With another 50 points to go, there is an estimated untapped hybrid market of $25 billion.

    If Detroit wants to enter this market, which Toyota currently controls about 90% of in terms of unit sales, there are plenty of opportunities. With the new clean diesel, the potential for diesel-electric hybrids getting up to 45% tank to wheel efficiencies is enormous. What about a diesel-hydraulic hybrids, didn’t UPS test one at 70-80% efficiency.

    How about the light truck market? It’s about half of the 17 million units sold each year, and where’s the hybrids? Detroit’s upside is the 50 points of efficiency gains available in vehicle classes that Toyota and Honda do not dominate in…Oh, and let’s not forget the light industrial sector…

    Is it really about plug-ins? Efficiency gains can be met with numerous off the shelf hybrid technologies: diesel-electrics, turbine-electrics, diesel-hydraulics, gas-electrics, gas-hydraulics, regnerative braking, etc.

    Detroit’s Upside is huge, if the Big 3 decide to go hybrid…

  • MoisheK

    Clean Diesel mild hybrid for heavy duty truck would pay for itself in no time.

    New york city makes enough mony on taxi medalions to give each cab driver a free hybrid ( that is if they dont have the brains to buy one )

  • Mike Tieman

    There is some new technology that cliams to make hybrids obsolete, their intake valve gives any 4 stroke engine, low end troque similar to that of an electric motor. With the omnivalve you can dirve around town at RPMs lower then your average idle speed of a hybrid! Very interesting technology!