All the world is abuzz about the “Big Three” American automakers begging for low-interest government loans.  Governmental life support for these companies in their current state of affairs would be, in my humble opinion, a huge waste of taxpayer money better spent elsewhere.  U.S. car ownership is rapidly approaching a saturation point.  If you don’t believe me, just drive around some weekend and take note of all the overflowing car lots and ask yourself who is going to buy those endless rows of shiny new vehicles.   According to the Bureau of Transportation Statistics, there were 243,023,485 registered vehicles on the road in 2004 (that’s the latest data I could find).  The total U.S. population in 2003, according to the U.S. Census Bureau was estimated at 291 million people.  Of those, 61 million were younger than15, meaning that only about 230 million people (including the 17 million who were over 75 years of age) could legally drive those cars.  If there were more cars than legal drivers, then we can assume either that we had a bunch of six-year-olds behind the wheels or, more likely, that almost every legal driver had one or more cars available to them.  I suspect the second case, making me believe that most car purchases these days are probably made to replace existing vehicles.  If you were an automaker wanting to increase sales in light of these statistics…would you be willing to build vehicles that operate efficiently for years and years…or would you be more inclined to engineer a few built-in flaws that would shorten a vehicle’s life expectancy?  Hmmm…. Unfortunately, your competitors may decide to build better cars in order to cut into your market share…kind of like what Toyota and Honda did to the “Big Three.”  Those rascals!  So, in order to meet your quotas, you have to engineer vehicles to break down even faster…sending even more customers away in search of quality.  It’s a nasty downward spiral for sure and, to make matters worse, the current recession has driven sales right off a cliff (pun intended).   Automakers can’t lower prices enough to entice nervous buyers, and buyers can’t get loans from banks anyway. Is there any way out of this mess?  I believe there is a win/win solution for both manufacturers and customers. 

Turn the automakers into “transportation service” providers, similar to what is described in the book, “Natural Capitalism.”  Think what it would be like if you were in the business of selling “transportation services” instead of cars.  I suspect you would immediate retool your factories and retrain your workers to build the best cars possible, reducing long-term maintenance and replacement costs.  Because customers are no longer buyers, they wouldn’t have to come up with large down-payments or have to qualify for loans.  Yes, it does make perfect business sense.  As transportation service providers, the “Big Three” should build the most durable, maintenance-free, environmentally-friendly vehicles they can muster.  Although cost per unit will initially be much higher than that for current models, it can easily be recouped through long-term service subscription plans…think telephone or cable services.  If most people are like me, all they really want is a vehicle that is safe and dependable, easy to maintain and doesn’t cost a fortune to run.  An automaker that can guarantee these criteria at low-cost will win many long-term customers…including me.  Once a customer is satisfied with a service provider, they will be reluctant to change to another company. How often do you change telephone providers?  In other words, the early adopter will develop a large loyal customer base and basically guarantee long-term viability…something the “Big Three” could really use at this point.  If the “Big Three” wish to remain competitive against rapidly-growing Asia manufacturers, their plan for survival seems pretty clear:  become quality transportation service providers.

When I was a kid, my parents used to tell me the story about the ants and the grasshopper… you know the one where the ants work all summer while the grasshopper is off doing his own thing, not worrying about his future?  Well anyway, winter sets in and old grasshopper comes to the ants and begs them to let him in. Of course the ants refuse because it had been “his” choice to avoid preparing for the future and he must accept responsibility for that decision.  I am reminded of this story daily as I pick up the newspaper or watch the news on TV. It seems that many corporations, supposedly led by brilliant people, spent the last few years conducting business activities that were not in the long-term best interest of their stockholders.  Economic winter has set in and now “grasshopper” executives are crawling to us “ant” taxpayers begging for our collective scraps of cash to help them make it through this harsh season.  Just like the grasshopper in the story, they, too, must face the consequences of their actions.

I am already plenty steamed about bailed-out financial companies using tax-payer money to bestow lavish salaries and bonuses on some of the very people responsible for helping to create this credit mess.  How can anyone expect to get a bonus, or even a full salary, for bankrupting their company?  If a business is willing to operate using public money then it should be held accountable under the same standards as those of public institutions.  Same goes for any of the Big Three automakers, even if they are asking only for low-interest loans.  Their current business models are unsustainable making them high credit risks and unworthy of such easy terms.  Besides, why should US citizens waste our money bailing out huge behemoths that have spent billions of dollars lobbying against legislation that would have made cars safer, more fuel efficient and cleaner?  Money could be better spent on funding “sunrise” industries that promise high growth, environmental preservation, more jobs and increasing tax revenues over the next 20-50 years.  Can the same be said about the future of the auto industry?  Automakers have had plenty of opportunities to change their business models between the 70’s oil crisis and the 90’s death of the electric car (see the movie “Who Killed the Electric Car?”).  But corporate leadership has always opted for the status quo:  building more expensive, bigger, faster more polluting vehicles and paying their unionized workers wages many times higher than their non-union counterparts in Asia and even Europe.  The auto executives, unless they were total idiots, had to know that these factors would make their businesses unsustainable and eventually lead to failure.  Maybe they were playing “Hot Potato” hoping not to be the last one getting their hands burned.  Well, I hate to tell them but the potato has come to a stop.  Americans, and others around the globe, have had enough of the stranglehold the car and oil industries have had on them.  Maybe it’s time to let the “sunset” US auto industry fade away.  Sure a lot of people will lose their $75/hour jobs, and subcontractors will lose parts contracts, but it was going to happen eventually anyway.   If the automakers were actually struggling to build something worthwhile, like electric or hybrid cars, then I’d feel more sympathetic and believe that a bailout plan could have merit.  But throwing tax-payer money at a bloated, inefficient system just so corporate executives don’t have to make uncomfortable decisions…?  Uh, this ant doesn’t think so.  I think it’s time for the grasshoppers to accept the consequences of their choice.  Bankruptcy may not be all that bad for the automakers; in fact, it may be just what they need to restructure more efficiently and get back to developing a business model that will be viable for the next 50 years.

The opinions expressed in this blog post are those of the author, David Hylton, and do not necessarily reflect those of BLTnetwork.com.

Check out the previous entry here:  http://bltnetwork.com/2008/08/29/slammin/

Check out my previous music post: http://bltnetwork.com/wordpress/wp-content/uploads/2008/08/squeaky-sax.m4a

Check out my previous music post:  http://bltnetwork.com/2008/04/27/music-on-my-mind/

Check out our previous “The Best of Obuse”: http://bltnetwork.com/2008/07/15/2008-obuse-field-of-t-shirts/

See episode 1 of “The Best of Obuse” here: http://bltnetwork.com/2008/07/08/the-best-of-obuse-iwasaki-bakery/

Way back in 1987 as an exchange student, a friend showed me around Obuse and happened to stop by the shop. There I found some cookies that were so good, I could have sworn that they were my grandmother’s. I later discovered the reason for that.

Ms. Iwasaki, the 5th generation proprietor, revealed that the bakery’s founder was originally a Japanese confectioner. Sometime before World War II, the family started producing bread for school lunches. Foreign staff at Obuse’s New Life Hospital, Japan’s only Tuberculosis Sanitorium, provided a wealth of information on western recipes. The head nurse, Ms. Lilius Powell, was especially helpful in teaching the Iwasaki’s how to make the famous Chelsea Bun. Ms. Powell indicated that the recipe came from her Grandmother, who had lived in Chelsea, England.

In addition to the Chelsea bun, you can find more favorite baked goods including:

Seasonal strawberry rhubarb pie
Cinnamon cake
and Banana cake.

Iwasaki Bakery is located near the Rokugawa Minami intersection. The street address is: 620 Obuse, Obuse-machi, Nagano-ken 381-0201 Japan.
Telephone: 026-247-2200 Fax: 026-247-6404. The shop is closed Wednesdays.

Thanks, again, for joining this episode of Best of Obuse. Don’t forget to visit BLTnetwork’s homepage at: http://bltnetwork.com.  Check out our last post:  How To Reuse A Box.

After a few moments of surprise, I managed a nod and watched as he dragged the box into the adjacent playroom. Within moments, laughter and shrill screams of joy pierced the silence. “What could possibly be more important than watching TV?” I asked myself. I grabbed my video camera and taped what I saw. I used one of the clips to produce this humorous environmental Public Service Announcement. Let me know what you think of it.

Thanks, again, for joining this post. Don’t forget to visit BLTnetwork’s homepage at: http://bltnetwork.com. Check out our last post: Music On My Mind.

I had a little free time to play with GarageBand and created this cool song in less than an hour. Let me know if you like it. It’s called David’s Dancepad.

Thanks, again, for joining this post. Don’t forget to visit BLTnetwork’s homepage at: http://bltnetwork.com. Check out our last post: Japanese Crown Prince and Princess.