Does General Motors Deserve A Bail Out?
Monday November 10, 2008
Before you answer that question, you'd best see Who Killed The Electric Car?, a compelling documentary that chronicles GM's rapid development of a super-efficient electric car, the EV1, that had zero emissions and required little-to-no maintainence and then exposes the automaker's equally speedy recall of the cars and destruction of the entire fleet.Why? Because, if you believe this convincing documentary, the EV1 was too good, and GM wanted to see the greater profits garnered from gas guzzlers that need frequent servicing and replacement parts. In other words, it was GM's corporate greed that killed the electric car. Yet the company can't seem to marshall it's gains to sustain its own fiscal policies. Do you want to see your tax dollars go the way of the electric car?
Even if you don't have time to watch the entire film, view the trailer and read my review, and then you can vote here
(PHOTO: 'Who Killed The Electric Car?' on DVD; courtesy Sony Pictures Classics)
Comments
I’m a big fan of electric cars (including the EV1), and I think their demise was due more to bad PR than to the well-publicised lack of demand. But I also think this movie unfairly demonized General Motors. The EV1 program was incredibly expensive, and keeping the cars on the road would have cost millions of dollars for a company that doesn’t exactly have the strongest bottom line. EV1 drivers leased their cars knowing that this was an experimental program and that the cars would have to be returned. That’s why GM leased them instead of selling them.
Honda leased the EV Plus to customers, and while they did allow some customers to extend their leases, they eventually reclaimed the cars. Some were destroyed, some were converted to other purposes, but none returned to the road as battery-powered EVs. Toyota leased some of their RAV4 EVs, sold others. The leased cars eventually went back to Toyota, never to return to the road again. And yet no one has made a documentary saying Honda or Toyota killed the electric car, even though they did the same thing as GM, because — senseless as it may seem to destroy working cars — it makes good business sense.
The fact is, the GM EV1 was the first modern production-model EV from a major manufacturer. If anything, GM helped give birth (or, should I say, rebirth) to the electric car.
– Aaron Gold, About.com Guide to Cars
Thanks for your insightful comments. I understand the points you make, but still am a fan of this film. It raises important issues and it’s an extremely well-made film.
From the environmental standpoint, the electric car makes a lot of sense, and it’s the direction we should be going in. Electric cars are cleaner, cheaper to run and maintain, and they are sustainable. And, drivers really like them.
However, automakers like GM and the other companies you mention consider the bottom line first, and that bottom line always embraces huge, disproportionate payoffs for management in the form of salaries, bonuses, golden umbrellas and all that, as well as highest possible profits for shareholders, and a large concentration of funds for marketing that convinces the public they must have that very product. The actual quality and durability of the vehicle seems to be of secondary concern. And, the effect that the vehicle in question has on the environment is considered only as much as legislation insists that it be considered.
The issue highlighted in the film, however, isn’t only the quality of the vehicle in question. It is instead that most corporations, while they certainly do spur the nation’s economy and support it with jobs and sales that circulate currency through the system, they don’t really feel obliged to serve the economy by placing the long term interests of the consumers of their products or the ongoing welfare of their workers as high priorities. Good business trumps best product. The corporation’s primary goal is profit, and the situation seems to be spiraling out of control–and crashing.
This film pulls the veil back and lets us see how one major corporation’s policy making works–or does not–to provide what is clearly a superior product–the electric car–that would improve our quality of life.
This film addresses GM‘s corporate behavior, but I’m sure its viewers can look beyond this singular example and apply the insights they gain to their perspectives on Honda and Toyota–although, to my knowledge, neither of those companies are seeking US government subsidies–and to corporations that don‘t make automobiles.
AIG, for example. News is out that the insurance giant recently spent some $350,000 on another (post bail out) corporate management retreat at a luxury resort. Excuse me. I’d be surprised if I were the only taxpayer who doesn’t want my tax dollars squandered on this sort of activity.
How and why should we make the leap from GM to AIG? It‘s not hard to see that the two companies and their situations are somewhat similar in that they show that corporations tend to their self interests first. It’s a form of greed that, in the long run, just won’t work.
So “Who Killed The Electric Car?” serves as a sort of allegory about a widespread corporate presumption that has resulted in the current crisis and the question about whether or not GM, the subject of the film, deserves a government bail out–or not.
I wonder what other people who’ve seen “Who Killed The Electric Car?” are thinking.
Jennifer Merin
I agree with Jennifer 100%.
I’ll bet 1/2 of what we pay for a car goes to former GM employee’s pensions. So if GM came up with a car, that cost less to make, needs fewer repair parts and stays on the road longer they would still be in the boat they are in. Its these pensioners that are the ones to soon be in trouble.
It kills me how you think that a corporation making a profit is a bad thing. EVERY corporation makes a profit or it GOES OUT OF BUSINESS–including your pets Honda and Toyota!! The auto industry’s ripple effect is enormous. To let the AMERICAN auto industry go under is unthinkable. One more thing: If Americans bought American products instead of Asian products (and please don’t tell me that the quality isn’t there, because it is), and import/export trade agreements were equal, maybe American corporations wouldn’t be in trouble.
Thanks for your comment, Renee. In response, let me assure you that I’m not opposed to corporations making profits. Quite the contrary. Profits are what allow a business to grow, and that’s what enables our economy to grow–hopefully to the benefit of all of us.
What I question–and admittedly find fault with–is the way corporations sometimes (and probably more frequently than those incidents that are brought to our attention by whistle blowers and/or the press) use their profits for reasons other than to maintain their fiscal health and continue to grow. Funds spent on luxurious executive retreats do not contribute to fiscal health, nor do they contribute to corporate growth. The extraordinarily generous bonuses bestowed upon top management do not contribute to corporate health–not even during times of prosperity, but certainly not when the corporation’s fiscal situation is so compromised that appeals are being made for bail outs from public coffers funded by taxation of we worker bees whose jobs are getting cut because corporations are in fiscal crisis.
Yes, I agree with you that the automobile industry represents a huge part of our national economy, and that we should all be quite concerned about its demise. I agree with you that we should support American industry by buying American-made products–but sometimes wonder just what that means. American-made autos, for example, are put together with lots of parts that are manufactured abroad in countries where labor is cheaper than it is in the U.S. So, the automakers who outsource parts production are not buying American. Should we hold them less accountable than those consumers who prefer to purchase foreign made vehicles? Or do you think the import of automobile parts (compounded by the export of job opportunities) doesn’t contribute to our trade deficit? Or should that category of international trade be exempted from consideration?
I think there’s a difference between profit and greed. I say yes to profit, no to greed. Excessive greed, it seems to me, is at the root of our current difficulties, and our difficulties–more bail outs or not–will continue until that greed is checked.
However, when it comes to discussing economics and fiscal policy, I don’t claim to be an expert. I’m simply expressing my opinion–just as you are. I think our current fiscal crisis requires us to re-examine our gut opinions, and to do a bit more investigating to uncover the facts and circumstances. As an expert on documentary films, I can suggest that one place to begin that investigation is with a film entitled I.O.U.S.A., which I find to be a convincing analysis of why we’ve arrived at the mess we’re in.
If you do decide to watch that film, I’d like to know what you think of it.
Thanks again for expressing your opinions.
I agree with Renee. I have never owned a commie car. Except for a Ford now and then, my favorite has been GM and always will be. But then, I love MY country.
You killed GM’s electric car, silly!! Did you contact GM and express your desire to own one? Didn’t think so. The battery cycle was too low to be viable and it was very expensive to build and to maintain, but it taught GM loads about producing a viable electric vehicle which will be displayed in the up-coming Volt. Before you rag on GM and the other AMERICAN automakers, get your facts straight.
I worked for a while on the EV1 project and I can tell you it was not ready for prime time simpy because the battery tecnology was not mature enough and could not be sold at a marketable price. The Chevy Volt is the rebirth of the EV1 and while I’m not working on the project every report I’ve read suggests it will be everything the EV1 should have been. Get your orders in as soon as possible.
Documentaries can seem very convincing by presenting hand-picked facts in a way that meets their agenda. On the other hand, maybe they are absolutely right. I have no way to know, as I don’t know anyone in the industry, but I appreciate Jennifer for sparking this conversation and getting us all thinking about the issue.
I hope that what Gary says is true. I would love to see alternative options so that we can lay off the foreign oil. I don’t mind a carefully allocated portion of my tax dollars going toward the development of electric or other fuel saving cars that will help the environment and our lesson our oil dependence.
As for me, right now, I own a Honda. I love my country just as much as the next person, but I also have a family and need a mini van that will last and last. The Honda Odyssy had the best record all around, and the cost to own over 5 years was the lowest. There ya go. I am happy to buy American when a similar vehicle with as good or better stats comes out, especilly if it’s fuel efficient, electric or something similar.
Although, upon reading this comment my husband has just informed me that our honda is actually American made. Who knew?
GM and quality is an interesting thing. Frankly, I think some of GM’s products are superior to their foreign competition. Chevy Malibu and Honda Accord are both all-new for 2008. The Malibu is the nicer car — it’s quieter, has a better control layout, and a nicer interior. And I do believe that GM has done a *lot* with the quality. But the Accord is pretty much a sure thing. (Although I’m re-thinking that… our Accord has just over 100,000 miles and a surprising number of problems.) In the end, people go with the sure thing. Fact is that the domestic car companies have to do things twice as well as the imports to get half the recognition. There are many GM products that I think are clearly superior to their Japanese competitors. Unfortunately, they don’t have anything strong in the small-car segment, which is where the growth is.
Incidentally, I often mention on my site that I have a Honda built in Ohio and a Dodge built in Canada. Which is the American car?
Thanks Carey–for the compliment and for raising such an important point about documentary films.
Documentaries DO raise public awareness and stimulate discussion about all of the subjects they touch upon.
We may never agree entirely with each other about exactly what qualities make for a truly excellent documentary film, and we will certainly have differences of opinion as to whether any given film deals with its subject matter and/or an issue accurately, supporting its thesis or point of view with sufficent and compelling evidence. Nor are we likely to find a genuine consensus on any issue covered in a documentary. However, the debate that centers around documentaries and their issues is a really good thing.
I think one thing we all agree upon, though, is that plurality of opinion is essential in a functioning democracy, and freedom of expression is one of our fundamental democratic rights.
Documentary films focus on such a wide range of subjects that concern us–on people who inspire us and on current issues that are likely to significantly influence our future. And, in doing so, as I see it, documentary films play a substantial role in upholding and furthering our American ideals and dreams.
Here’s to the debate–about bail outs, electric cars, balance of trade and all the other subjects that have been raised in these comments. May it continue!
Jennifer Merin
i have never seen “who killed the electric car” nor do i drive a car. i have been a film industry professional for nearly 20 years and am privileged to be in a business where the product (particularly documentaries) can profoundly impact our perspective of an issue or, more broadly, the world.
kudos to jennifer merin for sparking this dialogue and for creating a forum where someone can proudly proclaim that they have never owned a “commie car…”
Concerning Aaron’s question: Incidentally, I often mention on my site that I have a Honda built in Ohio and a Dodge built in Canada. Which is the American car?
I say an American car is a car built by an American company. Honda, no matter where it is built, is not an American company.
Why can,t GM get it right?
Regarding the bailout, I happened upon this article today. I have been thinking “catastrophe” will happen if the big 3 don’t get a bailout, but I found this viewpoint by previous presidential candidate Romeny very interesting. Thought I would share and see what everyone thinks.
Let Detroit Go Bankrupt
Thanks for sharing this, Carey. I find Romney’s comments very interesting. They certainly reflect some of my concerns about GM’s management (and about most top corporate management, in general). Exhorbitant salaries, gigantic bonuses and an endless stream of perks just aren’t right (nor are they deserved) when the company’s finances are crashing.
Did you happen to happen upon Wednesday’s nightly news bail out coverage? One item indicated that the heads of two of the Big 3 flew on individual private jets to meet with the Fed regarding bailout. The ABC News clip I saw featured much chagrined Fed members asking “Couldn’t you have car-pooled?” and “Don’t you think you could have downgraded to first class?”
That same report indicated that the head of GM has cut his own annual salary in half–to a mere $1.5 million, if I recall correctly.
One of the other Big 3 heads said he’d be willing to cut his salary to $1. But somehow I doubt we’ll ever see that become reality. And the third Big 3 topper said he thought he was doing just fine at his $9-million per annum salary. I think they’re overpaid ringmasters in this hellish circus.
Additional commentary in the Wall Street Journal is of interest. What do you think of this one?
Anyway, it’s a good thing GM can’t crush debate the way it crushed its fleet of EV1s. I still say that we see the seeds of the current situation in Who Killed The Electric Car?, a documentary that’s well worth seeing!
Wow. Another great article. It reminds me of parenting, if you always bail your kids out…
I have always been interested in economic issues, but never had the time to really indulge in any learning beyond my college years. This issue is both fascinating and a little scary to me. It will be interesting to see how it all turns out.
I did see that news coverage. Loved the idea that they should have car pooled! I have no problem with executives earning obscene amounts of money if their performance warrants it and the market sustains it. I really believe that most of them have sold their lives to get where they are. They work hours that most of us wouldn’t dream of. They made choices to sacrifice much in order to become educated and climb that corporate ladder. If that is the cost and reward they choose, fine.
However, if the company is struggling, and even worse, asking the American people for money, that is an obvious sign that a major restructure needs to happen with the company and the exorbitant salaries. If they are asking us to bail them out, they better be cutting their own pay. $9 million is beyond ridiculous!
I fail to understand how people are so convinced that the only option to save people’s jobs with these companies is to loan them taxpayer’s money, which they probably will not be able to repay. GM started as a holding company for Buick and has acquired multiple other companies over the past years, some of which are no longer in existence. Instead of supporting this bailout, Congress should force a sell off of their assets and/or some of the subsidiary companies to raise the $ necessary for whichever viable lines they want to keep. These corporations have grown so large in order to avoid competition and generate profits, however now cannot compete with others. I feel for the workers in this industry but it seems to me that the more popular lines of well designed vehicles would survive under smaller, hands on management and the others would go the way of the exploding Pinto.
Over the last 19 years, I’ve negotiated union contracts with the URW, AB&GW, UNITE HERE, IAM, and worked at a UAW facility six months before the company closed it. I’m often perplexed why the company negotiators at the not so Big 3 simply handed the keys to their business over to the UAW during most, if not every, contract negotiation. It was as though the company decision-makers didn’t care what happened to their business in a decade or two because they would be retired.
The only weapon most unions have is a strike, which hurts the unions more than an intelligent and committed company who is tough enough to hire strike replacement workers, and/or move some production across the Mexican border until employees, who in some cases, have less than high school education realize they shouldn’t be making a six-figure salary with overtime for screwing on auto parts, and also have better benefits in retirement than 80% of the rest of the working population.
I’ve surprised the union negotiators by saying this at the negotiation’s table, “We don’t fear a strike.” I didn’t say it because I was bluffing; I said it because I truly believe it may be needed to right-size the workforce and make our products more competitive on price and quality.
When I started working for my current employer nine years ago, we had three unionized facilities. Two locations voted the union out through decertification petitions. Now, the remaining unionized facility is talking about decertifying their union 60 days before the expiration of the current collective bargaining agreement. The secret is to treat people with respect, involve them in the process, communicate with them openly, and be consistent and nondiscriminatory.
High-priced shoddy workmanship is why I have only purchased two American cars in my lifetime, and that was only because I liked Lee Iacocca when he was at Chrysler. Since Mr. Iacocca retired I’ve purchased from Japanese car companies because you get similar quality to the German manufacturers at a better price.