I don't think I could have penned a better respons...

2008-11-25T19:37:18.097-08:00

I don't think I could have penned a better response than Don's. I actually like the idea of GM taking the C11 burden while allowing Ford and Chrysler to breath. I'm sure Rick Wagoner would argue otherwise.

One quick comment - I know there's a lot of discussion over consumer confidence in a bankrupt car company. I think in times where their brand equity was sky high, this would be an obvious concern. Today's world, and their perception of the Big 3 is drastically different. Would a bankruptcy deter prospective buyers? Not when the product is as bad as it has been. I say use the bankruptcy as a means to correct the UAW relationship, right the ship, and build better, smarter products with less brand engineering.

I agree that bold moves are required but I wonder ...

2008-11-23T07:38:15.943-08:00

I agree that bold moves are required but I wonder whether you go far enough. Personally, I think we need to question some of the fundamentals and whether it is in our best interest in having them exist in a form that even resembles the present. Let me explain my thinking.

1) Is there an argument that an automobile company benefits from efficiencies of scale like they use to - design, manufacturing, distribution, marketing, et al. I would suggest the model may be better off if it is broken up. Their present structure doesn't allow for enough innovation - let alone the speed of innovation required to thrive in today's environment.

2) If we all agree that climate change and energy independence is at a tipping point and should be a driving focus of whatever happens with the big 3 (let alone other industries), than we should break the industry's dependance on the internal combustion engine. Remember, Honda strategically considers itself an "engine company". They want to put 4 engines in each home. It doesn't really matter what they wrap around it. That is the mindset of the auto industry and why the Prius is not really a hybrid.

3) In the end, any restructuring and the accompanying investment should be spent for the long-term, as you rightly point out, but should be the bridge loan to the new structure. Personally, I think a managed bankruptcy that breaks up the assets that exist so that they can be used more efficiently and in a different way makes sense. Imagine the power of giving the assets to brilliant entrepreneurs to figure out what the next best use of the asset is. Here is a high-tech factory, labor force, etc. and seed funds (serious seed funds) - what would Steve Jobs do with it? What if you or I were given that chance. One hell of a fun challenge. Sure, about half of the experiments might fail but that would not be worse than the present situation.

4) If that all sounds too radical, then maybe we let one of them (my vote is GM) go under and support the other two. That way they get more market share (or we help them do that) that helps them with their volume issues in the short term. In return, they have to make your suggested structural changes. Hey, we let Lehman fail and the crisis isn't any worse from it.

In the end, this is the time to make a huge investment in new ideas and leverage the existing assets and investments - not perpetuate old models that were right for an economy that no longer exists.

Comments on Jeff Bell Blog: Big Three Rescue Part 2 -- Let's learn from Chrysl...

I don't think I could have penned a better respons...

I agree that bold moves are required but I wonder ...