Thursday, 4 December 2008

Hey Buddy! Can you spare $34 billion?

From my hotel room I can see five parked cars below: two German and three Japanese. As a write, a large Izuzu 4x4 rolls silently by; the engine noise blocked by the wind. Far below, white and red streams can be made out, marking the route of the north-south coastal highway. It’s six lanes are broad and are just like the I-routes of the USA. But unlike them, the Israeli roads hold very few American-built cars.

Earlier in the day I had a three-hour walk around Haifa and it struck me that, considering the state of US-Israeli relations, just how odd it is that there are so few US cars are on the roads here. During my unscientific meander through the city, I started to notice that most private cars are from the manufacturers of the Far East and Northern Europe. But even American companies that build in these places seem to be under-represented. Of course, it isn’t all clear-cut: there are a lot of Mazdas here: that company has close links to Ford. But of GM’s European offerings, I only noticed one Opel (and that an ancient Astra) and an even older Ford Escort. But no Ford Ka, no Fiesta, no Mondeo, no new Astra, Vectra or c’mon! What is the name of GM’s smallest offering? The Corsa – as advertised in Europe by those silly glove puppets. No, here it is mainly Japanese, German and a smattering of French cars. Of US labelled cars, there were a couple of small Chevrolets (GM again) and a couple of more of their relatively new 300C, which seem to be hoping to be confused with a Bentley. Oh yes, and one Jeep Grand Cherokee. Just one.

Petrol here is expensive: a litre of 95 octane unleaded costing about $1.40. So while hitting the US-built gas guzzlers, that should not have ruled out Ford’s and GM’s European-built offerings. Just what is going on? The answer must be obvious: these companies are building cars that nobody wants to buy.

Five years ago, my wife and I became the accidental dining companions of a charming and elderly American couple. Both are professors, the husband being in St.Petersburg as a speaker at an international conference; his good lady wife being a professor of philosopher, with a particular interest in engineering. She was polite enough to be interested in my work, especially as to how somebody without an engineering background (my degree is in geology) can be put into a position of being a geophysical engineer and surveyor. But she earned her living by studying American industry and especially the motor industry. The key question that she seemed to want to answer was why did US manufacturers continue to produce products, but cars in particular, that are technologically inferior to their international competitors?

Today sees Richard Wagoner, chief executive of GM, and representatives of the other US motor manufacturing giants appealing to Washington and the US taxpayer for serious, serious money to bale them out. $34 billion. The car moguls are just hoping that the politicians will agree that they are too big to fail. At stake are the jobs of 355,000 employees that are directly employed in the US by the big three and a couple of million more that work in the component supplies industries.

It is a tough one. But the question that needs to be answered is even if the funds are granted, in the long term will the American motor industry still be able to compete with the rest of the world? Because if they can’t sell their cars to the nation who is America’s biggest friend, just to whom are they going to sell them to?

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