Friday, December 19, 2008

bankrupt the big 3; go ahead... make my day

I'm just about sick of it! Bailout, bankruptcy, consumer confidence... WHATEVER! The bottom line is that we're living in FEAR. We're afraid to face the music. We're afraid to take responsibility. Afraid of loss.

But what, really, do we have to lose? Our way of life? Our standard of living? Our "stuff"?

Fear has been woven into our lives, like never before, ever since Sept 11th, 2001. The Bush administration has taken this event, and orchestrated the biggest, most elaborate fear campaign for the last 8 years that has driven the "blinders-on" general American public into perpetual hysteria, panic and stagnation while big business (war profiteers benefiting from no-bid contract awards, no oversight and a blind eye from GAO), especially OIL COMPANIES have reaped the biggest ever profits since the rape and pillage days of the Crusades.

Now they want us to believe that the "bankruptcy" of one, two or all of the Big 3 would cause a ripple-effect so damaging to the car-buying public that NO ONE would ever buy an American car again. We should all be so scared!

As my grandfather would say, "The horse shit is knee deep in there!"

Personally, I'm thinking we should be more worried about the health of a company MAKING THE PARTS for a vehicle, than for the company putting the vehicle together. Why? Because the quality of parts and pieces determines the overall functionality and reliability of the vehicle.

Choose your cliché... "A chain is only as strong as its weakest link", "Garbage in, garbage out", and on and on.

You see, what the general public doesn't fully understand is that American car makers, and every car maker, are mostly designers and assemblers of components! And right now, robots do most of any car assembly. Sure, people still do it all the time- shade tree mechanics, home-build "projects", hot rods, etc., but truthfully, any monkey can be trained to assemble a vehicle. I'm not saying there aren't smart people on the assembly line, but putting a car together is a learned process. It's nothing more than a jigsaw puzzle.

However, those pieces and parts are made EVERYWHERE... foreign and domestic- specifically by our neighbors to the immediate north (Canada) and south (Mexico). Other parts, mostly electronics, are made in China and other Asian nations.

“Made in America”, anymore, really means “Assembled in America”. And sometimes not even that!

OK, remember the conglomerate Delphi (http://delphi.com/)? They filed for Bankruptcy in 2005 (http://www.nytimes.com/2005/10/09/business/09delphi.html). To look at the intricate, purposely complicated, tangled web of incomprehensible "bad decisions", just review the time line at http://en.wikipedia.org/wiki/Delphi_Corporation

You can’t tell me this doesn’t have any effect on the quality of American automobiles!

Where was Delphi's bailout? Where was the government concern for the protection of consumer confidence? Where was Washington on that one?

In reality, consumer confidence is misplaced on "brand". This is fostered by emotion. And emotion is, for better or worse, influenced by marketing and social pressures.

If you have any doubt of this, ask yourself why companies, of all types, spend hundreds of millions on market research, advertising and understanding/molding consumer behavior.

There was an article a number of years ago I read that described a theory of why many of the dinosaurs went extinct. The concept was that the super-predators had grown so big, and so all-consuming, that they literally ate themselves out of their ability to sustain their own existence. They consumed all, and there was nothing left to eat. So they starved to death.

This concept is transferable to any entity that requires consumption for growth- an animal, a business, a country, an economy, a society, or even a person or family. Consumption to the point of extinction is, in a word, STUPID! Aren’t we smarter than dinosaurs?

ENOUGH! What, really, do we have to lose? What are we afraid of?

We’re all food for worms. We will all die someday. We are only here for 66.12 years on average (http://en.wikipedia.org/wiki/Life_expectancy). We can’t take it with us. Everything will be left to those who come after us.

Short-term thinking and “band-aid” fixes are bad policy. We need to make every decision with this in mind.

Right now, the nature of human development is finally at a critical mass- both in economic and financial consumption, as well as the sustainability of our ability to guarantee our own survival.

The big will fall. There will be reorganization. People will be financially hurt. People will suffer.

But people will still survive. They will survive, grow stronger, grow smarter, and learn to focus attention on areas of real importance- specifically figuring out what is truly necessary for sustainable existence.

Greed is going away; it needs to. Fear is going away; it needs to. The Big 3 are going away; they need to.

I'm not saying we don't need car makers. I'm saying we need sustainable, smart car makers.

Let Detroit file for bankruptcy. Force the car makers to reorganize. Allow them to get mean and lean. Allow them to embrace human capital and resources in a sustainable way, not in an entitled mentality.

Car makers won’t go away. They will get better!

Think of bankruptcy like chemo therapy; we must constructively destroy the infrastructure in order to rebuild a healthier existence.

Then once it’s “cured”, Detroit needs to eat a smart, organic, balanced, healthy and sustainable diet to maintain it’s longevity.

Consumer confidence in a car maker isn't governed by whether or not it is "bankrupt", but by how it is bankrupted- how the marketing and advertising machine "spins" the event.

If our leaders tell us that bankruptcy will cause a decline in consumer confidence, then we will lose confidence. If they tell us to stand strong, and support our auto industry through this tough, YET NECESSARY, step in their development, growth and survival, THEN WE WILL STAND STRONG.

It's all about attitude. About what we're willing to do. About what we're not afraid to face. About being smart.

If we fail to act, we are doomed to accept whatever happens to us. If we act in confidence, we command our future and accept responsibility for our actions.

Tuesday, December 16, 2008

detroit is all talk

If you haven't seen the docu-tainment (documentary-entertainment) film titled "Who Killed the Electric Car", you've got to. Period. If you have seen it already, then you probably know where I'm going with this conversation.

The pending auto bailout for Detroit's big 3 is nothing more than a band-aid for a much larger, and grotesque ailment- specifically GM's uncanny ability to talk the talk, but not walk the walk.

HISTORY
GM acquired 51% of Sweeden's car maker Saab in 1990. To be fair, Saab is much more than a car maker. Since 1937, Saab has been one of the world's most innovative builders of civilian and military aircraft, heavy trucks, buses, and other technology. Saab was the first car maker to turbo charge a production passenger car in 1978, giving a standard 2.0 liter 4cyl engine the power and performance of 6 or 8 cylinders, yet maintaining the fuel economy of the smallest Asian imports. Since then, Saab has led the way in powerful fuel efficient automobiles.

Jump to 1985 where Saab introduces the EV-1 (Experimental Vehicle One: http://en.wikipedia.org/wiki/Saab_EV-1). So advanced and cool looking, this car was even featured "as is" in the second Back to the Future movie. Beyond that, this car featured 66 PV solar cells on the all-glass roof that powered a ventilation system and a 285HP 4cyl, 16 valve turbo charged engine capable of pushing the car 0-16 in 5.9 seconds. Take that, Lotus!

OK, so GM acquires Saab in 1990, and by 1996, had hijacked the EV-1 brand name. It took the name, slapped it on a hap-hazard effort at putting an electric vehicle on the road, and ultimately bastardized the brand.

Here’s how: The GM EV-1, leased through Saturn dealerships in California and Arizona, was an unmitigated disaster, not because the cars weren't up to task, but because GM had no intention of continuing support for the cars past their 3 year leases. Further, GM “robbed” the Nickle Metal Hydride battery technology from a small battery maker, Ovonic Battery Co, it “partnered” with, and then sold the patents to Texaco in 2000. What does an oil company want with rechargeable battery technology? http://www.allbusiness.com/company-activities-management/company-structures/9321068-1.html

Also during this time, GM's engineers imposed their Detroit Will on the design and engineering of the Saab product line. Consequently, beginning in 1994, the NG (new generation) Saab began a major decline in quality and customer satisfaction. By 1999, GM handed the majority of design work back to Saab, and there was a resurgence of innovation and quality.

A NEW AGE
In the early 2000s, Saab begins experimenting with biofuels, specifically, E85 ethanol "dual fuel" engines. Jump to 2006 and Saab showcases its 310HP "BioPower" touring sedan (aka, stationwagon!) powered by, you guessed it, a 2.0 liter 4cyl turbo charged engine. Super efficient, super clean and super fast. Did I mention it has the cargo/payload capacity of most SUVs!

Then in 2007, Saab goes one step further showcasing a 100% ethanol powered hybrid-electric convertible at the Detroit auto show. The engine was the standard Saab 4cyl turbo, but get this, the hybrid-electric components were all GM! This car reportedly can be operated on battery alone, or with battery/engine working together.

Oh, did I mention that Saab has sold 100,000 BioPower cars in Sweeden! In other words, Detroit not only has the technology, but it has the ability and resources to put this stuff on the road.

TODAY
So where am I going with all this?

How about... GM is at it again! They killed the EV-1, and now with the market and economy in the toilet (including the pending auto-bailout), even though they say they want to be “clean and green”, they are willing to toss aside Saab and everything it has achieved. Additionally, GM is looking at allowing the Saturn brand to go away as well. FYI, Saturn has the most fuel efficient hybrid SUV on the market today. http://blogs.consumerreports.org/cars/2008/12/saab-volvo-satu.html

Enough already! It’s time for the Big 3 and the UAW (which is holding Detroit hostage) to step aside, and allow the smaller, more nimble, less burdened, and truly innovative companies take the helm for our transportation future!

Detroit, you say you want to build more fuel efficient cars, lower emissions and help build a greener future. You talk it, now walk it... or take a hike!

Sunday, December 7, 2008

EV initiatives- what's it gonna' take? (a preliminary discussion)

Ford said that we could have any color car we wanted, as long as that color was black! Just like in every aspect of life (relationships, investments, whatever), there is a give-and-take necessary (in this case, compromise between manufacturer and consumer) to achieve maximum ROI.

Market forces will eventually prevail. People won't buy EVs if they aren't compatible with the charging system. Do you think the auto industry would have grown like it had if "gasoline" hadn't been standardized? So it's in the car makers best interest to "universalize" their designs as much as possible for maximum manufacturing efficiencies, maximum sales potential and maximum profit. This is called "Optimization"- finding the right mix of inputs that allow for maximum benefit to everyone in the loop.

I’m guessing a big part of the bp initiative is to standardize both the "vehicle side" and "dock side" connections. Similar to USB, connections will be cross-platform regardless of vehicle make/model. In other words, regardless of battery design, the important thing is for the connectors to be universal. I'm sure bp probably has a business unit specifically set up for producing, selling and distributing these components to car makers such that, regardless of the battery design, the vehicle can utilize the charging system.

As for the battery exchange program, yes, this poses specific design concerns in terms of "fit". But regardless, not everyone will want to subscribe to battery exchange (just like some people still don't subscribe to text messaging). In other words, if I don't have a car with the type of battery used in the system, I won't want to pay for that service. But you better believe I want my vehicle to have the right plug-in.

However, there is always a solution. Just like each vehicle became standardized on gasoline, maybe the one thing about ALL electric vehicles is that the same battery pack dimensions have to be standardized. Imagine the incredible economies of scale and production efficiencies that can be achieved if this were the case! Something like, "This is the battery, now build the car around it! You can do anything you want in terms of car design, but this is the size and shape of the power cell."

Or how about this; have you seen the adapters that allow a AA cell to be put in place of a C cell? It's basically a C cell size casing that houses an AA cell such that the AA properly fits in the space where a C cell would normally be. Since both the AA and C are 1.5V, they both work (of course, the AA probably won't last as long). So, maybe it’s simply the battery compartments on every EV that needs to be standardized, in terms of size, location and access, in order to make automated swapping a reality.

Here's something else to consider; maybe battery exchanges shouldn’t be automated. Oregon and NJ fuel stations don't allow self-service, and are actually required by law to have full-service attendants pumping the fuel. I don't know the reason for NJ's law, but in Oregon, the law was enacted to create jobs in order to counteract the decline in jobs caused by the implosion of the timber industry as it literally grew too large to be sustainable.

Maybe the "law" might have to be that EV battery swaps are performed by service station technicians. These EV technicians would do the work necessary to keep the charging/swap station operating and functioning properly. This could be one of the very specialized, high-tech/green-tech jobs created by the industry! NEW BUSINESS OPPORTUNITIES AND CAREER PATHS FOR AMERICA’S CLEAN ENERGY FUTURE!

the price of "cheap"

The concept of an item or product being "cheaper" to buy than another is something that has bothered me for quite a while. Is "cheaper" better?

It really depends on how "cheaper" is defined, and in what context; near-term or long-run.

Ask yourself... would you rather buy a "cheap" $10 toaster every year for 10 years, or 1 $100 toaster that lasts 10 years?

I'll go out on a limb here and say that most American's prefer to buy the $10 toaster because it's a "bargain". It allows us to spend less on this item NOW, and allocate more financial resources to purchase other "stuff". But not only are we convinced that we need a toaster, but we need a toaster-oven, microwave, food processor, chopper, rotisserie oven, counter-top grill and any other gadget marketed to make our lives easier.

What is the real cost of all this?

We buy a $10 toaster and other "stuff" from a popular, well known, ginormous big-box retailer. In order for these items to be "cheap", they have to be built "cheaply"- using low cost labor, materials, etc. Low cost labor involves finding an opportunistic sweatshop overseas to take on the manufacturing project. This sweatshop not only needs cheap labor, but they need to use the cheapest materials and have the cheapest "process" costs (energy, etc.) because the big-box will only pay a certain amount for the toaster since it knows it must sell X quantity in order to make a profit.

The first concern here is that the cheapest materials directly lead to the failure of the product. This leads to the disposal and re-consumption of the item! The "disposal" does nothing but necessitate more and more landfills. As our landfills pile up, we lose valuable natural resources to toxic (because the materials were as cheap as possible!) and harmful exposure.

The second thing to consider is that the cheapest process costs lead to expensive long-term costs. Like what? Consider that "cheap" power, such as coal, oil or other fossil fuel resources emit massive levels of pollution. And these outsourced "cheap" production facilities in overseas countries DO NOT have the environmental safety protocols (or laws) in place to keep levels of pollution low. Further, because their only interest is being able to give the big-box what they order at the price the big-bix is willing to pay, they don't have the money to reinvest in ways to reduce pollution.

The third aspect of this supply-consumption chain is TRANSPORTATION. Forget for a moment that the raw materials have to come from somewhere and ask, "How does the finished product get from its manufacturing plant to my house?"

On a giant, fuel-oil guzzling ocean cargo ship of course! What's fuel-oil? Quick lesson... there are two types of engines that run on liquid petroleum: (1) internal combustion- aka gasoline engine, and (2) compression ignition- aka Diesel engine, or fuel oil.

Compression ignition engines are capable of delivering great levels of power. And they are rather efficient in terms of their consumption to power ratio. This is the reason they are used in construction and farm equipment, electric generators, hauling vehicles (OTR trucks and railroad locomotives), cargo ships and even some automobiles. But they still emit exhaust. What kind of exhaust? The worst kind!

Fuel oil comes in many different grades: 1 through 5. #1 is know as light oil such as kerosene. #2 is diesel fuel used in most standard diesel engine applications, #3 is light industrial oil, #4 is heavy industrial oil, and #5 is known as bunker fuel.

Bunker fuel is the heaviest, nastiest, thickest, dirtiest and "cheapest" of all fuel oil because it requires the least refining. As such, it pollutes the most!

Regardless of power to consumption ratio, bunker fuel, burned in cargo ships, is the worst polluting of all fuel oil. Not just because the oil itself emits the worst pollution when burned, but because the cargo ship HAS VERY LITTLE EMISSION CONTROLS to capture/clean the exhaust before it gets dumped into the atmosphere, and subsequently back to earth (and ocean) in the form of rain.

Now take into consideration the retail price of the toaster, $9.99. Typical retail margin is 40%, that means that the big-box, freight included, paid somewhere around $6 for the toaster.

So we're saying that it cost $6 to decide to sell toasters, decide on which toaster to sell, find a manufacturer that has the design for a toaster, have the manufacturer acquire the raw materials to make the toaster, actually have the worker convert the raw materials into a "toaster", pay the worker to do the conversion, dispose of any waste or by-product, pack and ship the toaster over seas. $6!

Now, for $3.99 more, we need to unpack and transport the toaster to a warehouse, transport the toaster to a big-box store, put the toaster on the shelf, turn on the lights so people can see the toaster, and conduct the transaction of the sale of the toaster. $3.99!

The only way for any of this to be profitable is on VOLUME. What kind of volume? The kind of volume created by selling "replacement" toasters when the original one lasts only a year because it was made on the "cheap"!

That assumes the toaster lasts a year. What about the ones that don't even make it that far? The ones consumers bring back when they break within a month or two. Not only does the big-box "give" them a new one, but REFUSES TO PAY THE MANUFACTURER FOR THE BROKEN ONE. With less revenue, the manufacturer is forced to cut costs by, (1) reducing wages, (2) finding "cheaper" materials, or (3) cutting shipping costs.

Any or all of these simply lead to lower standard of living for workers, less reliable products, more product failure, increased consumption, increased landfill and higher levels of pollution.

Further, do you think the manufacturer is going to take the toaster back, fix it, and send it out again? Hell No! The transportation costs alone would drive the company out of business.

AND IN NONE OF THIS DID WE EVEN CONSIDER THE ENVIRONMENTAL IMPACT (CARBON FOOTPRINT) OF THE HOUSE AND KITCHEN YOU PUT THE TOASTER IN, OR THE VEHICLE YOU USED TO GET TO THE BIG-BOX TO BUY THE TOASTER.

I ask again, "What is the price?"

And what's the window dressing as to why we buy into this? Maybe it’s the image of a higher standard of living! The concept that we're better off if we "have the stuff" because it shows we have the ABILITY to "have the stuff."

I submit that the highest standard of living, the real exercise of power and the ultimate in consumer evolution is when we HAVE THE ABILITY TO CONSUME, YET CHOOSE NOT TO!

I'm reminded of the movie Schlindler's List, when Liam Neesan attempts to prevent the camp commandant from killing a prisoner by saying the real power isn't in having the ability to take a life, but in the ability to spare it.

Lest you think I’m oblivious to the way the world works right now, I know this is only but half the story. What, actually, does the repeated sale of a $10 toaster represent in terms of the world financial picture?

I would surmise that we tend to pay for the toaster with plastic instead of paper- credit card rather than cash.

This ads a whole new level of complexity to the scenario, that is nearly IMPOSSIBLE to comprehend.

Simply however, when plastic is used, we say to the store, "If you give me the toaster now, my bank promises to pay you because I've promised to pay them. And if I don't pay them exactly as promised, I will pay them more (interest) for the extra time."

The bank, in turn, may not have the ability to pay for the toaster either, so it goes to another bank and asks to use their money. Just like before, if the money isn't paid back as promised, interest is owed for the extra time.

Each time these "loans" are made, money is created. Money that never existed before. But it has to come from somewhere! It comes from the next sale, and the cycle repeats. This is the growth of the economy- creation of money.

The money goes back around the horn in the form of wages, other loans and consumption based spending. Of course, in order to keep prices low, wages (and other costs) have to stay low. AND WITH WAGES LOW, WE CAN’T FINANCIALLY AFFORD ANYTHING BUT THE CHEAP PRODUCTS!

We've seen what the real price of "cheap" money is- just look at the real causes and effects of the mortgage implosion. We've seen what the real price of "cheap" products is- pollution, landfill, low wages, etc.

Now we see what the real impact of “cheap” is…

Short term- WOW, a $10 toaster! Long-term- not so good.

story of stuff

This is something everyone needs to take time to watch (20 minutes is all it takes!) It could change your life.

http://storyofstuff.com/

cheers. sg

Friday, December 5, 2008

to bail or not to bail?

Should Detroit, or any of the new, small "alternative" car makers get ANY congressional handout from the tax payer?

A billion here, a billion there... all the sudden, we're talking real money! "Getting" some of the money isn't necessarily what is needed by either Detroit or the small start-up car companies. What's needed is a restructuring of our ability to use the economic resources we already have (specifically tax law!) and allowing free-markets to operate. Of course, we've learned that "free-markets" still tend to need some kind of oversight and regulation (worker and environmental safety, etc.), to help keep the rampant, self-serving nature of human greed in check).

In reality, the "money' would be better directed if it were allocated for things like:

(1) Clean energy transportation and renewable energy infrastructure redesign/rebuild- remember, if the original power grid and road/highway system was never built to begin with (which put A LOT of people to work!), there wouldn't have been such a need/desire/demand for automobiles OR the overall growth/increase in standard of living we've experienced in the first place.

(2) Human capital- affordable education with REAL standards, greentech job training programs, etc.

(3) RAISE FUEL/CARBON TAXES!- no one likes higher taxes, but face it, higher cigarette taxes have helped more and more people see that the adverse financial effects of smoking are as hard to swallow as the adverse health effects. The general public needs to be shown that the adverse financial effects of driving petrol vehicles will be as painful as the adverse environmental effects of burning the fuel. This will eventually lead to a decrease in fuel usage, thus a decrease in fuel tax revenues, and the need to replace the funds some other way... like...

(4) Implement a national ROAD USE or TOLL system- Fuel taxes are a type of use tax, because you only pay them as you buy/consume more fuel. The problem with this is that tax revenues are directly dependent on the use of carbon emission spewing vehicles. The more we wreck the environment, the more money there is to better the road systems so we can continue to wreck the environment! VERY BAD IDEA!

But again, as people consume less fuel, even if the tax rate is higher, tax revenues (money used to pay for roads, etc.) will eventually fall. Thus, people that USE the ROADS need to pay for them, regardless of fuel usage. Just like betterplace wants us to adopt a subscription based driving experience, those who drive could subscribe to local, regional or national Road Use Program- paying only for what we use, when we use it.

(5) Consumer incentives- Remember when the government "created" demand for the biggest, heaviest, least fuel efficient, yet most profitable SUVs by allowing up to $100K tax incentives for buyers! Funny how the proposed incentive for the lowly EV is a mere $7500. I PROMISE YOU THIS, IF THE GOVERNMENT WOULD ALLOW UP TO $100K TAX INCENTIVE FOR EV'S (NEW OR USED!):
(A) PEOPLE WILL DEMAND CHARGING STATIONS (BUSINESS/JOB OPPORTUNITIES!)
(B) MORE FLEETS WOULD GO ELECTRIC (LESS CARBON EMISSIONS)
(C) MORE TESLA'S (AND OTHER EV'S) WOULD BE BUILT EVENTUALLY DRIVING DOWN THE COST, AND ALLOWING COMPANIES TO SPEND ON R&D, BRING BETTER AND BETTER PRODUCTS TO MARKET
(D) EVENTUALLY THE "PRE-OWNED" EV MARKETPLACE WILL BE CREATED, BRINGING DOWN THE INITIAL PURCHASE PRICE FOR MANY PEOPLE AND NECESSITATING MORE SPECIALIZED, HIGH-TECH/GREEN COLLAR JOBS TO SUPPORT THE PARTS, SALES AND SERVICE NEEDS OF THE EV SECTOR.
(E) DID I MENTION THE ENVIRONMENTAL BENEFITS OF LOWER EMISSIONS?

YADA, YADA, YADA.

Further, given that the US lost 533K jobs LAST MONTH ALONE, and part of GM's "grand plan" is to eliminate up to 30K more jobs, I don't see that the bankruptcy or reorganization of ANY of the big three would be any more degrading/destructive to society than throwing away billions on an attempted bailout- which many believe isn't even nearly enough money to make any real difference anyway!

So, who gets what? In the end, I'm afraid it's really up to YOU AND ME, AS A GOVERNMENT OF THE PEOPLE, BY THE PEOPLE AND FOR THE PEOPLE, to break away from our blinders-on, apathetic, non-in-my-backyard, Joe Six-Pack, Joe-Plumber CRAP, and demand accountability from business leaders, elected officials and each other.

Cheers! sg

betterplace- a great place to begin

Better Place company has initiated the mass development and implementation of the infrastructure necessary to support an all-electric vehicle transportation system- starting with the personal car- and powered through clean, renewable energy sources.

They also have an on-line community that has grown exponentially over the past week since the announcement of their efforts in Hawaii.

This is really worth checking out, and supporting!

betterplace.com