Al Babbington: I have been extremely impressed with the administration's role in getting cooperation from shareholders. The majority owners of Chrysler, who put $10 billion into the company not long ago, agreed to give up their equity. They've basically said, "Listen, we're going to help you get this profitable so that you can build your futures again." I don't think that could have occurred without strong administrative support.
Derek LaFavor: This is not about the government supporting the auto industry. It's about how many people we are going to put out of work. How many businesses are we going to bankrupt? How many communities will cease to exist? The taxpayer is going to pay either way. I don't believe that government should be supporting any business, but I do believe in the government supporting thousands of jobs at the community level.
China has begun focusing on hybrid and electric vehicles. Where should U.S. automakers look to innovate?
Scott Griffith: One opportunity that's been overlooked is diesel. There are clean diesel cars in Europe that are much more fuel efficient than any gas-powered car we have, but diesel got a bad rap in this country back in the '70s and '80s, when the engines were still unreliable. Also, it gets taxed at a higher rate than gasoline. I think the government should subsidize diesel for 5 or 10 years. That's actually a better use of money than bailing out the auto companies.
Noah Lehmann-Haupt: There are opportunities for innovation beyond the internal combustion engine powered by fossil fuels. But people won't buy electric cars until plugging in is as simple as filling up. You can't just tell everyone, "You've got to plug your car in at night." It has to be the automakers' role to take a lead in this. They have to build the cars before Shell has recharging stations everywhere.
Michael Schena: I think hybrids will be a flash in the pan, because they still rely on fossil fuels. GM's Chevy Volt is a good move. It is designed to operate fully electric, and its gasoline backup engine offers consumers comfort. The biggest roadblock is that we Americans enjoy our big v8 engines and our SUVs. But right now everything's changing, so this is as good a time as any to introduce new things.
Al Babbington: Ford and GM have spent extensive amounts of money to develop outstanding technology, but they haven't made the final investment to bring it to market. Four-dollar gas isn't gone forever. In fact, I think the administration should look at an energy policy that gets us at $4.00 gas right away and forces the builders of vehicles in America to think about alternative energy.
Derek LaFavor: We all talk about electric vehicles and hybrids, but I don't think the automotive manufacturers really know what the American public wants. Once we understand what they want, we've got to go back to the infrastructure. Do we have the right cost base to compete effectively with foreign manufacturers who don't have the same legacy agreements and plants?
Is the current crisis just limited to the U.S., or is it an issue for the industry at large? Are there any examples outside the industry that could help the automakers right now?
Scott Griffith: Car companies in Europe have the same exact challenges. They've got to retool around much smaller sales numbers and production runs and move from selling a product to selling a service. I think the challenge is as big as what computer companies faced in the 1970s. IBM adopted the PC early and got out of the mainframes business. Digital Equipment Corp. didn't. That's exactly the type of challenge that car companies face today.
Noah Lehmann-Haupt: The Big Three are dealing with a fundamental business issue, not a geographical issue. Whether you're making cars or computers or TV sets, you have to build what consumers want, not what you're obligated to build. The current leaders of these companies are not the ones who entered into these big union contracts and made commitments to dealerships and brands, but we've got to figure out a way to get out of that stuff.
Michael Schena: Companies around the world are feeling the economy just like we are. The automotive industry in Europe is down, and there's a huge surplus of inventory on the lots. The key is how the companies are managed. Look at Starbucks. It's not a car company, but it's a global brand, and with people cutting back on $4 cups of coffee, Starbucks has quickly closed up stores to compensate. I'm sure that when the economy picks up, it will be able to put stores up just as fast.
Al Babbington: The American auto industry has been hit so hard because we invented the industry. GM, for instance, has over 1,000 retired employees that are 100 years old. But there are things that the industry can look at elsewhere. We could learn from big-box retailers. When I go to Best Buy, I can look at four name brands together, but the auto distribution network has prevented different manufacturers' vehicles from being under the same rooftops.
Derek LaFavor: I believe it's purely an American issue. When foreign manufacturers can build plants here cost-effectively, what does that tell you? We've evolved into a model that doesn't allow us to be competitive. It's like what happened in the dot-com industry in the late '90s. Companies had to rethink what the Internet was all about. I think the American auto industry needs to think just like it's out of business and start from scratch.
