To save themselves, the Big Three should become ‘transportmakers’
Irony of ironies, the one set of products that could save GM is the one that GM destroyed — the electric trolley systems of America. According to the well-known research of Bradford Snell, GM killed the electric trolley, because in 1922 they decided that the only way to increase car sales was to eliminate the competition — decent public transit. So they bought systems, pressured railroads and banks, bought public officials, did whatever they could to replace electric — I’ll repeat that, electric — transportation with oil-based transportation.
Irony number one — if the U.S. had a set of decent electric public transit systems, the demand for oil would be much lower, and the car companies (and the rest of the economy) would not be in so much trouble. Irony number two, of course, is that the car companies have also been busy killing the electric car.
But the biggest irony may be that the Big Three could be revived by building a new generation of electric trolleys, or light rail, or high-speed trains, or electric bus rapid transit. As Paul Goodman wrote in the New York Times:
The Obama administration should ask the companies, as a condition of financial assistance, to begin shifting from being just automakers to becoming innovative “transportmakers” … As transportmakers, the companies could produce vehicles for high-speed train and bus systems that would improve our travel options, reduce global warming, conserve energy, minimize accidents and generally improve the way we live.
Harvey Wasserman argues that “GM Must Re-Make the Mass Transit System it Murdered.” That should certainly be part of an agreement that the Federal government makes if it is to grant GM, Ford, and Chrysler a large loan (EconomistPopulist has been running an excellent series on the situation). But as Louis Uchitelle shows in an article in the New York Times about the automobile industry, the market for cars may be declining in the United States:
In an industry capable of making 17 million cars a year, sales have dropped to an annual rate of only 10 million vehicles made here.
“None of the Big Three — and perhaps not the transplants [i.e., foreign car companies] — can make money at 10 million,” Mr. Luria said. “The transplants are O.K. at 12 million and the Big Three at 15 million or so.”
Annual sales of autos and light trucks have been at least 15 million through most of the last decade.
I’m not optimistic that Washington, D.C. or the Obama Administration will suddenly understand that the main reason we are dependent on foreign oil — and so incredibly vulnerable to the effects of rising oil prices — is because we don’t have a decent electric alternative within our transportation system. But it would certainly be history’s sweet revenge if the industry that did so much to give us an unsustainable society became part of the solution to our environmental and economic woes.