I have to start out with a bit of a rant. Trust me, this will relate to ContraCarbon at some point.
I have a problem with money going to the US auto manufacturers before they go into Chapter 11 bankruptcy. We know that under Chapter 11, the auto companies will keep operating, but they will restructure their finances and their operations. Creditors and equity holders will suffer. The US government will likely provide the funds to keep the companies running as Debtor-in-Possession. Some say that consumers won’t buy a car built by a company in bankruptcy. That may be, although the airlines go in and out of bankruptcy often and still carry passengers.
A few facts: In 2007, the US auto manufacturers directly employed about 240,000 (less now) workers in this country —a little more than half on the line. By the way, 240,000 is also less than half the number of jobs lost here each of the last several months. The non-US auto manufacturers employed 113,000 workers in this country with a higher proportion working on the line. The auto parts manufacturers, employing about 640,000 workers, service both the US and non-US manufacturers, although the US parts content of a US manufacturer is higher. The retail segment, dealers and parts sellers, employs over 1,700,000 workers. If you want more facts on auto employment and its projected future try these URLs: http://www.bls.gov/bls/auto.htm; http://www.cargroup.org/documents/Apale_book8a_001.pdf. If you do check these out, you will notice that the reported numbers differ between the two reports. Just a reminder to take all “facts” with a grain of salt — even mine.
I have a view that car sales are pretty fungible, particularly in this economic environment. If GM sells a car, Honda probably doesn’t. Net job losses ultimately relate to overall car sales. So, how would you feel as an auto worker in Tennessee employed by Honda, or a Honda car dealer, watching GM and Chrysler (and maybe Ford) getting money from the US government to keep their workers employed while your job is being put at risk? How would you feel as an employee (or investor) in a start-up high-mileage/low-emission car company trying to raise a few bucks, watching all this money going to companies that are dealing with the mileage and emission issues incrementally at best? [Full disclosure: I am a director of Idealab which has an investment in a clean-tech vehicle company, Aptera. I am also an advisor to that company. We are always trying to raise a few bucks. http://www.aptera.com].
Let us hope that, if the new administration proceeds with the auto industry bail-out, it will consider directing some of this capital to bail us out of our CO2 problem in the transportation sector. That would require instituting some significantly higher CAFÉ (Corporate Average Fuel Economy) standards on new cars as a quid pro quo, providing incentives or funding with some of the bail-out allocation going to the clean-tech transportation companies, truly dealing with alternative power sources in an intelligent way and supporting mass transit. Stay tuned for what might work