Thursday, September 24, 2009

Time to Send GM West


The Midwest, Michigan in particular, has been the home to the US auto industry for almost 100 years. It had its heyday, and has now reached a decadence almost as complete as Detroit. This decadence did not occur quickly, neither to the city nor the industry. It is something that has come on like a slow developing cancer, and has now reached a point where both patients need hospice care.

The home of the new economy is undoubtedly on the west coast. Silicon Valley alone is home to Google, Intel, Apple, EBay, Oracle, Adobe and Yahoo just to name a few. This type of innovation and thinking is what has kept this country moving forward. The aircraft industries, the film industry, software, microchips, are all based on the west coast. The one last bastion of the east coast, finance, has finally almost led the world to financial catastrophe. What’s best about America has become a West coast phenomenon.Should the auto industry be moved to the west coast? Do we even need an auto industry? If by auto industry we mean companies dedicated to vehicles with combustion engines, than the answer is no. That is best left to those who do it best, the Japanese and Europeans, and those who are on the verge of jumping in for the first time, China and India. For the United States to try and regain a foothold in the automotive industry would be like marrying a long forgotten high school sweetheart.

But, if we redefine the automotive industry as creating vehicles that move people on the existing automotive infrastructure, powered by clean energy, than yes, we do need to save it. First, it must immediately be moved to Silicon Valley. The new GM, owned by the American people needs to leave Detroit. It may seem like a terrible thing to do to a city that has already been pummeled, but unless the entire culture of GM is changed, the company is doomed. The old brands could remain in Detroit, and maybe the headquarters for the combustion operations.

A new GM needs to completely rethink the automobile. It must move at least two people, and carry at least 100 pounds of cargo, (45 kilos), and have a range of 300 miles (around 500 kilometers), and reach a speed of at least 80 mph (130 kph) and be powered by clean energy i.e. no fossil fuels. This, along with the full array of Silicon Valley marketing, should put GM back on its feet. The problem with GM, and its two smaller siblings, was not the world economic crisis, healthcare costs or unions. The problem with GM is and was the cars themselves. If instead of Buick, Oldsmobile, Pontiac, and Cadillac, we were talking about Mercedes, BMW, Porsche, Lexus, and Audi, Detroit would still be going strong.

The United States is not going to compete on price; it must compete on design, features, quality, innovation and marketing. Detroit was challenged in all of these areas. Only Silicon Valley can bring together the group of people capable of re-launching this industry. A new headquarters in Sunnyvale, and a Washington backed VC fund, loaded with $10 Billion in seed money to feed start ups in the area. The model that worked with new technologies should be employed to update an old one. The 10 Billion will make a nice return for the American people, and fund the kind of technologies we need to enter the post oil world.

The marketing and distribution of automobiles must move forward. Small automobile stores with a few models in the storefront, a service center in the back, and a couple of cars to test-drive in the parking lot. GM must get away from the tremendous amount of models. The old and new will need to live together simultaneously for a period, create a new brand, move it west, and have it completely separate from the old GM.

New materials, new design, new power sources and engines. The whole thing must be re-thought, than re-marketed using the internet, delivery services and small storefront shops in malls, etc. more I- store, than mega car lot.

How will this be paid for? A national tax on gasoline, oil and combustion engines should produce more than enough capital to fund the new GM. Once it is on its feet, the old “GM” could be sold to a combustion producer. Non-combustion vehicles, NCV’s, will become the standard for the future. Clean, sleek, marketed and sold online, interactive and fun, the automobile can be rethought, but on not in Detroit.

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