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American Autos Take It in the Shorts Again

The American automobile industry is taking it in the shorts again. According to the New York Times, Nissan plans to sell an electric car in the United States and Japan by 2010, "raising the stakes in the race to develop environmentally friendly vehicles." If successful, Nissan will be the first to bring a zero-emission vehicle to the American market.

Once again, Detroit's leadership is behind the 8 Ball. What's going on? Nearly everyone in the world of engineering and business recognized in the '70s that the electric car would at some point in time be a reality and a necessity. Knowing that, why and how does Japan beat Detroit in nearly every phase of automobile innovation that is based not on meeting current consumer wants but on future consumer needs, which when those innovations turn into cars represent both consumer wants and needs?

Both had to wait for the technology to catch up with the idea. So why will Nissan be first to market electric cars worldwide? And does it matter in the long run. If history teaches us anything in manufacturing of cars, being first with the next big innovation can be critical for success, especially in this case, with oil at $120 a barrel.

In an interview with the Times, Nissan’s chief executive, Carlos Ghosn, says: "Nissan decided to accelerate development of battery-powered vehicles because of high gasoline prices and environmental concerns, not just because of the need to meet stricter fuel-economy standards.

“What we are seeing is that the shifts coming from the markets are more powerful than what regulators are doing,” he said.

You think? Oh, and by the way, America is supposed to excel in understanding, projecting and meeting the market's demands. Apparently not so in Detroit. Or in much of American manufacturing.

Yes, it's true that General Motors is working on a battery-powered car with a small gasoline engine for recharging and plans to start producing the Chevrolet Volt in 2010. But that is a far cry from Nissan's plans to sell all-electric vehicles worldwide.

Here are my frustrations:

1. I am a proud American and a world citizen who believes in trade and competition. But how can Americans compete in manufacturing if we constantly fail the tests of innovation and creativity?
2. Why are big U.S. manufacturers seemingly so slow to change their operations so that they can remain competitive in the world marketplace?
3. Is there something about our business cultures that stifles creativity and innovation?
4. Is it simply a matter of economics?

Is this the final nail in Detroit's coffin? Should GM and Ford continue to exist? Do Americans or the world need them? If they went away tomorrow, would they be missed?

Dear Regulators: The Free Market Works

Dear Business Regulators:

I know there is job security in regulating everything on the planet, and I sympathize with your need to prove your existence is necessary. But is it too much to ask that you read a business book, magazine or newspaper article or a blog once in a while? A subscription to the Wall Street Journal would be nice. Perhaps, you might even consider a traipse through the want ads. Surely there are jobs you could do that would cause less harm to the economy.

You see, business straightens itself out eventually. It's true. There is some fraud and stupidity in the business world. So let the justice department punish the fraudulent and ignore the stupid, for they will eventually blow themselves out. But all in all, businesses and their customers would be a lot better off if you would all take an extended vacation, without pay. And so would the economy. Here's just one example of what little good comes from all your messing around.

For decades you imposed CAFE Standards, manipulated oil prices and required auto design features that costs us all money. What good did it do? With all your hearing and writings, here are the results:

We failed to implement an effective energy strategy, encouraged citizens to purchase gas guzzlers, and rewarded American auto manufacturers for producing them. If you had only done as the rest of the world has and allow oil prices to reach their appropriate pricing levels, which likely would have been lower and more affordable than they are today, the marketplace would have created what you can never produce. Incentives for innovation.

For the first time in American consumer history, about one in five vehicles sold was a compact or subcompact car during April, compared to the sales of  sport utility vehicles a decade ago, when one in every eight vehicles sold was a small car. Today, sales of pickup trucks and large sport utility vehicles have dropped sharply, while four-cylinder engines surpassed six-cylinder models in popularity. (See As Gas Costs Soar, Buyers Flock to Small Cars, the New York Times.)

Now if you had just gone away and left business and prices alone, and we instead used the tax dollars saved to become energy independent, not only would American auto makers been forced to look to the future, instead of the past, for their car designs, new energy industries would be creating jobs and perhaps we wouldn't be in Iraq today.

Surely, you don't think the Japanese are smarter than American engineers. Nope. It's your fault. Manipulating the economy is a bad idea and removes incentives for American businesses to take risks and employ visionary thinking. After all, trucks and SUVS, even for the Japanese, were the engines that fueled profits for the past two to three decades. It would have been stupid not to make them, with a barrel of oil hovering between $20 and $30.

I know, I'm simplifying and it's easy to be a backseat driver. But, hey, many of us have been complaining our entire lives about your propensity for over-regulating industry. I'm not talking about regulations and legislation that protect people from job discrimination or dangerous work environments and the like. (Although even in those areas, you should take a deep breath.) Nope! I'm talking about politicians and bureaucrats who hold hearings and come up with unworkable solutions, primarily because that's what you do. And you do it with little or no knowledge of the real effects of what you do will have on the economy, business and people. Gee, who's running the funny farm these days? And, oh, by the way: Your work doesn't make anyone laugh.

We don't need you to tell us how to run our businesses, how to make our products, or how much profit we should bank. The consumer will do that, without your meddling. Mostly, we need you to get out of the way and let the free market do its thing. You'd be amazed how well people will do without your constant meddling.

Respectfully yours,

Lewis