Should we bother to save GM and brands like Holden and SAAB? #cars #meltdown

What will it take to save these giant auto-manufacturing dinosaurs, and should we bother?

GM, like Ford, has been on the brink for years, selling off assets to stave off the inevitable. Bad bets on dumb cars made in the face of rising fuel and resource prices have only compounded the problem - and now the financial crisis is hitting hard, forcing GM to consider bankruptcy and break-up. If the US government stumps up enough cash, it can be saved - but why? As an unemployment relief scheme, or as a going concern? Can it be a going concern again? Will saving it only preserve the bad investments and poor management that got it where it is today?

It's worthwhile to look at the overall industry. It's past mature, it's commoditizing. Relatively fresh, new brands from Asia are pumping out cheap cars that match - perhaps even better - what the old guard has been offering. These new brands are agile, and they are better prepared to adapt to new fuels and new ways. But these are game-changing times and competive threats will come from unexpected places as new players, armed with new ideas, attempt to leverage the chaos.

This is not a new problem and hardly a surprise. Manufacturing has largely shifted out of the developed world, and services dominate those economies. Big auto companies do represent prestige as well as jobs, though, and nations are reluctant to let them go. Politicians, in defence of subsidies for these doddering corporations often rely on a combination of prestige and the old-world thought of preserving these 'seeds' from which a war machine could be built. 'If we let go of this capability we may not be able to defend ourselves', goes the argument. However we need more than just heavy manufacturing to 'defend ourselves' these days. It's an argument that needs to be answered carefully, but the thought strikes immediately that we probably need diplomacy, trade and strong, positive relations with other nations as much - or more - than we need an auto industry. If you really believe that an auto industry is an essential building block that can't be lost, then you'd have to believe that of all industries - from clothing to agriculture, from electronics to aircraft manufacture - and seek to preserve all of them. But of course we don't, do we? In the end we are pragmatic, and seek to trade with other nations that are better suited to making these things. And instead turn to our own strengths.

Now GM is really a cluster of brands, rather than a brand of its own - which works to the good in a break up. It's not hard to imagine a fire-sale where the best bits are taken over by competitors. Whilst that may happen with Vauxhall and SAAB, less attractive is the Aussie GM brand, Holden. It's outdated, reliant upon subsidies and a long way from other markets. It could possibly be shrunk down to focus on some key competency, if you could determine which competency that may be. As I established some time ago, it's way off the mark in terms of competively manufacturing cars, even the "big Aussie cars" it claims as its heritage:

I have to tell you I was somewhat surprised at the estimated factory cost of the Alfa Brera. It must be wrong, surely? Somewhere my assumptions have gone awry, because seemingly the prestige European sports luxury car has a lower base cost per vehicle than the locally built sedan. But then I wondered if the still-somewhat protected nature of the small Aussie car manufacturing industry may have distorted the real cost of manufacture.

I'm not the only one to crunch the numbers, either: "The Australian government can throw $6 billion or $600 billion at these car plants, but they still won't be economically feasible," he said.

So if Holden goes on the market, who will buy it? The obvious choices will be the extant manufacturers in Australia, namely Ford or Toyota. Ford has its own problems of course, but buying out its traditional foe would surely be tempting, if only to close it down. After all, we don't need - and probably can't afford - 3 manufacturers in Australia. But Toyota is a more logical choice. But why should either bother? If no buyer can be found and Holden closes, the problem is solved. If anything's to be bought here at a decent price it will be brand name itself.

Which leads to a more efficient local industry - 2 manufacturers plus importers. Jobs will still be shed and many tears as well - the Holden name will not rest easily on the shoulders of either Toyota or Ford, after all. But will that be enough to prompt the Rudd federal government to dive in and "save" the company? For the sake of the nation let's hope not. Instead let's seize the day, support the workers in more practical ways and take action that improves the efficiency and sustainability of the industry. Before its all too late.

Subaru says Stella "clean" but Drive.com says it's a "dirty" EV #environment

Who do we believe?

My confusion is all about the Subaru Stella EV. Apparently Subaru (in a press release) says: Based on power supplied from a coal-fired power station, STELLA produces an estimated 12.5 kilograms (kg) of Carbondioxide (CO2) per 100 kilometres of travel, compared to 20.24 kg of CO2 for a typical 2.0 litre small car.

So it's cleaner, no risk.

But Fairfax via its Drive.com site says the opposite (seemingly): Recent research has shown that electric cars don’t necessarily reduce the carbon footprint. Subaru recently said its electric Stella would account for 20 per cent more carbon dioxide emissions if recharged from a coal-fired power station.

Did Subaru say that? I didn't see that. But wait...

If we pull that apart a bit... Subaru compared the Stella, a small - in fact quite small, if heavy at 1,000kg - car, with a much larger "typical" 2.0l car. I assume they mean larger, because Subaru's 2.0l cars are "typically" Imprezas and the like... so it's not apples vs apples, is it? If we compared tiny Stella with a micro car with a 660cc engine we'd probably see around 10kg of CO2 per 100km, which is indeed somewhat less than the Stella and backs Drive.com up. You'd probably pick the petrol car over the EV for environmental reasons.

I do wonder though if Drive.com actually thought it through. It's not actually what Subaru said, although it's what we can derive from their statement. They are being a bit narky here, to use the Aussie idiom. Indeed Drive.com had a go at Subaru when it earlier reviewed the Stella, here: One thing the Stella not completely free of, though, is guilt. Despite no greenhouse emissions coming from its electric engine, Subaru says using Australia's coal-fired electricity would produce about 125g of carbon dioxide for each kilometre travelled in the Stella - almost 20g more than a Toyota Prius hybrid car that uses a 1.6-litre petrol engine alongside its electric motor.

Interestingly I think they meant 1.5-litre rather than 1.6, but they are the experts so let's go with that. So we can assume (so many assumptions!) Drive.com is actually comparing the Stella with the "1.6l", 1325kg Prius, which opens up a can of worms indeed.

All of these things are worked out by average use, of course, but nothing is ever really average, and it's not just about use. We need to look at the manufacturing footprint, too. If you are heavy-footed in your somewhat porky Prius, what happens to your carbon footprint? It goes up, obviously, and probably more so than an EV (better check that). And what of the extra complexity of the petrol/electric hybrid, with 2 power sources, a petrol tank and batteries? Which of these 2 cars (the Stella EV vs the Prius "1.6") is less resource-hungry - and has the lesser overall carbon footprint - to make and maintain? I'm guessing (so much guesswork!) the Subaru EV wins hands down if we look at it that way; but there's no denying, either, that a 660cc petrol Stella will beat both by a wide margin.

Of course none of this really stacks up, if it's not what you need in a car. You may drive short distances and the Stella EV will be ideal. Or you may travel long distances at a steady speed and can make the most of a hybrid's advantages. Indeed the Stella may be a perfect fit for me but too small for you. It all depends.

Manufacturing, efficiency, waste and all that #environment #business

Thinking of our carbon economy again, what can we do to solve our waste problem? How about by being less wasteful and more efficient? How about repairing rather than replacing?

It used to be that we repaired by preference, but now it's all about disposal and recycling and repairing is simply "old fashioned". But recycling has an energy cost, and probably a larger one than repairing (it's an assumption, but without doing some analysis how would we know?). And disposal means replacement - we get another one. It may be made from a higher proportion of recycled materials but it still had to be made. So how did we get here?

Well it's standard practice now, and has increasingly been so since post-WWII. It's taught. It's how we think. This is modern manufacturing practice. By constantly trimming the cost of production and making a "better" product we sell more, and fewer come back for repair. The consumer gets a cheaper, better product and can get an updated, even better one, sooner (it's a self-perpetuating feedback loop). At its heart the practice involves reducing the time spent assembling a product and cutting out wasted time and materials. Now you can also shift the assembly to the customer, a la IKEA, or you can incrementally redesign and "modularise" as much as you can (a la Toyota et al). And the latter method is very, very popular.

Now I have no real problem with the IKEA model, although I do wonder how many people simply give up on self-assembly or waste time and money taking it back; or - worse still - bringing someone else in to "fix" it. With the Toyota (or Deming, or Lean-influenced) model I have greater concerns. Perhaps in some instances - services, for example - it makes wholistic sense, but I do question the overall saving when applied to a manufactured product.

In this 'lean' manufacturing example a pre-configured module is just 'plugged in'. It's simple to install and less "wasteful" in terms of time, as well as dumbing-down the skill level required (thus cheapening the labour cost). It opens up assembly to more robotised processes, too, and designs-in less room for error. So you get a better, more reliable and cheaper product. Sounds good so far. However one issue with this highly modularised production process is that we end up with one module incorporating many functions. So when one function eventually fails you have to replace the whole module. That may mean replacing a headlight module instead of a bulb, for example, or in extremis it may force you to install an entirely new gearbox when you strip a gear. So repairs become more expensive, or simply impossible.

With cars (to cite just one example) becoming ever cheaper via streamlined, lower cost manufacturing and assembly and parts becoming individually more expensive (plus labour to fit) it becomes more likely (as time and problems mount up) that you'll simply get a new car and write off the old one. Which is of course only increasing demand for the less-repairable car and further lowering the cost (ensuring that the trend continues). Now that sounds fine if all we want is to eternally sell more cars, which the manufacturers certainly do, but is it sustainable, or even desirable for our community?

If we look far enough ahead we get dirt-cheap disposable cars for everyone. Whether they have petrol, diesel or electric motors doesn't matter, they'll be everywhere. And we'll throw them away like cheap MP3 players when one highly modularised function dies. Perhaps that's good, since we'll have the latest and greatest updates (including safety features, although we only get the safety features the manufacturers want us to have) whenever we want them. But if it's not good overall - for our society or the planet - then we need to rethink the balance between mass production and disposal/recycling/repairability. And find a way to reverse our current direction.

What we have really done (by focusing on least-cost manufacturing) is move the "waste" from the manufacturing process onto the consumer. So the upfront cost looks low, but the real cost is well and truly to be paid later. If you have safety concerns about an "old" product fleet, fine, there may be other ways to 'update' a product without re-manufacturing the whole product (look at the computer software market, for example). It comes back to innovation, rather than simply cost-effective manufacture.

Re-introducing some repairability may cost something, but it may also save us from ourselves.