Tuesday, December 2, 2008

the end of american manufacturing???

it's becoming increasingly apparent that true wealth, lasting wealth is not created through financial gimmickry but in actual productivity and production capacity. i question the relevance of our manufacturing base, we simply aren't as good at it as we once were. our once great production prowess and efficiency contributed to the allied victory in WW2, yet a mere 50 years later the very titans (Chrysler, GM, and Ford) who delivered the majority of the production are begging for a government bailout or threatening insolvency. i realize the midterm impact of failure would be painful but perhaps it is necessary. people and businesses can only be absolved of accountability for so long before they start behaving badly. consider GM, less than a decade ago they had a fleet of electric cars (the EV1) but chose instead to purchase the Hummer brand vehicles. GM CEO Rick Wagoner stated this about the EV1's cancellation "It didn’t affect profitability, but it did affect image," and that the worst decision of his tenure was "axing the EV1 electric-car program and not putting the right resources into hybrids." i wonder how GM would be fairing today if they had continued to develop the electric car platform over the last 10 years? perhaps their current troubles could have been mitigated by a ten year head start on hybrid technology? but Wagoner is probably right profitability wasn't affected...unless of course you add millions of electric cars sold placing your company in a dominant market position for the vehicle technology of the future.
the point of my example is this: we need manufacturing as a nation to have economic health, but it can't be crap. many companies compete on price or quality; apparently our major manufacturing companies do neither; they build junk at excessively high prices. damn foreigners making good stuff for cheap!
if it takes economic turmoil and the reorganization of uncompetitive companies in order fix our nations manufacturing perhaps that what needs to happen. poor choices and bad decisions should not be "bailed out." free markets require consequences to function properly, something we haven't had in our country for a while.
what do you think?


  1. I fear it's going to take a protracted period of hardship to wake up the typical American to the fact that the nanny state doesn't work. It seems like this is going to be their opportunity. However- if you look at Europe- the populace continues to be more or less happy with the socialist status quo. I wonder if the US will follow suit- or because of our shorter history and our natural distrust for gov't we might be able to straighten things out.

    Your point is well taken. Consequences are natural and necessary in order to have a free society.


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