Pestilence, Plague, Hunger, and Death

Open Thread

Car Buyers Downsize, but Spend Big on Options

In Iraq, Mixed Feelings About Obama and His Troop Proposal

Peak Oil Crisis: The Blackouts Spread by Tom Whipple

[thanks for the feedback on the Huffington Post Link]

Working Hard on Tomorrow, Today
By Bob Lutz
GM Vice Chairman

As you’ve no doubt heard me say before, we’ve made a lot of progress in the past few years at General Motors. And we’ve delivered on what we said we would do. We’ve tackled the legacy costs. We’ve improved our quality. We went from having, at least in North America, some mediocre products to having acclaimed products that are selling extremely well, especially on the passenger car side. In June, for example, in a slow market, our retail car sales were up 8 percent.

We continue to reinvigorate our product portfolio. We’re pursuing advanced propulsion technologies that will greatly reduce dependence on petroleum. And, we’re reacting to the swiftly changing market conditions here in the U.S.

But even with all the changes we’ve made and the actions we’ve taken, our business results aren’t yet what we want them to be. Why not? What went wrong?

Well, we got hit with a triple whammy: we face a generalized economic weakness due to the mortgage meltdown, which is creating a borderline financial crisis in the United States and other parts of the world; we have seen a big decline in the dollar; and we have, of course, experienced an unpredictable and very rapid rise in fuel prices.

Now, it’s easy for everyone to say about oil prices, “They should have seen it coming.” My answer to that is nobody saw it coming. Not the economists, not the governments, not the oil companies, not the smartest pundits in the world — no one saw it coming, not this kind of rise.

And to say that we recklessly and stupidly kept producing trucks in the face of it is just wrong. In fact, if we hadn’t kept producing trucks before the fuel prices rose, we would’ve been in a lot worse shape, and a lot more quickly. And if everyone is so smart except us, how come most of our import competition was rapidly rushing into the full-size truck market, just as the party was almost over?

I’m not going to sit here and say we have done everything right and made nothing but good decisions. But I will say that in recent years, particularly since Rick Wagoner announced our North American turnaround plan in 2005, we’ve had a firm, sound plan and have delivered on it.

As economic conditions here in the U.S. continue to decline, further adjustments and actions are necessary, many of which we outlined at this morning’s press conference. If you didn’t get the chance to see it live, you can read the press release here.

These actions — the corresponding business decisions we announced this morning, including employment reductions and elimination of post-65 retiree health care, as well as some cuts in capital spending — were hard calls to make. They weren’t made lightly, they weren’t pleasant decisions to reach, and we’re fully aware of the challenging impact they’ll have on our employees.

I know a lot of people are going to look at the cuts in capital spending and say, “Here they go, cutting their bread and butter.” Well, they’d be wrong.

We did make some cuts — like those that we confirmed a few weeks ago regarding the next generation full-size pickups and SUVs, which by the way are still best-in-class in terms of ride, handling and fuel efficiency. But we are conserving our capital for those things that we know will move the mark… and no strategic programs are being impacted; it’s full speed ahead on E-Flex technology and the production program of the Chevrolet Volt. And we will continue to cut costs and adjust to changing market demands. In fact, 18 of the next 19 GM vehicle introductions are cars or crossovers. We will adjust our portfolio to meet the market where it is headed — and still keep the integrity of that portfolio intact, while maintaining and enhancing the improvements we’ve made in product design and technology.

Being a leader means doing what must be done. Let it not be said that we won’t make the calls and take the actions that are necessary to keep GM viable and ensure that we remain the best automaker in the world — which I fully believe we are and will remain.

We’re doing exactly what you need to do in these situations, you cut back on anything that isn’t necessary, you limit your cash outlays to only those things that are truly going to move the company forward, and most importantly you continue the ethic of producing the world’s best cars and trucks because that is the only thing that long-term is going to get you through it. We have a complete and total commitment to a massive onslaught of outstanding new global products over the next 24 months as our top corporate priority. No compromise there!

So while some may choose to see the glass half-empty, I couldn’t disagree more, or more loudly. As the saying goes, “Those who say something is impossible should refrain from interrupting those who are doing it.”

Original blog post and comments

28 Replies to “Pestilence, Plague, Hunger, and Death”

  1. Yup, HuffPo’s “Sites Linking Here” has you & nobody else listed. Interesting.

    The amazing thing about the small cars with big options, is that the Big Three are even offering those appointments. They used to have this attitude “you buy cheap, you get cheap, deal with it,” but sales are adjusting their attitude a bit. Heck, first thing most people do with a motorcycle is start adding performance mods or blingage. (I stuck with convenience mods, adding a larger gas tank & cargo.)

    Whipple, as always, is quite scary. Amazing that a doomer gets a column in a real newspaper, even if it’s Nowhere, Idaho. I knew Pakistan & RSA were having major trouble, and China less major, but not 100 countries. Sounds like the first episode of FAR Future. :-o The third guy in the comments (Clifford J Wirth) would be a fine addition to ZK or CFN.

  2. Yep you are the only link.

    Yer famous!.

    Time to break out the troll spray.

    Last night a friend in the Detroit area (northern suburbs) had lost power for most of the night. The power company blamed it on storms. But I don’t know there just was not enough activity last night anywhere that would normally cause such a long black out. Could have been a lucky strike.

  3. Part of downtown Vancouver, BC is now without power for a few days, we heard because of a shorted cable. Lots of darkened tourist shops. Shit happens.

  4. We never absolutely count on having power during the summer on Planet Georgia, although it’s better than it used to be. Someone once opined to Mrs. Fetched, as they were waiting to pay for groceries ahead of a winter storm, “A bird can $#!+ on a wire and the power will go out.” Nowadays, it mostly blinks out for a few seconds or minutes. Enough to knock down the DSL & desktop computers, not enough to worry about replacing the generator that The Boy’s friends “borrowed then it got stolen.”

    We’re probably due for a big (multi-day) winter blackout. Even if we don’t have electricity, at least we’ll have heat. I need to look either into a way to completely drain the water pipes so they don’t freeze… or into some sort of backup power that will give us water and maybe a few lights. If we get a sufficiently good summer rally in the stock market, I’ll cash out the rest of my company stock & get the solar+wind system I’ve been pining for forever.

  5. FAR,

    Not my business, but I am commenting on your situation because it relates to mine in a way. Do you think it is better to take your money and get solar, or pay off some of the house? I ask because I keep lusting after solar but it would cost me $38,000. I am not in debt and would have to pull some kind of mortgage on the house to do this (I have a few grand cushion, but not 38,000). Debt in a deflationary environment could be lethal. In an inflationary one, not so bad.

    I aimed all my money at paying off my house and student loans for a couple of years. Getting rid of one of our cars and down sizing the other was part of that strategy. Also no frills. It worked. I wonder if you have assets laying around that if you got them into one pool, you could do the same for your house?

    Any thoughts along these lines? Solar vs. staying debt free?
    I guess where you are might matter…

  6. Wow, $38K? How much capacity does that get you? I was thinking about 3KW tops.

    Anyway, this is my line of thinking:

    1) I didn’t want to buy FAR Manor in the first place. If we lose it, I don’t give much of a flying CF. If I could pay off the entire house, that would be a different story, but given the housing situation right now, paying off *some* would be throwing the money away.

    2) We still have our old place, a double-wide + additions, in the woods. We can boot the renters, replace the carpet (they smoke inside, after I told them not to… never rent to a smoker), and listen to Mrs. Fetched p!$$ & moan for the rest of her life, and she could listen to me say, “I told you so.” But with the other kid heading to college, the nest will be empty 9 months out of the year for the next few years, then permanently.

    3) Paying cash for a power generation system means it’s *mine*. If they start foreclosure, it & the fireplace insert get removed before I do. I’d also borrow a flatbed truck & move the studio building if possible.

    4) I’m seriously considering starting with wind, because you can DIY the prop and even the alternator, but you can’t DIY a solar panel.

    I was planning on debt-free existence as well, before this debacle of a house came along. The double-wide was paid off, and we were chipping away at the rest of our american dream hangover. But my input & desires have never been much valued around there. Mrs. Fetched has also told me we’d not be allowed to lose the place (damn!) because her parents (who went berserk about “get[ting] the land back in the family!!1!!1!!!”) would cover the payments. As if they can even pay Mrs. Fetched more than a token amount for working the chicken houses.

    Assets? Besides my fallback position, and some stock that isn’t worth much at the moment, no.

  7. The one time I did slap Lutz at his Fast Lane, I stated that these peeps should be focussing on design and engineering across the product line. We all know how well that goes down in Detroit, from management through the customer. A Corvette is all that some people can dream of I suppose.

    BMW with the Mini really blazed a new trail with a small car that has high end features. They will reap the rewards for the time being. Fiat has the new 500, but that won’t be here for the foreseeable future. It is another nice example. Ford has some decent product in Europe, and we’ll see if they can pull it over. And, Volvo was an excellent example of such product in the past.

    The shortsightedness is simply amazing. Ford Jr. stated some interesting ideas about moving the industry past the sales mentality, but could never execute. Should they survive, the market will have handed them a decision, in the form of a much smaller company.

    I see Ford as perhaps the sole survivor in the American market due to their size. Certainly, my car buying days are behind me. The only thing I want is either an old Jeep converted to electric or an old Ford F100 for trips to Wisconsin. As an empty nester, a crazy near-monastic yogic hedonist version at that, I need a place to drop a blanket.

    Far, the times I vary from my silly minimalist squalor, a woman is usually involved. Think with the wrong head per usual…

  8. “Not the economists, not the governments, not the oil companies, not the smartest pundits in the world — no one saw it coming, not this kind of rise.”

    Ha ha ha. Nobody! Except for us fools on the hills… Asses.

  9. Here is the comment I posted there today about 2pm. They just cleared another batch of comments and this isn’t in it, so I guess they’ve nixed me again. I really don’t see what is that objectionable given some of the other negative things that were written about GM in the thread:

    Well, we got hit with a triple whammy: we face a generalized economic weakness due to the mortgage meltdown, which is creating a borderline financial crisis in the United States and other parts of the world; we have seen a big decline in the dollar; and we have, of course, experienced an unpredictable and very rapid rise in fuel prices.

    Shouldn’t a decline in the value of the dollar help GM sales overseas and hurt foreign companies’ sales here?

    As far as the mortgage crisis goes, well, maybe that is a bit out of your control, but it was certainly predictable. There have been those in all branches of the mainstream media and business press warning about it since 1999 or 2000.

    Typically, the same people who were saying in 2006 at the height of the bubble that housing prices would rise forever were the same ones who were saying at that time that oil would drop back to $20/barrel.

    Now. Ask yourself this. Why were there people arguing in 2005 and 2006 that oil was in a speculative bubble and would soon drop back towards its historical mean.

    Answer: Because at the time, there were many people warning of oil production peaking and the price moving very soon to $150.

    I don’t know if there are words to accurately describe a head of GM, a company that depends on the price of oil, saying “nobody saw it coming.” I would think that the mere possibility of it happening would figure into your plans. Certainly Honda, Toyota, VW, and Southwest Airlines saw it coming.

    So where do we go from here? Do we say it’s just water under the bridge and let’s get back to work, as is apparently the case. The price of oil is just a fluke.

    Or do we now do a little reading on the oil situation, learn a lesson, and figure $150 today – there is a good chance that in 3 more years it will be $300.

    So that there’s no temptation to use this excuse again, I’ll point you in the direction of a New York Times column by a pundit, Tierney, about the energy banker, Matthew Simmons, written in August 2005.

    In it, Simmons bets Tierney $10,000 that oil will average $200/barrel in 2010.

    NYT column

    This is not an obscure column. I have seen it referenced dozens of times.
    -Zulu Kilo

  10. Because the north facing roof is not that big we were looking at 2KW tops, with the understanding that the actual output would be more like 1.2-1.5 because of variables like 2 shadows that would be cast from neighbors trees and so forth. A big part of the price (almost a fourth) was transporting the panels.

    I wish I could talk to your wife. My husband and I kind of use prepping as something we do together, sort of a foundation for romance and getting closer. He calms me down, I help us get moving. Both of us like the results. As the house got paid down, we would celebrate every few thousand $ with a dinner out. We’d get statements and high five each one and we had a big celebration when it was over. Someone else may have felt deprived of the other “stuff” but I guess my security needs or nesting instinct is so huge that paying off the house was like having a fantasy come true.

    My husband is my hero and partner because he was willing to do this with me. My first one was not, all he wanted to do was consume. I’ll leave that rant out of this post. :-)

    You have me wondering if I need to find another installer and start over on the bidding.

  11. JR,

    Your comment looks fine to me. Good questions. You are asking for accountability, what a concept.

  12. MOU, $38K gets you 2KW of solar? Um… so much for that idea, but I think $9K for delivery charges are a bit excessive. I think $38K can get you an order of magnitude more windmill wattage, but I’m willing to be corrected there. To “do it right,” I think the primary expense for wind will be an 80-foot tilting tower to get it sufficiently higher than the surrounding trees (which I’m loath to cut down because of the summer shade they produce). If I do some of my own legwork, I think I can bring in the whole project for around $5K. It would be nice to have both — like I’ve said, one tends to work best when the other doesn’t work well at all — but I’m on a pretty tight budget.

    At least Mrs. Fetched is with me on the alterna-power project. I just need to set it up so we can take it with us if we have to leave.

  13. On Ed Bagley Jr’s home he put in a windmill which looked like an oil drum. Seemed to be a good solution for people in areas where a large blade would not be ideal.

  14. UY,

    Cool. Don’t know if wind is legal in the city.

    It does not matter, but SOUTH facing roof, not north.

  15. Holmes is the lawyer here, but if you put up a wind turbine that can fall down or pieces can blow off and cause bodily harm or property damage, you’d better have an insurance policy or you can get sued and not be covered. Solar gets a pass, and if it’s attached to the house, may be covered by your homeowner’s policy.

  16. That’s why I referenced the vertical axis units.
    Lower efficiency, but lower start up speed and easier to make a robust mounting.
    BTW MOU,
    Is that a grid-interactive system for $38k?
    Seems farking expensive if it is.

  17. FYI, about 1.5 years ago, we were quoted a grid-interactive PV system for $20,000 (approximate) for our house in Hawaii that would cover the basic appliance needs (we already have a passive system for water heating). There are also some rebates involved, but I’ve forgotten the details. Your rebate offers may vary.

  18. “Now, it’s easy for everyone to say about oil prices, “They should have seen it coming.” My answer to that is nobody saw it coming. Not the economists, not the governments, not the oil companies, not the smartest pundits in the world — no one saw it coming, not this kind of rise” Bob “f*cktard” Lutz

    March 7th-9th, 1956 – M. King Hubbert correctly predicted, based on his theory presented in a paper to the API, that production of oil from conventional sources would peak in the continental US around 1965-1970.

    May 14th, 1957 – The Energy Speech by Rear Admiral Hyman G. Rickover, USN.

    “Our civilization rests upon a technological base which requires enormous quantities of fossil fuels. What assurance do we then have that our energy needs will continue to be supplied by fossil fuels: The answer is – in the long run – none.”

    Then, July 15th, 1979, President Jimmy Carter delivers his “Crisis in Confidence” speech that, well, we drove through again. And drove and drove.

    “This intolerable dependence on foreign oil threatens our economic independence and the very security of our nation. The energy crisis is real. It is worldwide. It is a clear and present danger to our nation. These are facts and we simply must face them.”

  19. The 38K doesn’t surprise me though it sounds possibly a little steep. I’ve looked at it. Its been a couple years. I have a couple friends who have gone big with even larger systems. It really comes down to whether you can score rebates, grants and tax deductions through local, state and fed programs and tax laws. This was probably easier to do a couple years ago (I’m guessing) and you could knock 10K or so off the cost depending on state you live in.

    Also, and a biggy for my friends who’ve done this, is whether your utility allows you to meter back the unused power (i.e. sell it back to the grid or take the credit against your yseage of their services.) Not all utilities allow it. This makes or breaks the economics, otherwise the breakeven on this stuff can be many years or even decades (but depending on future cost/kwh of course!!).

    Another factor is you won’t be able to run high amperage appliances, etc. with these systems. such as clothes dryer, hot water heater etc. You can install passive solar for the hot water but there’s even more cost, and you won’t always have reliable supply of hot water, depending where and how you live.

    Residential wind turbine systems are also becoming available. The economics are about equally as tough, and rebates and reverse metering also are key here for making a large enough system affordable.

  20. Remus, I’m going to try to post what you said on the GM Fastlane Blog tomorrow under a new username. Some All-American pseudonym like George Truman or Henry Lincoln.

  21. Umm OK. I pulled that out of a post over on UR. BTW, I have moved to wordpress, so you may want to fix the link here.

  22. “You can install passive solar for the hot water but there’s even more cost, and you won’t always have reliable supply of hot water, depending where and how you live.”–SB

    Here’s a trick I’ve learned by accident. Depending on your location, sunny a lot, rain/cloudy a lot. If it’s sunny a lot, you can get by with as little as one 4×8 foot panel, at least in Hawaii. If cloudy, you’ll need more panels. We installed 3X more than the minimum. The results have been warm-enough water even after a few days of clouds and rain, and we have only used the conventional heater on grid power once in 1.5 years, when it was cloudy with rain for a week.

    Another trick is get a large insulated water tank. Most of the time the water is dangerously hot, so we have a safety blender valve on the unit (required by law now) that dilutes it with colder tap water.

  23. I’ve got an intantaneous gas booster aft of the storage tank. That way, it only adds the heat needed to get it up to temperature, and in summer, it has a valve that bypasses the booster.
    We went from 45kg of LPG every 6 weeks to 45kg every 5 months.

  24. $38k for a 2kw system sounds way high. How does that break down panels vs inverter vs misc hw vs labor vs transportation?

    SB is right – without TOU metering, the “payback” is pretty long. Of course, even then most have put caps on how much they’ll take statewide and you have to be in the program – and okay’ed – to do so. PG&E initially said something about 2.5% maximum of the states usage. I think it’s like 10% now, but they fought that (I keep losing track).

    Rebate wise, ours was about 1/3 gross cost of the system plus some tax writeoff (forget the amount) based on the panels’ maximum output. CA has changed it a bit since then. IIRC we’re fairly generous compared to many places.

    I will have to disagree on a few things SB said.

    You should be able to run high amp stuff, at least if you have gridtie and sufficient normal house amps. Our house is “tiny” – 100 amps. I have a 220 dryer and stove and have run both at once, plus whatever other stuff. I call this “tiny” as on-demand electric heaters need at least 150A for use.

    Also, the key to hot water is either extra capacity and/or backup (and so on) like Doom mentions. How much depends on your conditions. Electric to heat water is generally a bad idea, but as a backup it’s not too bad. You can always click it off if you feel it’s consuming too much. As I mentioned in another thread, I’ve noticed my electric backup click on two or three times and I have it set to 130F. Mostly ideal setup for my situation but I do think my insulation on the tank needs another look.

    Not sure how it works out there, but in our case the power company keeps track of usage on a yearly basis. Our anniversary is November, so by March our bill to PG&E – if we chose to pay it early – is pretty high. The late spring/summer/early fall months come in and that amount gets chipped away. YMMV, certainly, but by year end we’ve had a surplus of credits – which, sadly, the power company can just ignore. Were we to use more, then that’s when we pay. Ideally, I’d owe them something like 1c; I want to write the check for that.

  25. AB, That’s great you are doing this. I am in process of selling a house, and when I buy the new house I would like to deploy both a pV (not big though) and passive solar system. My current utility will not net-meter, but where I am moving to has a good program and incentives in that regard.

    For everyone/ anyone – Here’s a cool web site where you can enter your state,county and utility company, and avg utility bill, and it will crank lots of info for you regarding what you can get in fed/state/local/utility incentives, and provides your basic system economics.

    http://www.ases.org/

    Click on “Go Solar”, then click on “what does solar cost?”.

    The site is a little slow but that may be because it was discussed on NPR this afternoon, which is where I heard it mentioned. Could be high traffic at moment.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s