Like it or not, the America we see today is the result of “greed marketing”. Not just marketing, but GREED marketing.
Once upon a time, goods and services were priced at cost plus a reasonable profit. In the past 30-40 years, it has become instead: whatever the market will bear. While, at the same time, the economy of producing goods overseas lowered costs, thereby raising profits. The greed factor at work. Anyone remember the infamous Michael Douglas line in “Wall Street”: “Greed…for lack of a better word…is good”. America truly believes that….at least those with all the bucks believe that.
Primary evidence of the greed marketing mentality is the wild-ride oil prices just last year. Whether it was speculation, market manipulation, of whatever…it was greed at work. Those with the dollars to buy gasoline futures caused the prices to run amok. By creating a ‘demand’, the prices naturally rose.
Spin the clock back 8-9 years….to utility company de-regulation. Remember that? Remember the utility companies bought and sold kilowatts just like barrels of oil? They probably had ‘futures contracts’, and all the other games the oil market has. I live in New England, and the cost of electricity here has more than doubled. But California…if I remember my history, electricity got very, very, very expensive in California just by the manipulations of the utility companies. Electric companies, like oil companies, can control –where- their electricity goes. By short-changing one market area, they can justify the increased prices.
And the reverse logic is true, too…too much merchandise will cause prices to drop. OPEC seeks to control oil prices by controlling available quantity. Unfortunately, the various oil producers don’t always follow OPECs plans, causing prices to drop. Right now, there’s a glut of airline seats available…people have cut back…companies have cut back, but the airlines want to fly empty planes…at ANY price. So $99-to-anywhere pricing is back! How many airlines are going to survive with THAT kind of pricing??? But then, Uncle Sam will come bail them out, too! Just like they (we) bailed out Detroit… What spared the airlines, more or less, the past 10 years or so is labor concessions. Now, they are probably at the ‘end of the line’ for concessions. A couple more will HAVE to go under to make it work.
Which brings me to Detroit and their bailout. Yes, bailing out Detroit was like bailing out Penn Central. “Blind” management believing “they’re too big to fail”. Yea…right! They’re so blind they came to Washington to beg in their private aircraft! That’s like a beggar on the corner wearing a new tuxedo!! The big three is no different than Penn Central 40 years ago!!!
What saved Conrail from becoming merely an bigger version of Penn Central was the realization that money losing lines had to be abandoned, labor costs had to be contained, and other unprofitable activities…eg…commuters…had to go! The Conrail that went public and was later sold off was much, much more efficient and better run (FOR PROFIT!) than when it was formed. As difficult as it was for the Conrail employees that had to be let go, and the towns that lost service from abandoned branch lines, it was a necessary requirement for Conrail to survive at all! Reducing train crew size was also a major factor in the turnaround at Conrail.
Detroit MUST look to the lessons of Conrail. (Product) lines MUST be abandoned. Chrysler abandoned the Plymouth line; General Motors, Oldsmobile; and Ford, I don’t know…do they still make Mercurys? My guess is it’s time for Chrysler to merge Dodge and Chrysler lines into a single name; for GM to dump the Cadillac line and go with Chevy, Pontiac and GMC, and Ford to skinny down to just the Ford line. Already, they’ve started dumping a few models..perhaps they need do more! Yes, the towns with the abandoned car factories will be hurting…so will their workers. And as for reduced labor costs for what remains…I recently saw a program on TV about a (Hyundai, I think) car factory here in America that the first time human hands touch the car is to install the dashboard!! All the sheet metal forming, welding, and even painting, is completely robotic! Has Chrysler, GM and Ford got anything like that??? I doubt it! But unless they DO something like that, they DESERVE to go under!!!!
So how does this all relate to the discussion of fuel and fuel costs? Simple. One of the big reasons the foreign cars sell so well in this country is fuel economy. I don’t think the likes of Toyota or Suburu or any of the other Asian car makers make any automobiles that get less than 25 mpg. Detroit…well…they used to ‘buy off’ Washington to delay or defer their mileage-requirement laws for the past 20 years or more! Well…now they have to pay the piper. Or, is it time for Washington to ‘buy them off’ and send them off to oblivion?