1940s

Why American car companies are in trouble

business, history, tech in changing society / /

From Paul Ingrassia’s “How Detroit Drove Into a Ditch” (The Wall Street Journal: 25 October 2008):

This situation doesn’t stem from the recent meltdown in banking and the markets. GM, Ford and Chrysler have been losing billions since 2005, when the U.S. economy was still healthy. The financial crisis does, however, greatly exacerbate Detroit’s woes. As car sales plunge — both in the U.S. and in Detroit’s once-booming overseas markets — it’s becoming nearly impossible for the companies to cut costs fast enough to keep pace with the evaporation of their revenue. All three companies, once the very symbol of American economic might, need new capital, but their options for raising it are limited.

In all this lies a tale of hubris, missed opportunities, disastrous decisions and flawed leadership of almost biblical proportions. In fact, for the last 30 years Detroit has gone astray, repented, gone astray and repented again in a cycle not unlike the Israelites in the Book of Exodus.

…

Detroit failed to grasp — or at least to address — the fundamental nature of its Japanese competition. Japan’s car companies, and more recently the Germans and Koreans, gained a competitive advantage largely by forging an alliance with American workers.

Detroit, meanwhile, has remained mired in mutual mistrust with the United Auto Workers union. While the suspicion has abated somewhat in recent years, it never has disappeared — which is why Detroit’s factories remain vastly more cumbersome to manage than the factories of foreign car companies in the U.S.

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Two incidents in 1936 and 1937 formed this lasting labor-management divide: the sit-down strike at GM’s factories in Flint, Mich., and the Battle of the Overpass in Detroit, in which Ford goons beat up union organizers. But the United Auto Workers prevailed, and as the GM-Ford-Chrysler oligopoly emerged in the 1940s, the union gained a labor monopoly in American auto factories. As costs increased, the companies routinely passed them on to U.S. consumers, who had virtually no alternatives in buying cars.

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Nissan, Toyota and other Japanese car companies soon started building factories in America, followed by German and Korean auto makers. There are now 16 foreign-owned assembly plants in the U.S., and many more that build engines, transmissions and other components.

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Several years ago Ford even considered dropping cars altogether because they weren’t profitable, and focusing entirely on trucks. Then in 2005, Hurricane Katrina and growing oil demand from China and India sent gasoline prices soaring and SUV sales plunging. GM lost $10.6 billion that year. Ford topped that by losing $12.7 billion in 2006. Last summer Daimler gave up on Chrysler, selling it to private-equity powerhouse Cerberus for about one-fourth of what it had paid to buy Chrysler. Last fall the UAW approved significant wage and benefit concessions, but they won’t kick in until 2010. That might be too late. GM lost $15.5 billion in this year’s second quarter, Ford lost $8.7 billion, and further losses are coming. (Closely held Chrysler, of course, doesn’t report financial results.)

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Why we don’t have rights from the ground to the sky

business, commonplace book, history / /

From Salon’s “Throwing Google at the book“:

Lawrence Lessig, a Stanford law professor and copyright scholar, likes to tell the story of Thomas Lee and Tinie Causby, two North Carolina farmers, who in 1945 cast themselves at the center of a case that would redefine how society thought of physical property rights. The immediate cause of the Causbys’ discomfort was the airplane; military aircraft would fly low over their land, terrifying their chickens, who flew to their death into the walls of the barn. As the Causbys saw it, the military aircraft were trespassing on their land. They claimed that American law held that property rights reached ‘an indefinite extent, upwards’; that is, they owned the land from the ground to the heavens. If the government wanted to fly planes over the Causbys’ land, it needed the Causby’s permission, they insisted.

The case, in time, came to the Supreme Court, where Justice William O. Douglas, writing for the Court, was not kind to the Causbys’ ancient interpretation of the law. Their doctrine, he said, “has no place in the modern world. The air is a public highway, as Congress has declared. Were that not true, every transcontinental flight would subject the operator to countless trespass suits. Common sense revolts at the idea. To recognize such private claims to the airspace would clog these highways, seriously interfere with their control and development in the public interest, and transfer into private ownership that to which only the public has a just claim.”

… the airplane rendered the Causbys’ rights to the skies incompatible with the modern world …

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Which wires match the mouse test?

commonplace book, fiction, technology / /

From Computerworld’s “Q&A: A lost interview with ENIAC co-inventor J. Presper Eckert“:

What’s the zaniest thing you did while developing ENIAC?

The mouse cage was pretty funny. We knew mice would eat the insulation off the wires, so we got samples of all the wires that were available and put them in a cage with a bunch of mice to see which insulation they did not like. We only used wire that passed the mouse test.

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