Posts Tagged ‘Auto industry’

Losses from profits

2010/02/23

How much profit should there be in a system?  How much money can we extract from something before it stops working?  We have seen what happens when too many people are trying to extract too much money from the system, and push prices to unsustainable levels.  But what about health care insurance?  Should substantial profit be allowed from providing access to health care?  Because that is what the insurance companies are doing, is controlling access to health care, while making a  profit.

And, in order to make a profit, they must first cover all of their costs, which include the people who process the claims, the bookkeepers, the managers, the janitors.  As the insurance industry has grown in size, the percentage of the proceeds from selling insurance going into overhead has probably increased, which means that rates must be increased in order to provide a steady level of profit.  These profits are necessary so that the companies can pay their shareholders dividends every quarter, as well as their own salaries.

Calls for larger dividends mean squeezing more profit out of the system, which usually starts with raising rates.  I would really love to know what the total cost of health care is minus the costs of insurance.  Just the amount that the doctors, the hospitals, the labs, the technicians charge in a year.  By comparing that to the total cost of health care for that year, we could perhaps gain some understanding of what the real cost of health care insurance is.  And, of that cost, how much is pure profit.

Personally, I find it difficult to believe that we can ever reform our health care system as long as the insurance industry is such a major player.  By incorporating their costs and profits into total health care costs, we see a steady increase in what we pay, even though the providers of the health care are not seeing a corresponding increase in their income.

Maintaining large profit margins has other negative effects, such as outsourcing jobs.  Why is this a negative?  Because the people who used to do the jobs that have been outsourced frequently lose the ability to buy the products that they used to make.  This reduces the market for the product, which lowers profits.  Yet, the justification for outsourcing the work was to increase profitability.  Not merely to maintain it, in most cases, but to increase it.

Repeatedly, I have seen American companies managed right into the ground, as profits have taken precedence over quality and service.  What have been thriving businesses going broke because the owners took too much of the income for themselves.  Companies which manipulated their books to appear more profitable than they really were, to keep their stock price up.  Corporations which have ignored sustainable practices in order to maximize profitability.

Unfortunately, there is not enough profit in the economy for everyone to quit working, which is what seems to be the goal these days.  Nobody is interested in doing a job that they can take pride in, they don’t want to even work.  Somehow, being useless, a drone, has become fashionable.  Working for a living is looked down upon, a sign of poor financial sense.  Well, if we keep on pursuing extravagant profits, no one will have to work, because there won’t be any jobs.

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Building a better beast

2010/02/22

The United States economy is a sick puppy right now, reeling after over 1 trillion dollars evaporated.  The driving force of the economy in the past, consumer spending, has fallen drastically, as the middle class has been forced to live within its means.  Credit is almost impossible to get, and has become more expensive.  The declining value of homes has made the home equity loan a thing of the past.  Unemployment is scaring people into paying off credit cards, and building up savings.  Federal stimulus money has kept states from laying large numbers of employees, but the money is running out.

Maybe we ought to think about spending some of our money making the country more efficient.  This would reduce our dependence on foreign energy sources, as well as cutting the emissions of greenhouse gases.  Money would be freed up from energy costs, which could be used to increase spending.  Consider:  Many commercial buildings have no insulation.  That is right.  None.  The average home more than 20 years old is seriously lacking in insulation, and often leaks air copiously.

Putting people to work right now is difficult, because plans have to be drawn up and approved, bids taken, and contracts let.  But retrofitting homes and businesses could commence within weeks, if done properly.  Although President Obama talked about a program such as this a few months ago, little has been said regarding it recently.  Could it be that energy companies don’t want to see consumption reduced?  Could it be that Congress doesn’t like giving money to the average American, although they have provided plenty to the big banks and two of the car companies?

Perhaps we could couple improved efficiency with greater reliance on solar and wind power.  Low interest loans for solar panels and wind farms would probably increase the numbers in use considerably.  We are falling behind the rest of the world in the use of renewable energy, especially in the field of solar.  Building and installing solar panels would employ many people if we were to make a national push to utilize them.

Buses are a good way to save energy, and many parts of America have very few.  Building buses financed by federal loans to local transit operators would create employment in the parts of the country which have been hit so hard by the fall in auto sales.  People who ride buses save money which they can use to take their cars out for recreation, whereas people who drive to work often cannot afford Sunday drives.

There are ways to put people to work, right now, doing things that we would benefit from for years and years.  Some seem socialistic, but saving our society seems a worthy enterprise to me.  If we are going to keep borrowing money from China, at least we ought to do something worthwhile with it.

A new economic model

2010/02/21

Right now, we don’t have time for dealing with health care costs, new legislation regarding the financial industry, or immigration reform.  We have a great need to re-invent our economy, immediately, before we slip further into recession.  Our old economy depended too much on manipulating money to make money, on huge profits on inefficient automobiles, and credit.  Consumer spending was the engine of the economy, accounting for 70 percent of all economic activity.

Those days are long gone, and they are not coming back soon.  But our economic model has not changed, and millions of people are sliding into permanent unemployment.  Somehow, we have to find a way to create things that other people, people outside the United States are going to want.  They do not want our automobiles, they do not want our computers, they do not want our clothes.  What does America do better than anybody else?  Besides screw, start wars, and piss people off in general, I mean.

We are the world’s leader in advanced aerospace technology right now.  We are currently operating the only reusable spacecraft in the world.  We have learned tremendous amounts about getting into space and getting back.  By applying that knowledge to the development of a new generation of spaceplane, spacecraft designed solely to climb a short distance out of the atmosphere, and then return, we could lay the groundwork for another industrial revolution, one which would create more new wealth than has been made in all of Earth’s history.

The most difficult part of space travel is the getting into space.  We have to accelerate ourselves to a velocity of 5 miles per second, 17,500 miles per hour, to be able to stay in orbit.  There are several different rockets that can put freight into space, but only a few which can carry people.  The space shuttle is one of them, and it is set to be retired this year.  After that, the United States will not have a way to reach space, and will have to buy seats from the Russians to send our astronauts to the International Space Station.  NASA had been developing an old-fashioned rocket to carry a small number of people into space, but it duplicates the capabilities of several existing American rockets in most ways.  And none of the current or projected rockets will be able to carry more than a few people at a time.

This coming industrial revolution is going require people, lots of people, people who will be living and working in space.  Getting them there is the only thing holding up this new revolution.  Once that bottleneck is broken, investment in space stations; laboratories and orbital factories, is going to start.  The United States has a head start in building the type of spacecraft that will be the backbone of space travel in the future, which will look a lot like the space shuttle.  But, unlike the space shuttle, this spacecraft will only carry people, at least at first.  The parts for the space stations can be sent up on freight rockets that already exist.

But having people use a rocket means that it has to be ‘man-rated’, which means that the chance that a malfunction will result in the death of the crew is minimized.  These requirements add so much weight to existing rockets that they cannot be used.  That is because they all take off straight up, which means that failure will have the crew right in the middle of a whole bunch of explosive materials.

But there is another way of reach space, besides going straight up in a rocket.  By carrying the spacecraft to about 50,000 feet of altitude, the spacecraft can be launched where the air is thin enough that the spacecraft can fly horizontally and still go fast enough that it will reach space.  Lower down in the atmosphere, the air is too dense to be able to do that, which is why rockets launch straight up, then curve toward the horizon.

The United States, under the guidance of NASA, could build the immense carrier wing needed to carry the spacecraft to launch altitude, and the spacecraft that will then fly to orbit, and return, to land where it took off, where it will be prepared to fly again.  This kind of launch system can operate in bad weather, which rockets generally avoid, and does not require huge numbers of people to monitor every aspect of the spacecraft, the launch site, and the surrounding area.  Because a malfunction will simply result in the spacecraft flying back to the landing sight, and not blowing itself apart, with the crew section floating to earth by parachute, it is not necessary to be aware of every detail.

Space flight which does not have to wait for perfect conditions, perfect performance, is the prerequisite of this industrial revolution.  It must be low-cost, safe, and reliable.  We have the ability to make it happen, and doing so in a short time would require the work of many people.  It would also result in many people being paid enough that they could afford to hire housekeepers, gardeners, and music teachers.  Coupled with a national program to improve the energy efficiency of the United States, employment for all could be achieved in a matter of months.

What was spent on the fiscal stimulus program would have paid for the complete development of this new spacecraft, the carrier wing, and the launch and recovery facilities, as well as the ground support needed to operate it, several times.  No other investment we can make offers the potential for larger returns, for new wealth to be created.  Other nations are anxious to take part in this revolution, and some are planning to start it themselves.

But this revolution will need people on the spot, people who can perform experiments, people who can figure out how to make things work, people to keep things working.  Lots and lots of people.  People who will ride to work on spacecraft that take off and land like airplanes.  Spacecraft that we can, and need, to build.

The estimated value of debt

2010/01/29

This financial crisis we have just started dealing with is not a surprise, nor was it unexpected.  And it isn’t over.  We are dealing with the consequences of our actions, the paybacks for the greed we all have been guilty of.  Sure, we believed that our homes were appreciating at astronomical rates, and why, of course we took our banker at face value when he said that it would wise to take out a home equity loan.  We wanted to have that money to play with.  We wanted to buy a nicer car to commute to work with, that boat that was on sale, or put in a pool.  Could we afford to do these things without borrowing money?  Not no.  Hell no.  We shoveled debt onto our heads like we were digging foxholes under fire.

What has all this economic activity created, all the money that we spent bought?  And how could so much of it just evaporate overnight?  People think about credit, but what about debt?  How many people think about the fact that most of the wealth that has been created in the last 20 years or so has been nothing more than numbers in computers, based upon the value of debt.  The more people owe you, the richer that you are.  People invest in debt, banks sell it, and nobody seems to want to pay it off.  What a wonderful concept; buy today what you cannot pay for until tomorrow, if you are lucky.

Did anyone figure in the effect of laying off millions of the highest paid consumers on the planet?  Is it really growth when you take jobs away from one group of people and give them to a different group?  Or is that just financial manipulation, to create wealth by cutting costs.  What happens when the cost that you cut is the buyer of your product?

Real wealth does not evaporate, it does not diminish in value, it is durable, and serves all the people.  Real wealth is roads, bridges, fiber optic cables, transmission lines.  How much real wealth has been created in the United States in the last 20 years?  And it is not creating new wealth to repair old roads, it is investing in what you already have.  So, we built a lot of buildings, but were they needed, or were they funding for a developer?

On every level, Americans have chosen to ignore the future, to resist real change, to accept that they were no better than anybody else.  Other people could ride trains and busses, we were going to drive.    So what if our new building doesn’t have any insulation.?  It is cheaper that way.  And the whole time, we have been insisting that everything is worth more.  Not because of any discernable reason, but just because we said so.

We have invested in trying to be wealthy enough to not have to work, not in making our futures better.  Now, we are paying for sitting on our butts.  We don’t create anything of value anymore, and we can’t even govern ourselves without borrowing money to do it.  Instead of spending money to develop the technologies needed to make a future possible, we have invested in moving production from America to some overseas country.  But we have not invested in giving Americans anything to do.  Normally, economic growth means that the leading countries improve their technology, and move from building one kind of product to one which is more complex, advanced, or somehow beyond the abilities of other producers.  Displacement happens as new industries replace old ones, and people have to learn new skills.

We veered off from advancing our technology, because it would have required a long-term investment, tying up our money for decades.  And we wanted to keep our technology to ourselves, so that no one else could use it against us.  In the 1960’s, during the administration of Richard Nixon, it was decided that the United States would not invest substantial resources into outer space.  The Apollo program would be cut, and no other manned exploration would be funded.  The military was going to handle space exploration, and only for the purpose of defense.

Since that time, the United States has spent more on cosmetics every year than has been spent on developing space manufacturing, mining, and processing.  Typical budgets for manned space exploration have amounted to a few brief missions every year, and nothing else.  The US would not have built a space station except because of pressure from its allies to contribute to one.

It is almost like we are committing suicide by starvation.  We give away all of our food, and do nothing to find more.  The world is fighting over a pie, each person wanting a bigger slice, and more people wanting slices all the time.  We need true growth, growth that results in wealth that will not evaporate.  The Earth is being used up, corrupted in our quest for wealth, while everything that we could possibly need exists somewhere in our Solar System.

Americans should be building space ships, working on space stations, or the Moon, doing work that produces tremendous value, so that they could bring home enough money to buy cars from Japan without having to borrow the money from China.  General Motors would be the worlds leading producer of launch vehicles, and Ford would be making deep space probes.  But we chose to be wealthy instead.

Scott P. Holman

2009/01/29

A new car

2010/01/24

I want a car that doesn’t have any pistons, or valves, doesn’t have a crankshaft or a camshaft, and doesn’t need a catalytic converter.  What kind of car would this be?  A turbine-electric hybrid, which burns diesel fuel at least 95 percent efficiently.  A turbine engine doesn’t burn the fuel in little bursts, but continuously, which means that it burns cleaner.  Practically all automobiles today use the most inefficient kind of engine known to Man, the reciprocating type, where the pistons keep changing direction, and the fuel is exhausted when it is only partially burned.

Added to that inherent inefficiency is the fact that most cars are automatics, which means that a considerable amount of energy is lost in the torque converter, the device that allows the driver to stop without taking the car out of gear.  Adding together all the inefficiencies in the modern automobile, and you might as well pour three quarters of the gas that you buy right onto the ground, for all the good that it does you.

Why haven’t turbine engines been used in cars before?  Because they create their power in a very different way than a reciprocating engine.  A turbine spins at high speed, which makes it difficult to couple that energy to a drive line.  Previous attempts at turbine cars often used bulky, wasteful transmissions, or something equivalent to a torque converter.  But today, with computer control, we can use the turbine to generate electricity, which is then used to drive the wheels.

Replacing fossil fuels with batteries or fuel cells invokes serious performance penalties, limiting range and speed, as well as load carrying capacity.  But the main reason that engineers are trying to get around using fossil fuels is that they are expensive and dirty.  A turbine would enjoy far greater fuel economy than any possible reciprocating engine could, and will burn much cleaner.  Several hundred miles per gallon is quite feasible with a turbine-electric hybrid, without limiting speed or load carrying capacity.

Of course, we still will have to reduce fossil fuel use as they get more and more expensive, but we are not likely to find a way to continue to rely solely on the automobile as our primary means of transportation.  Public transportation, such as buses and trains, will eventually have to shoulder the majority of the passenger miles traveled in this country, but that does not mean that we will have to give up cars entirely.  They will just have to be far more efficient than what we have now.

The new automobile industry

2009/05/25

As General Motors prepares to enter bankruptcy court, autoworkers across the country are waiting to see if their jobs will evaporate.  What many don’t realize is that building cars will probably be very different in the future.  In order to make cars as light as possible, composite carbon materials will probably be used.  Lighter and stronger than steel, composites are now used in building aircraft.  The Volvo Open 70 sailboats used in the Volvo Ocean Race are built entirely of carbon, making them about the most high-tech sailboats in the world.

Not only is steel likely to be phased out in automobile construction, but the kinds of motors used is going to change.  Electric motors are already in use in hybrid cars, and other electric cars are on the drawing boards.  Measured in terms of electicity, todays cars consume about one kilowatt for every horsepower.  Which means driving your car for an hour consumes somewhere on the order of 150 to 200 kilowatt hours.  Burning ten 100 watt light bulbs for an hour consumes 1 kilowatt, so you would have to have 2,000 100 watt light bulbs burning to consume the same amount of electricity as driving a car does.

So autoworkers will have to be electricians, able to understand wiring diagrams, batteries, capacitors, generators, and electric motors.  Sheet metal workers will become composites fabricators. Foundry workers will have to be retrained to work with aluminum, which will take the place of steel whenever possible.  Frames will be made of composites, and even engines might be made with composites, using steel sleeves in the cylinders.

All of this will be to reduce the weight of the vehicle dramatically.  The less the vehicle weighs, the less power it takes to move it.  To be able to drive long distances or at high speeds, weights will have to come down to around 2,000 to 2,500 pounds from the 4,000 to 6,000 pounds many vehicles weigh today.  Reducing weight wherever possible will be the priority, as luxury gives way to utility.  Our image of the automobile as a mobile living room, with various sources of entertainment is likely to change to that of a austere box on wheels to get from one place to another.

Whether the automobile industry will be able to cope with these changes remains to be seen, and new companies may end up replacing the giants we know today.  Willingness to change is not one of the qualities one associates with the Big Three of Detroit.

Looking over a cliff at the End Of The World.

2009/03/15

When your world is falling apart, it is little consolation that you are undergoing a paradigm shift which is going to bring about far better things than what you have known before.    Because making the shift means ending old ways, and learning new ones.

If we were smart, we would put the big car companies to work building buses, mini-buses, and passenger vans.    They also could team up with the aircraft manufacturers and begin building high speed trains.  Right now, there are trains that are capable of traveling long distances at 300 miles per hour.  Without any high technology gambles, like magnetic levitation.  Just steel wheels on steel rails.

Riding in an airplane or an automobile is very likely to become a rare thing.  Many people will still own cars, and airlines will still fly, but the numbers are going to be small percentages of what they were, for a couple of reasons;  we are in no danger of running out of oil, but it is getting much more expensive to extract it than it has ever been.  Oil drilling equipment now has to work in thousands of feet of water, to drill miles under the seabed.  Burning hydrocarbons for energy produces a great deal of carbon mon- and di-oxide, gasses which we are hoping to reduce the emissions of.  Everything we do leaves a carbon footprint, and the tracks of the automobile are huge.

The ages of the automobile and the airliner have come to an end, which has been forecast for decades, but no one wanted to believe it could actually happen.  So, we are completely unprepared for switching over to mass transit, or building high speed rail networks.  Because the automobile industry is so deeply rooted in the American culture, the unemployment rate is quite likely to be much higher than at any other time since World War Two.

We will have to, as a nation, recognize that impossibility of continuing to use cars for transportation everywhere before we will accept paying for alternative transportation systems.  As unemployment rises, and incomes shrink, travel by air will become something unusual, except for some business people.  Teleconferencing via broadband will come into its own, and light rail, monorails, and electric buses will take over the streets.

Plug into what?

2008/12/25

The American auto industry has indicated that part of the recovery plan involves developing plug-in electric and hybrid cars.  This is a brilliant strategy, because it absolutely minimizes the emissions of the vehicle.  Of course, there is the small matter of where the electricity is going to come from to charge up all those batteries every night.  Are we merely allowing the car makers to rob Peter to pay Paul?

We are going to have to accept that there are no viable substitutes for petroleum fuels, due to their portability, energy concentration, and cost.  What we need is new ways to think about extracting the energy from the fuel.  Detroit is in love with the reciprocating, internal combustion engine, one of the least efficient methods known to extract energy from fuel.

The turbine engine, which features continuous combustion, as well as only a single major moving part, is far more efficient at burning fuel, which means cleaner, as well.  Coupled to an electrical generator similar to those used in airplanes, electricity for movement can be generated.  Advanced computer controls could maximize efficiency, and motors at each wheel all could dramatically increase fuel efficiency and versatility.

Detroit must make a clean break with the past, abandoning the tried and true, and safe, for new technologies, new ways of doing things.  Just because none of the Big Three have ever built a successful turbine engine (That I know of,) doesn’t mean that there are no companies in America with the expertise to develop power plants for automobiles.

Over and over, America tries to fix problems by throwing money at them, while avoiding any significant change.  Well, significant change is coming our way, it would seem, and the only way to make it any easier is to try to ride the change, and maybe guide it a little bit.  We can’t stop what has already happened, but we can still affect what happens to us.