davywavy | The seventies make a comeback

As is commonly known, sister and I live in poverty , so it might come as a surprise to you to learn that people often try and sell us financial services. Not of the "Sign here and get our new low credit rate of 57% for the rest of your pathetic, squalid life!" sort as so often appears from people offering loans to the poverty-stricken, but more sophisticated scammers than that, instead offering stock tips and investment advice. The other day, we received a mailshot from these people, offering us unrivalled access to stock market secrets.
Now this sort of thing tends to make me guffaw merrily before adding the letter to the recycling, but not on this occasion. On this occasion these people made two mistakes: one, they make completely wild and unreasonable statements in their literature, and two, they included a reply-paid envelope.

If you want to read a copy of the mailshot they sent us, you can do so here.

And thanks to their kindly inclusion of a reply paid envelope, we got to reply to them:

Dear Sir,

Thank you for your recent letter setting out your reasons for contending that the current economic situation is similar to that prevailing in the early 1970’s.

Although in some ways I would agree that parallels can be drawn between then and now (although there are also notable differences, most obviously an independent Bank of England), one aspect of the 1970’s which I certainly don’t consider due for revival any time soon, and am surprised to see that you apparently do, is that era’s attitude to race. I refer (of course) to your subheading; “6. ASIAN MANUFACTURING IS STEALING OUR JOBS -” beneath which you allude to the problems faced by the Rover car plant in the 1970’s, and draw a present-day parallel with the Chinese manufacturing boom.

Sir, I have spoken to auto engineers working for motor and Diesel companies in Britain and Detroit, and it is the considered opinion of all these (British-born) designers that people did not want to buy Rover cars in the 1970’s because, quite simply, Rover then made a dreadful product.

By comparison, Toyota, for instance, is one of the great car manufacturers of the world. British people did not buy Toyota cars because they were conniving with evil slant-eyed pilferers of work that rightfully belonged to the decent British labourer in a conspiracy to undermine our economy. As you, by using the word ‘stealing’, imply. No. They simply bought Toyota cars because they were better value for money. There was no theft or dishonesty involved, simply global market forces. If you genuinely believe that the Japanese car manufacturers of the ‘Seventies committed some dishonest or underhand act then the British purchasers of the product are also guilty by association and you ought to be including them in your defamatory remarks, unless of course you consider them to be the witless dupes of a cunning and ingenious race, incapable of organising a boycott. In any case, I consider your observation to be distasteful in the extreme, and if this is the sort of thing you feel to have to resort to in order to attract potential customers I trust you will kindly remove my name and address from your mailing list with all due expedience.

Yours sincerely

Well, it passed an evening, anyway.

Flat | Top-Level Comments Only

From:

applez.livejournal.com

Honda ... and yes, they all build consistently good trucks. Interesting to observe that whilst they always maintained a share of the truck/SUV market during the cheap-fuel 90s, they really made a strong push at the very start of the elevating fuel prices, precisely when GM and Ford had gone down the Escalade and Expedition paths...having ruined their sedan development (such as Ford's rescue vehicle of Taurus from the late-80s).

The Japanese companies were smart to concentrate on progressive improvement on their sedans, only invading the GM/Ford SUV territory fairly late, when the fuel market began to shift...bringing in their sedan-efficiency lessons to the larger truck chassis late.

Likewise, the Ford management never really knew what to do with the 90s environmentalism, and were very late in bringing in successful European models to the American market, such as the Focus class of cars.

I quite agree, the management has been the perennial problem with these companies...who, for too long, have drawn the majority of their business from government contracts, rental fleets, Congressional help...not everyday families with their car(s) in the garage.

From: (Anonymous)

You seem to have implied earlier that CAFE is/was protectionist, whereas I see it as having dealt a killing blow to the US auto industry: Look back to the great stuff they built in the 50s, and weep. Jimmy Carter took the coward's way out by forcing the US auto industry to build crappy little cars which no-one wanted - to get reasonable performance they had to buy trucks which were, by dint of having live rear axles and leaf springs, CAFE exempt (go figure) and also, inevitably, environmentally (heavy, crap aerodynamics) and dynamically inferior (The NHTSA estimate 2400 US citizens a year die in single vehicle rollover incidents - Americans die because they drive trucks)instead of taxing fuel and letting people who could afford it drive proper cars.
Governments need to raise taxes, it would not have raised the overall tax burden on the American consumer.

that's not to say US builders aren't to blame: In the late 90s / early 00s Ford were shipping 450,000 F150s a year, and making about $10,000 a unit on them, but they still didn't bother trying to re-enter the low margin car market. Too competetive. It was inevitable the Japanese would chase them into their last lucrative market segment and deliver the killing blow, the oil crisis is just hastening the all too predictable end.

If the big 3 had wanted to stay in business, they'd have fixed their products. When all is said and done, it's the value proposition of it's product which determines whether a company sinks or swims.

Whilst it's easy to be wise post facto, the failure of CAFE illustrates all too well why governments should avoid trying to micromanage society, whilst having the courage to impose unpopular but necessary reforms on the electorate.

From:

applez.livejournal.com

You seem to have implied earlier that CAFE is/was protectionist, whereas I see it as having dealt a killing blow to the US auto industry

No, I believe the 'light truck' exemption to CAFE was a lifeline given to US manufacturers, which they grasped with both hands desperately...and worse, matched that with the sort of favoured pet lazy mismanagement that killed a diversity of automobiles and auto development that could have given those companies a better competitive position today.

It's sad-funny actually. GM does do quite a lot of R&D, but very little of this translates into their mainstream manufacturing. Just the odd concept car (e.g. Hy-Wire) or gadget (IR HUD on the Cadillac).

I think Carter did what needed doing, and the only shock was because the US companies had fallen so far behind on actually building anything genuinely innovative, and recognizing the realities of resource vulnerabilities. That the first generation of post-CAFE cars were seen as 'crappy' is a combination of both the shock to the consumers who were told "muscle cars forevah!" and the fact that GM/Ford were on the earliest step of the learning curve...one that Japanese and some European companies were much further along.

As for raising taxes? In the 70s or any era? Political suicide. Any politician worth their vote-computational salt will sooner flush the nation down the financial sewer than raise a reasonable tax. That said, fuel taxes did start in the 70s, continue to the present day, in various forms and states...though arguably these have fallen behind.

failure of CAFE illustrates all too well why governments should avoid trying to micromanage society,

I agree somewhat, but this has to come with the recognition that the likes of GM/Ford have essentially been a government-based industry since at least 1940. I feel so many of their management decisions have reflected the profitability of Congress more than the market. Up to and including the generous worker benefits well into the troubled 80s. One simply cannot expect serious technical innovation and mainstreaming from a company like that.

From: (Anonymous)

Maybe I'm being over - generous to the US auto builders, but I believe CAFE shut them out of the global market - no-one else was going to buy light trucks without the peculiar to the US no-tax but arbitrarily regulated market conditions making them an unusual but rational choice - just as the market was globalising.

With European manufacturers now making 160mph cars still capable of 40mpg, (43.5 according to official bmw figs, but they're a bit optimistic) you can have CAFE compliant performance tin, but the US builders are so far off the game they're probably out for good. BMW have stolen the cachet Cadillac once held, and I think it's game over.

As for Carter comitting political suicide had he raised fuel taxes: he was on his way out anyway, stagflation saw for him, he could've had some guts and done the right thing.

Same thing we are faced with in Britain now, a tinkering government without the guts to stand up to the electorate (or anyone else) when it's right that they do, but perfectly happy to keep loading the burden onto any cash cow without a vote.

I do agree that US industry has been a branch of the government since, ooh, God was a lad, with 'Pork Belly' contracts paying my salary all too frequently. Unless US manufacturers develop word class quality consumer products, it'll come to a sticky end though.

From:

applez.livejournal.com

I believe CAFE shut them out of the global market - no-one else was going to buy light trucks without the peculiar to the US no-tax but arbitrarily regulated market conditions making them an unusual but rational choice - just as the market was globalising.

Hm? I don't quite follow how that can be laid all on CAFE. Given the (long overdue) modernization effort that followed the failure of 'Buy American,' the new compromise with unions, and Iacocca's experiment with robotics, GM and Ford were as well placed as they were ever going to be to make the most of CAFE without putting all their development eggs into the SUV/light truck basket. It just happened to be that VW, Toyota, Honda were better placed than Chevy or Ford to take advantage of CAFE circa 1982. But that's no reason for US auto manufacturing to slide (as they did) on the compact & sedan challenges.

Without CAFE, US auto manufacturing would be in the position it is today a lot sooner is all. They didn't take advantage of the breathing window they were offered to either achieve parity* or leapfrog their competitors in other model areas. This is something I've been complaining about for 10 years now. What particularly erks me is that they could have used their large SUV profits on diversifying their models more...alas no.

As for no one else buying 'light trucks/SUVs' ... that's not quite true either, considering the extensive African and Asian markets for light utility trucks - in which Toyota did very well throughout the 80s and 90s. I mustn't forget Brasil and Argentina either.

*To be fair, there were reasonable model competitors in 1995, such as the Dodge Neon compact or GM's Saturn experiment (each had their cult following) - but institutional mismanagement meant they were never able to grow past the limits the central firms placed on them. That, and poor manufacturing leading to recalls.

From:

applez.livejournal.com

re: Carter ... he lacked the charisma needed in the late-70s, but he did all right for his day. Certainly better than more modern disappointments.

re: New Labour - well, to each their own. I will say this though: the efficiencies of decentralization make less sense in a nation the size of Britain than it does the US. Worse, it is decentralization without genuine empowerment - something the Dutch seem to do right by comparison.

re: US manufacturing ... well, it is very very hard for me to see it surviving and thriving without the crutch of government contracts, but I suppose there are spots of light with regards to consumer electronics like the iPod. Incidentally, one more reason why I want to see Why We Fight [ http://www.whywefight.com ]

From: (Anonymous)

My iPod says 'Made in China' on the back.

However, less flippantly, I don't think we're going to agree, I see CAFE as political cowardice, you see light truck exemption as a lifeline. I don't think it was ever intended as such. I think light trucks at that time were not ever expected to become the closest thing to sports cars available. Clever marketing turned them from utilitarian tin cans lethal at speed into macho status symbols. In the UK they are known as 'Gay Jeeps' due to their prominent placement in homophillic drama 'Queer as Folk'

CAFE shut US builders out of the premium auto market where they had previously been players, and, as a glance up any San Francisco street will tell you, they have made no inroad at all for decades. (Seriously, it's like being in Stuttgart, not a single non-German car visible.)

The premium auto market is where the money is, and with 'emerging' economies due to eclipse the US in the next decade, unless you have product ready to sell there now, last one out please put the cat out.

I believe CAFE was intended to reduce US reliance on imported oil without fiscally disadvantaging the US taxpayer, and, because other countries were the opposite apprach to the same problem: creating fiscal pressures on auto builders to produce more economical cars by raising the cost of ownership across the board, the US measures created a market imbalance favouring a vehicle which, without special market conditions, no-one in their right mind would buy. This denied US builders the global economies of scale which VW & Toyota have used to such effect. The US builders bread and butter products were unsellable outside the US, as they made no sense unless madated by morally cowardly legislation.

Jimmy Carter did get the Israelis & Egyptians to shake hands, permanently it seems. If Dubya can do 1/10th as much, he won't have wasted his time.

From:

applez.livejournal.com

I think light trucks at that time were not ever expected to become the closest thing to sports cars available.

Interesting, since the SUV may be marketed as a luxury sports car in Europe, but in the US it has actually become a whole range of vehicles...from utility, to family conveyance, to luxury auto.

CAFE shut US builders out of the premium auto market where they had previously been players,

I think CAFE was only a small part of this outcome. Moreover, I'm sure more than a few GM/Ford Execs would disagree with you.

and, as a glance up any San Francisco street will tell you, they have made no inroad at all for decades. (Seriously, it's like being in Stuttgart, not a single non-German car visible.)

As one who lives in my fair city, I have to say you are actually wrong on that count. Granted, there is a higher proportion of German cars here than one would find in the MidWest, but there are all types here. Moreover, the Hummer has proven particularly popular (grrr).

unless you have product ready to sell

Credit to Jeep for opening factories in Thailand in the mid-90s...but they never took it very far.

If Dubya can do 1/10th as much, he won't have wasted his time

I rather doubt Dubya will achieve much at all - at least nothing of lasting positive value through the ages.