Gran Torino

It is awful that Hollywood waits until the end of the year to release its good movies--the kind of movies that eventually show up in the Oscar nominations list.  We then have to squeeze in so many movies into a very short time period before they disappear from the cinema halls--yes, we can watch them on DVDs later, but there is something special about watching the movies in a big theater with a bunch of others.

So, this time it was Gran Torino.  

For the most part, it was a neat movie.  But, at many places, it was stilted and put-on.  It did not have the kind of nuances that Eastwood played with in Million Dollar Baby, even though there were plenty of opportunities.  The old man's shift to tolerating and liking his Hmong neighbors was quite sudden, compared to the personality we were made to understand.  

I liked the way the movie ended, though it would have been better if the storytelling had involved a little bit more of the character being introspective--the nuances that I miss.  

Later, as I was driving back home, I thought that maybe the movie was the right one for the times for another reason: the "big three" are still stuck in the years of the Gran Torino, while the auto market itself had moved on to Toyotas, Hondas, and Hyundais!

Car crisis could well be repeated

Like most Americans, I am conflicted over how we ought to deal with the crisis with the three car manufacturers — Ford, General Motors and Chrysler.

This is not an abstract public policy issue for me by any means. After all, the vehicles that our family currently owns are from one of these manufacturers — a Ford Focus, a Saturn Vue and a Jeep Cherokee. We also have owned a Ford Taurus and a Saturn station-wagon. The only “un-American” vehicle we ever had was a Nissan Sentra.

It is not that we were implementing a “Buy American” policy at home. It just so happens that the vehicles we bought met our preferences and budget constraints.

Earlier today, when I took my Saturn Vue to the dealership for the regular oil change, I began to wonder whether the brand will even exist in the future. News reports suggest that General Motors is planning to sell the division, or merge it with another. It’s possible Saturn could be shuttered completely.

On the one hand, the public policy person in me prefers inefficient economic enterprises to fade away without government intervention. I think about Pan Am, which symbolized air travel when I was a kid. It has been almost two decades since Pan Am closed down when it could not survive in a highly competitive global travel industry. It is the law of the jungle that inefficient businesses lose out to efficient ones. In order to pre-empt a Pan Am-like story, the auto manufacturers should have avoided the strategic errors they made, especially during the cash-flush decade from the mid-1990s when sport utility vehicles and minivans delivered billions of profits.

On the other hand, I recognize that government actively intervenes in practically every aspect of our economy. Heck, even my home is partly underwritten by the government, which permits us to write off the interest paid on the mortgage loan. Thus, if many other industries can be subsidized or bailed out, well, why not help out Saturn and its loyal and committed employees?

Even as policymakers try to figure out the current crisis, we might want to understand a few longer-term trends as well. “Planes, Trains and Automobiles” was a holiday season movie two decades ago; these same American manufacturing industries listed in the title also have been in decline. Trains, for all purposes, have been nearly relegated to history. The automobile industry is in a pickle — some might argue that it has been in denial since the energy crisis in the 1970s.

And all is not well in the aviation industry either — both in the manufacturing of planes and in passenger transportation. Boeing was the undisputed champ in its field, perhaps even more powerfully so than the American “Big Three” ever were. Slowly but steadily, Boeing has been losing its market share to other manufacturers. Twenty years ago, Airbus had barely 16 percent of the market; now it is nearly on par with Boeing in terms of the value of aircraft delivered.

Meanwhile, Brazil and Canada have become active in the manufacture of short-haul jets. China is the latest entry into this field; last month, the Commercial Aircraft Corporation of China announced the sale of five of its ARJ21s to General Electric’s aircraft leasing division, with an option for 20 more. The ARJ21 and other larger CACC-­manufactured jets are essentially China’s effort to crack the market dominated by Boeing and Airbus.

Over the last few years, we have come to realize that anything we do can be done cheaper in China. This means that, if we don’t watch out, here in the Pacific Northwest we could be worrying about Boeing 20 years from now, just as Americans are worrying about General Motors today.

Therefore, even as we try to mitigate the woes of the auto industry, and even as the manufacturers begin to articulate a long-term survival strategy, I hope we will learn one important lesson.

Global economic competition is real, and it will only get more intense in the future. If we don’t learn that lesson, another bottom line awaits us: History does repeat.

Published in the Register Guard Dec 16, 2008

Let the auto companies fade out

This is a photo of one of the most expensive parking lots on the planet. Cars being brought in containers from Germany and other countries, off-loaded and parked in lots because there is no dealership that wants them, says the LA Times.

But, that is not even as fascinating as another one in that same story--the sharp drop in our leading exports through California: recycled cardboard and paper products.

This material typically goes to China, where it is used to make boxes for new electronics and other products that are sent back to the United States. But Chinese factories reacting to sharply falling demand are slowing production, so they need less cardboard. Tons of paper are piling up recycling businesses around the port, the detritus of economies on hold.

My students always find it hilarious that containers from China get here loaded with electronic gadgets, and all kinds of crap we don't need, and we send back in those containers scrap metal and paper as our exports. What is wrong with this picture, eh!