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GM's New Car Made With US Government
#31
What I Learned as a Car Czar

History shows government and automobile manufacturing don't mix

June 2, 2009

Wall Street Journal

By ION MIHAI PACEPA
They say history repeats itself. If you are like me and have lived two lives, you have a good chance of seeing the re-enactment with your own eyes. The current takeover of General Motors by the U.S. government and United Auto Workers makes me think back to Romania's catastrophic mismanagement of the car factories it built jointly with the French companies Renault and Citroen. I was Romania's car czar.

When the Romanian dictator Nicolae Ceausescu decided in the mid-1960s that he wanted to have a car industry, he chose me to start the project rolling. In the land of the blind, the one-eyed man is king. I knew nothing about manufacturing cars, but neither did anyone else among Ceausescu's top men. However, my father had spent most of his life running the service department of the General Motors affiliate in Bucharest.

My job at the time was as head of the Romanian industrial espionage program. Ceausescu tasked me to mediate the purchase of a minimum, basic license for a small car from a major Western manufacturer, and then to steal everything else needed to produce the car.

Three Western companies competed for the honor. Ceausescu decided on Renault, because it was owned by the French government (all Soviet bloc rulers distrusted private companies). We ended up with a license for an antiquated and about-to-be-discontinued Renault-12 car, because it was the cheapest. "Good enough for the idiots," Ceausescu decided, showing what he thought of the Romanian people. He baptized the car Dacia, to commemorate Romania's 2,000-year history going back to Dacia Felix, as the ancient Romans called that part of the world. In that government-run economy, symbolism was the most important consideration, especially when it came to things in short supply (such as food).

"Too luxurious for the idiots," Ceausescu decreed when he saw the first Dacia car made in Romania. Immediately, the radio, right side mirror and backseat heating were dropped. Other "unnecessary luxuries" were soon eliminated by the bureaucrats and their workers' union that were running the factory. The car that finally hit the market was a stripped-down version of the old, stripped-down Renault 12. "Perfect for the idiots," Ceausescu approved. Indeed, the Romanian people, who had never before had any car, came to cherish the Dacia.

For the Western market, however, the Dacia was a nightmare. To the best of my knowledge, no Dacia car was ever sold in the U.S.

Ceausescu, undaunted, was determined to see Romanian cars running around in every country in the world. He tasked me to buy another Western license, this time to produce a car tailored for export. Oltcit was the name of the new car -- an amalgam made from the words Oltenia, Ceausescu's native province, and the French car maker Citroen, which owned 49% of the shares. Oltcit was projected to produce between 90,000 and 150,000 compact cars designed by Citroen.

Ceausescu micromanaged Oltcit, but he didn't even know how to drive a car, much less run a car industry. To save the foreign currency he coveted, he decreed that the components for the Oltcit were to be manufactured at 166 existing Romanian factories. Coordinating 166 plants to have them deliver all the parts on time would be a monumental job even for an experienced car producer. It proved impossible for the Romanian bureaucracy, which pretended to work and was paid accordingly. The Oltcit factory could produce only 1% to 1.5% of its intended capacity owing to the lack of the parts that those 166 companies were supposed to furnish simultaneously. The Oltcit project lost billions.

Ceausescu was an extreme case, but automobile manufacturing and government were never a good mix in any socialist/communist country. In the late 1950s, when I headed Romania's foreign intelligence station in West Germany, I worked closely with the foreign branch of the East German Stasi. Its chief, Markus Wolf, rewarded me with a Trabant car -- the pride of East Germany -- when I left to return to Romania.

That ugly little car became famous in 1989 when thousands of East Germans used it to cross to the West. The Trabant originally derived from a well regarded West German car (the DKW) made by Audi, which today produces some of the most prestigious cars in the world. In the hands of the East German government, the unfortunate DKW became a farce of a car. The bureaucrats and the union that ran the Trabant factory made the car smaller and boxier, to give it a more proletarian look. To reduce production costs, they cut down on the size of the original, already small DKW engine, and they replaced the metal body with one made of plastic-covered cardboard. What rolled off the assembly line was a kind of horseless carriage that roared like a lawn mower and polluted the air worse than a whole city block full of big Western cars.

After German reunification, the plucky little "Trabi" that East Germans used to wait 10 years to buy became an embarrassment, and its production was stopped. Germany's junkyards are now piled high with Trabants, which cannot be recycled because burning their plastic-covered cardboard bodies would release poisonous dioxins. German scientists are now trying to develop a bacterium to devour the cardboard-and-plastic body.

Automobile manufacturing and government do not mix in capitalist countries either. In the spring of 1978 Ceausescu appointed me chief of his Presidential House, a new position supposed to be similar to that of the White House chief of staff. To go with it he gave me a big Jaguar car. That Jaguar, which at the time had been produced in a government-run British factory, was so bad that it spent more time in the garage being repaired than it did on the road.

"Apart from some Russian factories in Gorky, Jaguars were the worst," Ford executive Bill Hayden stated when Ford bought the nationalized British car maker in 1988. How did the famous Jaguar, one of the most prestigious cars in the world, become a joke?

In 1945, the British voters, tired of four years of war, kicked out Winston Churchill and elected a leftist parliament led by Labour's Clement Attlee. Attlee nationalized the automobile, trucking and coal industries, as well as communication facilities, civil aviation, electricity and steel. Britain was already saddled by crushing war debts. Now it was sapped of economic vigor. The old empire quickly passed into history. It would take decades until Margaret Thatcher's privatization reforms restored Britain's place among the world's top-tier economies.

The United States is far more powerful than Great Britain was then, and no American Attlee should be capable of destroying its solid economic and political base. I hope that the U.S. administration, Congress and the American voters will take a closer look at history and prevent our automotive industry from following down the Dacia, Oltcit or Jaguar path.

Lt. Gen. Pacepa, the highest ranking Soviet bloc official granted political asylum in the U.S., is the author of the memoir "Red Horizons" (Regnery, 1987).


http://online.wsj.com/article/SB124381203054570397.html
BTW, I "red" his book many years ago. It was very interesting. I still have it on the shelf.
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#32
Besides the bone-head move by our government..in my opinion. Here is something else to think about when you have people running and/or designing cars that have zero experience doing it.

You get something like this
[Image: TheHomer.jpg]
It is only through labor and painful effort, by grim energy and resolute courage, that we move on to better things. --Roosevelt
 Reply
#33
Or this:

[Image: 110.jpg]
 Reply
#34
Quote:ibofb wrote:
Nobody believes governments should be running car companies - again a silly caricature of "the left" promoted by the right (including our friend MichMan on this forum).

The fact is that the government IS running the car companies. Right?

Senate proposal would force GM, Chrysler on dealers
Thu Jun 4, 2009 7:54pm EDT

WASHINGTON (Reuters) - Chrysler and General Motors Corp would have to fully reimburse terminated dealerships and give them 180 days to wind down their operations under a proposal introduced on Thursday in the U.S. Senate.

The plan represents the first direct effort by Congress to legislatively influence the GM and Chrysler bankruptcies, which were orchestrated by the Obama administration.


http://www.reuters.com/article/businessN...1320090604
 Reply
#35
MichMan Wrote:The fact is that the government IS running the car companies. Right?


That depends on your definition of "running". Yours is a little looser than mine.

Either way, the point is I don't think anyone believes that under normal circumstances they should be doing it. The difference seems to be with regards to how serious you believe the consequences of not getting involved would be.
 Reply
#36
The Auto Task Force is made up of Obama administration officials including several Cabinet level officials.

It has "orchestrated" the bankruptcies of GM and Chrysler, fired GM's CEO, cut deals with bond holders and creditors, protected union pensions and decided to stop production of a vehicle manufactured in China so that the production will return to the US. It has also forced the closure of hundreds of car dealers, eliminating the jobs of more workers than are employed by GM's UAW.

But no. They are not running the company. :blink:
 Reply
#37
Amtrak was only supposed to be run by the gov't temporarily too...
That was what 20-30 yrs ago? It still hasn't gone back to the public sector.
Look at how bad the condition of Amtrak is, that is what is coming for Gov't Motors.
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#38
What's scariest you guys believe this stuff ....
 Reply
#39
ibofightback Wrote:What's scariest you guys believe this stuff ....


There is nothing to be scared of in the US. We have divine help guiding us though this time of turmoil. Didn't you know that?

Newsweek’s Evan Thomas: Obama Is ‘Sort of God’
By Kyle Drennen (Bio | Archive)
June 5, 2009 - 18:45 ET

Newsweek editor Evan Thomas brought adulation over President Obama’s Cairo speech to a whole new level on Friday, declaring on MSNBC: "I mean in a way Obama’s standing above the country, above – above the world, he’s sort of God."

http://newsbusters.org/blogs/kyle-drenne...a-sort-god
 Reply
#40
MichMan Wrote:There is nothing to be scared of in the US. We have divine help guiding us though this time of turmoil. Didn't you know that?


Yeah, it's worked well in the past. Bush reportedly said God told him to invade Iraq.

Quote:Newsweek’s Evan Thomas: Obama Is ‘Sort of God’
By Kyle Drennen (Bio | Archive)
June 5, 2009 - 18:45 ET

Newsweek editor Evan Thomas brought adulation over President Obama’s Cairo speech to a whole new level on Friday, declaring on MSNBC: "I mean in a way Obama’s standing above the country, above – above the world, he’s sort of God."

http://newsbusters.org/blogs/kyle-drenne...a-sort-god

I don't know about being scared of Obama, but you might want to be scared of Evan Thomas! :doh:
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