American Leyland Birthwatch 5: Plans, Trains and Automobiles

Edward Niedermeyer
by Edward Niedermeyer

The New York Times has an interesting piece today comparing automotive rescue plans to earlier government intervention in the railroads. As apt a comparison as it might be, the piece ultimately advocates exploring an option for the auto rescue based on Conrail, the government-owned rail holding company created in 1976. If the American Leyland model worked for trains it might just work for autos, right? “The ideological debate already in progress,” says Wharton prof Peter Cappelli, “is whether government should actually direct the auto companies, stepping into management, or passively give them more loans, and then get out of the way.” Hows that for a choice?

Since the two options have been chosen, the Conrail experience shows how the former option could work. After all, congressional activism in railroad restructuring created Conrail out of several failing railroads in 1976, cut its employment in half and returned it to profitability by 1981. Conrail was then taken private and persists to this day as CSX, stubbornly preventing Acura from selling its Civic rebadge in the US.

Success? Possibly. But the infrastructure-heavy nature of the railroad business makes it far more similar to traditionally-regulated businesses like energy and landline telecom than durable goods manufacturing. Competition is far more vibrant in the auto industry than in train transport, meaning that rationalization or “right sizing” alone can “fix” railways but for automakers the right business structure is only half the battle.

Actually building products that consumers respect and desire is something that government can’t conjure up with either blank checks or active nationalization. But since those are apparently the only options on the table, it’s time to flip a coin.

Edward Niedermeyer
Edward Niedermeyer

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  • Anonymous Anonymous on Mar 16, 2009

    The USA as it was is officially finished. If you like Peter Schiff and Jim Rogers you will enjoy Marc Faber (Dr. Doom) http://www.youtube.com/user/MarcFaberChannel

  • Robert Schwartz Robert Schwartz on Mar 16, 2009

    "I lived in Tokyo for several years, and learned some lessons about infrastructure and real estate from that experience." You forgot the part about firebombing the place so that you can start over with a blank slate.

  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
  • Jalop1991 what, no Turbo trim?
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