Great article a few days ago in the Financial Times about how GM's lobbying in Washington against logical progress fuel consumption standards set it back years later and contributed to its current woes.
I remember one of the first times I visited DC and was amazed by the number of Associations, organizations and the like which had offices in Washington DC. All protecting their turf and often delaying progress and the inevitable.
The car industry probably has one of the most formidable lobbying apparatus around. It was quoted that the Alliance of automobile manufactures spend $ 36.6 million on lobbying from 2000 to 2005. In addition GM spend $ 43 (Ford 36 million) on various tactics to make sure that law makers see it their way. These tactics varies from sending armies of lawyers to help politicians study and mark up bills to so called grass roots movements. This is in addition to their campaign donations and the work the United Autoworkers does on their behalf.
A good example of the short term “success” of lobbying is the defeat of the “Bryan” bill which sought to raise fuel efficiency standards by 40% over ten years. The bill was defeated in 1990. Subsequent efforts to raise “Cafe” standards by Congress was defeated in 1995, 2000, 2001 and 2003.
The reason is that the automobile industry opposed this because it would hurt sales and jobs what other cock and bull stories they could come up with.
So progress on fuel economy standards stagnated in the US and of US cars. Guess how many jobs did that cost in the end? GM and Ford's combined market share declined from 58.5% to 43.5% in the same period. Compare that to the market share of Honda and Toyota which went from 12.7% to nearly 22 %.
All that money wasted, all these engineers which could have worked all that time on fuel efficient cars and engines. Instead they fell behind their Japanese and European counterparts. GM and Ford are now forced to “license” or import Japanese know how when it comes to designing and building fuel efficient cars. Let's not forget the limited appeal of US cars abroad to countries which always have had relatively high fuel prices because of taxation.
Unfortunately the car industry is not the only industry which is wasting money and opportunities with lobbying efforts: Look at the RIAA (Recording Industry Association of America) which through armies of lawyers and intimidation tried to do anything to postpone the advent of digital downloads. We have them to thank for over stringent copyright laws which are based on the that every consumer is a (potential) crook.
The article also mentioned the electric utilities in the US which did everything to defeat congressional efforts to require them to derive at least 10 % of their power from renewable energy sources such as wind and solar against 2.5% right now. You only have to look at current gas prices to see what would have been the best option.
I have to say that I don't understand what “Congressional Efforts” mean when they seems to always water things down so that it is a meaningless proposal. Remember that incrementalism does nothing. It seems that the draw of short term gain and protectionism is more important for both lawmakers and industry than long term progress and profits.
Progress will always win in the end. Just looking through old failed companies and you see it are disruptive technologies which get the upper hand eventually. Better spend money on renewal, evolution and progress rather than delaying the inevitable. Lobbying is far too often defensive and negative. It is a waste of money. Let markets decide, not (short term) political interests.
In the same newspaper today I read how GM has reduced their R&D budget because of their current financial positions. I rest my point.
Technorati Tags: Disruptive Technologies, GM, Honda, internet, Lobbying, puppy, Toyota
Quite a few stories yesterday on how football (or soccer as it is known in the US) club Manchester United (a major brand in the UK, Europe and China) apparently reneged on a verbal shirt sponsorship deal, reportedly worth £70 million (about $ 120 million) for a 4 year deal (I would have thought it would have been 5 years).
