Baton Rouge Area Homes Technology Blog


What Is Happening to Automaking in the U.S. and in Louisiana?

What Is Happening to Auto making in the U.S. and in Louisiana?  

I am going to divert a moment from the most commonly thought of technology, computers, to another type of technology that is part of a Realotr's life every day, cars.  Every Realtor in the U.S. must have a car.  And we all know the high cost of owning and operating one.  As I listened to some political ads, it reminded me of a blog I wrote a while ago about a young start up company in Louisiana called V-Works that had committed to manufacture "green" cars made with U.S. labor and design in north Louisiana.   Here is a snippet from from the 2008 news release:

  • "V-Vehicle Company, or VVC, is a new American car company that will produce a high-quality and fuel efficient car for the U.S. market. Its goal is to provide the American car buyer greater product value and a superior automotive experience. By designing and building its cars in the U.S. WC wants to help re-establish American leadership in the global automotive industry

  • VVC has been funded thus far by the venture capital firm Kleiner Perkins Caufield & Byers, or KPCB,under the stewardship of VVC board members and KPCB partners Ray Lane and John Doerr. KPCB s one of the world’s leading venture capital companies, with success stories including Genentech, Amazon, Compaq and Sun Microsystems. VVC and KPCB are currently in the process of closing a second round of equity funding.

  •  VVC has applied for engineering and manufacturing loans under the Advanced Technology Vehicle Manufacturing Loan Program, a $25 billion loan program established by Congress in 2007 and administered by the U.S. Department of Energy to spur innovation in automobile technology."

Where Would the U.S. Auto Industry Be Without Henry Ford's New Start Up Company?Start ups are many times unsuccessful, though this one had backing from big names like Kleiner Perkins Caufield & Byers and T.Boone Pickens of BP Capital Management.  The company had solid leadership with experience in the automotive industry.  The company raised $90 million in private investment and $83 million from state and local governmental agencies.  the State of Louisiana came on-board in June 209 with a performance-based incentive package of over $133 million of infrastructure, tax credits, tax abatement, and customized training.  It changed the company name to Next Auto Works and applied for a $320 million loan with the United States Department of Energy.  After clearing extensive technical, market, financial, regulatory, credit and legal analysis the DOT determined that the applications were 'substantially complete' in May 2009.  The DOT waited and led the company to believe approval was imminent and then in March 2011 announced that DOT would not recommend approval of WC's applications from the Advanced Technology Vehicle Manufacturing Loan Progeam (ATVMLP) This loan program was set up and approved by congress for exactly this kind of venture in the U.S.  By refusing this next financing step, it essential brought to a halt  the start up of a U.S. automotive manufacturer offering a car totally produced with U.S. labor, the v-car that was a high quality, fuel efficient car priced 35-40% BELOW COMPARABLY EQUIPPED CARS.

The company announced shut down of the Monroe, Louisiana facility in early 2012 and is paying back money and bonds collected to responsibly end this venture.  A loss for Louisiana and perhaps the rest of the U.S. as well.

A not so flattering article written in Forbes Magazine by Paul Roderick Gregory may have a ring of truth.  It is titled "Outsourcer-In-Chief:  Obama Of General Motors"  You can't discern truth from any of the political ads on t.v., but in this article Forbes a respected business publication points out some enlightening information

"We need to look no further than General Motors' own figures to learn that GM outsources almost two thirds of its jobs overseas.  Less than one in five GM vehicles are manufactured in the Unite States.  To be exact GM's December 31, 2011 annual report shows GM of North America accounting for 98,000 of the 207,000 GM jobs worldwide....GM has 74,500 jobs in the United States and 122,500 abroad...Almost two thirds of GM's jobs are in other countries."

There may be other examples of such startup companies in your states.  This is just one I know about.

I salute the entrepreneur spirit in the U.S., and close out my blogs on VVC at the sad end of this Louisiana automotive company.  I leave you with these questions for reflection. 

1.  Why did the U.S. bail out General Motors without requiring that all other partner countries that profited even more than the U.S. pay their fair percentage of the bailout?

2.  Why did the DOT under Obama refuse to help a auto start up company that was well backed, and well run by experienced auto executives, and with only U.S. labor, and that had a lower priced, fuel efficient auto that would have been a good alternative for many in the U.S.? 

3.  Is it possible that General Motors and unions afraid of real competition?


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Comment balloon 0 commentsAnn Dail • November 02 2012 03:06PM
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