Of Chips and Cars

While not professing to be any form of expert in materials science or manufacturing, there are some larger common sense observations that any average American can be draw from news about technological progress. IBM just announced that it has developed a new material created by a process using heat that enables manufacture of microchip processors in mass quantities that could yield up to 35% faster processing speed and that consume 15% less energy than chips currently employed in computers. IBM is pushing to refine the process and manufacturing capabilities as soon as possible in order to compete for market share in the highly competitive computer chip industry.

Now imagine a company that has developed and patented technology that allows for the manufacture of a durable consumer good that is lighter weight, as fast and powerful as currently used goods of the same class, but that would be 30 to 60% more efficient in terms of energy consumption. This company, unlike IBM, has chosen to sit on this new technology and use aggressive measures to prevent other companies from developing the superior technology. At the same time, the company has continuously lost market share as the consuming public steadily seeks out more efficient goods of this type.

The latter company is not hypothetical. In fact, the former “Big Three” US automakers have held patents for technology that would enable production of lighter weight and more fuel efficient cars for decades. They have fiercely defended those patents from attempts by other companies to use similar technologies to produce more lightweight and fuel efficient cars. They have grudgingly introduced minimal bits of the technology as “upgrades” in their traditional models only if actually forced to do so to meet competition. At the same time, Japanese and other foreign car manufacturers have developed alternative technologies that also achieve greater fuel efficiency, and have aggressively incorporated those technologies in their products. The consumer response is clear and convincing. This year, Toyota became the top auto manufacturing company in the world.

While some may still be scratching their heads as to the cause for decline of auto manufacturing dominance of US companies, it really does not require a "scientist" or an economist. The traditional and common sense model of commercial competition – “Build a better mousetrap and get it to market” – is what has led to huge leaps in technology, huge growth in sales volume and very significant improvements in efficiency and environmental benefit in the computer chip industry. Toyota and other foreign auto manufacturers have used the same model to grab large enough market shares from US auto manufacturers to topple the Big Three. More significantly, much of the gain they have achieved is in the United States, right in the back yard of the Big Three.

There are signs that the Big Three have finally begun to recognize the reason for their downfall. The mystery, however, is why Big Three executives have remained in some clouded obscure "other" world, unable to see what each of us average consumers has seen for decades. US automakers' negligence might be excusable if they lacked the technology and were simply losing the race to obtain and incorporate new developments. However, there is no excuse for their failures when that have had access to technology that, if employed, could have helped maintain their competitive advantage and significantly improved the environment.

Unfortunately, the "loss" from their negligence has been more serious than just company profits. Tens of thousands of workers have lost employment permanently. Jobs have been exported to other countries where cars that consumers actually want are being produced. And the Environment of this world continues to be damaged by the excessive use of hydrocarbon fuels. One expert on Global Warming suggested that the increase in Global Warming could be stopped in its tracks if the United States would simply adopt and enforce fuel efficiency standards for all vehicles that are currently imposed in Europe. Even if such substantial gains could not quite be accomplished, there is little doubt that the economy and the circumstances for the thousands of displaced autio workers would have been better had the Big Three executives not been so arrogant and misguided.