Essay: Innovation in Transportation

Sustained inflation of the price of oil has set in motion a number of adjustments in the economy. On the one hand, consumers have made adjustments, perhaps under duress. Many have tended to drift to public transportation to satisfy their needs for short-distance travel, and the capacity of the mass transit systems to serve the mounting demand is beginning to reveal its limits. Unfortunately, possibly owing to decades of disinvestment or simply neglect, the transit systems in most cities are not capable of scaling commensurately to meet the increasing demand. Consumers have also made longer-term substitutions of fuel efficient versions of their motor vehicles for gas guzzling models that until recently have enjoyed the status of household pets.

American motor vehicle manufacturers, on the other hand, after successfully resisting credible threats to force them to produce fuel-efficient models, have now begun to deploy their ever-scarcer resources to re-engineering their vehicles. Strategies to accomplish the fuel-efficient vehicle focus on re-engineering the engine, redesigning vehicle bodies to reduce resistance to air and road surfaces, improving engine and vehicle management systems, and other steps.

Ford Motor Company lost $8.7 billion in the second quarter of 2008. Its immediate response has been to announce that it will now shift its resources to the design and production of smaller, fuel-efficient models. One has to wonder if this public intention is credible or sufficient in addressing what might be a systemic alteration in its environment. Ford’s strategic intentions are not different from those of General Motors or Chrysler, and why should anyone expect them to be? All three manufacturers benchmark against each other.

The collective response of the manufacturers to the complex but evident changes in their environment is reminiscent of a wonderful passage in the novel, Ever After by Graham Swift, observing the plight of the great railroads of a fading Victorian Great Britain. At one point, perched on a hill, the protagonist watches in the distance a great express rushing across the scene as if steaming to its oblivion. So now one might ask whether the motor vehicle manufacturers should continue tinkering on their progressively quaint and anachronistic capsules of individualized transport as the world around them adjusts to a new reality. Some drivers may return to their urban origins, thus obviating the need to sit behind the wheel of a motorized vehicle as they ponder the objectives of their daily activities. No matter how much the manufacturer can make the interior of the vehicle look like a hotel room, or endow the vehicle with entertainment features, the erstwhile consumer may ultimately commit to a life without a motorized vehicle.

Should we expend energy or thought to rescuing the U.S. automotive industry? Were we to do so, would we retrogress to a lower standard of living? After all, we are not ignorant of the unpleasant externalities that have accompanied the transition of a railroad driven economy to an automobile driven economy. Here is a start on the list: smog, congestion, urban decay, despoiled plains and farmlands, and pronounced dependence on despotic foreign suppliers of a dense energy source (oil).

What would be the optimal use or role for the automobile in American society now or in a future we might anticipate? More pointedly, should the use and role of the automobile change in light of how the U.S. economy has evolved from the introduction of the automobile as a romantic instrument for escape, adventure, and liberation about a hundred years ago to a current status as a kind of multidimensional” hell on wheels?”

Considering the constraints of the infrastructure supporting its use, is the automobile now more suited to short- or long-distance transportation? Or does it matter? Or is transportation the real purpose of its use? The motorized vehicle had some assistance from the airplane over several decades of the 20th century in ultimately displacing the railroad as the preferred mode of choice for long-distance travel. With the development of road systems to support the automobile, and a network of airports to support airplanes, travel times between any random pairing of cities were re-calibrated in the minds of the American traveler. If gasoline prices at the pump continue to rise, then why should there not be a retrenchment in both the intensity and the variety of automobile use?

By David Gautschi

David Gautschi is dean of the Lally School of Management and Technology,
the business school at Rensselaer Polytechnic Institute, Troy, New York.