On my morning walk that is the normal office going time for Americans, I find cars speeding towards the destinations. For Americans, the proximity of the workplace is not the top priority for selecting their house of residence with one of the cheapest oil prices, good roads, and latest cars financed so easily with plastics. Surprisingly, I see the cars of Toyota and Honda far more in number followed by other Japanese, South Korean, and European cars. I hardly find cars of American Big Three. Why is it so? Is it because of quality or price?

With my experience of Hindustan Motors that had close connection with GM, I am of opinion that American Big Three had gone creating its presence in the entire potential markets world over. But they never tried to be at the top in those markets and yielded soon to competitors. As with other sectors such as machine tools and electronics America never tried hard to remain at the top. It is just by sheer worldwide presence that GM and Ford still remains near the top. In India, GM started with HM, and Ford with M&M, but soon decided to become fully-owned companies. Neither GM nor Ford was serious to become the leader in the market and so today Suzuki and Hyundai are the main car manufacturers followed by Tata Motors. Nano may push Tata Motors ahead of the other two, but with a bad beginning at Singur, many have started doubting it. Interestingly, VW is number one in China, and Fiat in Brazil. GM and Ford may have a better position in Russia. It appears the management of the American automakers doesn’t have the fire required to reach the top and remain there. Should it not be considered as a failure of the management that is taught in all world famed schools of Harvard, Stanford, Wharton, or Princeton that are the benchmarks for other developing countries including India?

General Motors, Ford and Chrysler have been making losses and going to run out of cash to continue soon. The course left is either bailout by the federal government or going for bankruptcy before year's end. The Big Three have asked for bridge loans of $25 billion. The alternative route to file bankruptcy may mean catastrophic economic hardships in all 50 states with automakers having 239,000 U.S. employees, 775,000 retirees and spouses and 2 million people covered by company-sponsored health care. Collapse of Detroit Three could be cataclysmic and touch more than 4 million other jobs including suppliers, dealers, car haulers and rental companies. A shut down of Detroit will mean an around 10% of the national unemployment rate .

Both the Democrats and Republicans appreciate the problem and stake involved, and so are ready to assist, but it must impose certain tough conditions.

Automakers must restructure and become viable.It must improve up on its perception about its quality, and services among the customers. It must come out with some breakthrough innovations in hybrid, fuel efficiency, or alternative fuel technologies. The government would put limits on executive compensation including a provision barring bonuses from executives whose salaries are higher than $250,000 (couldn't even retire with lucrative "golden-parachute" compensation) and a prohibition on the payment of dividends. Automakers would also have to submit plans on how they intend to remain competitive.

The Democrats' plan in the Senate would give automakers access to $25 billion in loans from the $700 billion Wall Street bailout program for the financial companies.

The White House and many Republicans favor amending the law approved in September to extend automakers $25 billion in technology loans to retool factories and make more fuel efficient cars.

The whole of US is divided on only the way to help, and not on the need to help.

Some doubt if the bailout will fail to reform American auto makers. Jack Welch, the legendary former CEO of GE in Business Week suggests bankruptcy reorganization. According to critics like Jim Schrager at the University of Chicago, Booth School of Business, the wrong people are in charge. Bush, whose limousine is made by GM, opposes a bailout. President-elect Barack Obama is in favour of an aid package, but not a blank check.

Why the legislators are so afraid in talking about the union that is equally responsible for the poor shape of automakers today? Why are the old workers not agreeing to have cut on wages over going to bankruptcy? Why can’t the federal government subsidize the health care cost or get negotiated to the level of other sector? Interestingly, under a labor agreement last year, the companies are required to provide $15 billion to a health care fund for retirees in January 2010 and another $15 billion in 2012. And the UAW is separately asking for $ 25 billion bailout for it.

Naturally, US auto industry is badly in need of total platform change. The country must come out with some long term strategies in many areas of operations to make manufacturing relevant for it. Will it go for a similar bail out for Boeing tomorrow or for Cisco in tech sector, if situation arises?

GM is trying to educate the people about some wrong perceptions about the US automakers. I wish Americans find time to visit the site.

While in US, I now think that the ‘Nano’ concept of Ratan Tata regarding the price of cars can never work. Though Mini Cooper may be a car liked by many, the price for the customer will be about the same as one for Toyota Corolla or Honda Civic. Auto manufacturers or for that matter the manufacturers at large work on old principle of keeping the margin of profit very high. They prefer to manufacture and market products that can provide a maximum margin. That is the reason behind the popularity of SUV/ MUV in US.

And to get the maximum return, the manufacturers may get into unholy cartel too. It was clear from a recent judgment. According to a verdict of the Justice department, “Prices for the flat screens in televisions, personal computers and cell phones have plummeted in recent years — but the decline would have been even faster if it hadn’t been for an international price-fixing cartel.”  Three leading flat-screen producers — LG Display of South Korea, Sharp of Japan and Chunghwa Picture Tubes of Taiwan — pleaded guilty and agreed to pay a total of $585 million in criminal fines for their role in fixing the price of liquid-crystal display panels.

And that is the reason that the Chinese are capturing the market through their disruptive cost innovations, where they offer almost same quality or perhaps sometimes better at half the price. It for the Chinese that DVD are available at $40 an so are the many gadgets that are making your life better.

India manufacturers must emulate the disruptive cost innovations to compete in manufacturing sector that can save the country.

It was Sunday, October 19. Alpana and Rakesh had invited us to join them in a carnival with their kids. Montair Elementary School, the public school of Keshav and Anvita in San Ramon had organized it for fund raising as mission. Rakesh said, ‘a middle class Americans can’t afford private school in US’. For those in India whose children are in US keep on boasting about their salaries in US converted in Indian currency. But that fat salaries can’t buy a good school for their own children. Is it not surprising? As I understand, almost all young parents in Noida must be sending their children in private schools. Every sector of Noida is having a good private school. It is unlikely that anyone except from the very menial workers such as maids and cart pullers send one’s child in government schools.

The elementary school in US covers KG to class V. Rakesh and Alpana took us through the carnival, that didn’t have anything unusual. However, the book fair was a unique idea. There was a section where a parent could buy the books for the class teachers of their kids. Moreover, the fair makes it easy for the children to get exposed, attracted and interested in books. The school was closed. But I could see some part of school. The creativity center, science centre, and the beds for plantation made me feel happy and excited. Even in this totally urban population, the school tries to make the kids plant some flowers or teach its need. The science centre imparts basic science knowledge through models and easy to carry out experiments. The creativity centre provides the means to find out the special interest in the pupils. I wish India could emulate the concept of creativity centers in every school. I don’t think it means a lot of investment. The education must provide facilities to identify and further the latent creativity in every student. I could find the website of the school that provides interesting information.

All the while I was thinking about the public schools in India. Yamuna was associated with one in our own sector that is maintained by Noida Authority. I can’t draw any comparison. Media of both the countries express concerns about the poor rather miserably poor condition of government schools. In US, parents keep a watch of the locality with better public schools based on ratings that are easily available through Internet and shift. Perhaps, in India too, a system of rating system of all the schools by an independent authority must start to help the parents.

Rakesh feels the American system is pretty good. In a chapter on American Power in ‘The Post-American World’, Fareed Zakaria writes, ‘it (American education system) is much better at developing the critical faculties of mind, which is what you need to succeed in life. Other educational systems teach you to take tests; the American system teaches you to think. It is surely this quality that goes some way in explaining why America produces so many entrepreneurs, inventors, and risk takers. It’s America, not Japan that produces dozens of Nobel Prize winners.” US certainly gives a lot of importance to education.US is going to invest $18 billion to overhaul of the nation's public education system over the next few years. It was clear during the campaign and even now. We are happy. We can dream a better future of our grand children, who are all American citizens by birth.