GM, Conspiracies, Controversies, and Complications

Note: I quite dislike conspiracy theories. I don’t know how many of the numerous theories put forth turn out to be true but it seems like most have no real foundation and thus cause considerable harm for no reason. On the other hand I do think that given enough evidence it is important to at least take a look. I really really hope that the potential conspiracy outlined below is false, but I also think it’s important to get it out there.

I recently wrote about what a great opportunity I think that 3M has with their Maplewood campus and nearby neighborhoods, including bikeshare possibilities.

A couple of weeks later I was made aware that GM are implementing a bikeshare system on their campus in Michigan. This sounded really great, especially for a car company to be acknowledging that bicycles are such a valid transportation option.

Could it be that simple?

The ad that GM ran in most every college newspaper in the country a couple of years ago might complicate things a bit.

GM Bicycle Ad

Is this a company who thinks bicycles are a valid mode of transportation?

Within minutes of publication there was a twitter storm resulting in amazingly quick apologies from GM. I’d guess that they knew this would happen and saw no major negatives. They got their point across (bicycle riders suck, GM cars rule), the people that they wanted to reach would likely not have even noticed the twitter storm and subsequent apologies anyway, and either way they would have garnered a lot of PR.

Perhaps GM had a change of heart after that ad and their bikeshare system is a genuine result of that?

Or not? As a part of their system GM will require all bikeshare users to always wear helmets. Ah, now we’re talking good stuff. Conspiracy and controversy.

Some have argued that this is a requirement of GM’s insurance company. There are two problems here. First, they are likely self-insured[1]. Second and perhaps more important, the company running the system for them says on their website that helmets are not required.

Just concerned for their employees? There has been no indication that bikeshare is exceptionally dangerous. In it’s first year of operation, NYC’s Citibike program recorded no fatalities and few injuries. And this was in New York traffic! Other studies have indicated that cities with bikeshare systems have seen an overall decline in injuries, including head injuries, of bicycle riders.

There is also the issue that only two of over 600 bikeshare systems worldwide require helmets (others did but dropped the requirement due to user complaints and low use).

On top of this, there is nothing that I’m aware of indicating that bicycle helmets reduce head injuries. Most significant is that countries with high helmet use have about the same or higher rate of head injuries per overall bicycle injuries as helmetless countries like The Netherlands.

Why then would GM include this requirement?

A conspiracist might say that they want their bikeshare system to fail. They’ll get all kinds of great PR for implementing such a healthy and green initiative. And then they’ll be able to show how ineffective bikeshare is. I can hear the quotes from GM now “We tried very hard but people just don’t want to ride bicycles.”

The word will go out that corporate campus bikeshare systems like this will be failures because “people just don’t want to ride bicycles”. In other words, people prefer campus commuter vans and cars. Ideally GM branded (but any motor vehicle is better than the threat to sales of people realizing that bicycles are a good alternative).

Corporate types might look at this and not want to risk a similar failure. People in corporations are understandably like that. Most really dislike doing anything risky that could in any way reflect poorly on their job performance. Something that has failed at GM then carries the appearance of considerable risk. It’s tough to go against the grain. And GM will have set that grain.

Certainly no company would actually do this? Sabotage their own program? Well at least no major upstanding company like GM?

Hah!

Most recently we can look to GM’s ignition switch scandal[2]. Before that GM was blamed for the deaths of over 2,000 people in what became known as the saddlebag fuel tank cover-up. The EV1 conspiracy discussed in the 2006 documentary “Who Killed The Electric Car” is at the least a bit interesting.

Perhaps most interesting though is the GM Streetcar Conspiracy[3].

Did GM (and Firestone Tire and Standard Oil) really buy up electric streetcar systems across the nation only to convert them all to buses? Just to sell more motors, tires, and petroleum?

Pacific Electric streetcars awaiting destruction

Pacific Electric streetcars awaiting destruction

Buses were, by most accounts, much more expensive to operate, especially as a replacement for existing streetcars. They required more maintenance than streetcars, didn’t last as long, fuel was possibly more expensive, tires had to be replaced. They also likely caused more wear and tear expense on streets—street rail networks were already in place and largely a sunk cost except for routine maintenance and were better able to bear the weight of heavy mass transit than even todays best pavement technologies.

Nah, they’d never do anything like that. These were all private companies. Why do something that would be so much less profitable? Well, just get the government to help pay for it, yeah, that’s it [4].

Did GM really sabotage their own streetcar companies?

Would GM really sabotage their own bikeshare system?

Bikeshare has been wildly popular and I think it’s safe to say that is true of every city and corporate campus where it’s been implemented—except two. Of approximately 500 bikeshare systems, Melbourne is the lowest performing and Brisbane is close behind. These two are also the only ones I’m aware of that currently require users to wear helmets.

Fortunately I think we’re somewhat safe in MN. Target is already a leader in promoting bicycling with more plans in the works. I doubt that 3M will, in this case anyway, give much credence to GM if GM fails. For starters, a quick check of the National Bike Challenge shows a number of 3M executives participating, including CEO Inge Thulin, and most with significant mileage. Of 24 GM Executives: zero.

Mayo Clinics? According to Google they don’t want bicycles chained to to things.

I hope that GM’s bikeshare is a huge success and that in hindsight this post can be properly viewed as tongue-in-cheek rather than anything serious. If it is anything less than wildly popular I think we’ll have our answer.

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[1] Most large companies are self insured. The purpose of insurance is to spread risk among a relatively large population. Larger companies receive no benefit from this since they are themselves a large population and usually find no benefits in an further risk sharing and thus no need to bear the additional costs. This also allows them to set their own rules and better control their costs/benefits from various risk scenarios.

[2] Questionable ethics in the auto industry isn’t limited to GM. Ford have had their fair share such as the recent F-150 parking brake scandal. Somewhat more entertaining is the intermittent windshield wiper scandal that was shared by Ford, GM, and Chrysler with Ford and Greg Kinnear in the leading roles.

[3] This scandal has some MN connections: http://www.intransitionmag.org/archive_stories/streetcar_scandal.aspx

[4] Some of the streetcar companies were indeed struggling and near bankruptcy so an argument could be made that they were not financially viable anyway. However, along with converting electric rail systems to buses the GM/FIrestone/Standard group went to governments for subsidies. While the streetcar systems were either fully supported by fares or close to it, today only about 1/3 of the costs of Twin Cities Metro Transit bus services are funded by fares with about 2/3 paid for by taxpayers.

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16 Responses to GM, Conspiracies, Controversies, and Complications

  1. Aaron Isaacs
    Aaron Isaacs October 8, 2014 at 10:27 am #

    As the co-author of Twin Cities by Trolley and a longtime volunteer for the Minnesota Streetcar Museum, I can assure you that the GM/Standard Oil/Firestone partnership did not cause the demise of streetcars. It was caused by the public’s wholesale shift from public transportation to the private automobile after World War II.

    The post is incorrect that buses cost more to run than streetcars–just the opposite. Streetcars had to maintain their tracks and overhead wire power systems, while buses could use the roads for free. Furthermore, the municipal franchises that governed streetcars required Twin City Rapid Transit Company to maintain the pavement within the track area of the street (about 1/3 of the street width) and plow all the streets used by streetcars, all without compensation. These same requirements were typical nationwide. Bus operators were freed of those obligations.

    The streetcar companies were profit-making businesses–there was no public subsidy available. With ridership and revenue plummeting, their choice was convert to bus or go out of business. Everyone seems to know about the GM conspiracy, and it’s nice to have a convenient villain, but they didn’t make the streetcars go away. We collectively did.

    • Joe October 8, 2014 at 11:20 am #

      An interesting thought experiment would be if streetcars lost these restrictions from franchises, and ordinances, while also recieving the public subsidy that came to buses, would they still be around? Were the track and maintenance costs that high?

      • Aaron Isaacs
        Aaron Isaacs October 8, 2014 at 4:10 pm #

        The answer is Yes. Since 1980, some 30 North American cities have opened light rail and streetcar lines. Had the subsidies been available in 1950, many would have survived, especially those running on their own exclusive rights of way, rather than in mixed traffic. Toronto is a good example of where that actually happened.

        • Matty Lang
          Matty Lang October 8, 2014 at 7:51 pm #

          Since the bus companies were not required to pay for street maintenance like you say the streetcar companies were required to do, wasn’t that a political decision made to subsidize the bus companies? I’m guessing the parties involved in the alleged conspiracy lobbied for this policy favoring buses.

    • Alex Cecchini
      Alex Cecchini October 8, 2014 at 4:08 pm #

      I’m planning a series of Twin Cities specific urban myths/legends for the week of Halloween. This is one of the top topics. I may consult you for some info 🙂

    • Alex October 9, 2014 at 8:55 am #

      As the author of Twin Cities by Trolley, you must be familiar with the extensive evidence of racketeering and asset-stripping conducted by its postwar owners, which led to convictions for at least one executive. So would you say that the public’s wholesale shift from transit to private cars was entirely removed from the context in which the TCRT (and other transit companies around the country) was being actively and intentionally run into the ground? Or might the fact that its owners were trying to destroy it have had something to do with this wholesale shift?

      I understand you are an author, not an entrepreneur, but are you familiar with the various means by which corporations acquire debt in order to finance capital improvements? I’m not sure, but my understanding is that these methods are somewhat common.

      • Aaron Isaacs
        Aaron Isaacs October 9, 2014 at 3:57 pm #

        There was absolutely criminal activity by some of the companies that discontinued streetcars, including here. However, that was a sideshow, not the cause of the discontinuance. In the case of Twin City Rapid Transit, they didn’t downsize their staff or physical plant fast enough to keep up with the rapid reduction in ridership. Too much unproductive infrastructure and administrative overhead left them vulnerable to a stock takeover, which is what happened. It wouldn’t have happened had they been publicly owned, but that didn’t happen here until 1970.

        • Nathanael October 20, 2014 at 2:18 am #

          It’s interesting to look through the history of when various public transportation lines first got public subsidies, and when they first went into public ownership.

          The US tried to muddle along with private for-profit operators for a *ridiculously* long time — it largely worked until the US started funding roads in the 1920s, after which it did not really work. A few systems were taken into public ownership quite early — Fort Collins, CO bought its system in 1919. However, the first *major* system to get public subsidy was the Long Island Rail Road in the early 1950s.

          The LIRR’s need for public subsidy should have been a warning sign to other governments, but it wasn’t, and public ownership only arrived in the 1970s for most other systems in the US.

    • Bill Lindeke
      Bill Lindeke October 9, 2014 at 9:43 am #

      Riding the St. Charles streetcar in New Orleans is a bittersweet revelation. It’s been running since the 30s, and is still a fantastic way to travel.

      The formation of the hegemonic US car culture is a complex story, and I dislike it when anyone oversimplifies it.

    • Walker Angell
      Walker Angell October 9, 2014 at 11:53 am #

      Aaron, everything I’ve read points to this being a very intentional act to kill off streetcars and replace them with petroleum fueled buses running on tires. A few thoughts:

      – Buses might have made sense for extending the network to avoid the up front capital costs of rail and power/catenary, but wouldn’t seem to have made sense as a replacement for existing network.

      – If I was running one of these companies as a private enterprise and wanted it to succeed and be profitable I can’t see any way that replacing the streetcars with buses would come close to making sense. The rails, power/catenary system, and rolling stock were all sunk costs. Streetcar vehicles last two to five times as long as a bus and apparently required much less maintenance. Even if you add in the costs of maintaining the power/catenary system I’d guess it was still less than the costs to maintain buses. I haven’t looked over the financials in detail so I could be all wet, but it seems like a really massive stretch.

      – Streetcars (Trams) have remained strong in Europe. Why have they not converted them to buses?

      – There were some convictions.

      – I also wonder about cities or other government entities agreeing to the swap without some compensation. I can’t see that it would have been good for them considering the increased wear & tear on streets as well as increased noise and pollution. These may not have been known issues at that time, but I’d think that at least the cost of street maintenance would have been.

      You may well be right, but I can’t get there.

      • Aaron Isaacs
        Aaron Isaacs October 9, 2014 at 4:03 pm #

        You’re not taking into account that by 1950 most of the streetcar fleet, track and power distribution system was obsolete, worn out and needed to be replaced. TCRT had no prayer of generating the cash to make that kind of investment. They were also way behind on the franchise-required street paving. General Motors offered financing of 500 buses to replace the streetcars, and that was the only way TCRT was going to be able to renew its fleet.

        • Walker Angell
          Walker Angell October 10, 2014 at 6:20 am #

          Wouldn’t that all be handled as depreciated routine maintenance? I wouldn’t think you’d replace it all at once unless you’re changing gauge or voltage but even then you could probably do one line at a time.

          Rail/Bed apparently lasts 30 – 100 years so you replace 2-3% per year on average. Same for catenary but a slightly shorter life calculation? Same for rolling stock?

        • Nathanael October 20, 2014 at 2:14 am #

          That’s what you call a “conspiracy to destroy the streetcar system”.

          If GM had offered financing for new streetcars on the same terms as buses (which GM could have, but chose not to), that would have allowed for fleet renewal as well.

    • Nathanael October 20, 2014 at 2:13 am #

      GM/Firestone/Standard Oil really did engage in a conspiracy to shut down streetcar lines, for the purpose of replacing them with buses (sold by GM), with tires (sold by Firestone), burning oil (sold by Standard Oil). The conspiracy benefited Firestone & Standard Oil a lot more than it benefitted GM, for obvious reasons.

      Now, it’s true that a lot of the country were in favor of the conspiracy. When GM/Firestone/Standard were *convicted in court* of the conspiracy — which they were, since it was undeniable — the judge just gave them a token fine, and most of the people seemed to think that that was Just Fine.

      But many cities did something different: the *cities* bought out the private streetcar companies and provided them with public subsidies. Many of these cities later ripped out the streetcar lines and bought buses (causing a massive loss of ridership in pretty nearly every case), but some of them hung on to streetcar lines: Boston, Newark, New Orleans, Philadelphia, Pittsburgh, San Francisco, and Toronto.

      In retrospect, the ones which hung on to streetcar lines made the better financial decision, and the ones which ripped them out and put in buses made a very bad financial decision. Which is what the fellow who prosecuted the original conspiracy case was trying to point out. But in the era of cheap oil, buses must have looked cheap… until the 1970s oil crisis. It was really dumb to rip out the streetcars for a system which was cheaper for 20 years and then became more expensive, but that’s shortsightedness for you.

  2. Monte Castleman
    Monte Castleman October 8, 2014 at 8:38 pm #

    I’m no lover of the automobile companies, but one should be careful explaining by conspiracy what can be explained by incompetence ( or laziness). GM most likely just heard from the helmet advocates that scream that everyone should be required to wear helmets, and took them at their word rather than researching the downsides of helmets and bothering to make an informed decision.

    • Walker Angell
      Walker Angell October 9, 2014 at 11:39 am #

      Good point. Incompetence rather than conspiracy is very possible. On the other hand this is a relatively high profile project at GM and generally these get a fair bit of scrutiny from a number of people to avoid incompetence type mistakes. People involved in the trial also raised the issue.

      I’d bet that Zagster, their vendor, brought it up as well since they’ve got a very vested interest in seeing this succeed and I’m sure they know that helmets have been a major thorn in the success of other bikeshare endeavors. Their position seems to be quite strongly against requiring helmets and then they follow that up with a kind of quiet ‘but voluntarily wearing them is a good idea.’

      In the end I think it could go either way. It’ll be interesting to watch what happens and either way I hope that this is a really huge success because if not it will greatly hinder the ability of people at other corporations to do something similar even if they can point out that it was the helmet requirement that doomed it.

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