So, Toyota is the new GM?

Remember Government Motors General Motors?  It was bumped into second position by the mighty Toyota?  I suppose one cannot be king for long:

Toyota’s “reputation for long-term quality is finished,” said Maryann Keller, senior adviser at Casesa Shapiro Group LLC in New York, a strategic adviser to auto industry. “People aren’t going to buy Toyotas, period. It doesn’t matter which model. What’s happened is sufficient to keep people out of the stores,” she said in an interview yesterday.

The carmaker said late yesterday it’s expanding a record 4.26 million-vehicle recall announced in November to include 1.09 million additional U.S. autos, to fix accelerator pedals at risk of being trapped by floor mats. Losing its reputation for quality would undercut Toyota’s decades-long campaign to promote reliability and safety that helped it become No. 2 in U.S. sales.

So, if our logic for pouring money into GM and Chrysler because they are American companies that needed to be propped up, will we then extend that sympathy to Toyota too? Just asking :)

Ford and Toyota sell .... Chrysler and GM?

Turns out that Government Motors General Motors, is still struggling .... while Ford, which did not get any bailout money, is doing fine, says the WSJ:

Ford Motor Co. posted a 33% rise in December U.S. light-vehicle sales, ending a stellar year for the auto maker compared with its rivals. Ford recorded its first full-year market-share gain since 1995.
Meanwhile, Chrysler Group LLC posted a 3.7% decline compared with a year earlier and said its full-year sales were the worst the auto maker had seen in 47 years.
The largest U.S. auto maker—General Motors Co.—posted a 5.7% decline, but said its process to sell down Pontiac and Saturn inventory was ahead of schedule and reported a 2.2% increase for the four brands GM will keep after its streamlining.
Toyota Motor Corp. of Japan said its U.S. sales rose 32% to 187,860 vehicles last month.
The results underscore how the auto makers have responded to the recession that began officially in December 2007 and led to the bankruptcy filings of Chrysler and GM.

More cash for clunkers?

The United Printing Press, er, States of America :-(

Every once in a while, the master manipulator of metaphors, Thomas Friedman, comes up with something really, really good. Like this from his column:

Sometimes, I worry, though, that what oil money is to Russia, our ability to print money is to America. Look at the billions we just printed to bail out two dinosaurs: General Motors and Chrysler.

Lately, there has been way too much talk about minting dollars and too little about minting our next Thomas Edison, Bob Noyce, Steve Jobs, Bill Gates, Vint Cerf, Jerry Yang, Marc Andreessen, Sergey Brin, Bill Joy and Larry Page. Adding to that list is the only stimulus that matters. Otherwise, we’re just Russia with a printing press.

Hey, give credit where it is due, eh!

Karl Marx, GM and Chrysler. More than surreal!

The workers are now, finally, significant owners of the means of production. The United Auto Workers control about 65 percent of Chrysler and 17.5 percent of General Motors.

Daniel Gross has, as always, an engaging column. The ending is even better:

A shrinking union accepts stakes in shrinking companies. It promises not to strike. The governance system muffles the union's voice by restricting its board presence. It sounds like an arrangement a union-hater like Jack Welch would have cooked up.

Saving "domestic" auto companies ...

I don't get this: we are spending billions of taxpayer dollars to save the "domestic" Chrysler, which for a few years was owned by Germany's Daimler, so that eventually it will be run by Italy's Fiat?
One would think that the Onion made this up! Oh well ....
ps: I am a proud co-owner of a Jeep Cherokee, the model that was orphaned by Chrysler in 1999.

Carmageddon and the Car-Dealer-in-Chief :-)

I was listening to President Obama's remarks on the continuing GM/Chrysler saga when I was driving, and I could not understand why he talked about the government standing behind auto warranties. It felt bizarre. I felt the same way when he talked about weather-proofing roofs in the context of the stimulus bill discussions; remember that?

Thus, I was eagerly looking forward to Jon Stewart's satire, because I was that confident that it was one strangely humorous press conference. The Daily Show did not let me down. But, first, an excerpt from David Brooks' column:

by enmeshing the White House so deeply into G.M., Obama has increased the odds that March’s menacing threat will lead to June’s wobbly wiggle-out. The Obama administration and the Democratic Party are now completely implicated in the coming G.M. wreck. Over the next few months, the White House will be subject to a gigantic lobbying barrage. The Midwestern delegations, swing states all, will pull out all the stops to prevent plant foreclosures. Unions will be furious if the Obama-run company rips up the union contract. Is the White House ready for the headline “Obama to Middle America: Drop Dead”? It would take a party with a political death wish to see this through.

And now, Jon Stewart:

The Daily Show With Jon Stewart	M - Th 11p / 10c
Carmageddon '09 - Lemon Aid
comedycentral.com
Daily Show Full Episodes Economic Crisis Political Humor

Car crisis could well be repeated

Like most Americans, I am conflicted over how we ought to deal with the crisis with the three car manufacturers — Ford, General Motors and Chrysler.

This is not an abstract public policy issue for me by any means. After all, the vehicles that our family currently owns are from one of these manufacturers — a Ford Focus, a Saturn Vue and a Jeep Cherokee. We also have owned a Ford Taurus and a Saturn station-wagon. The only “un-American” vehicle we ever had was a Nissan Sentra.

It is not that we were implementing a “Buy American” policy at home. It just so happens that the vehicles we bought met our preferences and budget constraints.

Earlier today, when I took my Saturn Vue to the dealership for the regular oil change, I began to wonder whether the brand will even exist in the future. News reports suggest that General Motors is planning to sell the division, or merge it with another. It’s possible Saturn could be shuttered completely.

On the one hand, the public policy person in me prefers inefficient economic enterprises to fade away without government intervention. I think about Pan Am, which symbolized air travel when I was a kid. It has been almost two decades since Pan Am closed down when it could not survive in a highly competitive global travel industry. It is the law of the jungle that inefficient businesses lose out to efficient ones. In order to pre-empt a Pan Am-like story, the auto manufacturers should have avoided the strategic errors they made, especially during the cash-flush decade from the mid-1990s when sport utility vehicles and minivans delivered billions of profits.

On the other hand, I recognize that government actively intervenes in practically every aspect of our economy. Heck, even my home is partly underwritten by the government, which permits us to write off the interest paid on the mortgage loan. Thus, if many other industries can be subsidized or bailed out, well, why not help out Saturn and its loyal and committed employees?

Even as policymakers try to figure out the current crisis, we might want to understand a few longer-term trends as well. “Planes, Trains and Automobiles” was a holiday season movie two decades ago; these same American manufacturing industries listed in the title also have been in decline. Trains, for all purposes, have been nearly relegated to history. The automobile industry is in a pickle — some might argue that it has been in denial since the energy crisis in the 1970s.

And all is not well in the aviation industry either — both in the manufacturing of planes and in passenger transportation. Boeing was the undisputed champ in its field, perhaps even more powerfully so than the American “Big Three” ever were. Slowly but steadily, Boeing has been losing its market share to other manufacturers. Twenty years ago, Airbus had barely 16 percent of the market; now it is nearly on par with Boeing in terms of the value of aircraft delivered.

Meanwhile, Brazil and Canada have become active in the manufacture of short-haul jets. China is the latest entry into this field; last month, the Commercial Aircraft Corporation of China announced the sale of five of its ARJ21s to General Electric’s aircraft leasing division, with an option for 20 more. The ARJ21 and other larger CACC-­manufactured jets are essentially China’s effort to crack the market dominated by Boeing and Airbus.

Over the last few years, we have come to realize that anything we do can be done cheaper in China. This means that, if we don’t watch out, here in the Pacific Northwest we could be worrying about Boeing 20 years from now, just as Americans are worrying about General Motors today.

Therefore, even as we try to mitigate the woes of the auto industry, and even as the manufacturers begin to articulate a long-term survival strategy, I hope we will learn one important lesson.

Global economic competition is real, and it will only get more intense in the future. If we don’t learn that lesson, another bottom line awaits us: History does repeat.

Published in the Register Guard Dec 16, 2008

Bailout for the auto manufacturers

Like most Americans, I too am conflicted over how we ought to deal with the crisis with the three automobile manufacturers—Ford, General Motors, and Chrysler.

This is not an abstract public policy issue for me by any means. After all, the three vehicles that our family currently owns are from each one of these manufacturers—Ford Focus, Saturn Vue, and Jeep Cherokee. We have also owned a Ford Taurus and a Saturn station-wagon in the past. The only “non-American” vehicle we have ever had was a Nissan Sentra.

It is not that we were implementing a “buy American” policy at home. It just so happens that the vehicles we bought met our preferences and budget constraints. Earlier today, when I took my Saturn Vue to the dealership for the regular oil change, I began to wonder whether the brand will even exist anymore. News reports suggest that General Motors is planning to sell the division, or merge it with another division. Even worse is the possibility that Saturn might be completely shuttered down.

On the one hand, the public policy person in me prefers inefficient economic enterprises to fade away without government intervention. I think about PanAm, which symbolized air travel when I was a kid. It has been almost two decades since PanAm closed down when it could not survive in a highly competitive global travel industry. It is the law of the jungle, so to say, where inefficient businesses lose out to efficient ones. In order to preempt a PanAm-like story, the auto manufacturers should have been watchful, and could have avoided the strategic errors they made, especially during the cash-flush decade from the mid-1990s when SUVs and minivans delivered billions of profits.

But, on the other hand, I recognize that government actively intervenes in practically every aspect of our economy. Heck, even my home is partly underwritten by the government, which permits us to write-off the interest paid on the mortgage loan. Thus, if many other industries can be subsidized or bailed out, well, why not help out Saturn and its loyal and committed employees? It is a tough question that can be an easy one only for dogmatic ideologues.

Even as policymakers try to figure out the current auto industry crisis, we might want to understand a few longer term trends as well. “Planes, Trains and Automobiles” was a holiday season movie two decades ago; these same American manufacturing industries listed in the title have also been in decline. Trains, for all purposes, have been relegated to history. The automobile industry is in a pickle—some might argue that it has been in denial since the energy crisis in the 1970s.

And not everything is well with the aviation industry either—both in the manufacturing of planes, and in passenger transportation. Boeing was the undisputed champ in its field, perhaps even more powerfully than the American “Big Three” auto manufacturers ever were. Slowly but steadily Boeing has been losing its market share to other aircraft manufacturers. Twenty years ago, in 1988, Airbus had barely 16 percent of the market and now it is nearly on par with Boeing in terms of the value of aircrafts delivered.

Meanwhile, Brazil and Canada have become active in the manufacturing of short-haul jets. China is the latest entry into this—last month, the Commercial Aircraft Corporation of China announced the sale of five of its ARJ21s (Advanced Regional Jets for the 21st Century) to General Electric’s aircraft leasing division, with an option for 20 additional aircrafts. The ARJ21 and other larger jets to be manufactured by CACC by 2020 are essentially China’s effort to crack the aircraft market dominated by Boeing and Airbus.

Over the last few years, we have come to realize that anything we do can be done cheaper in China. This means that, if we don’t watch out, here in the Pacific Northwest we could be worrying about Boeing twenty years from now, similar to the worries over General Motors today.

Therefore, even as we try to mitigate the woes of the auto industry, and even as the manufacturers begin to articulate a long-term survival strategy, I hope we will learn one important lesson—global economic competition is real, and will only get more intense than ever before. If we don’t get that lesson, another bottom line awaits us: history does repeat.

Let the auto companies fade out

This is a photo of one of the most expensive parking lots on the planet. Cars being brought in containers from Germany and other countries, off-loaded and parked in lots because there is no dealership that wants them, says the LA Times.

But, that is not even as fascinating as another one in that same story--the sharp drop in our leading exports through California: recycled cardboard and paper products.

This material typically goes to China, where it is used to make boxes for new electronics and other products that are sent back to the United States. But Chinese factories reacting to sharply falling demand are slowing production, so they need less cardboard. Tons of paper are piling up recycling businesses around the port, the detritus of economies on hold.

My students always find it hilarious that containers from China get here loaded with electronic gadgets, and all kinds of crap we don't need, and we send back in those containers scrap metal and paper as our exports. What is wrong with this picture, eh!

Harley-Davidson worth more than GM!!!

It shows how far GM's market value has tanked over the years, and in the past few weeks in particular. I can't help wonder whether it can survive on its own.
BBC:
GM's stock price has fallen to below $30, its lowest level in a decade, which means that on paper the company is now worth less than the motorcycle maker Harley-Davidson.