Archive for the ‘automobiles’ Category

Mitt Romney Says: Let Detroit Go Bankrupt

November 19, 2008

IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

Published by The New York Times
November 19, 2008

I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit’s automakers.

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

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Obama Not Such A Hero In Japan

November 16, 2008

Like millions of Americans, I watched the scene in Chicago’s Grant Park on election night, as President-elect Barack Obama delivered his victory speech, with a real sense of hope that something fundamental was changing. A few hours later, I began receiving e-mail messages from friends in Europe who were overjoyed by the choice American voters had made.

By Ayako Doi
The Washington Post
And the next day, the world’s excitement was visible in news stories, photos and television images broadcast from around the globe — with one striking exception.

Surfing Japanese news Web sites for commentaries on the Obama victory from a key U.S. ally, I was taken aback by the skeptical, even negative, tone that prevailed. “Obama Likely to Stress Importance of China,” read one headline in the mass-circulation daily Yomiuri Shimbun, implying that the new administration will relegate Japan to the foreign policy back seat. The economic daily Nihon Keizai Shimbun fretted about the likelihood that the Democratic president and Congress may concoct a massive rescue package for troubled U.S. automakers and about the potential fallout for the Japanese car industry. Everyone seemed to agree that Obama, who has talked about withdrawing U.S. troops from Iraq to concentrate on Afghanistan, may well put pressure on Japan to send ground troops to the latter country — something the nation’s postwar pacifist leaders don’t feel prepared to do.

President George W. Bush (L) sits alongside Japan's Prime Minister ... 
President George W. Bush (L) sits alongside Japan’s Prime Minister Taro Aso at the G20 Summit on Financial Markets and the World Economy at the National Building Museum in Washington November 15, 2008.(Jason Reed/Reuters)

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Sign Of The Economic and American Industry Times: New Cars Go On Sale, Cancelled in Same Month

November 15, 2008

“There have been significant market changes from the time we started to put hybrids in these vehicles until the time we decided to close the plant early.”

By Eddie Alterman
The New York Times

HYBRID versions of the Chrysler Aspen and Dodge Durango seem likely to secure a spot in automotive history: the two vehicles fell under the executioner’s ax in the same month they went on sale.

2008 Dodge Durango

2008 Dodge Durango

The hybrid S.U.V.’s became available at dealerships in early October. But on Oct. 23, Chrysler announced that at the end of the year it would close the Delaware plant where they are built.

Production of the hybrid models began on Aug. 22. Even if production continues until Dec. 31, the Aspen and Durango hybrids are almost certainly the shortest-lived new models from a major manufacturer in modern times.

One of the shortest previous model runs was for the Lincoln Blackwood, a luxury pickup that failed to excite buyers in 2001-2.

A Chrysler spokesman, Ed Saenz, said last week that 400 of the hybrid S.U.V.’s had already been built; this suggests that total production may not exceed 800.

The Durango and Aspen hybrids, which are 2009 models, use the two-mode gas-electric powertrain that was jointly developed by General Motors, BMW and DaimlerChrysler.

G.M. was first to market with the technology and is now offering two-mode versions of the Chevy Tahoe, GMC Yukon and Cadillac Escalade; it also plans two-mode versions of the Saturn Vue crossover and full-size pickups.

Since Daimler and Chrysler have split, both parts have claimed the technology; Mercedes-Benz plans a two-mode S.U.V. called the ML450 BlueHybrid to go on sale in fall 2009.

The two-mode system packaged a suite of fuel-efficient technologies in one powertrain. Along with engine cylinders that shut down when not needed, there are two motor-generators in the transmission that provide electric propulsion when electronic sensors see fit.

Chrysler Aspen Hybrid, on sale since October, is already on borrowed time.

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Chances Dwindle on Bailout Plan for Automakers

November 14, 2008

The prospects of a government rescue for the foundering American automakers dwindled Thursday as Democratic Congressional leaders conceded that they would face potentially insurmountable Republican opposition during a lame-duck session next week.

By David M. Herszenhorn  
The New York Times

At the same time, hope among many Democrats on Capitol Hill for an aggressive economic stimulus measure all but evaporated. Democratic leaders have been calling for a package that would include help for the auto companies as well as new spending on public works projects, an extension of jobless benefits, increased food stamps and aid to states for rising Medicaid expenses.

But while Democrats said the stimulus measure would wait until President-elect Barack Obama takes office in January, some industry experts fear that one of the Big Three automakers will collapse before then, with potentially devastating consequences.

Despite hardening opposition at the White House and among Republicans on Capitol Hill, the Democrats said they would press ahead with efforts to provide $25 billion in emergency aid for the automakers. But they said the bill would need to be approved first in the Senate, which some Democrats said was highly unlikely.

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A Lemon of a Bailout

November 14, 2008

When you get gemons, “make lemonaide” the saying goes.  But when spending taxpayer billions for a fiscal and economic recovery plan or “bailout” that almost nobody likes, a lemon can get in the way….

By Charles Krauthammer
The Washington Post
Friday, November 14, 2008; Page A19

Finally, the outlines of a coherent debate on the federal bailout. This comes as welcome relief from a campaign season that gave us the House Republicans’ know-nothing rejectionism, John McCain‘s mindless railing against “greed and corruption,” and Barack Obama‘s detached enunciation of vacuous bailout “principles” that allowed him to be all things to all people.

Now clarity is emerging. The fault line is the auto industry bailout. The Democrats are pushing hard for it. The White House is resisting.

Underlying the policy differences is a philosophical divide. The Bush administration sees the $700 billion rescue as an emergency measure to save the financial sector on the grounds that finance is a utility. No government would let the electric companies go under and leave the country without power. By the same token, government must save the financial sector lest credit dry up and strangle the rest of the economy.

Treasury Secretary Henry Paulson is willing to stretch the meaning of “bank” by extending protection to such entities as American Express. But fundamentally, he sees government as saving institutions that deal in money, not other stuff.

Democrats have a larger canvas, with government intervening in other sectors of the economy to prevent the cascade effect of mass unemployment leading to more mortgage defaults and business failures (as consumer spending plummets), in turn dragging down more businesses and financial institutions, producing more unemployment, etc. — the death spiral of the 1930s.

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China: Less Than You Thought

July 30, 2007

By Les Lothringer, ShangHai
Special to Peace and Freedom
July 30, 2006 

The Chinese Administration is now well placed with overwhelming FX reserves to pursue strategic asset purchases globally.  Rather than commit more funds for domestic wealth creation, they will seek to control sources of production and mining, rather than buy outputs.
By not investing more in China’s internal domestic growth, personal wealth and consumption here will not keep pace with the overwhelming production capacity that China now has built, courtesy of massive foreign investment and know-how which could have been directed to home country capital growth.
As Chinese automobile factory output far exceeds domestic consumption, or the road capacity to soak up that output – and, by the way, the roads in large Chinese cities are already saturated and you save more time, a lot more time by taking the subway – those car factories will send their motor cars offshore for sale to Western buyers.
Superficially compelling they are.  Seductive in their bargain basement breaking pricing and ostensibly modern designs, it is an almost irresistible dream come true for families seeking to upgrade to a motorcar they might not otherwise afford.
Yet, like so many products here in China, they are the result of the same production psychology where quality and branding are absent in a culture that competes largely on price alone and uses the tools of “down gauging” and copying to lower production costs – and none too well either.
Chinese motor cars may look similar to certain Western models but the similarities end when one considers engineering design and the structural integrity of that motorcar, as revealed in crash tests conducted in the West.  Whereas, say, a Japanese family sized Lexus will maintain passenger compartment integrity, similar looking Chinese marques can experience passenger shell collapse, with both front seat and back seat “occupants” suffering catastrophic injuries.  This is true of both sedans and four wheel drivers.
Yet, there is another side to this which is the loss of quality standards enforcement by Western states on whatever is shipped to their borders.  The safety advances and standards that evolved over many years are not adequately applied to prevent the import of Chinese cars and motorcycles into Europe and the United States, the UK and Australia.
Consider, say, the electric motorcycle which we are seeing more of in the West, in the desire by consumers towards a lower carbon footprint.  Electric motorcycles here may sell for as little as US$130, including a battery that will convey you about 40 miles between charges.  But the quality standard cannot be up to Western expectations, not at that price.  We see electric bikes like this in the West.  Close inspection reveals brake handles with the pivot screw working itself loose, bike frames with lower safe working loads, inferior metallurgy and welds and, overall, a machine with a much shorter “mean time between failure”, an engineer’s way of saying that the machine is going to break down more often and, for a bike, possibly while being ridden.
That these products can be imported cannot be entirely the fault of the Chinese and there remains, as always, no substitute to owning and controlling one’s own factories.  The concept of the “virtual factory” or “the virtual brand manager” and contracted outsourcing, as was widely written up in the last ten years or so was always a short-sighted and flawed growth strategy.
Les Lothringer – ShangHai

Tim Johnson covers China for McClatchy Newspapers. On June 26 he wrote a piece on automobile safety for China’s newly minted cars.

“The Brilliance BS6 sedan was hoping to enter the European market this year as a premium-style sedan. But the 40 mph crash test left damage on the automobile that the blogger described as catastrophic.

Most Europeans now won’t be caught, er, dead in one of these vehicles.

Back in 2005, China’s Jiangling Motors tried to market its Landwind SUV in Europe. But sales evaporated after the SUV failed this kind of crash test miserably.