Tuesday, November 30, 2004
Auto News 11/29/04, Part II
First up is news that Nissan will be shutting down plants in Japan for up to five days per month due to steel shortages. What the article doesn't make clear is whether there's an actual shortage of steel, or simply a shortage of steel at prices that Nissan wishes to pay. Perhaps this is also just an convenient excuse to idle a plant due to simple overcapacity. But if it's a real shortage, then this might be looked back upon as the day that the industrial revolution ground to a halt. Bring on the age of the resource wars.
Next up is a prediction that 25% of the jobs related to automotive suppliers may be gone by the end of the next decade. That does not make the Angry Engineer one bit happier about going to work. The thought is that in order to survive, there will be a series of mergers, bankruptcies, and outsourcing in the upcoming years to meet with the "new realities of the global automotive market" or some MBA bullshit like that. It would seem that much of this will simply come through the failure of management to effectively employ the talented pool of labor here in the US, and instead turn towards the attractive cheaper labor offered overseas (for how long, who knows). The article claims that innovative products, efficiency, and high quality will be required to survive. I think it's mainly going to be a matter of shifting dependance from the Big 2.5 (or whatever we're supposed to call them nowadays) over to the "transplants", who seem to be in the process of expanding the market for innovative, efficient, and high-quality products. The American OEMS will likely continue to envision a high level of engineering as a hinderance to creating a low-cost high-quality part.
We've got some more info on the effects of the dollar's fall on the automotive industry, AKA The Chickens Come Home To Roost. At this point, I'll ignore the overall negative impact that this might have on the economy as a whole and myself in particular, and take a moment to snicker at all the dumbasses who figured that offshoring was the path to lower prices and higher profits. Yep, even those who build cars in Canada are suffering right now. I'm not sure what the real cost advantage is to building in Canada or what the shift in exchange rates has been in the past weeks, but I'm guessing that it makes a hell of a lot less sense to build a car up north than it did a year ago. How to best hedge against currency flucuations? Simple - build products where you plan on selling them. I firmly believe that Honda is the best at this right now, with Toyota and Nissan closely behind. All three companies are showing positive trends in the amount of work they're placing in the States, while the "American" OEMs all seem dead-set on moving work out of the country (exactly where to doesn't seem to matter, as long as it's not being built with "high-cost labor"; and while we're at it, just ignore the actual balance between labor costs and material costs while making these decisions). So while GM gets the crap beat out of them for building cars in Canada and Mexico using Chinese engines, Japanese transmissions, and Korean electronics that either are or will be steadily increasing in price as the dollar slips further, I'm sure that Honda will just chug right along and pay the same price for the same components, therefore maintaining a healthy margin.
Seatbelt use is up among adults, finally reaching the 80% mark. That still means that there's 20% of the public out there that's apparently too stupid to be trusted with their own life, and it took nearly Draconian laws in all but one state (let's hear it for New Hampshire!) to get it done.
Saturn reported is going upscale, getting a larger array of models on the upper end - including the Sky roadster. Great, just what GM needs - more muddling of their various brands. Where is GM weak? On the low end, where they're importing a Daewoo just to compete. What was Saturn supposed to bring to the table? Low-end American cars that weren't crap. I think it's cool that GM is finally building another low-cost RWD platform, but realistically, how many different models does GM think they can create and sell in the same marketplace? Does Saturn really need a drop-top two-door, or should they be instead looking closely at what Scion is doing? As a side note, Scion is apparently blowing away Toyota's initial projections and hitting their sales targets over a year ahead of time. Not bad for a brand that's barely been available nationwide for a full year, and much better than I'd ever thought they'd do. And when was the last time that GM had a similar success story to talk about? I doubt it'll be with any of the three new Saturns that we'll see in the upcoming years (the Sky, the Relay mini-van, and the L300 replacement that's likely to be a plastic-bodied version of the Malibu). It's highly doubtful that GM will bring in any new buyers with these vehicles, with the exception of a very small percentage of folks who might consider the Sky over the import competition. Instead, they'll just be taking away buyers from other GM brands who are cross-shopping to find that oh-so-perfect mix of price, features, and cheap interior trim.