Let them play darts
7th January 2009 17:02

The news bulletins today have a couple of headlines in them that I seem to have heard before. It's a case of 'here we go again'. Without wishing to trivialise what I know is a very serious subject, the latest military skirmish taking place in the Middle East is one example. That whole underlying conflict just seems to rumble along with occasional flare-ups, little real prospect of lasting resolution (and 'envoy' Tony Blair doesn't seem to have made a big impact does he?).

I feel sorry for the vast majority of the people who live there - on both sides of the divide - who just want some stability and the chance to live decent lives without feeling threatened. Tragic.

Less tragic is Russia and the Ukraine having an argument over the price of natural gas that is spilling over to impact other countries in Europe. Deja vu again. It's not clear to me what the underlying politics of that one are, but if an old lady in Budapest is having trouble keeping warm in her flat this winter, that surely cannot be right.

And it looks like there is also an impact on industry. Mind you, car plants in Central Europe that have to trim output right now due to an energy shortage might not be too troubled. There's probably a fair bit of inventory out the back.   

Conflict resolution is frequently not a piece of cake, but I read something earlier that made me smile. I should warn you, we're about to go a little off-piste...and land on the oche.

Now, let me just say that I have been known to throw darts in a pub and I must also admit I find the professional 'sport' of arrow throwing in Britain a bit captivating for all sorts of reasons. It's something else; the practitioners are obviously real pedigree athletes with finely honed skills. Darwinian. There's also the rapid-fire mental gymnastics going on ('it's a three dart checkout if he goes treble 18, double 12, bull'). And the fans are pretty passionate, too. 

Look, we're all the same deep down, much more in common with each other than we realise etc (actually, that's something you appreciate if you travel around in the auto industry). People, please stop the endless arguing/fighting. Why not just have a good game of darts and sort yourselves out...

British darts official speaking to a reporter: "..we had Persian TV visiting, because Iran is a real growth area, with 500,000 members in the Iranian darts federation.

"They've latched on to the fact that darts can bring different people together in peace. Instead of sitting down and debating things, they should have a game of darts."

If only, if only.

Link to full article about, ahem, the glorious sport of darts.

SLOVAKIA/HUNGARY: Gas 'shortage' adds to automaker woes

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Fender and Defender
5th January 2009 18:33

I'm a big fan of analogies and metaphors to help make points or draw lessons from history. The more creative or unusual they can be, still hanging together, the better (though you have to be careful with them; sometimes they can mislead). I enjoyed Mark Bursa's study of how Fender, under threat from low-cost competition, embraced that competition and contracted out manufacturing activity to the very people who threatened to put it out of business. Fender managed to carry on in business by going to where the cost is low and building its clever brand strategy on top of that. The parallels with the car business are certainly there. As Mark points out, this is the same low-cost manufacturing outsourcing model that the auto industry has been adopting. I guess the question is, how far do you take it?
 
With reference to JLR and the Land Rover Defender, I suspect the idea of making that vehicle in India will be something Tata will be definitely looking at, along with a possible rationalisation of UK manufacturing capacity.

Did wonder whether Mark's reference to Pink Floyd's Dave Gilmour was more than a bit wistful (I know he likes his music very much). Maybe in that parallel dimension we all sometimes imagine there's a megaband with a lead guitarist known by the very simple moniker, 'Coolbear'.

ANALYSIS: How to rebuild an icon

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Good wishes to all
23rd December 2008 13:04

Well, that's almost it for this year. It just remains for me to sign off and wish you all the best for the festive season (should you get one) and the year to come.
 
The just-auto editorial department will be having a festive break from tomorrow (December 24) and we'll be back in your inbox on January 2, 2009.
 
At least we here are fortunate enough to get a voluntary holiday break. For some the break this year will be involuntary and indefinite.
 
These have been - and still are - testing times for many and thoughts at this time are with those who have lost their jobs.
 
As a contributor to the just-auto forums recently noted, the numbers themselves also represent more than just a cost saving. There's a human cost. Many lives, at the very least, are disrupted, livelihoods or careers lost or damaged. In this industry at least, many companies have displayed an admirable degree of humanity as they attempt to transform in these trying times and that's good to see.
 
Let me at least end on a positive note. Restructuring and cost cutting, though painful, will be making many companies leaner and fitter. Energies will be focused much more intensely on what really works and gets a return. This is a resilient industry that has been adapting to one of the great challenges of our time in the shape of the environment. Getting through this recession in good shape is another challenge to face.
And when you look at some of the new products launched or coming and some of the research and development work going on, there's good reason to feel optimistic about this industry and its future prospects. It makes products that excite and are still at the very core of our lifestyle.

In emerging markets cars and car brands are hugely aspirational and those markets will continue to grow in the future. People love cars. And commercial vehicles are the lifeblood of the economy. This industry may be undergoing change but it isn't going away.

I would like to take this opportunity to wish everyone out there a happy, successful and peaceful 2009.

I would also like to thank the dedicated team around me - on the staff and also the freelance contributors - that create just-auto and also you for your continued support.  

2009 will be a challenging year in the automotive industry globally, but when was that not the case?

Review of 2008

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The credit problem
19th December 2008 18:44

I have just been chatting with Michelle Krebs over in snowy Detroit about today's developments on the 'bailout' of GM and Chrysler. The loans buy some time. How tight is it? Well, the energy department loan finance is on top, so it's maybe much better than it looks. This should see Detroit through to March 31.

Michelle made a very good point, which is that the underlying problem is the need for the banks to get lending again in order for market volume to recover.

Edmunds.com estimates that December's US sales will come in at 38% down on last year with a SAAR of just 9.8m units. Yes folks, an annualised running rate under 10m units. In 2007, the market was over 16m units.

There's certainly plenty for Obama to think about when he contemplates what Bush is handing over in January. And that's when the looking beyond the 'bridge to a bridge' gets going in earnest. 

Just how do you get the banks lending again? As BO himself has observed, super-low 0% interest rates don't do a lot of good if you would like the finance but just can't get it.

US [updated 15:45GMT]: GM and Chrysler get fed loans

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JLR supply chain
19th December 2008 8:55

I heard an interesting item on the radio this morning that very amply illustrates how the supply chain in the English West Midlands is being hit very hard and quickly by reduced output at Jaguar Land Rover (JLR). When Rover went belly-up a few years' back, suppliers knew the writing was on the wall for some time before it hit, and could prepare by diversifying their customer base.

And the ultimate impact of that failure on the UK automotive supplier industry was much less severe than feared.

The current business crisis, on the other hand, has hit much more suddenly - in Britain's manufacturing heartland, as elsewhere in the world.

The radio clip is a reminder of the reason why the British government will feel compelled to act: jobs. This is about managing the economy so that the immediate impact of the recession is minimised and - more importantly - that long-term damage to Britain's economic health is kept to a minimum. When companies are gone, assets sold off at auction by the receivers, that's your lot. They're really gone. And manufacturing jobs are maybe seen as even more important in Britain now that the dangers of relying too much on services (especially financial) have been shown up so graphically. 

In the recession of the early 1980s Britain lost a lot of manufacturing capacity. The loss to employment was severe, but the economy later grew its services sector dramatically to take up the slack. And some new manufacturing activity came in (eg FDI by Japanese car companies). But there was a pronounced structural shift in the economy from manufacturing to high-growth services. It's hard to see that happening again in the next decade. Hanging on to manufacturing jobs looks like the thing to try and do right now.     

While Jaguar Land Rover may be owned by an Indian conglomerate, there are scores of jobs (and many are high value jobs, requiring skills and training) in Britain dependent upon its operation - directly and indirectly. Some will say that UK taxpayer money should not be used to support (via a soft loan to aid liquidity) a foreign-owned company and effectively transfer substantial UK Treasury resources to Tata. And it's a debate well worth having that illustrates one of the consequencies of globalisation in the modern corporate world. The lines of responsibility and accountability have become much more complex. 

But in the cold reality of struggling companies and potentially harmful knock-on effects, governments will find it very difficult to stay out. To not get involved risks long-term damage to manufacturing capacity and the economy happening by default. 

Tata is holding a few cards here. If support is not forthcoming, the spectre of work and jobs shifted from the UK to India might well come into play (and that can be an unspoken threat lurking in the background). From the vantage point of Bombay House (Tata's Mumbai HQ), to what extent should it be supporting or underwriting jobs (and relatively expensive ones at that) in Britain? The UK government, like many others facing up to this sudden economic crisis, has little choice but to act - and quickly.

After the dramatic banking sector shore-up in the autumn, it's the so-called real economy requiring support now.

It's maybe not as dramatic as Lehman going bust overnight, but the long-term consequences of what's now occuring in manufacturing industry - much of it under the radar in the small supplier companies - could be just as serious, if not more so.

Peston posting on the subject

JLR suppliers - radio clip

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