May 9, 2007
From Fifth Gear
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Learnshare’s Leadership Summit to Discuss Developing High Potential Employees
Analysts warn that rising interest rates could have a debilitating effect on US auto manufacturers, which will see their cost of borrowing rise while they are still required to offer low-cost financing and other incentives to attract buyers for their cars. With both Ford and GM rated triple-B-minus, a downgrade would affect other issuers as well. Major auto-parts manufacturers, for example, also could be downgraded to below investment grade.
A downgrade of either company would send shock waves through the corporate bond market. Ford and GM are the secondand third-largest issuers of US corporate debt in the Lehman Brothers US Credit Index, following General Electric.
With their higher cost of producing vehicles compared to the Asian producers, Ford and GM likely will be forced to announce more layoffs and plant closings before too long, according to industry analysts. Both carmakers said they would reduce production for the first quarter of 2005 after disappointing sales for November. GM announced in October that it would cut as many as 12,000 jobs in Europe over the next two years in an attempt to staunch losses in the region. Ford’s luxury brand Jaguar is cutting 1,150 jobs in Britain in an effort to return to profitability.
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Toyota: The New Number One?
* Production tools
When asked what he thinks the Pontiac Solstice will do for Pontiac, John Larson, Pontiac division general manager, answers without reservation, "Worlds." Before the first car rolled out of the Wilmington, DE, assembly plant, the division had 9,000 orders. While Larson admits that some of those people might not follow through, the level of enthusiasm that he’s witnessed for the vehicle (during the press introduction in Portland, Oregon, one of the "first 1,000" people to place an order for the car spotted a photo on a blog, analyzed the background, determined where the hotel was, and set out to see the cars and to meet people who have been raised to demigod status in that world, like Small Car vehicle line executive Lori Queen), he’s not concerned that they’ll be able to sell what they build. And while he’s not specific about the number of vehicles that they’ll be building annually in the plant–low-volume production that will be shared with Saturn when it comes out with its Sky roadster in the first quarter of ‘06–he provides a ballpark of 15,000 to 20,000 units, but notes that they’ll always try to have one less Solstice than there is demand for, a strategy that was used by Mazda for its Miata two-seater … speaking of which, Larson points out that the 9,000 orders is nearly the number of Miatas sold last year (9,356). While there was some pre-production public speculation that the program was being delayed, Larson points out that they’d always promised that the vehicle would be coming in the Summer of ‘05, and that the first 1,000* went out the first week of August. "We’re on the cusp of great things at Pontiac."
* Integration vehicles
About those widely reported hiccoughs for the Solstice, the problems with the front fascia, the top, etc. Lori Queen explains that if the Solstice had been a high-volume, high-risk vehicle (like, say, the Chevrolet Cobalt, a program that she was working on at the same time as the Solstice), then those problems would have been, well, problematic. But in the case of the Solstice, this was a matter of expectation, not enormous concern. That is, the development of the program was one where they went from the math data to production tools. There were no intermediate prototype tools–or vehicles built (so-called "integration vehicles")–as would be the norm in a vehicle program. Part of this was an issue of cost, as this was to be not only a low-volume program, but a low-cost program, as well, with the car starting at less than $20,000 ("Ten years ago, a vehicle with fewer than 30,000 units would be a premium program," Queen remarks). And it was a matter of timing, too (it was a 27-month program), and tooling builds take plenty of time. "We pulled tools ahead and assumed that there would be fit or processing problems," Queen says, which is certainly a non-traditional approach to vehicle development. In fact, the entire program–which she not entirely facetiously describes as "no volume, no money, no time"–was one where non-traditional approaches were the norm, not the exception. Normally, she explains, there would be three iterations:
[ILLUSTRATION OMITTED]
GM’s home market though may be what causes the capitulation. With planned layoffs and plant closings in progress, GM is dumping excess capacity in favor of anticipated need. Toyota, on the other hand, cannot keep up with capacity as demand for its three lines of vehicles –- Toyota, Lexus, and Scion –- continue to drive growth. Indeed, if there is factory space available, Toyota will use it to produce more vehicles. So, the prediction for Toyota overtaking GM is based largely on available capacity and demand.
* Pre-prototypes
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Oneida Chrysler 45-Piece Flatware Set, Service for 8
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Pontiac’s bright light creating the Solstice: the executives at General Motors have been talking about building "gotta have" products for the past few years. The Pontiac Solstice is among the few that actually deserves that appellation
For the past several months news reports have been focusing on the declining fortunes of the world’s largest automaker, General Motors, as well as on the rise of Toyota to pre-eminence. Many are predicting that this will be the year that Toyota overtakes General Motors in sales while others are expressing caution regarding this assessment. Does it really matter who is number one? In many ways it does. Let’s examine the fortunes of the Top Two to determine whether Toyota’s quest to overtake General Motors will happen this year.
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