The Ghost of Christmas Past

Each year I want a certain type of Christmas. As the Rolling Stones said it ... you can't always get what you want! Don't get me wrong, this was a good Christmas. I finally got to McAdenville to see the beautiful little town all lit up for the holidays. Two of my sons were home for all or part of the holidays and I did see my family and my wife's as well, and I became a Grandpa. But there are some things I miss from my childhood that I just can't ever seem to work in over such a short period ... because of work, I missed again the local presentation of Handel's Messiah. I did not see a single old movie, which I really love: Christmas in Connecticut, The Bishop's Wife, A Christmas Carol (the old B&W version), Holiday Affair, White Christmas not even Ralfie in A Christmas Story. My dad and I really liked the old movies. I missed the neighborhood carolers. So, somehow there is just not enough time and soon I am back to work. Unlike Europe, we ditch Christmas on Jan 1. Over, done with, decorations down, stores ready to move on. Seems like we could hold it until Epiphany. Well, maybe next year I can hit some of the things I missed; it gives me something to keep on working toward. One day, I want to have a snowy Christmas in Vermont or someplace like that. At a B&B. That would be nice.

Talking Heads

I got a bit riled up today when some talking head came on and said that now that the auto companies have a loan, they might finally wake up and make cars that people want to buy ... hybrids, not gas guzzlers. These folks always have an agenda and do not deal with facts.

Fact: many people like large cars and SUV's
Fact: not everyone wants to own a hybrid
Fact: GM is still the largest auto maker in the world
Fact: Toyota sales are down 30%
Fact: This is a market recession, not an issue with GM (or Chrysler) quality or product portfolio (the first is getting better and the latter spans all types of vehicles)
Fact: GM (and Chrysler) are victims of too many models & too high of a cost structure

Please stop trying to shove your agenda down our throats. The thought that having hybrids would have avoided this mess is ludicrous. With a million or so folks out of work, with credit on hold for all but the best of borrowers, the auto industry is in the tank, plain and simple.

Kan u spell "kronyizm"?

Chicago machine politics ... why am I surprised that Obama has chosen the head of the Chicago public school system for his Education secretary. I had no idea that Chicago was the progressive capital of thinking regarding innovative approaches to education.

English - a crazy language

Another observation of a phrase, similar to one I have had in a previous post ...

I heard an advertisement yesterday claiming that the product was "second to none". Wow. Seems to me that there is not much that could be worse than coming in second place to none. If there are no others and you come in second, that doesn't say much about you. It's kind of like losing an election to a dead guy.

Automotive afterthought

I heard today that, at the meetings in Washington, Ford noted that their sales were down 31%. GM is down 41%. Clearly they have a big issue. However, Toyota is down a third (33% last time I checked) and they are still moving forward. When you are not the low cost producer, you blow through cash more quickly than your competitors and will not last as long.

Maybe this auto problem is all wrong?

The big three auto makers saunter down to the Capitol today to beg for money from the American people via our elected "representatives"! Last time around, these CEO's caught a lot of flak for flying to Washington in private jets. The implication was that it was bad taste to beg after taking your private jet ... never mind that the jets belong to the companies. So, the talking heads and the politicians were pontificating on the use of these jets. Well, I don't normally come to the defense of the CEO's, but the trip was not about their use of jets, it was to get money from the people. The CEO's use the jets so that they can travel from smaller airports. This avoids delays, masks their trip routes to some extent (good when you want a deal to be kept from your competitors), and increase their personal safety (they are well paid and famous ...). All in all, this is a time, and, at their salaries, a cost savings especially since they have to pay for the jet even if it is not used (they could sell it, though). Anyway, so this time they are DRIVING from Detroit to Washington. That is a great use of their time.

So, the talking heads all say that the problem is that the car companies are mis-managed. They don't make the right products and their labor costs are too high, especially for retirees. I am looking at it a bit differently. They do make the right product mix. SUV's, that bad word, are not all gas guzzlers ... the hybrids were relatively fuel efficient, just not quite enough in production when we hit the skyrocketing gas prices over the past summer. They have small cars, but nobody normally wants them except as a starter car for a teenager. Only with the wierd market did we see a shift, and, again, the product mix was wrong. By the way, it was also wrong for the foreign cars (I don't call them imports since they are made in Texas, Tennessee, South Carolina, etc). Toyota heavily advertises its huge truck, the Tundra, and nobody seems upset by that (maybe the Sierra Club). So, timing may be bad, but they do have the right cars ... small, luxury, SUV, minivan, truck, etc.

They do have too many models. For General Motors, we have Chevrolet, Pontiac, Buick, Cadillac, Saturn, etc. The Chevy is always the basic model, the Pontiac the sporty one, the Buick the luxury one ... all for the same basic car. Scale up a Chevy with options and you have a Buick with a slightly different paint scheme. Compare with Honda where you have Honda and Acura or with Toyota where you have Toyota and Lexus (I think) or BMW where all you get is a BMW. So, Detroit may have too many brands. Time to sink this concept.

Detroit also has a fast follower mentality. They want their cars to look like the Asian or European style, with a few notable exceptions (Mustang, Corvette). Without a unique style, they are just a "me too" offering, up against the still stinging reputation for having quality inferior to the Asian cars (whether true or not ... perception is truth to consumers).

Detroit has higher costs due to large distribution networks, labor costs, and retiree costs. If one generates a value curve for a business, if you have higher costs (that is you are not the low cost producer), you must bring more value to achieve preference. The value can be quality, safety, leading-edge technology, green philosophy, style, market leader for new concepts, etc. The big three are none of these and therein lies their demise.