you dont need to believe it...but you do need to read it...
Carmakers' woes aren't unique to Detroit –The Detroit News.
Daniel Howes: Commentary
Friday, December 19, 2008
In appearances before congressional inquisitions, General Motors Corp. Chairman Rick Wagoner got lambasted for suggesting the deepening recession was pushing the General to the existential edge.
The studied lawmakers on Senate Banking and House Financial Services didn't buy it. The blogosphere hooted denunciations. Others ignored Detroit's recent record of change and recycled tired stereotypes, dutifully repeating the riff that all things green-and-hybrid paved the only way out (irrespective of market demand or oil prices). And they portrayed Japan's Big Three -- Toyota, Honda and Nissan -- as somehow above the recession ravaging Detroit automakers.
Except they aren't. Witness production cutbacks, grim profit warnings and a prediction from Standard & Poor's that Toyota Motor Corp. could post operating losses in the second half of this year. The real stunner: Toyota's decision to postpone the start of production in Mississippi of its Prius hybrid -- the car America couldn't get enough of earlier this year.
Far from invincible, these foreign automakers are scrambling to protect enterprises because demand and consumer confidence are in free-fall, here and in markets around the world. Next thing you know the bosses of the "New American Auto Industry" will begin laying off permanent staffers, lest the Japanese Three end up operating the fattest jobs banks in the American auto plants.
That'd be an interesting twist to lay before congressional committee chairs, House Speaker Nancy Pelosi and the southern Republicans determined to lard Detroit's federal loan package with layers of draconian conditions.
Which isn't to say Detroit won't get them anyway. No question, debt-laden GM and Chrysler LLC are seeking emergency bridge loans from the Bush White House because they're nearly out of cash. And Ford Motor Co. says it wants access to $9 billion in federal credit lines.
In that, all three are demonstrably weaker than their chief foreign competitors. But Congress, official Washington and the Bigger America would get a truer picture of the relative competitiveness of Detroit Auto vs. Rest of World -- and the vulnerability of those not based here in Michigan -- if more folks reported the inconvenient truths diverging from the Detroit-is-bad and everyone-else-is-good template.
Honda Motor Co., which just two months ago said it would be profitable in the second half of the year, now expects to slip into the red. Nissan Motor Co. is sharply cutting production. Toyota's sales are tanking along with everyone else's, the strengthening yen is cutting export earnings and the assumed runaway popularity of its hybrid line-up is proving susceptible to the price of gas and the credit crunch.
"As the downturn in global auto markets may continue for some time, Toyota's profitability could remain under considerable downward pressure, at least until fiscal 2009," S&P said, adding that "the company is not immune to the weakening state of worldwide auto markets."
Which is the point. Anyone who looks at the numbers (financials, market share, equity prices), grasps the history (of product hits, management gaffes and labor intransigence) and understands what Detroit's Big Three have done -- and what they haven't -- knows this reckoning has been waiting to happen for years.
They'd also know that in an economy as wretched as this one, from Detroit and New York to Paris, Frankfurt and Tokyo, even the mightiest juggernauts can stumble. Why is that so hard to understand and acknowledge, honestly?