And then there were two?
By Colin Campbell - Friday, March 13, 2009 - 17 Comments
What Chrysler’s departure would mean for the Canadian auto industry
Chrysler’s threat this week to close its plants in Canada if it doesn’t win big union concessions is one of the most dramatic moves yet in the ongoing auto industry meltdown. In the words of one auto union official, it was like adding gasoline to a fire.
Chrysler president Tom LaSorda said the company needs to lower its labour costs by about 25 per cent, to $55 an hour from an estimated $75 an hour. He also said the company needs US$2.3 billion in government money if it’s to keep building cars in Canada.
On the surface, LaSorda’s demands appeared to be the kind of posturing that’s expected in such critical negotiations. Chrysler’s fate, after all, is hanging in the balance. But industry analysts say the threat is very real—the company could shift Canadian production to plants in the U.S. in a matter of months. And while the auto industry would likely survive such a move, the impacts would be severe and cause painful disruptions right through the entire industry. Continue…
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You call this a showroom?
By Colin Campbell - Tuesday, January 20, 2009 at 3:30 PM - 0 Comments
This year, Detroit’s annual auto party feels more like a wake
Strolling through the Detroit auto show feels a bit like wandering through a half-empty, carpeted parking garage. Gone are the audacious auto-show concept cars that look like they were made by NASA. The Cobo Center, on the bank of the Detroit River, is instead dotted with conventional-looking cars and trucks—most with hybrid badges slapped on the back. Aside from the occasional splash of thumping music, there’s little trace of the glitz and glamour that were once the hallmarks of this show. This year in Detroit, sex appeal is out, replaced with what seem like cries for help. At General Motors, that meant no pretty models in low-cut dresses, but rather some raucous auto workers and dealers waving signs that read “Here to Stay” and “We’re Electric” as they showed off the latest product line.
It was, if nothing else, a fittingly austere presentation for an industry that’s fallen on the hardest of times. In the U.S., already abysmal sales fell off a cliff last month, dropping 35 per cent. In Canada, where the industry was surprisingly resilient for much of 2008, things have started to crumble too, with sales falling over 20 per cent. Auto analysts say there’s little worth celebrating. “If there’s any optimism it’s just that the market hasn’t gone into total collapse,” says Dennis Virag, president of the Automotive Consulting Group, Inc. in Ann Arbor, Mich. He, like many others taking in the show, predicts things won’t start to turn around until mid-2010.
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Car dealers offer their best deals yet
By Colin Campbell - Monday, January 19, 2009 at 1:20 PM - 5 Comments
The buyers have vanished and now the leases are drying up too
The double-digit decline in auto sales has been a disaster for carmakers—but it has been especially nightmarish for the dealerships. At Chrysler, U.S. sales are down so much (53 per cent last month) its dealerships are barely managing to sell a car a day, on average. Things are starting to look a bit like the auto industry version of Glengarry Glen Ross.
Dealer profits have actually been falling for some time now. In 2007, they dropped to $1.1 billion in Canada, from a high of $1.6 billion in 2004, according to a report last year by DesRosiers Automotive Consultants. The problem now is two-fold: not only are people reluctant to buy cars in these dark economic days, but the credit crunch has made financing hard to find even if they want to buy.
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The employment storm of ’09 is on its way
By Jason Kirby - Thursday, January 8, 2009 at 10:05 AM - 36 Comments
Economists expect 251,000 jobs will be lost this year. Will yours be one of them?
Every Thursday, Kim Kent’s bosses at Cooper Standard tack a list of names to the wall. Cooper is an auto parts plant in Stratford, Ont., that makes rubber door trim for the Detroit Three, and the printout dictates the work schedule for the week ahead. It’s simple, really, explains Kent. “If your name is on the list, then you’re working; if it’s not, you’re not.” On Dec. 11, hers wasn’t. And with that she became yet another victim of the job crunch sweeping the country.
This isn’t the first time the 41-year-old autoworker has faced the axe. Two decades ago she took a job at another auto parts maker, where her father had worked before her, only to see the company go bust during the recession of the early 1990s. As stressful as that time was, it was nothing compared to the anxiety she’s feeling now. “This is so much scarier,” says Kent, 41. “The first time I lost my job, there were lots of other plants in town. Nowadays, there’s nothing else. I don’t know what I’m going to do.”
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Do auto workers make too much?
By Philippe Gohier - Thursday, December 18, 2008 at 11:33 AM - 64 Comments
Are labour costs to blame for the Detroit Three’s collapse?
Late last week, Ontario and Ottawa agreed to extend a lifeline to the country’s struggling auto industry. The provincial and federal governments pegged their bailout package at “about 20 per cent” of the amount the U.S. will commit to the beleaguered trio of Chrysler, GM, and Ford. The Bush administration announced on Friday that it would sign over US$17.4-billion to the Detroit Three, meaning Canada’s contribution figures to be in the $4.3-billion range. But rescuing car makers with taxpayer money hasn’t proven to be a universally popular idea on either side of the border, with auto workers’ wages attracting much of the scorn. On average, Canadian auto-sector workers make about $35 an hour—$72,000 a year—plus benefits. The average wage of a Canadian manufacturing-sector employee, by comparison, is $20.75 an hour, or $41,500 a year. Could the auto workers comparatively high wages be to blame for the Detroit Three’s collapse?
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Rise and fall of the young fogeys
By selley - Monday, November 24, 2008 at 1:32 PM - 10 Comments
WEEKEND ROUNDUP
Must-reads: Conrad Black on a certain grotesque miscarriage of justice; Jeffrey Simpson on Henry Waxman; Don Macpherson on Mario Dumont; Greg Weston on Bob Rae; George Jonas on “Singapore of the North.”
Brother, can you spare a dime?
From Washington to Lima to the Circuit Gilles-Villeneuve, there’s bad news on the economy. But you already knew that.The National Post‘s Terence Corcoran asks us if we really want the future of the North American auto industry to be in the hands of politicians intent on aping Jerry Maguire (“Until they show us the plan,” said Sen. Harry Reid, “we cannot show them the money”) or who actually believe “GM would be better off if CEO Rick Wagoner wandered about U.S. airports in search of his luggage.” By all accounts, he observes, a bailout would mean “further suppression of market forces from an industry already burdened by regulations that have driven it into the ground” and the “continued existence of union protections,” among other impediments to future success. Let them go bankrupt, Corcoran implores, in hopes they might someday be able to recover “in a genuine market.”
Playtime’s over, the Ottawa Citizen‘s Randall Denley advises Canadian union members in both the private and public sectors. It may well be unfair that government workers should suffer for the fiscal mismanagement of city councillors or school board trustees, he concedes, but “the same accusation could be made about the management of many corporations that are laying off employees. That doesn’t create any more money for raises.” He suggests the brothers and sisters be happy just to remain employed, and believes “sharing the pain” with their fellow Canadians isn’t too much to ask.
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The car industry crash, by the numbers
By selley - Friday, November 21, 2008 at 5:23 PM - 5 Comments
A close look at what used to be known as the Big Three
As a rule, recent years have not been kind to automakers. But amidst the general chaos, the North American car manufacturers—formerly the “Big Three,” now more accurately known as the “Detroit Three”—have sunk well below the rest. As the CEOs of Ford, General Motors and Chrysler plead for mercy from Washington, Macleans.ca presents a statistical snapshot of their nightmare.
Highest stock price of the five largest publicly traded automakers as of the Nov. 20 close on the New York Stock Exchange: $59.79 (Toyota)
Toyota’s stock price on Nov. 20, 2007: $110.07
Best performance of those five stocks over the past year: -43.9% (Honda)
Poorest performance: -89% (GM) Continue…
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Trust him. He's Bob Rae.
By selley - Friday, November 21, 2008 at 2:27 PM - 13 Comments
Must-reads: …Dan Gardner on the McMurtry/Curling report; Colby Cosh on bailing out the oil
Must-reads: Dan Gardner on the McMurtry/Curling report; Colby Cosh on bailing out the oil patch; Don Martin on Bob Rae.
A long, bumpy ride
And so dawns the new age of economic consensus…“Maybe I should simply be happy no one’s yet suggesting we rekindle inflation and see if it helps,” a predictably outraged John Robson writes in the Ottawa Citizen. “But I’m not.” Indeed, he’s borderline apoplectic at the speed and obtuseness with which governments abandon solid economic principles—balanced budgets, not “picking winners and losers” in the corporate world, etc.—when the economy goes south. In fact, he observes, most people pushing for some kind of Detroit Three bailout on the basis that allowing them to fail would be untenable have abandoned even the “pretence that GM, Ford and Chrysler are winners,” and yet they still want to throw good billions after bad. But alas, Robson laments, we are at these people’s mercy. Just stay the hell away from the stock market until it’s over, he advises.
Colby Cosh returns to the pages of the National Post in fine form, observing that lots of potential jobs are being lost in the Alberta oil patch thanks to “purely temporary business-cycle conditions,” and yet Tony Clement’s nowhere to be seen with a bailout proposal. What gives? Partly, Cosh argues, it’s the old political truth that the visible (i.e., existing jobs at crap Detroit-based automakers) trumps the invisible (i.e., potential jobs at viable but not-yet-built oilsands facilities) no matter how illogically. And partly, he suggests, it’s because Ontarians’ “understanding of the world remains heavily influenced by the opening credits of The Beverly Hillbilies.”
