Automotive News - August 18, 2008 - (Page 30) 30 • AUGUST 18, 2008 Moody’s cuts GM rating NEW YORK — Moody’s Investors Service last week lowered its ratings of General Motors one notch to Caaa1 — seven levels below what it considers investment grade. The rating had been B3. The ratings agency said GM could have cash-flow problems if industry sales stay below 15 million units through 2009. GM adds 4 XFE models DETROIT — General Motors will add four full-sized light trucks to its XFE trim line for 2009. Lighter weight, better aerodynamics and drivetrain tweaks boost fuel economy by about 1 mpg. New XFE models are the Chevrolet Silverado pickup and Tahoe SUV, and the GMC Sierra pickup and Yukon SUV. There are XFE versions of the Chevrolet Cobalt and Pontiac G5. All four of the new XFE vehicles are EPA-rated at 15 mpg city/21 highway. The regular 2008 versions are rated 14/20 mpg. MATERIALS Automakers help with rising prices continued from Page 1 GM’s scrap steel themselves. Andersson appears reluctant to index oil and natural gas, which are used to make plastic and rubber components. GM negotiates these prices with suppliers case-by-case, he says. BMW recalls 320,000 vehicles Delphi ends battery venture DETROIT — Delphi has sold its 19.5 percent stake in battery maker EnerDel Inc. to Ener1 Inc., which becomes the sole owner of the venture the companies formed in 2004. In exchange, Delphi gets 2.86 million shares of stock in Ener1, plus $8 million in cash. It also has warrants that can be exercised for 750,000 shares of Ener1 stock. WASHINGTON — BMW of North America is recalling 320,000 200406 models because the front-seat passenger airbag may not deploy properly. Affected vehicles include 2006 3- and 6-series cars and X5 crossovers; 2004-05 Z4 cars; and 2004-06 5- and 7-series cars and X3 crossovers. Ford will sell stock DETROIT — Ford Motor Co. said last week it will sell up to $500 million worth of new stock. The transaction is expected to strengthen the company’s balance sheet by reducing debt, a Ford spokesman said. The company gave no timetable. Intermet in Chapter 11 again FORT WORTH, Texas — Metal components supplier Intermet Corp. has filed for Chapter 11 reorganization for the second time in four years. Jeff Mihalic will resign as CEO but will remain in a consulting role. Intermet said operations will continue while it reorganizes. The filing could affect the contracts of more than a dozen of Intermet’s customers, including the Detroit 3 and several Tier 1 suppliers. GM relies on prices posted on the London Metal Exchange, a futures exchange. GM adjusts raw material figures monthly or quarterly, Andersson told Automotive News. Other companies use internal indexes based on statistics generated by global commodities markets. Most of GM’s metal-bending suppliers are insulated from volatility because they buy steel from GM’s steel resale program. Andersson says 90 percent of GM’s suppliers of steel components participate. Several automakers get discounts on steel by purchasing bulk quantities, then resell it to their suppliers at cost. But GM is still struggling to develop a price policy for suppliers that produce castings made from recycled steel scrap. The price of steel scrap has soared as world demand rises. General Motors sells about 300,000 tons of scrap each year to steelmaker Nucor, which then sells new steel to GM. By next year, Andersson says he hopes to work out a deal with some GM suppliers, such as foundries, which could recycle Ford more willing Ford Motor Co. appears more willing to consider pass-throughs for these components. Two suppliers have told Automotive News that the company has agreed to index the price of raw materials used for tires and rubber components. Ford declined to comment. Last week, Chrysler LLC purchasing chief John Campi said at the conference here that raw-material price escalators are critical to the long-term health of suppliers. But he said Chrysler first needs to know suppliers’ true costs. That will require suppliers to share information and work with Chrysler to reduce materials usage or find alternatives before they can expect Chrysler to provide higher prices. At Johnson Controls Inc., about 50 to 60 percent of all new orders peg reimbursement for raw materials to outside indexes that track price fluctuations, said Beda Bolzenius, chief of Johnson Controls’ global automotive business. “Awareness of the issues has increased, and so has the willingness to resolve them,” Bolzenius said. He said the use of indexes grew in popularity after steep raw-material price increases in 2004 and 2005. Johnson Controls, one the world’s largest makers of auto seats and interiors, began negotiating the indexes then. But those changes were put in place only after Johnson Controls improved productivity, he said. Not universal But the use of indexing is not universal. At Lear Corp., Lou Salvatore, president of Lear global seating, says automakers still are pushing traditional contracts requiring annual price decreases for productivity gains. Salvatore said a supplier that relies on indexed contracts risks losing out to a competitor willing to work without one. If Lear or other Tier 1 suppliers can’t get index provisions from automakers, they can’t give relief on raw materials to their own suppliers, Salvatore said. “We can’t be in the middle of the sandwich,” he said. “We’re not a bank. We’re not looking to make money on the economic increases, but we can’t lose it, either.” Dana’s Convis said he plans to deal with soaring raw material costs, “just like everyone else. We are going to our customer, getting on our knees and pleading.” c Analyst Merkle moves CHICAGO — Auto analyst Erich Merkle has left the Grand Rapids, Mich. consulting firm IRN for an analyst position at Crowe Chizek & Co. LLC here. TOYOTA Idled workers will train, study, clean continued from Page 1 stock watch Manufacturers BMW-ADR Fiat S.p.A.-ADR Ford General Motors Honda-ADR Hyundai-ADR Nissan-ADR PSA-ADR Renault-ADR Suzuki-ADR Toyota-ADR Volkswagen-ADR Closing price Aug. 15 Closing price Aug. 8 Weekly percent change 52-week high 52-week low $42.73 25.50 5.11 11.18 33.88 11.00 15.56 49.25 87.05 20.80 90.91 61.45 Closing price Aug. 15 $44.15 25.50 5.26 10.03 32.52 11.00 15.63 51.59 87.05 20.80 90.34 60.40 Closing price Aug. 8 –3.2% – –2.9 11.5 4.2 – –0.5 –4.5 – – 0.6 1.7 Weekly percent change $67.80 34.85 9.24 43.20 37.64 23.00 23.75 92.50 165.75 33.25 119.00 65.95 $41.45 14.15 4.30 8.81 27.01 11.00 14.21 46.00 78.75 19.25 82.08 38.50 Retail Groups Asbury Automotive Group AutoNation Group 1 Automotive CarMax Lithia Motors Penske Auto Group Sonic Automotive 14 weeks, even at a conservative estimate of $20 an hour, would represent at least $50 million.The shutdown also means a production loss of 30,000 to 40,000 big-ticket pickups and SUVs. At an estimated wholesale value of even $25,000 per vehicle, that translates into as much as $1 billion in lost revenue. Other complications are developing. Toyota’s assembly plants that still are producing are leery of others getting an advantage in intracompany competition for future work. So they are vying to take part in the retraining programs. Slumping sales of the Tundra pickup shut down assembly lines. tion and a stream of online tests to measure and record their skill improvements. But just as the plan got under way, things became more complicated. In Toyota’s manufacturing system, its plants compete for each new vehicle program based on their achievements. If one plant gets a leg up on worker skill levels or safety achievements, it could sway a future decision on where a new vehicle gets manufactured. “Our other North American plants that were not affected didn’t want to get left behind by the skill improvements, so they have asked if they could also participate in the programs,” Newton says. Keeping busy During 3 months of plant shutdown, Toyota’s 4,500 factory employees will Learn how to work faster Improve maintenance skills Study safety and material handling practices Take tests on skill knowledge Clean public buildings and parks Fill in at busy assembly lines elsewhere ing will be enough to see the San Antonio and Indiana workers through until production resumes. The automaker says it has not decided what employees will do after completing their classes, but they probably will work in community service programs around San Antonio and southern Indiana. That would put Toyota employees to work cleaning public parks and scrubbing graffiti from buildings around San Antonio, a company spokesman says. And if executives can resolve logistics and safety issues, they may authorize a weeklong employee assignment to clean up the shoreline of a Texas lake. c 52-week high 52-week low $13.13 12.37 23.00 15.20 6.16 15.05 11.41 $12.22 11.87 22.42 14.90 5.39 14.74 11.51 7.5% 4.2 2.6 2.0 14.3 2.1 –0.9 $23.52 19.84 39.95 25.38 21.31 23.58 27.74 $9.62 7.30 14.53 10.53 3.51 11.42 7.82 Scrambling for a plan It was Newton who first received word of Toyota’s decision last month that assembly lines in San Antonio and Princeton would stop making Tundras and Sequoias. Her instructions were clear: All affected workers would remain on the clock at full pay until assembly resumes in November. No one had developed a contingency plan, so that left Newton and her Kentucky staff with about two weeks of late-night meetings and weekend scrambling to create a plan of action. Their solution: Move the affected work force through a nonstop schedule of classes and training exercises aimed at improving their assembly skill levels. Among the classes they are rotating through: safety drills, productivity improvement exercises, presentations on material handling and workplace hazards, diversity and ethics classes, maintenance educa- Suppliers Biggest weekly swings from among the Automotive News top 150 suppliers to North America whose stocks are traded in the United States Closing price Aug. 15 Closing price Aug. 8 Weekly percent change 52-week high 52-week
Table of Contents Feed for the Digital Edition of Automotive News - August 18, 2008 Automotive News - August 18, 2008 Smart answer: A tiny Hyundai from India Toyota idles factories — but can't lay anybody off Sharing the pain N. America: Brembo's big break? Ford adds 7 preferred suppliers; total rises to 65 Suit: Report of store's death is premature Lincoln crossover will get MKT nameplate Ligocki will head Mexican/Chinese car deal Industry tries lean lobbying at conventions Ford reins in F-150 order combinations Nissan will buy more in Mexico Leland, master of precision and luxury cars Honda will launch Prius fighter in April Porsche bolsters warranty on pre-owned vehicles CTS wagon arrives in spring GM: Aerodynamic design boosts Volt's range Denso is Chrysler 'Supplier of Choice' Kudos to Ford for improving supplier relations How do we define 'automaker'? Concept of leasing had been polluted Totaled cars: We don't need a new law Hybrids too quiet? Sounds like trouble Marketing tips for the 21st century Scion tries to get leg up when flexing its hip Scion ads show community of cool — but no owners July trucks sales fall; rate of decline slows Hargrove forecast: Good for now, bad for long term Mitsubishi plans plant to meet battery demand Mini Cooper D(iesel) delivers, but not here yet Logistics company's goal: Cut fuel use even more Transporter joins the cars it delivers in going green Saturn, Scion lost that special feeling Expert: CAFE debate irrelevant Chrysler plans unibody, fuel-efficient Grand Cherokee Panel: CAFE will change U.S. car mix Toyota revs up its aftermarket parts business Dealers Who's that sporting Brembos now? Moody's cuts GM rating Analyst Merkle moves Ford will sell stock BMW recalls 320,000 vehicles Intermet in Chapter 11 again GM adds 4 XFE models Delphi ends battery venture Chamco cases bounce around court system Mercedes sues Cobasys over batteries For a while, the party's over at Toyota Buy Hummer? Nyet, says Russian automaker What cars will be the cruisers of tomorrow? GM sets 'em up for Dems, GOP Chung sprung A good day at work: $22 million Automotive News - August 18, 2008 Automotive News - August 18, 2008 - (Page Intro) Automotive News - August 18, 2008 - Sharing the pain (Page 1) Automotive News - August 18, 2008 - Sharing the pain (Page 2) Automotive News - August 18, 2008 - Ligocki will head Mexican/Chinese car deal (Page 3) Automotive News - August 18, 2008 - Nissan will buy more in Mexico (Page 4) Automotive News - August 18, 2008 - Nissan will buy more in Mexico (Page 5) Automotive News - August 18, 2008 - CTS wagon arrives in spring (Page 6) Automotive News - August 18, 2008 - CTS wagon arrives in spring (Page 7) Automotive News - August 18, 2008 - Denso is Chrysler 'Supplier of Choice' (Page 8) Automotive News - August 18, 2008 - Denso is Chrysler 'Supplier of Choice' (Page 9) Automotive News - August 18, 2008 - Denso is Chrysler 'Supplier of Choice' (Page 10) Automotive News - August 18, 2008 - Denso is Chrysler 'Supplier of Choice' (Page 11) Automotive News - August 18, 2008 - Totaled cars: We don't need a new law (Page 12) Automotive News - August 18, 2008 - Totaled cars: We don't need a new law (Page 13) Automotive News - August 18, 2008 - Marketing tips for the 21st century (Page 14) Automotive News - August 18, 2008 - Marketing tips for the 21st century (Page 14a) Automotive News - August 18, 2008 - Marketing tips for the 21st century (Page 14b) Automotive News - August 18, 2008 - July trucks sales fall; rate of decline slows (Page 15) Automotive News - August 18, 2008 - Mitsubishi plans plant to meet battery demand (Page 16) Automotive News - August 18, 2008 - Mitsubishi plans plant to meet battery demand (Page 17) Automotive News - August 18, 2008 - Saturn, Scion lost that special feeling (Page 18) Automotive News - August 18, 2008 - Saturn, Scion lost that special feeling (Page 19) Automotive News - August 18, 2008 - Saturn, Scion lost that special feeling (Page 20) Automotive News - August 18, 2008 - Saturn, Scion lost that special feeling (Page 21) Automotive News - August 18, 2008 - Chrysler plans unibody, fuel-efficient Grand Cherokee (Page 22) Automotive News - August 18, 2008 - Panel: CAFE will change U.S. car mix (Page 23) Automotive News - August 18, 2008 - Panel: CAFE will change U.S. car mix (Page 24) Automotive News - August 18, 2008 - Panel: CAFE will change U.S. car mix (Page 25) Automotive News - August 18, 2008 - Panel: CAFE will change U.S. car mix (Page 26) Automotive News - August 18, 2008 - Panel: CAFE will change U.S. car mix (Page 27) Automotive News - August 18, 2008 - Dealers (Page 28) Automotive News - August 18, 2008 - Who's that sporting Brembos now? (Page 29) Automotive News - August 18, 2008 - Delphi ends battery venture (Page 30) Automotive News - August 18, 2008 - Delphi ends battery venture (Page 31) Automotive News - August 18, 2008 - Mercedes sues Cobasys over batteries (Page 32) Automotive News - August 18, 2008 - Mercedes sues Cobasys over batteries (Page 33) Automotive News - August 18, 2008 - A good day at work: $22 million (Page 34) Automotive News - August 18, 2008 - A good day at work: $22 million (Page 35) Automotive News - August 18, 2008 - A good day at work: $22 million (Page 36)
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.