Automotive News - July 7, 2008 - (Page 12) 12 • JULY 7, 2008 opinion Some execs win even when their companies lose While the North American auto industry is hemorrhaging cash, wiping out thousands of jobs and turning itself upside down, some things haven’t changed: Executives still do well even if their companies and employees don’t. For example, Richard E. Dauch, CEO of American Axle & Manufacturing Holdings Inc., last month got an $8.5 million bonus from his board for his leadership role in the recent three-month strike against his company by the UAW. The strike cost chief customer General Motors $2.82 billion. GM was forced to slow or idle as many as 30 plants and put tens of thousands of workers off the job. American Axle won key concessions from the UAW but will close three plants and try to shed 2,000 jobs. Dauch’s bonus is a slap in the face to the workers who are losing their jobs and to the survivors who will have to exist on half of what they had been making. The board rewarded Dauch for doing an outstanding job, and in some ways he has. But the symbolism undermines his leadership going forward. Across town, Julie Brown, who has presided over the rapid failure and liquidation of the supplier she founded, Plastech Engineered Products Inc., will be paid a $9.25 million settlement by the company’s lenders. That’s after she paid herself and nine other family members $6.4 million during the 12 months before the company’s Feb. 1 bankruptcy filing. Brown’s failure and the cost to her employees are a tragedy. And the exorbitant pay she got shows one of the things woefully wrong with American business. Executives are insulated and win no matter how much they lose while the workers are buffeted. Not many industries can burn through money as fast as the automobile business. Sadly, the Detroit 3 are learning that lesson like never before. There have been other times when the automobile companies were bleeding massive amounts of red ink. In the early 1990s, General Motors was reported to be within days of not having enough cash to meet its payroll. GM seriously considered bankruptcy. Ford has mortgaged itself to the hilt, and it’s not certain the company has enough money to weather the current storm. And Cerberus is learning a very painful, expensive lesson about the automobile industry. It’s costing a large fortune, and the investment group wants out. Regardless of what the folks at Chrysler say, Cerberus is shopping Chrysler around the world to anyone who might be DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. Show me the money interested. Cerberus also owns half of GMAC, another problem costing billions of dollars. The profit potential for an automobile company on the positive side of breakeven is gigantic. But the potential for losses is just as great on the negative side. All of the American companies are below breakeven in the United States, with short-term results looking even bleaker. Whether they figure out how to conserve their cash or need to look for new sources of capital to tide them over during what we all hope will be a temporary downturn, the Detroit 3 need more money to stay alive and well. Or at least alive. There’s not much point lecturing them on the history of oil in the United States over the past 35 years or talking about what they’ve learned from it, which seems to be little or nothing. What’s important is what they are going to do now. The American car companies are between a rock and a hard place. They have billions invested in their large pickups and fuel-inefficient SUVs, not to mention the brick and mortar. Chrysler and Ford will introduce new pickup trucks this fall in the worst possible economic environment. And GM and Toyota, which both have year-old trucks, will do whatever it takes to keep their market shares and sales volumes as high as possible. Meanwhile, Nissan was smart enough to throw in the towel on a billion-dollar investment by killing its own large pickup with its dedicated V-8 engine. The truck, engine and plant cost a large fortune, but Nissan may be ahead of the game. It is the perfect storm. Let’s hope everyone survives it. 1982 we’ve been one of Chrysler’s top 50 volume dealers. We’ve exceeded all volume objectives that Chrysler ever set for us. We are profitable. We sell more than 2,000 new units a year. Crain wants me to acknowledge that my store should simply fade to black? No — I respectfully decline the invitation. BOB SHUMAN Shuman Chrysler-Jeep Walled Lake, Mich. Tata’s personal touch Ratan Tata made waves in the auto industry by buying Jaguar and Land Rover and by championing the Tata Nano, a $2,500 car. But Americans had few chances to meet him. Then last month, the hands-on, billionaire new owner toured Jaguar and Land Rover dealerships in the Chicago area and on the East and West coasts. He dined with dealers, asked questions and listened. When Ford Motor Co. owned those brands, dealers rarely received much attention from the boss. Similarly, few if any Chrysler dealers have met the bosses at New York private equity firm Cerberus rather than the hired managers in Detroit. Tata’s personal attention bodes well for the future of Jaguar and Land Rover. Try a green car; you might like it To the Editor: I think Jesse Snyder missed the boat on this one (“Green cars: So sensible and so uncool,” Comment, June 16). He says green cars are cramped and not versatile, have limited range, are ugly or all of the above. Not true at all. As a Toyota Prius owner (and Toyota finance manager), I can assure you that there is ample room — many 6-foot-plus drivers and passengers will attest to that— and it is quite versatile; I can get my golf clubs and hand cart in with only half the rear seat folded. Also, it has the same acceleration as a 2.4-liter Toyota Camry (which has about 160 hp), and I know a few Volvo/Audi, etc. owners who have been quite surprised at my beating them onto the freeway ramp. I have leather, heated seats and a lumbar adjustment just like the luxury guzzlers. And ugly? Beauty is in the eye of the beholder, and the fact that Snyder makes styling an issue emphasizes the problem with the automotive industry today. So much value has been put on looks that function and efficiency have gone out the window. Maybe a few days of driving a Prius or a Honda Civic Hybrid would make Snyder see the light. He wants to save the planet? He should tout green cars, not knock them. JEFF RICHMAN Novato, Calif. THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Honda: Give credit where it’s due To the Editor: With a long history of leadership in introducing the industry’s first lowemission vehicles, America’s first hybrid car and the world’s first fuel cell vehicle — among other environmental technology firsts — Honda deserves more acknowledgement for developing the FCX Clarity than that shown in Keith Crain’s June 23 column, “Lots of talk but little to show.” By introducing the industry’s most advanced fuel cell vehicle, Honda is demonstrating that fuel cell vehicles are a viable long-term solution to the challenge of providing customers with mobility in an era of unstable energy pricing and global climate change. Although our leasing plans for the FCX Clarity are modest during the next three years, the fact that we have indeed started production is a giant step forward — and a historic event for Honda and the industry. It should be acknowledged as such. KURT ANTONIUS Assistant Vice President American Honda Motor Co. Inc. Torrance, Calif. Keith E. Crain, Publisher and Editor-in-Chief Peter Brown, Associate Publisher and Editorial Director David Sedgwick, Editor Edward Lapham, Executive Editor HOW TO REACH US Web site: www.autonews.com Editorial staff autonews@crain.com Phone: 313-446-0361 Fax: 313-446-0383 Circulation Advertising subs@crain.com rgreer@crain.com Phone: 888-446-1422 Phone: 313-446-6050 Fax: 313-446-6777 Fax: 313-446-8030 Editorial data/research To locate information that has been published in Automotive News, call 313-446-1662. Customer service To start or renew a subscription or to report an address change or a delivery problem, e-mail subs@crain.com or call 888-446-1422 (in the U.S. or Canada) or 313-446-1662 (in all other locations). AUTOMOTIVE NEWS (ISSN 0005-1551) is published weekly at 1155 Gratiot Ave., Detroit, MI 48207-2997. Periodicals postage is paid at Detroit, MI and at additional mailing offices. Postmaster: Send address changes to AUTOMOTIVE NEWS, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement #40012850, GST#136760444. Canadian return address: 2-7496 Bath Road, Mississauga, ON L4T 1L2 Printed in the U.S.A. Too many dealers? That’s just not so To the Editor: Keith Crain should be careful when he uses a word like “everyone.” I do not acknowledge that there are too many dealerships in the United States (“Lots of talk but little to show,” June 23). Maybe a few college types and factory executives agree with him, but in the trenches, most of the factory people I work with know that one more dealer selling one more unit is a good thing. Chrysler now wants to wipe my store off the face of the Earth; yet since http://www.autonews.com/signup http://www.autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - July 7, 2008 Automotive News - July 7, 2008 Turnaround trouble: Mitsubishi back on the skids It's a panic — but don't panic CAUGHT FLAT-FOOTED Japan's new diet plan: Slim down, ounce by ounce Amid sale rumors, Volvo has upmarket plans Reynolds sues dealer over computer upgrade Chrysler and dealers to improve Internet marketing strategies Seat strategy: Lear aims to make more profits by producing more parts Nissan: Despite a truck glut, Titan gets no more incentives American Axle cuts staff; boosts India business, CEO bonus Bosch sees N.A. red ink this year Bill Mitchell's designs blew away the past Hyundai Santa Fe to get a 4-cylinder GM Europe exec: Curbing CO2 is 'around the clock' effort Supplier input varies in Nissan's tech plans Great Wall becomes Chrysler's 2nd Chinese partner Steel prices nudge up Nano's costs Analyst: GM could tap UAW benefits fund Automakers create opportunities for Mexican molders Chrysler pitches gas savings on hybrid SUVs Researchers test capturing CO2 before it leaves the car Some execs win even when their companies lose Tata's personal touch Show me the money Obituaries Study: Dealership service shops extend their hours New Web tool promotes GM service Fiat CEO Marchionne is Industry Leader of Year Jim O'Sullivan Johan de Nysschen Sergio Marchionne Ratan Tata Dick Colliver Fritz Henderson Martin Thall Jim Farley Jack Stavana Roger Penske Walter de' Silva Mike Stanton Tim Manganello David Friedman Jim Hallett Larry Jutte Kim Kosak Ron Gettelfinger Tom Stephens Bob Lutz Tom Shoupe Jay Amestoy June caps a dismal first half Personnel Auto roof rule due by Oct. 1 Mitsubishi dumps 9 ad associations Small-car transaction prices rise in June Turbo taboo may end for BMW M's The mpg fracas: Pick your favorite fairy tale Great news? Analysts shun the Kool-Aid at Chrysler And now, from Wall Street, a short tale of terror VW tells builders: Plan for Southeast plant Dodging a bullet: Half-off deal busts dealer's Ram jam To run the train, should you be an engineer? Automotive News - July 7, 2008 Automotive News - July 7, 2008 - CAUGHT FLAT-FOOTED (Page 1) Automotive News - July 7, 2008 - CAUGHT FLAT-FOOTED (Page 2) Automotive News - July 7, 2008 - Amid sale rumors, Volvo has upmarket plans (Page 3) Automotive News - July 7, 2008 - Seat strategy: Lear aims to make more profits by producing more parts (Page 4) Automotive News - July 7, 2008 - Seat strategy: Lear aims to make more profits by producing more parts (Page 5) Automotive News - July 7, 2008 - Hyundai Santa Fe to get a 4-cylinder (Page 6) Automotive News - July 7, 2008 - Hyundai Santa Fe to get a 4-cylinder (Page 7) Automotive News - July 7, 2008 - Analyst: GM could tap UAW benefits fund (Page 8) Automotive News - July 7, 2008 - Analyst: GM could tap UAW benefits fund (Page 9) Automotive News - July 7, 2008 - Chrysler pitches gas savings on hybrid SUVs (Page 10) Automotive News - July 7, 2008 - Chrysler pitches gas savings on hybrid SUVs (Page 11) Automotive News - July 7, 2008 - Show me the money (Page 12) Automotive News - July 7, 2008 - Show me the money (Page 13) Automotive News - July 7, 2008 - Show me the money (Page 14) Automotive News - July 7, 2008 - Show me the money (Page 15) Automotive News - July 7, 2008 - Obituaries (Page 16) Automotive News - July 7, 2008 - Obituaries (Page 17) Automotive News - July 7, 2008 - Obituaries (Page 18) Automotive News - July 7, 2008 - Obituaries (Page 18A) Automotive News - July 7, 2008 - Obituaries (Page 18B) Automotive News - July 7, 2008 - Obituaries (Page 18C) Automotive News - July 7, 2008 - Obituaries (Page 18D) Automotive News - July 7, 2008 - Obituaries (Page 18E) Automotive News - July 7, 2008 - Obituaries (Page 18F) Automotive News - July 7, 2008 - Obituaries (Page 18G) Automotive News - July 7, 2008 - Obituaries (Page 18H) Automotive News - July 7, 2008 - Obituaries (Page 18I) Automotive News - July 7, 2008 - Obituaries (Page 18J) Automotive News - July 7, 2008 - Obituaries (Page 18K) Automotive News - July 7, 2008 - Obituaries (Page 18L) Automotive News - July 7, 2008 - New Web tool promotes GM service (Page 19) Automotive News - July 7, 2008 - Dick Colliver (Page 20) Automotive News - July 7, 2008 - Walter de' Silva (Page 21) Automotive News - July 7, 2008 - Larry Jutte (Page 22) Automotive News - July 7, 2008 - Jay Amestoy (Page 23) Automotive News - July 7, 2008 - Jay Amestoy (Page 24) Automotive News - July 7, 2008 - Jay Amestoy (Page 25) Automotive News - July 7, 2008 - Jay Amestoy (Page 26) Automotive News - July 7, 2008 - Jay Amestoy (Page 27) Automotive News - July 7, 2008 - Jay Amestoy (Page 28) Automotive News - July 7, 2008 - June caps a dismal first half (Page 29) Automotive News - July 7, 2008 - Personnel (Page 30) Automotive News - July 7, 2008 - Mitsubishi dumps 9 ad associations (Page 31) Automotive News - July 7, 2008 - Small-car transaction prices rise in June (Page 32) Automotive News - July 7, 2008 - Small-car transaction prices rise in June (Page 33) Automotive News - July 7, 2008 - To run the train, should you be an engineer? (Page 34) Automotive News - July 7, 2008 - To run the train, should you be an engineer? (Page 35) Automotive News - July 7, 2008 - To run the train, should you be an engineer? (Page 36)
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