Ford Means Quality

An interesting aside to the current trends of dispair and depression flowing through the market.  Bloomberg just released an article showing a significant rise in Ford automotive quality.  While the company has been struggling on the stock market, and who hasn't these days, management appears to be focusing on what is important and that is product.  Ford's CEO Alan Mulally, formally from Boeing, has been righting the blue oval as of late.  The key here ,I believe, has been his focus on changing the culture of Ford.  He has removed the red tape and the name calling that symbolized American metal for so long and has focused on that key component, product.  He is using Toyota's own play book to improve the way that Ford has been going about business emulating their success as much as possible.  He has also shown independence in rather sternly rejecting an offer from GM to combine the two companies in this current economic downturn earlier this year.  What will this mean for the future of Ford? While history suggests that at the turn of the century (millenia in this case) we would see significant closures I dont' believe Ford will join them.  

John W. Schmotzer
MSAE Exec Board Member
Webmaster/Administrator

Chrysler's Future

If you have read any newspaper or watched any television news program, you must know about the speculation around Chrysler and the multiple suitors considering to swallow up or join the automaker. At one end, you have General Motors considering absorbing the entire automaker in a possible ownership swap of GMAC. The interesting factor in the deal is that Cerebus, which owns 80% of Chrysler, owns 51% of GMAC at the moment. At the other end, you have Renault-Nissan looking at bringing Chrysler into their alliance. The GM proposal must be the most shocking, as it suggests the possibliity of GM eliminating and redundancies with Chrysler and keeping valuable assets such as the Jeep brand. The Renault offer, on the other hand, is quite predictable. Renault actually partnered with AMC with the 1980s, although the partnership was ultimately not a success. It appears though that the French automaker is searching for an American partner once again. On top of that, Nissan has future plans for product sharing with Chrysler, including a compact Nissan car and the Dodge Ram pickup. Whatever ends up being the outcome, let us hope it is the best plan to ensure the health of the automakers, protect jobs, and preserve the history of these mighty industry titans.

Robert Cudini

Less Oil = More Trucks?

As everyone knows, the high price of oil and gasoline has driven many consumers away from trucks and SUVs. Not only were these vehicles high in production but they were high in profit margin. In some cases, companies could make $10,000 in profit, per vehicle. Alas, those days are gone. With gas at $4 a gallon, who wouldn't switch?

In the past few weeks of economic turmoil, oil prices have been hit very hard. Oil is now half of what it was just a few months ago. The price today ($67.29) is bringing us back towards the low prices we had in the early part of the century. Given, it isn't $15 per barrel, but being cut in half is quite significant.

What I am looking to watch is whether these low prices are going to stop this green revolution and make efficiency no longer priority one. The arguements that hybridization and efficiency weren't cost effective that had been rightfully laughed at over the summer are now seeming more appropriate.

We have made huge gains as far as reducing our consumption of oil. These tough times with cheaper oil will tell us whether we truly have made a shift. It is easy being green when it is more cost effective. Let's see how many people will hold fast and not given up our gains.

I love seeing people being energy conscious and doing their part. My personal belief is that the market will tell us otherwise. When you lose your job, you don't care about the environment. A lower price will increase consumption and we will fall back to many of our old ways. The only way for us to truly break our addiction is for it to not be economically feasible. The environment is important, but we can't force cleanliness upon people. Only when it is economically viable will people make the switch.

So for now we are back to cheap oil while we weather recession. The environment will wait until brighter days.