Lean Thinking

Lean Thinking

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  • Paul Bayer
    Paul Bayer    Premium Member   Group moderator
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    car market downturn
    Hi folks,

    especially in times of crisis we must carefully observe what happens. This is one of the most important functions of a viable system. Therefore I propose to collect important informations about the automotive slump in this thread.

    The most important graph this week is this timeseries, showing an unprecendented drop in US car sales: http://1.bp.blogspot.com/_pMscxxELHEg/SYjYYkc8-yI/AAAAAAAAEe...
    The graph shows no indication that the downturn is slowing.

    January statistics show that different car producers are hit differently by the crisis:
    http://2.bp.blogspot.com/_8rpY5fQK-UQ/SYjDm4WIQTI/AAAAAAAAFx...
    Comparison with the same december statistics show that there is some variation in the ranking but that the entire picture remains the same: http://4.bp.blogspot.com/_8rpY5fQK-UQ/SWK_kGXHcAI/AAAAAAAAFa...

    There were some articles about how Toyota is doing in the crisis:
    - Toyota shuts down all but one assembly line http://money.cnn.com/2009/02/05/news/international/toyota_as...
    - In the Red, Toyota Sees Loss Tripling http://www.nytimes.com/2009/02/07/business/worldbusiness/07t... (free subscription required)

    Cheers,
    Paul
    This post was modified on 07 Feb 2009 at 08:07 am.
    • 07 Feb 2009, 08:06 am
  • Ralf Lippold
    Ralf Lippold    Premium Member   Group moderator
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    Re: car market downturn
    Hi all,

    Thanks to Scott Monty, Head of Social Media & Communications of Ford Motor Company, http://www.twitter.com/scottmonty, I got the following with even more informantion about the
    reference modes of various variables:

    http://www.econbrowser.com/archives/2009/02/january_auto_sa_...

    Cheers,

    Ralf
    • 07 Feb 2009, 3:09 pm
  • Egil von Kirschten
    Egil von Kirschten
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    Re: car market downturn
    Hi Paul and All,

    The offer of our German Government, the “junky gratuity of € 2,500” (getting rid of our old and buy a new car now), made demand for small cars increase, as this has more impact on lower car prices. For Volkswagen, this was a nice present.

    http://www.waz-online.de/newsroom/wirtschaft/dezentral/polit...
    http://www.autokiste.de/psg/0801/6811.htm

    Is the German Government acting correct and fair?
    What shall Volkswagen do now: save money by working short time, or reducing delivery time by working full time?
    Why are almost all other car makers in a more difficult position? How about Toyota’s production principles?

    Regards
    Egil
    • 13 Feb 2009, 08:54 am
  • Paul Bayer
    Paul Bayer    Premium Member   Group moderator
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    Re^2: car market downturn
    Hi all,

    more specific informations about Toyota's job cuts: Toyota Offering Buyouts To 18,000 U.S. Workers

    http://www.manufacturing.net/article.aspx?id=185734

    Why is Toyota in a bad position?

    Some hypotheses:
    - Toyota is engaged in markets seeing bigger slumps than those, other companies like VW are engaged in.
    - Toyota is engaged in market segments seeing bigger slumps.
    - Toyota built up more overcapacity due to its forced expansion.
    - Toyota lost some of its competitive advantage due to its forced expansion.
    It seems that all of these apply somehow.

    Chet Richards commented over a year ago on Katsuaki Watanabe:
    It is somewhat sad to see the head of Toyota exhorting the workforce rather than taking action to bring his system back into harmony and to refocus. Kiichiro Toyoda and Taiichi Ohno must be spinning in their graves. This is the price one pays when the focus (Schwerpunkt) shifts from being the best car company to being the biggest. (see: http://www.chetrichards.com/c2w/2008/01/16/ford-faint-signs-... )
    General Patton said “Good tactics can save even the worst strategy. Bad tactics will destroy even the best strategy.”

    Hopefully Toyota's operational excellence will save its questionable strategy.

    Cheers,
    Paul
    • 14 Feb 2009, 10:16 pm
  • Egil von Kirschten
    Egil von Kirschten
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    Re^3: car market downturn
    Paul Bayer schrieb:
    Why is Toyota in a bad position?> Some hypotheses:
    - Toyota is engaged in markets seeing bigger slumps than those, other companies like VW are engaged in.
    - Toyota is engaged in market segments seeing bigger slumps.
    - Toyota built up more overcapacity due to its forced expansion.
    - Toyota lost some of its competitive advantage due to its forced expansion.
    It seems that all of these apply somehow.
     
    Chet Richards commented over a year ago on Katsuaki Watanabe:
    This is the price one pays when the focus (Schwerpunkt) shifts from being the best car company to being the biggest. (see: http://www.chetrichards.com/c2w/2008/01/16/ford-faint-signs-... )
    Hi Paul,

    For me the question is, who is stronger: The Best or the Biggest?

    In order to become the BEST, we must have the best cars; In order to become the BIGEST, we must have not only the largest variety of cars, but also production sites at the largest markets.

    Daimler Benz targeted once toward becoming the biggest by fusing with Chrysler, which almost killed them, as they could sell Chrysler before this crisis.

    VW had a very bad experience in the US with their production of the RABIT (Golf). Their quality failed, as on crash tests their fuel tank exploded. Thus, they gave up their US production in the 80s. However, VW invested early in China, where quality was not as important, and got a huge market share in a climbing market. They also invested in Europe, where Spain is their problem market.

    Toyota set mainly their expansion in the US, producing almost everything there, even trucks, which is not their strength. Now they are paying for this.

    I therefore agree with your points and Chet Richards comments, and add, that it is almost impossible to become simultaneously the BEST and BIGGEST, as we can’t see anymore the trees in the forest.

    And I believe that in a market crisis, it weights more the bad model (Schwerpunkt) than the good one.


    Regards
    Egil

    P.S. Who grows like a palm tree, will fall like a coconut.
    This post was modified on 16 Feb 2009 at 11:26 am.
    • 15 Feb 2009, 09:04 am
  • Ralf Lippold
    Ralf Lippold    Premium Member   Group moderator
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    Re^4: car market downturn
    Hi all,

    Egil von Kirschten schrieb:
    ...
    I therefore agree with your points and Chet Richards comments, and add, that it is almost impossible to become simultaneously the BEST and BIGGEST, as we can’t see anymore the trees in the forest.
    Reading the 3rd version of "Limits to Growth" by Dennis Meadow, Jorgen
    Randers and Donella "Dana" Meadows, I would strongly question the
    assumption that there is a business model in these days that strives
    for the BIGGEST.

    I doubt it and the NON-ZERO-SUM approach of Toyota is slowly leaking
    through the snow cap done by the crisis.

    Cheers,

    Ralf

    PS.: @Paul, sorry for going a bit off-target in this thread we you proposed
    just to post the new numbers on the market downturn. Please let me know
    what you think and I would move the non-relevant postings to another
    thread.
    • 15 Feb 2009, 10:00 am
  • Paul Bayer
    Paul Bayer    Premium Member   Group moderator
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    Re^5: car market downturn
    Good NYT article on Toyota's situation: Taking the Wheel as Toyota Skids
    http://www.nytimes.com/2009/02/15/business/15toyota.html?_r=...

    … while the WSJ writes about GM: GM to Offer Two Choices: Bankruptcy or More Aid
    http://online.wsj.com/article/SB123458663412987489.html

    Cheers,
    Paul
    This post was modified on 15 Feb 2009 at 05:41 pm.
    • 15 Feb 2009, 5:31 pm
  • Ralf Lippold
    Ralf Lippold    Premium Member   Group moderator
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    Re^6: car market downturn
    ...the story hasn't come to an end:

    http://www.washingtonpost.com/wp-dyn/content/article/2009/02...

    What is really going and hasn't been brought up into the
    public conversation? I guess GM is not the only OEM
    that is hoping for the better to arrive - which probably never
    will come.

    Reframing the problem after deeply thinking about what it
    really is would be a good start.

    I haven't seen much of it and also in other parts of the auto-
    motive world. Seems to be that all the top guys stick to their
    handles that worked so well in the past instead of "letting go"
    and go with the flow.

    What would be possible to achieve with all the brain power
    put on the street (47.000 workers on danger at GM for the
    coming months)?

    To put this power into action, it would need...?

    Cheers,

    Ralf
    • 18 Feb 2009, 01:09 am
  • Paul Bayer
    Paul Bayer    Premium Member   Group moderator
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    Re^7: car market downturn
    GM and Chrysler ask for more money

    From CNBC: GM Needs Up to $30 Billion in Aid to Avoid Failure: http://www.cnbc.com/id/29243063

    General Motors said on Tuesday it could need a total of up to $30 billion in U.S. government aid—more than doubling its original aid—and would run out of cash as soon as March without new federal funding. ...
    The GM restructuring plan of more than 100 pages was posted on the U.S. Treasury Web site.

    The GM Restructuring Plan: http://treas.gov/initiatives/eesa/agreements/auto-reports/GM...

    The Chrysler Plan: http://online.wsj.com/public/resources/documents/WSJ-2009021...

    The plans are based on the forecast of a market recovery in 2010.
    See: http://4.bp.blogspot.com/_pMscxxELHEg/SZtQQEz6tAI/AAAAAAAAEi...

    Cheers,
    Paul
    • 18 Feb 2009, 05:54 am
  • Paul Bayer
    Paul Bayer    Premium Member   Group moderator
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    Re^8: car market downturn
    Interesting FT article: Call for global think-tank on crisis

    One of Germany’s most influential engineers has made an urgent plea to bring leading global industrialists, scientists and politicians together in an attempt to rapidly stabilise the financial system, highlighting the growing fear of tightening credit hitting supply chains.
     
    Franz Fehrenbach, chief executive of Bosch, the world’s largest car parts supplier, called for the creation of a global interdisciplinary think-tank to find ways to tackle the financial crisis.
     
    The head of Germany’s biggest privately owned engineering group warned that the risks of further bank crashes and a meltdown of credit supply to the broader economy remained unabated and urgent action was needed to prevent that.
     
    “We have to bring the best people in the world together to find a sophisticated and interdisciplinary solution for the stabilisation of the world’s financial markets. The approach has to be enforceable on a global basis as too many plans have been torn apart by national governments,” Mr Fehrenbach told the Financial Times.
     
    “It has to be the absolute top priority to bring the credit industry back to life.”
    see: http://www.ft.com/cms/s/0/2d08e842-0132-11de-8f6e-000077b076...

    Paul
    • 24 Feb 2009, 12:03 am