At the beginning of this year, the United Auto Workers pledged that it would launch a campaign to organize the foreign-owned, non-union “transplant” factories in the US, threatening to tar uncooperative automakers as “human right abusers.” The campaign initially lost steam, but the UAW stuck to its pledge, re-iterating on several occasions that it would organize “at least one” transplant factory by the end of 2011. With one month left to accomplish that goal and no signs of progress in sight, the UAW has officially called off that goal. In fact, the UAW now hopes to simply pick an automaker to target by the end of 2011. Spokeswoman Michelle Martin tells Bloomberg

At this point, our hope is to make a decision about who we’re going to target by the end of the year. But obviously, we won’t have the organizing campaign completed by the end of the year.

This is not too surprising, considering the UAW announced last week that it would be focusing on dealership pickets initially rather than factory organizing. And sure enough, the first dealership picket has begun, targeting Hyundai dealerships. And yet, says Martin

This has nothing to do with the domestic organizing campaign. Hyundai is not the target.

Huh? If the UAW is not committing to organizing Hyundai’s assembly workers, why picket Hyundai dealerships?

The Freep explains that the union is targeting 75 Hyundai dealerships, in order to show international solidarity, a recurring theme in the presidency of UAW boss Bob King. Says King

The UAW has embraced a global vision of social justice and will mobilize its membership to defend labor rights here and in other parts of the world

So, what is the UAW picketing in solidarity with? Martin tells the Freep that Hyundai’s Korean unions are picketing across Korea to protest the firing of a worker whistleblower. According to Martin

The worker, who is employed by a Hyundai subcontractor, was fired after she reported the sexual harassment in 2010 to Korea’s National Human Rights Commission… The commission ruled in the worker’s favor and ordered the subcontractor to pay damages and rehire the worker, but the subcontractor has refused.

A UAW statement adds

Holding banners that read, “Stop Sex Discrimination at Hyundai” and “Reinstate Ms. Park,” UAW members from Los Angeles to New York, at more than 75 different dealerships, informed American auto buyers about an injustice to an autoworker on the other side of the globe.

“Though we may work for different companies and in different countries, as workers, we support each other’s struggles and know that one of the best ways to hold our employers accountable is through consumer action at dealerships,” said Mike O’Rourke, an 33-year employee and president of UAW Local 1853 at General Motors’ Manufacturing Facility in Spring Hill, Tenn.

Hyundai Motor America’s response: the worker was an employee of a subcontractor at Glovis, a Hyundai “affiliate,” therefore

the issue has nothing to do with Hyundai Motor Company

In other words, the UAW will be alienating itself from Hyundai’s US workers and dealers over one person who doesn’t even work for Hyundai. Standing on principle is great, but trying to block sales of cars will not exactly endear Hyundai’s assembly workers to the union. Meanwhile, similarly to the UAW’s last protest against Hyundai, there doesn’t seem to be as much moral clarity on this issue as the UAW would like it to appear. Of course sexual harassment has no place in the workplace, and  the circumstances of this case in particular do not sound good, but by hammering on the treatment of contracted employees, and by associating the contracter “affiliates” with the automakers they work for, the UAW opens itself up to criticism along the same lines.

The Freep is also reporting today that the UAW has called off a protest that was planned at GM’s Orion Assembly plant, over contract negotiations with a supplier at that plant. Workers at the GM affiliate supplier LINC, who organize and deliver parts for the Orion plant, make ten dollars per hour, less even than the “Tier Two” wages that most Orion assembly workers make. And yet, with GM’s stock (which funds part of the UAW’s VEBA account) remaining weak, it seems unlikely that the union will actually protest, let alone strike, over the LINC wages. Which raises a tough question for the union: why are they so concerned about transplant workers making $14.50 per hour and up when they are working alongside folks making $10 per hour? And if workers at a Hyundai supplier are Hyundai’s responsibility, why isn’t the UAW livid at GM for allowing LINC to hire workers for such low wages? And in light of these fundamental contradictions, a single case of apparent injustice half the world away seems even less relevant.

Germany’s Autobild continues to bang the drum about HFO-1234yf, an air-conditioning coolant sold by US supplier Honeywell as an “environmentally-friendly” alternative to other refrigerants. Problem is, C02 seems to be not only more environmentally safe, but safer for humans (notably rescue workers) as well…

Though the basic problem is that nobody outside of the manufacturer of the substance has much of an idea of what its real risks are, there are a couple of lines of criticism that researchers want to test.

• Flammability. Honeywell knew HFO-1234yf is flammable, and initially marketed it mixed with a fire extinguishing substance. That igniion-retarding iodine compound was later implicated in ozone depletion, and Honeywell now simply downplays concerns about flammability.
• Toxicity: HFO-1234yf breaks down into trifluoroacetic acid, a phytotoxic substance Autobild calls an “insidious poison.” In an experiment undertaken for Autobild, a chemist exposed a pig’s head to ten grams of the substance and “within a half hour, its skin had turned grey and its eyes had become dull and milky.”
• Alternatives: German automakers abandoned HFO-1234yf in 2007 for these very reasons, but went back on their decision in 2009. Industry-watchers blame lobbying and the automakers’ desire to increase the volume of their orders from Honeywell (which also supplies other systems) for the about-face, although the official reason was that the main alternative (C02) was more expensive. Autobild argues that this is a specious argument, as C02 is a far cheaper refrigerant, and that it amortizes its extra up-front cost after “a few refills.”

Rescue workers are now leading the charge to undertake independent testing of the coolant, which was first produced in 1946. Alex Lechleuthner, Head of the Cologne Fire Brigade’s Department of Emergency Medicine says there are “very high operational and personnel expenses” associated with such tests, but that they independent testing is crucial as “previously known information from the manufacturer could be judged very differently depending on the viewing angle.”

And there’s more than just the possible risk of eye-dulling toxicity for rescue workers: according to one EPA document’s abstract:

Automobile air conditioning HFO-1234yf emissions are predicted to produce concentrations of TFA (trifluoroacetic acid) in Eastern U.S. rainfall at least double the values currently observed from all sources, natural and man-made. Our model predicts peak concentrations in rainfall of 1264 ng L(-1), a level that is 80x lower than the lowest level considered safe for the most sensitive aquatic organisms.

But what kind of world would we live in if C02 emissions were less harmful than their alternatives? Especially if one of those alternatives were proprietarily manufactured by a supplier that could charge $150 per kilo for the stuff? Well, when faced with the Autobild attack, that very supplier Honeywell responded [presentation PDF here], arguing that

The new gas has already been approved for use in the US, Japan and Europe and was recently given the all clear by the German firefighter association Deutscher Feuerwehr Verband (DFV) which said it was convinced it had the same safety standards as R134a. The DFV described the toxicity of R1234yf as low and comparable to R134a and was safe for passengers and emergency services.

The chemical manufacturers point out that HFO1234yf has undergone significant testing for safety and efficacy by independent testing groups, including the SAE International Cooperative Research Program, which comprises leading automakers. The SAE testing found HFO1234yf to offer “superior environmental performance” to CO2 while having “the lowest risk for use in mobile air conditioning systems in meeting environmental and consumer needs.”

Separately the EPA reports [PDF] that the SAE test found that

the risk for excessive HF exposure is less than one ten-thousandth the risk of a highway vehicle fire and one fortieth or less of the risk of a fatality from deployment of an airbag during a vehicle… The highest risk identified for HFO-1234yf is potential consumer exposure to HF from decomposition and ignition, which is of the same order of magnitude of risks of HF from the current most common automotive refrigerant, hydrofluorocarbon collision

Dig around long enough and you’ll find a middle ground in HFO-1234yf analysis, like this one from the Auto Parts Accessories Journal, which identifies the long-term risks of TFA buildup and Honeywell/DuPont’s monopoly on supply (and the resulting high price of the substance) as the two major drawbacks of the coolant. That piece concludes

As people who love good engineering, we admit to being just a bit regretful that the CO2 systems were not at least given a chance to prove themselves. It’s difficult to believe that in terms of total environmental impact, from manufacture, distribution, maintenance and actual use, that CO2 would not have a greatly reduced environmental impact over any complex chemical refrigerant. We’ve just emerged from an era where the poor decisions of major automakers have caused their businesses to collapse. Often those decisions were made on the basis of what was most convenient, rather than what mechanics would recognize instantly as good technologies. Let’s be hopeful that HFO-1234yf turns out to be a good technology, and not just a convenient one.

We had better hope that’s the case, as the forthcoming 2013 GM products will be the first in the US market to use HFO-1234yf, starting next year.

Crains Cleveland reports that NASA will be offering some 38 technologies developed for its space program to the auto industry at a trade show next week at the Glenn Research Center. With 100 OEMs and suppliers attending, the event will bring materials and technologies chosen for their usefulness in automotive applications to an industry that is anxious to develop solutions for upcoming fuel economy standards. And hopefully bring some licensing fees to an agency that is anxious to find private sources of income. In the words of NASA’s Paul Bartolotta

NASA is open for business. We’re opening our safe, so to speak

So, what’s on offer?

Per Crains,

The technologies are far ranging and include things like a special copper alloy that NASA developed for rocket nozzles. Those nozzles have to withstand tremendous temperatures and other harsh environmental conditions.

As it turns out, they also make great welding electrodes that can be used on robotic welders — electrodes that last far longer than those available using other metals, NASA says.

Also set to be unveiled is the material NASA developed to keep jet engine blades from penetrating the bodies of jet engines and plane fuselages.

The material, a type of foam sandwiched between special layers of something similar to carbon fiber, is super tough, but it’s also light. It might even serve as a new, lighter skin for NASA’s next rocket, though it could be useful in making lighter and stronger car bodies, Dr. Bartolotta said.

Other technologies include sensors and controls that could help hybrid or electric cars become more efficient; solid oxide fuel cells to power vehicles; new materials that can be used to contain pressurized natural gas; and green polymers that put out only water and not noxious gases when they are used.

And though NASA is attacking the same challenge as the auto industry, namely how to build vehicles that are cheap and efficient yet up to the rigorous demands of their duties, it seems interest may not be as high as you might think. Though over 100 firms will come by to see NASA’s technology, nearly 500 invitees have decided to sit the exhibition out. Given how competitive the auto industry is, it seems unlikely that these firms are sleeping on a truly game-changing technology… but then, materials technologies are all about applications. As pointed out in the example of the copper alloy, a material designed for one purpose can end up having a much bigger impact in a completely different application. And who knows where these new technologies could end up in your next car…

Bloomberg [via the Financial Post] reports that “one of the five biggest European banks” is “close” to loaning Saab $157m  so that it may pay workers and suppliers, in order to move towards restarting production. According to DI.se, the deal is predicated on Saab securitizing the loan with shares of Saab Great Britain or other “alternative assets.” But apparently whatever the banks ask for, Saab will try to give, as Theodoor Gilissen Bankiers analyst Tom Muller explains

They need the money immediately. I hope they solve it this week, otherwise I think it’s over for Saab. It’s a very dire situation.

He’s not kidding…

Even in a “nuclear winter” scenario, Saab needs about $50m per month to keep the lights on. Add about $8m for supplier debts already logged with the kronofogden, and Saab might hold off bankruptcy for another week. To restart production, however, it needs to spend anywhere from $30m to $60m in order to pay off its entire estimated supplier debt. And get this: according to Bloomberg, Swedish Automobile’s market capitalization on the Dutch exchange is under €18m (about $26m at current exchange rates), but it’s still waiting on €245m (about $353m) from PangDa and Youngman in a deal that would value the company at over half a billion dollars. This looks quite a bit like a bridge to nowhere…

Saab has already warned its workers that paychecks due tomorrow could be delayed until “committed” funds from investors arrive, but Bloomberg reports that the warning may not be enough. According to the report

Any delay in the August payments will prompt the unions immediately to start a process aimed at ensuring state coverage of wages in the event of the carmaker’s failure, officials from the IF Metall and Unionen labor groups said. The unions, after gaining employees’ backing, would first file payment requests with Saab. If salaries remain unpaid in seven days, the unions may then ask a district court to declare Saab bankrupt.

That could put Saab into bankruptcy in as little as two weeks. Saab’s long nightmare seems to be drawing to a close.

Though Saabsunited is predictably highlighting a supportive comment from an ostensible worker, the unions are not happy. A Unionen rep tells thelocal.se

If salaries are delayed for the third time this summer, it’s obviously completely unacceptable. We know there’s a strong sense of loyalty among employees, but the question is if the boundary for this loyalty hasn’t been reached

IF Metall is equally at the end of its rope, telling Bloomberg

We must start the process, as there’s no alternative to our moving to protect our members’ wages. Later, if we don’t see a solution, we’ll likely be forced to act.

Saab meanwhile, insists that it is

doing everything we can to prevent salaries being paid late this time, but there’s still a risk that will happen. Paying the salaries is our No. 1 priority, and our second priority is to restart production.

But, having audited at least one of Saab’s bank accounts, the Swedish Debt Enforcement Office (Kronofogden) questions whether the money is there to both pay off suppliers and pay workers. The Kronofogden’s Hans Ryberg tells SVD.se that the first two suppliers in line, Kongsberg and Infotiv, need to be paid in about a week… and that they’ll take any money intended for Saab’s employees if they can find it. Per thelocal’s report

But the Enforcement Agency’s search for Saab’s money is also ongoing. Their goal is to find and collect the 163 million kronor that various creditors have asked for.

If they find the account containing employees’ wages, which according to Saab’s intentions ought to contain roughly 100 million kronor within the next couple of days, the money will be levied.

“Saab’s suppliers also have employees waiting for salaries,” explained Hans Ryberg, manager of Uddevalla’s enforcement division

So, in order to pay workers, Saab has to sneak money to them before the Kronofogden finds it and gives it to suppliers. If workers don’t get paid, Saab goes bankrupt. But if the suppliers, who are supposed to be paid first, don’t get their money, you get the same outcome. In other words, hang tight: we’re looking at about two more weeks of this sad tale, and then we’ll all be able to get on with life.

Just three weeks after Saab narrowly avoided being pushed into bankruptcy by supplier SwePart, SvD.se reports that three other suppliers have now initiated the bankruptcy process by requesting that Sweden’s national debt bailiffs pursue their debts. One Spanish supplier is reported to be foreclosing on €2m ($2.8m in debt), while two of the rebelling German firms are said to be owed at least €5m each. And though Saab says it is meeting with the Spanish firm to try to hammer out a deal,  SvD reports that four of the 14 outstanding claims against Saab have run out of time. Lars Holmqvist, head of the European Association of Automotive Suppliers argues that, by paying some suppliers and not others, Saab is de facto bankrupt, and that a trustee should be brought in to pay suppliers in order of priority, rather than order of Saab’s necessity. Meanwhile, Saab CEO Victor Muller has been in Brazil and the US, trying to bring new investors on board, as  its Chinese funding won’t be approved for two-to-three months, if ever. Meanwhile, “taxes and fees” must be paid by Friday, August salaries are due in just two weeks, and Muller cut his latest money-raising trip short to reassure workers back in Trolhättan. But according to thelocal.se, even the most optimistic of union leaders hope Saab will have a new CEO soon. Do I hear the fat lady warming up her vocal cords?

With GM’s share price currently hovering below $25, well under its $33 IPO price, The General is holding its second annual Global Business Conference in hopes of encouraging investors the world over to buy into its turnaround. A webcast is currently streaming over at the GM Investor Relations website, but the key points are available in slides available in PDF here. The presentation involves nearly every level of GM’s business, so listening in and reading the entire PDF is going to be the best way to make sense of what GM is trying to communicate… but if you just want an overview, check out the gallery below for a few hand-picked slides, illustrating some of the more important points.

The AlixPartners 2011 Automotive Outlook finds that while automakers and suppliers have seen profits bounce back handsomely – North American original equipment manufacturers (OEMs) posted $12.5 billion in 2010 profit on a net margin of 4.6% and North American suppliers reaped $8.2 billion on a net margin of 4.3% – no one should be tempted into thinking that things are now back to “normal,” or at least the normal defined by the consumer-incentive-induced sales levels of the past. In sync with its past annual auto studies, AlixPartners continues to predict that U.S. auto sales will climb slower, and to a lower peak, than many others are predicting. Specifically, the firm estimates U.S. auto sales will reach just 12.7 million units this year and only 13.6 million in 2012.

This is a tough moment for us: on the one hand, pessimistic economic forecasts don’t make anybody happy… on the other hand, the AlixPartner outlook is a significant validation of TTAC’s longtime bearishness. So rather than either moping or self-congratulating, let’s just take a look at why AlixPartners is so gloomy about the near-term outlook.

First, a little more on the market outlook, which predicts

13% compound annual growth rate (CAGR) for small cars and a 7% CAGR for small crossover vehicles between now and 2015 in the U.S., as large cars, SUVs and pickups are expected to see a CAGR of just 2%, respectively, in that time. The study also finds that pickup-truck sales will be hurt by the continuing housing crisis. U.S. pickup sales for 2011 are estimated to reach only 1.7 million units, well below the recent peak of 2.9 million in 2006.

But it turns out that weak demand in the US, driven by under- and unemployment, a weak housing market and a slow recovery, is only part of the industry’s challenge. John Hoffecker, managing director at AlixPartners sets the stage:

It’s a cliché, but the auto industry really does face a ‘brave new world,’ and the differentiators for winning in the world we are transitioning to will be significantly different from the past.The good news is that most of the U.S. players now have their costs in line to capitalize on a slow, steady sales recovery. On the other hand, the industry is facing some truly momentous, and momentously expensive, decisions on everything from powertrain choices to emerging markets; and for OEMs to count on a U.S. sales bubble like in the last cycle – artificially-induced to begin with – to help fund all that is wishful thinking at best.

Technologically, the auto industry could well be on the cusp of its biggest set of changes since the invention of the internal-combustion engine more than 100 years ago. This will put unprecedented pressure on all players to pick the right business models, the right legal and capital structures, and the right partners. And, this all comes at a time of potential margin erosion as the industry, in general, shifts to smaller vehicles, both for regulatory and consumer-preference reasons. Preventing that erosion will be key.

What makes a convergence of technological and sales challenges so potentially dangerous, is what AlixPartners calls “competitive convergence”:

One of the striking features of the new automotive industry is the convergence among competitors around the globe in areas including cost, quality, production processes, supply chain, management expertise and, last but not least, profitability. Profitability parity is evidenced by the fact that last year earnings-before-income-taxes (EBIT) margins for automakers globally clustered in a tight band ranging from 4.3% to 5.7% — with OEMs in China and India at 5.2%, while suppliers from China and India enjoyed an EBIT margin of 7.5%, the highest in the world.

This competitive convergence, the study says, will require big leaps forward in differentiators such as consumer-focused innovation, product-development excellence, truly strategic partnerships at various places around the globe, careful brand-building and, perhaps above all else, a general focus on speed – in achieving either first-mover advantage or fast-follower leverage.

With the bulk of sales growth shifting to emerging markets, commodity costs rising and overcapacity lingering, the US market is hardly the engine that drove the global auto business that it once was. It’s still hugely important, as the second largest national market in the world, but the case for bearish behavior in the US market is strong. The real question in my mind after reviewing this report is: how will the automakers respond? Will our debt-weakened demand be met with a malaise of underinvestment? Given the technological arms race, one would hope not, but rising costs (from technology and raw materials) and sluggish demand do not make for a great combination. Consumers have nearly as much reason for concern here as the automakers themselves…

We will start the collection process in a few days.

The good news? A previous request to place a Saab subsidiary in bankruptcy has been revoked as the supplier in question there was paid off. Now, however, with eight more debts going to collections (worth an undisclosed amount, we know that one debt alone is worth around $70m and estimates put the total at around $1b), the situation has become dire once again. The answer? Vladimir Antonov, of course! Thelocal.se reports that suppliers are pushing for the EIB to approve Antonov’s ownership stake, seeing the Russian as the only way out of the situation. And because the EIB will clearly never approve Antonov, another report that’s just breaking now says that Saab is seeking to “replace” the EIB loan in order to bring Antonov on board. The looming question: who on earth is going to lend this bleeding-out corpse of a company $350m? Does Antonov even have a billion to spare for his pet project? Needless to say, nobody has the faintest clue… they just know it has to happen. Yikes!

One of Saab’s suppliers, SwePart Verktyg AB, asked a Swedish court to declare a key Saab subsidiary, Saab Automobile Tools, bankrupt today reports Automotive News [sub]. Saab Tools owed about $935,000 to SwePart for tooling, and according to the supplier

More than one week has passed from the summons and payment has not yet been made. Saab Automobile should therefore be considered insolvent… We don’t want them to go into bankruptcy, I wish you understand that, that would be horrible, but we are a small company and for us that is a lot of money

Saab Tools was created to guarantee EIB loans for tooling, so had the “subsidiary” been declared insolvent, the whole ship would have gone down. But before a judge could act, Saab somehow managed to put out the fire, as a company press release proclaims

Swedish Automobile N.V. confirms that Saab Automobile Tools AB reached agreement on payment terms with the supplier that filed for bankruptcy, thereby resolving the issue.

Once again, Saab pulls the fat from the fire at the last minute… but the clouds are dark and rolling in fast. Many suppliers are still looking for money, Saab Automobile has 104 claims pending against it, and SwePart’s bankruptcy request won’t be formally withdrawn until Monday. And with the Swedish government and EIB seemingly unwilling to lift a finger to help, even the faithful are losing hope. This feels like the beginning of the end of the end…

Why was Honda as much hit as Toyota by the March11 earthquake and tsunami? Doesn’t Honda have the bulk of its production outside of Japan? How could Nissan avoid most of the damage, even with an engine factory close to Fukushima?

It was a bit like a roulette game, and it involved a lot of chips.  According to industry talk in Japan, Nissan had taken a large supply of ECU chips before the quake. Honda and Toyota were waiting for their just-in-time delivery.  Honda and Toyota received most of their engine controller chips from one chipmaker, Renesas. Two weeks after the catastrophe, we had pointed out that Renesas and its damaged fab near the epicenter would turn into a major bottleneck. What’s more, Honda had no idea.

Honda bought its engine computers from three different companies, Keihin, Denso and Hitachi Automotive. Honda thought that it was well diversified. What  Honda did not realize at first was that the chips in the controllers were all from the same company: Renesas.

“Before the quake, automakers were trying to diversify their suppliers,” writes The Nikkei [sub] today. “But the troubles at Renesas revealed that when they looked farther down the supply chain — at indirect suppliers — they had in fact actually been relying on single firms for certain components.”

Honda did not have a problem with its V6 engines, which use chips by U.S.  Freescale Semiconductor. More that 80 percent of Honda’s cars volume is small and midsize cars. They usually use in-line four-cylinder engines, and it turned out than in most of their ECUs were microcontrollers supplied by Renesas.

Starting this fall, Honda will begin to use microcontrollers from other manufacturers for some of its models. What’s more there is a drive under way that seeks to standardize common parts across the Japanese industry, and microcontrollers are the ideal target. The firmware in the controllers can change, but the chips can be supplied from multiple manufacturers.

In my review of the VW Golf blue-e-motion on Tuesday, I noted that “the holy grail of EV development is a multi-speed transmission,” but that nobody has been able to build one that can reliably handle the 100% torque at zero RPM characteristics of an electric drivetrain. Tesla tried two different multi-speed transmissions (from X-Trac and Magna), before giving up and going with the single-speed setup that every production EV now uses. Nobody has even talked about a multi-gear EV since… until now. With Fisker’s Karma about to go to market, CEO Henrik Fisker tells Autocar that his firm is developing a multi-speed EV gearbox, and that it would improve performance in EVs like the Karma, saying

With the torque at the wheels increased by the use of a gearbox, Veyron levels of performance should be possible.

We’re as excited as anyone else by the idea of an EV with shiftable gears, but this sounds more like Fisker trying to drum up some hype for the Karma launch. After all, the Karma launches to 60 MPH in a leisurely 7.9 seconds in “stealth” (EV) mode and 5.9 seconds in “sport” mode with gas power to up the wattage… a far cry from Veyron performance. As C&D puts it:

The Karma’s initial surge is sufficiently potent to avoid damnation as a slug. But the physics conspire against it keeping pace with other $100K sports sedans.

Lugging over 4,000 lbs is certainly easier with a multi-gear transmission, but given the reliability challenge, we’d be more likely to trust an EV transmission from a reliable supplier rather than a boutique luxury PHEV maker. And until Fisker can back up the Veyron reference with some hard evidence, we’re filing this one under “intriguing but unlikely.” Still, it’s exciting to know that this technical challenge is still out there, unconquered by major manufacturer or feisty startup… in a world where cars are becoming increasingly mundane, the multi-gear EV transmission challenge is a throwback to the golden years of automotive development.

As automakers face slowly diminishing returns in their attempts to make internal combustion engines more efficient (while facing huge challenges in electric, hydrogen and other alt-fuel drivetrains), they are looking ever more closely at alternative materials to improve efficiency (and, to a lesser extent, driving pleasure) through weight-savings. Perhaps the biggest emerging trend in this area, especially at the higher end of the market, is in the use of carbon fiber, which is being actively pursued by automakers like BMW, Toyota, Lamborghini and Daimler. But, as WardsAuto points out, there’s another material that’s trying to earn a place in the lightweight cars of tomorrow: polycarbonate plastics.

Polycarbonate windows weigh half as much as glass, and because they are made with injection molding they can come in shapes that can’t be imagined with glass.

However, the material is more expensive. To get auto makers to convert, Sabic and its main material competitor, Bayer MaterialScience, have to sell the idea of integrating other parts into the plastic mold that makes the window.

For example, says Umamaheswara, “on a liftgate, a lot of features can be integrated, and if the manufacturer is short of room in the factory, it can be delivered as a module.”

A modular liftgate could include the window, cladding for the D-pillar, a roof spoiler, the high-mounted rear brake light, a rear wiper foot, handles and logos. When all those processing costs are included, he says, polycarbonate is competitive with glass and metal.

These unique assemblies are just one of the growth areas for polycarbonate plastics. Already, Wards reports that the material has become standard for headlamp covers, and when it comes to high-end, cost-no-object projects, well:

Bugatti developed a targa top for its Veyron 16:4 Grand Sport roadster in both glass and polycarbonate from Bayer, and the plastic version chosen had a weight savings of 13.0 lbs. (5.9 kg)

But that’s not the only project that has seen polycarbonates used to create light-weight windows and lower centers of gravity:

The Smart Fourtwo was the first to use polycarbonate windows, with fixed rear sidelites starting in 1998. Supplier Freeglass has made about 4 million plastic windows for Smart, Mercedes-Benz, the European Honda Civic and the SEAT Leon.

But don’t expect to see many polycarbonate plastic windows or other large subassemblies in many mass-market cars for the next few years. Even though firms like Sabic are coming up with special plastics that, if used on panorama roofs, will not just lower weight but improve insulation as well, they don’t expect major-volume projects until more EVs start coming to market, in the 2014-2015 timeframe. In the meantime, if you’re already raring for some polycarbonate windows, you’ll have to spring for a high-price Euro-spec road-racer like the Renaultsport Mégane R.26.R.

With a new Viper being readied for a 2012 auto show debut ahead of a 2013 launch, Automotive News [sub]‘s Rick Kranz has discovered something of an issue in the development process: suppliers don’t want in.

Ralph Gilles, who heads Chrysler Group’s design organization and SRT, the automaker’s performance group, says many suppliers said “thanks, but no thanks” when the automaker knocked on their doors.

“It has been tough to get low-volume suppliers,” Gilles says. “We have had a few hiccups here and there as we get suppliers. That type of fringe business has really dwindled. A lot of people are looking for big accounts now, but now that is behind us.”

Kranz blames low volume (2,103 units in its best year, 392 units last year) and supplier consolidation for the “hiccups.” But as it so happens, this has been a recurring problem for the Viper since day one…

Today’s reading is from the First Book of Lutz (“Guts”), Part One, Chapter 3: “We Just Did It”: The Story of the Viper.

Our other problems concerned suppliers. The Viper program proved to be our first experiment in having suppliers do the core engineering for a new model’s components. Curiously, it wasn’t that tough a goal to reach for those suppliers who’d already agreed to sign on. Most of Chrysler’s suppliers had caught Viper fever and wanted to participate. (The fact that many of their CEOs lusted after having their own Viper probably didn’t hurt).

But some of our most trusted partners simply refused to join, contending that the low volume didn’t justify the effort. From a narrowly left-brained viewpoint, they were right. Had they engaged their whole brain, however, and considered the project’s total benefits, most, I suspect would have chosen differently. A German supplier whom we had asked to produce the Viper’s new six-speed transmission really let us down. When we were already well into the program (and when it seemed to late to change something as fundamental as the transmission) he told us the deal was off unless could cough up several million dollars not previously discussed (and not available in our budget).

What to do? Knuckle under to prevent delay? Or tell the supplier “Thank you; it’s been semi-nice working with you, but forget it”? Bravely, the team picked the latter course. Working quickly and creatively they found a excellent alternative in the all-new Borg-Warner T-6 transmission, which was then under development fir GM’s Camaro, Firebird and Corvette models. Viper remained on track, while the German transmission company won an empty victory: To achieve a trivial savings, they sacrificed their opportunity to become a supplier for Chrysler’s more mainstream products and, more importantly, the unquantifiable but undeniable luster they would have enjoyed from being associated with, perhaps, the most publicized car in modern times.

What’s the lesson? Bringing suppliers on board a low-volume project like Viper requires holding “more mainstream product” business over the suppliers head, but even more, relying on “Viper fever” to inspire suppliers to become part of the project. Lutz doesn’t just identify the “luster” from being associated with Viper, but even goes as far as to point out that suppliers may have participated simply because they wanted a Viper of their own. To Lutz, the product guy, this is simply testament to the visceral power of a highly emotional car. To the purchasing and supply chain managers, however, this emotional basis for a business deal is hardly a sustainable state of affairs. Not only does it have the potential to challenge the financial stability of supplier firms with already low margins, but it also makes the supply chain dependent on the hype generated by the vhicle.

And that seems to have been the problem this time around: though the new Viper will doubtless be an impressive machine, there is no way it could even hope to make the kind of splash that the original did. As a car, the Viper has improved with age… as an idea, however, the Viper is getting stale. Are there still supplier bosses who are participating in the project simply because they want a 2013 Viper of their own? Very possibly, but “Viper fever” as it existed back 1989 isn’t going to keep a low-volume project running. The implication of this supplier trouble: the new Viper could well become an even bigger money loser than before. After all, enthusiasm and industry have always been turbulent bed-mates.

[UPDATE: Automotive News [sub] reports that Linc workers voted “overwhelmingly” to authorize a strike, noting

We’ve been watching the drama at GM’s Lake Orion plant unfold for some time now, as an “innovative labor practices” agreement between the UAW, GM and the government has already drawn UAW protests and NLRB complaints, as well as increased backlash against the union’s two-tier wage structure. Thus far GM had been able to prevent Tier One workers from being forced into the second tier, by shuffling them off to the Flint HD pickup plant. But with GM’s truck inventory soaring to “Old GM” levels, Flint is being idled, and those “Tier One Gypsies” are once again facing the choice between moving to some other plant or accepting a 50% paycut to return to Orion. And now, another labor issue is raising its ugly head, as Crainsdetroit reports that

About 125 workers for a critical supplier [Linc Logistics] inside the General Motors Co. Orion Assembly Plant are taking a strike authorization vote today as a means of accelerating contract talks.

GM has been tooling up Orion for production of its Sonic subcompact, which replaces the Aveo, ahead of a launch this fall. But the supplier workers, who are being paid even less than the second-tier GM hourly assembly workers, may just be able to wreak havoc on The General’s launch schedule.

The Linc workers agreed, by card check, to join the United Auto Workers this spring. So far the UAW has been unable to negotiate a contract with Linc, said Pat Sweeney, president of UAW Local 5960. The local represents hourly workers at Orion and workers from the third-party parts suppliers operating there.

The union is fighting for what it calls a “living wage” for Linc workers, who currently earn less than $10 an hour, the UAW’s Sweeney said. The straight-time annual wages for a worker earning $10 an hour is $20,800, less than the federal poverty line for a family of four.

Sweeney said a strike authorization would give the UAW the option to strike after a short waiting period, although the union wants to resolve the issue without a work stoppage. He said the number of Linc employees at Orion could double by the time the plant reaches full production.

Not only does the Linc workers’ move towards a strike vote inflame GM’s hottest labor trouble spot, but the “innovative labor practices” at Orion also mean the workers there are more likely to take a stand with their recently-unionized supplier bretheren.

GM spokeswoman Kim Carpenter said the automaker does not expect the strike authorization vote and UAW’s negotiations with Linc to affect the Sonic launch.

But it’s unclear how many UAW workers at the assembly plant would be willing to cross a picket line if a strike is called…

Orion has about 800 traditional workers, 500 of the entry-level workers and 200 people employed by the parts suppliers. Other GM plants have only a handful of entry-level workers, if any.

With the market moving towards smaller cars, GM had better hope that the Linc dispute doesn’t snowball into a wider disruption at Orion, but the high percentage of lower wage workers, and the plant’s history of rancorous labor relations make conflict highly likely. And based on GM North American boss Mark Reuss’s comments on the matter, it appears that The General’s management is in denial about just how charged the Orion workplace is [Ed: Do you work at Orion Township? TTAC wants to hear from you. Please drop us a line at our contact form]. We’ll be watching this latest flare-up closely to see if it touches off the powderkeg that the bailout-era “innovative labor practices” set to smoldering.

Foreign suppliers could produce the final nail in the coffin of struggling Saab, the head of a European supplier association fears. “I think that the patience has more or less run out,” Lars Holmqvist, CEO of CLEPA, the European Association of Automotive Suppliers, said to Swedish news agency TT [via The Local]

Foreign suppliers “probably have less feeling for Saab than many Swedish companies which have grown up with Saab in a different way. Many also have a personal connection to Saab because they might have driven one at some point in their life. But the foreign suppliers are tougher,” Holmqvist, himself a Swede, told TT.

Except for a few days when the lines were moving, impressing foreign dignitaries, production at Trollhättan has been at a still stand for ten weeks.  Victor Muller’s pledge that “we will definitely ensure that [a production stop] will not happen again” was good for two weeks. Then it happened again.

It is easy for foreign suppliers to drop the ball on Saab. Most of them are swamped with orders and have a hard time making their largest customers happy. Even if Saab would run at planned production volumes, Saab’s orders would not create rapid eye movement in the best of times.

According to Holmqvist, patience of foreign suppliers is running out. Says Holmqvist:

“This is partly due to a lot of empty promises that have turned to nothing and partly due to lack of information. No consideration has been taken of these suppliers, they feel duped and therefore Saab is now standing there with a factory at a standstill.”

Holmqvist’s prognosis for Saab is damning:

“I am surprised that they have managed this far. I don’t think Saab will make it.”

Meanwhile, over at Sobsunited, it’s already news that Saab paid its taxes on time. Not that Saab has to pay any taxes on any profits. However, there were some $5.5 million in payroll taxes and deductions due (which gives you an idea of the cost of letting the workforce sit idle.) Somehow someone at the Swedish tax office had leaked to the press that Saab hadn’t paid the taxman.  On Friday afternoon, the money hit the government’s account. As long as prompt payment of withholdings is news in Sweden, we shall continue our coverage of the sobstory.  If Holmqvist is right, it won’t be long.

When I stopped working for Volkswagen in 2005, they had some 400,000 parts, or “numbers” as they are called in industry parlance, in their central warehouse in Kassel. With each car, the number climbed higher. On the other hand, some 5 percent were usually out of stock. The launch of each car caused raw nerves in the parts department. When a part was faulty, dealers and production manager were at war for parts. The production managers usually won, and blamed the dealers for shoddy service.

It’s tough enough to keep the hungry beasts at assembly lines and in workshops supplied with parts during peacetime. If a volcano over Iceland blows ash, or if a huge tsunami wipes out a good deal of Japan, it turns into parts paranoia. Now, Japan’s formerly powerful METI, the Ministry of Economy, Trade and Industry, is using the Tohoku disaster to force the Japanese car industry to standardize a lot of the parts it uses.

“Under the lead of the Ministry of Economy, Trade and Industry, manufacturers of automobiles, parts and materials will look into ways to share more components across the various vehicles produced by the automakers,” reports The Nikkei [sub].

One area is chips. Shortages of microcontrollers turned into a big problem after the tsunami. METI is now considering setting up a committee to discuss the standardization of microcontrollers and other semiconductor-related parts.

This is good news and bad news for the auto industry. The good news is that if a disaster strikes, that chip, battery terminal, brake pad, or cylinder head bolt can be bought from another manufacturer. Larger runs of commodity parts would lower their cost and shorten development times.

The bad news is that it could kill a golden goose. Selling replacement parts at huge mark-ups provides major income for automakers and dealers. Large automakers have it down to a science how to make a part slightly different, just to frustrate the efforts of those who deal in replacement parts. A standardized parts bin eventually will be a bonanza for the Boschs, AutoZones or Pep Boys of this world. It would also lower the barrier of entry for new competition.

Therefore, says The Nikkei, “some in the auto industry worry that using more common parts will shift the focus in the autoparts market too much in the direction of price, exposing Japanese autoparts makers to intense competition from low-cost producers in China and elsewhere.”

Saab was supposed to reach 100% production speed sometime in the middle of last week after enduring a nearly two-month shutdown. But now it seems that more “material shortages” have brought the Trollhättan plant to its knees again, as Steve Wade of inside.saab.com reports

Yesterday, production at Saab Automobile stopped at lunchtime due to material shortages. We have now stopped again today for the same reasons…

The liquidity situation is still tense, and depends on several different financing solutions falling into place, long-term as well as short-term. Some milestones have been achieved, such as the letter of intent signed with Pang Da and the additional funding that their order of Saab cars means. An example of things that still await a solution is the sale and leaseback of Saab AB Property, which we have addressed in previous communications. Representatives from Spyker and Saab will continue to work with these solutions, while the dialogue between Saab and suppliers progresses.

According to one supplier quoted in GP.se, Saab has worked out new payment terms with its just-in-time suppliers, but still needs to work through issues with so-called batch suppliers. Swedish supplier sources confirm [via AN [sub]] that some suppliers still have not been paid, and have yet to restart their own production lines. And though official statements from Saab executives and spokespeople emphasize that this stoppage was not unforeseen and will be resolved, nobody at Saab seems ready to give a date for a production restart. Swedish media outlets have reported that production has been called off for the remainder of the week, though, and some suppliers have sent their workforces home.

And while the short term situation reverts from “glimmers of hope” to “same old sadness,” Saab also seems to be soft-pedaling the importance of its Pang Da deal, which Bertel and numerous other commentators have argued will not be approved by the Chinese government. Automotive News [sub] reports

“It’s tough for me to predict but I think everybody expects [the Pang Da deal] to come through,” Saab President and COO Tim Colbeck said at a media luncheon in New York on Tuesday.

If approved, the Pang Da deal could be a mid-term solution to Saab’s financial woes, Colbeck said. “Midterm” means at least through the end of 2012, he said, adding that Saab’s message to dealers right now is to focus on the company’s long-term potential.

“If this deal fails, it’s on to the next one. There are a lot of people looking to invest in Saab,” he said. There is no timeline for a final decision from the Chinese government on the Pang Da deal, he said.

But how many people can really be that interested in investing in Saab when only 385 Americans invested in actual Saab cars last month (around 1,600 global units for the month), and only 3,150 people have bought Saabs in the US market since the beginning of the year? And with production falling apart just days after Saab’s CEO said he would ensure that a shutdown wouldn’t happen again, this feels like the beginning of the end of the end for Saab.

Where relatively high EOL-RR [End Of Life Rates of Recycling] are derived, the impression might be given that the metals in question are being used more efficiently than those with lower rates. In reality, rates tend to reflect the degree to which materials are used in large amounts in easily recoverable applications (e. g., lead in batteries, steel in auto- mobiles), or where high value is present (e. g., gold in electronics). In contrast, where materials are used in small quantities in complex products (e. g., tantalum in electronics), or where the economic value is at present not very high, recycling is technically much more challenging.

Hat Tip: Auto123

With new compact and subcompact models from Ford and GM enjoying respectable sales, the mainstream media has been indulging in some “feel-good” headlines, like the New York Times’s Detroit’s Rebound Is Built on Smaller Cars, or CBS’s more equivocal Can small cars rebound U.S. auto industry? It’s an understandable instinct, as the media has long battered Detroit’s inability to build competitive compact and subcompact cars, and in the post-bailout atmosphere of redemption, these headlines definitely help reassure Americans about the value of their “investment.” Unfortunately (if unsurprisingly), however, these pieces gloss over the full truth of the situation. Yes, Ford and GM are enjoying improved sales success with small cars. The “U.S. auto industry,” on the other hand, isn’t actually getting all that much out of the situation, beyond some fluffily positive press. Here’s why:

Final assembly, as many know, is just one way in which to measure the impact of a given car on the thousands of firms that make up the U.S. auto industry. Some cars which the MSM are highlighting as perception changers for “Detroit” and “the US auto industry,” like the Ford Fiesta (or the Cadillac SRX compact crossover), are not built in the US at all. But even those that do are hardly any more American than strong-selling nameplates that have been built in America for years. To understand how this can be, it’s important to understand “content mix,” or the percentage of US/Canadian origin in each vehicle. Luckily Car & Driver publicized 2010′s NAFTA-area domestic content mix by model, in a PDF that you can download here.

What that data shows is that most of the cars that are being most closely associated with the “American Small Car Rebound” are not, well, all that American. Fiesta and Chevrolet’s Cruze are perhaps the most widely-referenced “perception-changing” Detroit small car, and yet both are average or worse when it comes to US/Canadian content mix for their segment. A Honda Civic made in Indiana, for example, uses considerably more North American-sourced parts than either the Cruze or its even-more-lauded Volt platform-mate. Nissan’s Mexican-made Versa has more North American parts content than any other NAFTA-made subcompact. In short, the Detroit firms may be selling more domestically-branded small cars, but they’re hardly breaking new ground in terms of selling high-domestic-content compact and subcompact cars… yet.

The good news is that this situation should improve in some cases. GM’s 2% North American Aveo will be replaced later this year by the Sonic, a 65% NA content subcompact, built in Michigan. Ford’s new 2012 Focus appears to keep its high domestic parts content mix, apparently improving over its predecessor by one percent for a segment-leading 85% North American content. On the other hand, Dodge is getting a new Fiat-based replacement for Caliber soon, and a relatively rapid homologation could mean much lower domestic content there.

In any case, though Ford and GM’s sales numbers show improvement in the small car arena, America still has a long way to go before it’s a small car manufacturing hub. Furthermore, the improvements in Ford and GM’s small car sales still aren’t having as much of an impact on the “real US auto industry,” the thousands of parts suppliers and related firms across the US, as the mainstream media’s narrative implies. And the most-hyped cars, in particular, still don’t match the North American parts content mixes that transplants have been achieving for some time.

We still have not heard from Saab and there have been six weeks without production. It eventually reaches a point when you have to make a decision

Johan Andersson of the Swedish unit of supplier giant Lear in the WSJ, on why his employers just laid off all 160 workers of its Trollhättan-based Saab workforce. Apparently Mr Andersson and Lear aren’t any more encouraged by Saab’s PangDa deal than TTAC. And considering that the Chinese dealer group is telling Gasgoo that “production has already restarted” at Saab, the fleeing suppliers who haven’t even heard from Saab yet create some credibility problems for the PangDa-Saab alliance (even if PangDa was referencing GM production of the 9-4X at Ramos Arizpe). Which makes the dire rumors that the deal has not, nor will be, blessed by the Chinese government a little more worrying. Sounds like the rotund lady is warming up her vocal cords…

Saab has received wire transfers of around €30m from both Gemini Investments and the Chinese dealer group PangDa, reports Aftonbladet, and it will be using that money to pay off its supplier debts which could use up most of that cash (Saab’s supplier debts are estimated by DI.se at between two hundred and four hundred million kroner, or as much as €44m). Leaving aside the issue of how that money was able to be transferred from China to Sweden in a matter of two days (more on that from Bertel here, the short version: the deal should need Chinese government approval), there are serious questions about Saab’s ability to restart production. After all, the €30m from Gemini is debt, while Saab owes PengDa for an undisclosed number of vehicles that it bought with its investment. Unless those cars are sitting somewhere waiting to be shipped, Saab will have to pay off its suppliers and then build the cars on what is essentially credit from PengDa. Meanwhile, that’s not the only demand on Saab’s finances and attention, as CEO Victor Muller is planning on taking a bonus of over half a million dollars, a decision that is creating fresh problems of its own.

The Swedish paper DI.se reports

At Saab, Spyker’s shareholders’ meeting in Zeewolde in the Netherlands on Thursday will get Muller’s criticism from the Dutch shareholder rights association VEB. Muller may, for the first time, receive a cash bonus of 4.5 million kroners, while Saab has severe problems. The bonus is disproportionate, argues the VEB.
“We will try to convince him to surrender,” said David Tomic, an economist at the VEB, said.

Muller defended at a press conference in Nacka in early April, their choice to receive the bonus with certain goals in the business plan is reached and that management did a good job even if the company made a loss.

It does not impress David Tomic.

“The bonus is disproportionate. Given the large financial losses and poor sales, we wonder what objectives have been achieved that may justify a bonus,” said Tomic.

Spyker Cars has not previously had monetary bonuses, according to David Tomic.

At current exchange rates, that bonus amounts to over $710,000. Is it enough to sink Saab-Spyker? No. Is it an appropriate reward for hustling millions in financing for a company that many are already writing off as dead? Possibly. But given the touch-and-go nature of Saab’s recent history, it’s clear that Muller’s bonus sends the wrong message. After all, not only does Saab apparently not know exactly how much it will cost to restart production, but it’s not at all clear what terms the suppliers will accept to keep a long-term relationship together. If you asked us, we’d say C.O.D… which is a brutal way to run any automaker. Not only does Saab need every penny it can scrounge to stay afloat, but it also needs to send the message that its priorities are such that its worth suppliers taking a risk on it. Executive bonuses in the midst of declining sales, huge losses and whirlwind finance-seeking tours hardly send that message. If anything, Muller’s just lost some of his incentive to continue his Saab Rescue World Tour.

And, having received a healthy little bonus for simply keeping Saab alive, Muller now has to face his suppliers as well as the angry shareholders represented by VEB. Given that Muller’s last shareholder meeting included the promise that Saab would turn a profit by 2012, the feelings of anger and betrayal are likely to outweigh sympathy for the plucky little automaker. Meanwhile, the storm clouds continue to gather. Beijing Auto, which bought Saab’s old IP last year, is preparing to roll out new cars based on the technology, using the tagline “From Saab, Better than Saab”. And, with hope running out, Saab’s sad plight has inspired a thoughtful meditation on how companies die, from Forbes‘s Ron Ashkenas, which notes

While the final days of some companies are dramatic and garner top news coverage, most companies deteriorate over a period of years due to competitive issues, financial weakness, or strategic missteps. For example, Saab’s growth and expansion in the 1980’s created a need for capital that brought it into the arms of General Motors, which purchased 50 percent of the automotive division in 1989, and the remainder in 2000. From that point, Saab became a casualty of GM’s inability to rein in costs, prune products and platforms, and compete on quality.

In other words, companies don’t usually die of sudden heart attacks, but rather have protracted illnesses that kill them over time.

Clearly the end of a company — whether through bankruptcy, merger, restructuring, or shutdown — is often painful and traumatic for those involved. Most people emotionally identify with their employer so even when their job continues with a new entity, or they get a financial payout, there is still a sense of loss. And of course, the loss is more acute when there is neither a job nor a payout.

Organizational failure, like death, is one of those subjects many of us avoid and deny, which makes it all the more shocking when it happens. But given the reality — it might be worth considering in advance how you would handle the impending death of your company or division. Is there anything you could do to prevent it based on your position and influence? If not, think about your own future.

It seems that Muller has already taken Ashkenas’s advice… now the question is whether he’s ready to let go of his floundering company. The next weeks will hold the answer either way.

“This is the worst situation we’ve faced since the war,” a source close to Toyota told the Yomiuri Shimbun. The Japanese car industry is facing post-war-like shortages when it comes to auto parts. Toyota is short 150 parts positions, which can be anything from a bolt to a complete dashboard.

Dealerships are empty – of cars. Test drive cars do double duty as display vehicles. “We get a lot of customers coming in, but we don’t have cars to sell them,” a salesperson told the Tokyo paper.

Major Japanese carmakers have restarted production at the beginning of last week, but plants are only operating at about 50 percent of their normal output. Toyota does not expect to be back to normal before the end of the year.

Japanese automakers have reported a 57.5 percent reduction in production for March – a month that had only its second half affected by the March 11 earthquake and tsunami. April numbers are expected to be worse. What’s more, overseas production is just beginning to be affected. “

In the meantime, Toshiyuki Shiga, chairman of the Japan Automobile Manufacturers Association, said what many refuse to accept: Japanese automakers simply don’t know what the near future will bring.

“Generally speaking, car makers are in a situation where they can’t fix their production volumes, even though this is an importantelement of their business,” Shiga, who is also COO at Nissan, told The Nikkei [sub]. “We hope (investors) will understand.”

TTAC has always taken pride in its outsider status, and we’ve taken pains to cover the industry from a safe distance in order to continually bring a fresh perspective to developments. As a result, we’re not always on the same page as trends in the industry at large, which tends to be far more given to wild optimism than the average TTAC analysis. But, based on a new study by Booz & Company [PDF], it seems that the “carpocalypse” of recent years has driven the industry to a more TTAC-esque pessimism. According to responses by executives at both OEMs and suppliers, the industry generally feels that the bailout was either a missed opportunity or it didn’t do enough to address fundamental weaknesses… and as a result, executives see challenges ahead.

So, where is the industry now? Not much better than it was at the height of the “carpocalypse,” when GM and Chrysler were going through bankruptcy on the government’s dime. And though OEMs generally benefited more than the suppliers, the automakers themselves are less optimistic about the current state of the industry… although that might be a function of the fact that suppliers were going bankrupt by the 12-pack before the industry recognized that it was in crisis.

So, what did the bailout do right? Cutting capacity, or in less politically-palatable terms, firing people. Ironic, isn’t it, that a policy that’s being defended as a jobs-saving measure did its best work (at least according to the OEMs) when it put people out of work? Meanwhile, feel free to draw your own conclusions about the fact that the industry liked the “capacity rationalization” aspects of the bailout, while feeling like the bailout didn’t do enough. Saving jobs, as we’ve pointed out for some time, is not the same as saving companies… in fact, the two goals often clash significantly.

In any case, both OEMs and suppliers picked the government’s rescue of Chrysler as the least-positive impact of the auto industry rescue. Some 42% of OEMs feel rescuing Chrysler was negative for the industry, while 20% of suppliers sign on to the same sentiments, despite being largely positive about the GM bailout.

And here’s where the rubber hits the road: nearly 30% of the industry thinks another OEM will fail within the next two years. Risk is fundamental to every industry, but the fact that almost a third of industry execs expecting an OEM failure within the next 24 months is a searing indictment of the bailout, which was supposed to create a sense of confidence. And if GM or Chrysler fail again, all those rescue efforts will have been wasted, and every job “created or saved” will be injeopardy again.

So what to do now? Incentive and pricing discipline, long a TTAC hobbyhorse, is identified by both sides of the industry as being one of the most important tasks (the most important for OEMs). Production discipline is also identified as a key consideration, something the bailout also hasn’t been able to change. In short, the easy cuts and consolidation have been achieved, leaving only the tough challenges that require a focused, disciplined culture… and the bailout still hasn’t made a demonstrable difference in the culture of the industry, which has been flirting with a price war since the beginning of this year. The lesson: you can cut, rinse and inject cash, but ultimately, success in this industry comes down to focus and discipline, neither of which can be provided by a government bailout.

In a memo that surprises no-one that has followed TTAC’s extended coverage of the March 11 earthquake and tsunami, Toyota’s U.S. chief  Bob Carter warns dealers that deliveries of parts and cars could be severely restricted for months to come. “What we don’t know are vehicle production levels for May through July,” Bob Carter wrote in a memo. “The potential exists that supply of new vehicles could be significantly impacted this summer.” You have seen this coming.

Most of Toyota’s Japanese production has been down for a month now. As of last week, Toyota – and for that matter the Japanese industry – had no clear picture of the status of many suppliers and their parts. With near daily regularity, Japan is being rocked by huge 6 to 7 magnitude earthquakes that became “normal” only in comparison to the March 11 monster. Japan runs out of everything from bottle caps to cigarette filters, and especially out of electrical power. Renesas, a company that controls about 41 percent of the global market for automotive microcontrollers, is battling outages that will affect strategic supplies for many months. In a land that can only guess how many of its own have died (currently, the confirmed number stands at 13,013, while 14,608 are listed as missing), the only thing that is clear is uncertainty.

Currently, the only car production Toyota has running in Japan is that for the Prius, the Lexus HS 250h and CT 200h, and a just re-opened tired plant in Sagamihara that had been scheduled for decommissioning. In addition, Toyota has been making some parts. Toyota will restart vehicle production at all its Japanese facilities from April 18 to 27 – very carefully. Then, production will be shut down for a holiday week, while parts levels are being assessed.

Add to this a month-long supply line to the Americas and Europe, and you have problems well into June and beyond – from the currently known outages alone. “The memo is Toyota’s clearest statement that the shortage caused by the March 11 earthquake and tsunami in Japan will last into the third quarter,” writes an astonished Wall Street Journal. Only amateurs will be surprised. In the morning after the tsunami we had warned that it will severely disrupt the auto industry around the world.

Last week, we said that it is it is conceivable that the industry in total will have lost a million cars by the end of April – in Japan alone. IHS Automotive ups the ante and says that five million fewer vehicles could be produced globally this year. Michael Robinet, a senior analyst with IHS Automotive said “it would be miraculous if Nissan and Honda were able to circumvent the same pressure that Toyota is feeling,”

Today, The Nikkei [sub] writes that Japan’s major automakers barely begin “restarting production at domestic plants suspended by last month’s earthquake.” Nissan will bring a small-car factory in Yokosuka, Kanagawa Prefecture, back online Monday. Honda has resumed operations at assembly plants in Sayama, Saitama Prefecture, and Suzuka, Mie Prefecture. “Even though their production will remain at about half normal levels for a while,” writes The Nikkei, “the three manufacturers intend to gradually lift facility utilization as they restore supplies of components that have been disrupted since the March 11 disaster.”

Japan has lost a month of production. Production is on half rations until further notice.

Only amateurs will assume that the problems will be limited to Japanese manufacturers. Ford warns in an SEC filing made yesterday that “we now expect that beginning in the last week of April and continuing into May, certain of our operations in the Asia-Pacific region (including certain of our joint venture operations) will be affected by shortages of components and vehicle kits as a result of the events in Japan.” The company does not expect “a material impact on” its overall results from this.

However, the filing continues, “because the situation in Japan continues to develop, supply interruptions related to other materials and components from Japan could manifest themselves in the weeks ahead.  Should the supply of a key material or component from Japan be disrupted and an alternate supply not be available, we could have to reduce or temporarily cease production of vehicles, which could adversely affect our and Ford Motor Credit Company’s financial condition and results of operations.” As a precautionary measure, this is a filing any U.S. listed car company should make.

Lastly, as we have been warning from a few days after the tsunami until yesterday, the limited supply of cars will have a material impact on car prices and car sales. April transaction prices are expected to be the highest in 15 years, when measured as a percentage of MSRP. And as you can see from above, this is also just the beginning.