Paris Auto Show: A Short Test Drive in the Electric Mitsubishi iMiEV
By Martin SchwoererOctober 3, 2008 -
Take that, GM. Formerly-sick car company Mitsubishi Motors has a working electric car; they’re already testing a fleet of a few hundred units in Japan. The Mitsubishi innovative Vehicle promises a 75mph top speed and a 100 mile range. It’ll take seven hours to recharge the battery using a normal socket (220V). If you’ve got high voltage, figure an 80 percent recharge within 30 minutes. Being a totally new car, the iMiEV benefits from the packaging advantages inherent to electric propulsion. The Li-Ion batteries are located beneath the passenger department, and the small electric engine is rear-midships. Thus, despite a sub-four meter’s length, it’s roomy enough for four. The Innovative Vehicle’s interior is airy but spartan/simple– no expensive materials for a lightweight car that wants to be affordable for commuters. I could only take the Mitsu EV for a few-minutes’ spin in a parking lot, so I can’t verify any of company’s range or speed claims. But acceleration is strong, smooth and silent, the steering is pleasant, and it brakes in a solid fashion. It feels like a proper, developed car, not like a prototype. No magic-year nonsense; commercial sales will begin in 2009. If Mitsubishi can keep their performance promises, this one’s a winner, at least for urban early adopters.
Posted in Alternative Energy | Electric Vehicles | Europe | News Blog | Paris Auto Show | Suppliers | 12 comments 
Ford Enacts Supplier Reforms
By Edward NiedermeyerOctober 2, 2008 -
While Chrysler plays hardball with its suppliers, Ford is reforming its supplier relations by sharing technology and standardizing components. Automotive News (sub) reports that Ford will share a variety of its intellectual property with minority-owned suppliers in hopes of developing new products and commercial uses for them. Among the first suppliers to receive assistance in the Joint Technology Framework are Dakkota Integrated Systems, Flex-N-Gate, Gonzalez Production Systems, Grupo Antolin Wayne and Prime Wheel. “We need to support our minority- and women-owned suppliers in moving toward a business model that competes on technology, in addition to cost,” said Tony Brown, Ford VP for global purchasing. The program aims to allow those suppliers “to attract the engineering talent and new sources of capital to migrate these technologies to the next level.” Ford is also attempting to standardize European and American products by sharing as many components across markets as possible. The forthcoming US-market Fiesta will share 78 percent of its parts with its European cousin, while the US Focus will share 90 percent of its parts with the Euro model. Unifying product strategies helps Ford not rely on the approved $25b bailout loans, says Brown. “Our product plans are funded,” Brown tells Automotive News (sub). “None of Ford’s product plans hinge on it.”
Posted in High Finance | News Blog | Suppliers | 14 comments
Toyota Squeezes Supplier… For Chevy
By Edward NiedermeyerSeptember 10, 2008 -
Though Chrysler gets special attention from us for its supplier-gouging, the practice of sticking parts makers with cost increases is basically an industry standard. As further evidenced by a Bloomberg report that bankrupt supplier BHM is filing to be released from an unfair (it claims) contract with ToMoCo subsidiary Toyota Boshoku. BHM sells vehicle seat-frame components to Toyota Boshoku, which has refused to increase payments in line with an 80 percent rise in steel costs this year. “The supply contract is so unprofitable that the debtors’ continued performance on the current terms cannot be justified,” says BHM in its bankruptcy court filing. The firm had requested a new pricing schedule in June, which Toyota Boshoku has rejected. Interestingly, Boshoku may be facing pricing pressure of its own. BHM components go into vehicle seat frames that Toyota Boshoku manufactures for Chevrolet’s HHR hatchback. GM has not commented on the case, but the facts prove two imutable truths about the industry. First, that everything and everyone in the biz is connected, and second that every OEM would just as soon see suppliers go under as raise their own costs. Be they Chrysler, GM or Toyota.
Posted in Industry | News Blog | Suppliers | 10 comments
Chrysler Pisses Away $7.7m on Parts Oursourcing Scheme
By Edward NiedermeyerSeptember 8, 2008 -
Supplier relations in Detroit continue to take a beating, thanks to the OEM’s insistence that parts makers can simultaneously cut costs and deliver higher quality. And nowhere has that strategy been so fully embraced and/or embarrassingly revealed as a pipe dream than at Chrysler. Under the Cerburian fist of John “win-win proposition” Campi, Chrysler has squeezed suppliers into bankruptcy while continuing to rank at or near the bottom of most quality ratings. And now it seems the Campi-led attempts to squeeze money from nothing (and his chicks for free) have conjured-up yet another egg on the Pentastar’s face. Automotive News [sub] reports that Chrysler paid consulting firm Accenture “at least” $7.7m as part of its “Project Magellan” aimed at uncovering $900m in savings by identifying suppliers in India and China. But Chrysler “saw virtually no savings,” from the project. An enraged Campi is suing the Arthur Anderson spin-off, claiming “Accenture demonstrated virtually no experience in identifying low-cost-country suppliers for the automotive business and had no knowledge of the supply base in China or South America.” So why did Chrysler pay Accenture in full for services rendered? Since Campi took over after Project Magellan fell apart, he couldn’t answer that question. How about this one: Why should our tax money be used for low-interest loans to automakers to create U.S. jobs when these same automakers are so damn busy outsourcing jobs to Mexico, Canada, China, South America, etc.?
Posted in News Blog | Suppliers | 20 comments
Delphi Heads for Chapter 7 Meltdown
By Robert FaragoSeptember 6, 2008 -
Even before GM spun off parts maker Delphi in 1999, critics questioned the new company’s viability. Delphi depended on GM’s business for its survival. While bean counters talked-up diversification, new markets, etc., the 800-pound General in the room wasn’t going away– especially with all the GM-obligatory Delphi-related job, pension and wage benefits secured by the United Auto Workers. And GM’s need for parts. Since then, Delphi done well abroad and lost money hand-over-fist in the U.S. And so Delphi failed, filing for bankruptcy protection in 2005. But here’s the thing: GM wants Delphi to survive as is. The money they’re proposing to pour in– $650m loan agreed, $300m more proposed– seems a good money after bad mistake. Until you realize that a semi-viable Delphi guarantees the ailing automaker a supply of mission critical parts at a price they like. That’s right: $950m (and the rest) is less expensive than paying full freight for Delphi’s parts, which cost GM $3.12b in the first half of 2008. If Delphi goes into Chapter 7 (liquidation), GM’s either going to have to buy out the factories that make their stuff (with what money?) or face a more “realistic” pricing structure from the factories’ new owners. What’s good for GM isn’t good for Delphi’s investors and creditors, and don’t they just know it. “A group led by Highland Capital Management LP said in a letter to Delphi’s board of directors that the new financing by GM would benefit only GM while stripping worth from creditors imperiled by Delphi’s continuing massive losses in North America,” Automotive News [sub] reports. And there you have it. Until you don’t. Delphi’s Chapter 7 is coming; it could well be the straw that breaks GM’s back.
Posted in Chapter 11 | News Blog | Suppliers | 13 comments
Inside Chrysler’s Supplier Squeeze
By Edward NiedermeyerAugust 25, 2008 -
Since taking over as Chrysler's purchasing boss in January, John Campi has whipped the Cerburian dog into an appetite for hardball supplier tactics. And the pressure to hoist the black flag and begin slitting throats is coming from Cerberus, who have mandated a $1k per vehicle cost reduction within three years. Automotive News (sub) details Chrysler's nasty legal battles, from the shockingly crass Plastech debacle to (relatively) petty suits against giant firms like Magna and JCI. When asked about his law-firm-fueled approach, Campi talks a blunt party line. "I will work with every supplier I can in a collaborative fashion to help them become profitable and help us. "But we don't have the wherewithal to prop up a supplier simply to keep them running. I won't do it." And oil, steel and plastic price hikes be damned. Supplier lawyer Fred Smith of Warner Norcross & Judd characterizes Chrysler's negotiating style as "we don't care who is at fault, you will contribute; give us money if you want to maintain a parts relationship." Acknowledging that several suppliers have threatened to stop production over price negotiation, Campi has only tough talk for the malcontents."If a supplier wants to push us because of their fear, then they are violating the contract in place, and I will take the necessary action," he glowers. "And I say, I'm not going to let you shut down production. If you're serious about this, you have to live with the legal consequences." But, after showing off all the lawyers in his Rolodex, Campi seems to remember that Chrysler has to at least appear to care about its middle- to long-term, and pledges "equally shared benefits." Meaning there's plenty of nothing to go around.
Posted in Industry | News Blog | Suppliers | 16 comments
Delphi Bondholders Sue GM To Stop $300m Loan
By Robert FaragoAugust 21, 2008 -
Why would Delphi's bondholders sue GM in Manhattan court to prevent a $300m cash infusion? Because Highland Capital Management and other bondholders fear GM's "undue" influence over the bankrupt parts supplier. [NB: the $300m is on top of an existing $650m loan.] In other words, GM's money could give it the leverage it needs to prevent its former division from selling off profitable bits of Delphi. Like, say, the parts of Delphi that supply the GM corporate mothership with parts. GM control would also mean that the artist formerly known as the world's largest automaker could forestall a Delphi Chapter 7, should the bondholders decided that the jig is up. "It is merely a band-aid (albeit an enormously expensive and porous band-aid),'' the bondholders told Bloomberg. "It is a truism that borrowing to fund losses is a loser's bet.'' You want to talk about cash burn? "Highland and other bondholders said in the objection to the additional financing that Delphi used more than $960 million in net cash to fund operating activities in just the first six months of 2008." Anyway, bankruptcy judge Robert Drain approved a $5m company payout for the legal costs of defending former Delphi officers and employees from lawsuits related to pension funds and the bankruptcy.
Posted in Chapter 11 | Media | News Blog | Suppliers | 5 comments
Carmakers Fight Anti-Terrorism Import Law
By Robert FaragoAugust 20, 2008 -
You'd think "just-in-time" production techniques wouldn't extend to, say, Korea (Aveo) or China (Equinox engine). But you'd be wrong. And The National Association of Automakers view new anti-terrorism legislation– that's been six years in the making– as a threat to their business. "The U.S. Customs and Border Protection Bureau wants shippers to collect 10 new categories of data for U.S.-bound cargo 24 hours before it's loaded on ships in foreign countries," The Detroit News reports. "As well as to provide data about the physical location of cargo aboard a U.S.-bound vessel and status messages that report container movements… Automakers say the rule could upset the delicate 'just in time' shipping of parts to arrive at auto factories as they are needed for vehicle production, which saves the companies the cost of stockpiling parts… The automakers argue the rules would do little to make the country safer." And might be extended to Canada and Mexico. "Automakers argue in their letter that 'there is a better way,' saying that CBP [Customs and Border Protection] should focus 'on importers, exporters and countries that pose a risk.'" Isn't that exactly what they're trying to do?
Posted in China | News Blog | Safety | Suppliers | 35 comments
Chrysler to Johnson Controls, Mahindra: You Talkin’ to Me?
By Robert FaragoAugust 18, 2008 -
CNNMoney reports that Chrysler has filed suit against Johnson Controls for "systematic and deliberate overcharges." The ailing American automaker claims the world's leading battery supplier "provided fictitious weight data under the guise that it could charge Chrysler more for the amount of lead used in its battery products. Chrysler had agreed to pay more to cover increasing lead costs." ChryCo's seeking to claw back $15m from Johnson. Or it could be trying to ensure that none of its suppliers gets too "feisty," in terms of demanding cash-on-the-nail for their goods or services. Or both. Or maybe Chrysler's Cerberusian masters reckon there's gold in them thar lawsuits. The Times of India intimates that Mahindra and Mahindra are looking to pay-off settle with Chrysler re: the Jeepish front grill on the Indian automaker's Scorpio SUV.
Posted in Chapter 11 | News Blog | Suppliers | 6 comments
TTAC Called It: Delphi “Involuntarily separates” 600 Employees by 2009
By Robert FaragoAugust 18, 2008 -
Our Wild Ass Rumor was three days early, but accurate. Our source inside the former GM division and bankrupt autoparts maker reports that the company has told its workers that 600 white collar Delphinians– in the Electronics and Safety organization– will be shown the door by the end of the year. (The total number employed thereabouts is 3k.) Delphi will identify the 600 puntees by the end of this month [August]. And despite previous promises, the pension freeze is now "independent of bankruptcy emergence." And when might THAT be? Our source says there were "no warm fuzzies on when we could expect to emerge." The Delphi wound continues to fester, only more so.
Posted in Chapter 11 | News Blog | Suppliers | 17 comments
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