Editorial: Between The Lines: The Freep Hearts Fingleton

Bertel Schmitt
by Bertel Schmitt

Eamonn Fingleton is the author of insightful books titled “Blindside: Why Japan is still on track to overtake the US by the year 2000” and “In Praise of Hard Industries – Why manufacturing, not the new economy is the key to future prosperity.” Whoever followed his advice either has committed suicide by now, or lives in a place where sharp objects are banned. Except for Bill Clinton and Ralph Nader, who think Fingleton is a swell guy. In truth, the Tokyo-dwelling Irish author has few friends left. He just found a bunch of new ones: the editors of The Detroit Free Press (Freep).

The Freep was so desperate to find a new scapegoat for The Big 2.8’s woes that they scoured the Internet and found and republished a two-week-old rant on Fingleton’s whacko blog “Unsustainable.”

“Detroit’s problems are partly – but only partly – its own fault,” Fingleton states in his opening salvo. The trouble with Detroit, Fingleton wrote, is not managerial incompetence, greedy unions nor wrong cars. Blame those numbnuts in Washington who failed to lock-out the foreigners. Without foreign competition, Detroit would be just fine.

“For 40 years the Detroit companies have been systematically undermined by foreign competitors’ predatory pricing in the U.S. market,” writes Fingleton. Whoever priced an import lately will beg to differ, but neither Fingleton nor the Freep are fazed.

The theorist then asserts that the Japanese “have kept their home market as a protected sanctuary, operating in cartel fashion and free from effective foreign competition.” As in: if the market be open, the Japanese would all drive Chevys. Living in Japan, Fingleton must be blind. But let’s play the numbers game…

Statistics from the Japan Automobile Imports Association show that the island nation imports some 300K cars a year. The U.S. only accounts for 15K of model year 2007’s imports, including, of all things, HUMMERS (favored by the Yakuza.)

According to Japan’s Automobile Inspection Registration Association, Mercedes makes the most popular imports, with 633,402 on the road. Next up: VW, with 623,089. And a little less than 200K units later, BMW accounts for 489,106 cars in the land of the rising yen. (We’ll get to the yen part soon.)

In Fingleton’s original piece, these statistics were misrepresented as “two German manufacturers, Mercedes Benz and BMW, enjoy token positions.” The Freep wisely (or maliciously) left it out. It would have begged the question: how many American cars are on the road in Japan? In all, just 50K Chevys. That’s less than 10 percent of Mercedes’ total. Not including 1473 of the aforementioned HUMMERS.

At some point, it should have dawned on Fingleton and the Freep that American exports have been on the rise. According to the Federal Reserve Bank of Chicago, “exports of light vehicles have increased by 52% since 2002, with exports of new vehicles up 21% and exports of used vehicles up almost fourfold.” Ignoring that factoid, Fingleton fingers another culprit for Detroit’s dementia: “the unrealistically high dollar.” Excuse me?

Until July, the greenback was so dirt cheap, that – damn the real estate crisis – there was a bubble in Manhattan condos, snapped-up by the Euro trash with wildly depreciated greenbacks. And now the dollar is heading back down, in the “unrealistically low” direction last seen in July.

The unrealistically weak dollar had its effect. “Between 2002 and 2007, exports to the NAFTA countries actually fell by 5%,” writes the Chicago Fed. “In contrast, Europe received 52% of the net increase of 287 thousand in new vehicle exports over that period; the Middle East accounts for about 40%.”

The rise of the Japanese Yen is the talk of Tokyo. Fingleton must not be just blind, he must also be deaf.

The Nikkei writes today: “The yen’s steep appreciation and the global economic meltdown have turned the tables on Toyota Motor Corp. and other Japanese manufacturers that had sought growth in foreign markets in recent years.” Even the Financial Times, which certainly is not biased towards Japan, concedes that “Dented consumer demand is exacerbated on the bottom line by the strong yen , which lopped a third off Toyota’s November forecast operating income.”

“So, yes, the U.S. car industry’s fate reflects in large measure American incompetence,” Fingleton’s piece ends, undeterred by simple facts. “But the main source of this incompetence has not been the engineers of Detroit but the opinion makers of New York and Washington.”

Apparently, even the Freep must have come to the conclusion that the $17.4b of taxpayers’ money is the last Detroit will ever see. The begging has ended. So let’s throw dirt at those who gave. Let’s demand quotas. Let’s demand a Detroit cartel. Let’s demand high prices. Let’s demand inflation. Nothing short of a full frontal assault on the forces ranged outside Fortress Detroit will save the Big 2.8. At least, according to Fingleton and the Freep.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Efingleton Efingleton on Mar 01, 2009

    A modest proposal for Mr. Schmitt I have only just now become aware of your commentary on my Detroit Free Press article of last December. I stand by my article. Also by my books, which you evidently have never so much as opened. You take issue, for instance, with my point that the dollar is massively overvalued, but all you can say by way of rebuttal is that Europeans some months ago were buying a lot of apartments in Manhattan. Your perspective is local and short-term: mine is global and long-term. You evidently aren't aware that America's current account deficit has ballooned sixfold from the already disastrously high level it recorded in 1989. By comparison Japan's current account _surplus_ has soared threefold from a level in 1989 that already then had earned that nation the sobriquet "juggernaut Japan." Judged by its trade performance, the United States is now weaker than any major nation since the last "basket case" years of the Ottoman Empire. I calculate that for the United States ever to balance its trade again it would have to increase employment in manufacturing industries by 40 percent -- and all the new jobs would have to be at the top end, which is to say in highly capital-intensive and knowhow-intensive activities. When do _you_ think America will again record a trade surplus? I have a modest proposal: if you really believe the Japanese car market is open why don't you join me for a debate on the subject -- before the Council on Foreign Relations in Washington. I will pay your fare. Eamonn Fingleton -- Aoyama NK Building 2F Minami Aoyama 4-3-24 Minato-ku, Tokyo 107-0062 Telephone: (81) (3) 5476 8727 or 5770 5087 Fax:(81) (3) 5770 5088 Website: www.unsustainable.org

  • Tedward Tedward on Mar 01, 2009

    now THAT is interesting. New thread RF?

  • Varezhka I have still yet to see a Malibu on the road that didn't have a rental sticker. So yeah, GM probably lost money on every one they sold but kept it to boost their CAFE numbers.I'm personally happy that I no longer have to dread being "upgraded" to a Maxima or a Malibu anymore. And thankfully Altima is also on its way out.
  • Tassos Under incompetent, affirmative action hire Mary Barra, GM has been shooting itself in the foot on a daily basis.Whether the Malibu cancellation has been one of these shootings is NOT obvious at all.GM should be run as a PROFITABLE BUSINESS and NOT as an outfit that satisfies everybody and his mother in law's pet preferences.IF the Malibu was UNPROFITABLE, it SHOULD be canceled.More generally, if its SEGMENT is Unprofitable, and HALF the makers cancel their midsize sedans, not only will it lead to the SURVIVAL OF THE FITTEST ones, but the survivors will obviously be more profitable if the LOSERS were kept being produced and the SMALL PIE of midsize sedans would yield slim pickings for every participant.SO NO, I APPROVE of the demise of the unprofitable Malibu, and hope Nissan does the same to the Altima, Hyundai with the SOnata, Mazda with the Mazda 6, and as many others as it takes to make the REMAINING players, like the Excellent, sporty Accord and the Bulletproof Reliable, cheap to maintain CAMRY, more profitable and affordable.
  • GregLocock Car companies can only really sell cars that people who are new car buyers will pay a profitable price for. As it turns out fewer and fewer new car buyers want sedans. Large sedans can be nice to drive, certainly, but the number of new car buyers (the only ones that matter in this discussion) are prepared to sacrifice steering and handling for more obvious things like passenger and cargo space, or even some attempt at off roading. We know US new car buyers don't really care about handling because they fell for FWD in large cars.
  • Slavuta Why is everybody sweating? Like sedans? - go buy one. Better - 2. Let CRV/RAV rust on the dealer lot. I have 3 sedans on the driveway. My neighbor - 2. Neighbors on each of our other side - 8 SUVs.
  • Theflyersfan With sedans, especially, I wonder how many of those sales are to rental fleets. With the exception of the Civic and Accord, there are still rows of sedans mixed in with the RAV4s at every airport rental lot. I doubt the breakdown in sales is publicly published, so who knows... GM isn't out of the sedan business - Cadillac exists and I can't believe I'm typing this but they are actually decent - and I think they are making a huge mistake, especially if there's an extended oil price hike (cough...Iran...cough) and people want smaller and hybrids. But if one is only tied to the quarterly shareholder reports and not trends and the big picture, bad decisions like this get made.