New From WMB: ChinaWatch

To our readers: We’ve noticed posts involving China draw higher viewer interest. In response, WMB will provide a weekly digest of business and consumer-related news, ChinaWatch, culled from reliable websites. As always, please share the post and comment if you like. Enjoy – Ken.

Food Prices Jump

Annual food price inflation hit 10.1 per cent in October compared with a year earlier - a level not seen in China since mid-2007 - deepening concerns that the economy is now starting to overheat after two years of stimulus.

Many ordinary people feel the official inflation figures underestimate the true rises.

''Ten per cent? That's a joke,'' says Li Mingwei, a shopkeeper at Beijing's largest wholesale food market. ''The price of leeks has doubled from last year; cooking oil is up by 25 per cent since the summer and rice by even more. Everything is going up.''

This kind of disgruntlement makes China's leaders very nervous. In the past, inflation has been a catalyst for social unrest, including in 1989, the year of the Tiananmen Square massacre, and it remains a sensitive political pressure point.

Investing In Green

China invested 200 billion yuan ($30.12 billion) to boost energy conservation and curb greenhouse gas emissions in the past five years, according to the Xinhua news agency.

He Bingguang - a senior official of the department of resource conservation and environmental protection at the National Development and Reform Commission, the country's central planning agency - made the statement to reporters in Beijing at a clean-technology conference.

The announcement comes two weeks before Chinese officials head to Cancun, Mexico, for climate pact talks, which aim to fix a new framework for tackling global warming.

China, the world's biggest emitter of greenhouse gases from human activity, has made a domestic vow to reduce "carbon intensity," the amount of carbon dioxide emitted for each dollar of economic growth, by 40-45 percent by 2020 compared to 2005.

GM Venture Debuts

General Motors Corp.'s commercial micro-van joint venture in China started producing its first Baojun brand passenger vehicle at a plant in southern China, the U.S. auto maker says.

The Baojun 630 sedan, which is the first model to be produced under the soon-to-be-launched Baojun brand name, rolled off the production line in Guangxi province's Liuzhou city on Monday, GM says in a statement.

The four-door sedan is the first of a series of passenger cars the joint venture, SAIC-GM-Wuling Automobile Co., expects to launch over the next few years under the Baojun brand name. GM says the Baojun 630 will go on sale in early 2011 through a new network of dedicated Baojun dealers.

The new brand was created to address growing demand for affordable passenger cars in China and is aimed at competing with the country's home-grown auto brands including Zhejiang Geely Holding Group Co. and BYD Co., GM says.

No Motor Madness In Detroit

It’s been a long time since American automakers had something to rev their engines about, but that could be changing with some recent announcements by the Big Three.

General Motors and Chrysler plan to renovate plants and restore jobs in efforts aimed at building a new generation of automobiles. Even Ford will invest nearly a billion dollars in four plants in a bet that the nation’s slow recovery will eventually mean more demand by consumers.

These ambitious plans demonstrate the Big Three have shifted gears in an attempt to move forward and leave the dismal sales of the recession years in the rear view mirror.

After years of downsizing and reorganizations, Detroit’s moves have buoyed hopes that the upper Midwest can reverse years of high employment and economic decline. Here’s the latest from the automakers:

Chrysler

The smallest automaker of the Big Three is now controlled by Fiat. The firm said it will invest $600 million in its Belvidere, Ill., plant to prepare for building new vehicles there in 2012. This spending and new vehicle production will spare 2,349 local workers whose jobs are scheduled to end soon with the product lines.

The plant now makes Dodge Caliber compact sedans and Jeep Compass as well as Patriot small crossovers. Chrysler did not say what new vehicles it will make, but speculation has centered on Chrysler-branded products based on Fiat and Alfa Romeo vehicles from Italy.

General Motors Corp.

The Lansing Grand River plant will add 600 jobs and a second shift following GM’s investment of $150 million to produce a new small Cadillac. This car will be a compact and less expensive than the CTS line already made at that plant in Michigan’s capital city.

Ford Motor Co.

The only one of Detroit’s Big Three not to go through bankruptcy court and take government money says it will invest $850 million into Michigan plants through 2013. This will add an additional 1,200 jobs, according to a Ford spokesman.

The spending will be spread over several plants including Van Dyke Transmission, Dearborn Truck, Sterling Axle and Livonia Transmission.

In September, Michigan’s unemployment rate was 13 percent, second only to Nevada. Ohio’s employment also was particularly high because of the downturn in auto manufacturing. America’s Rust Belt has felt a larger sting from the Great Recession than many other areas.

As part of their expansion, the Big Three are investing more into making small cars in the United States rather than in South Korea or Mexico, a reversal of previous trends.

The reasons are based on wage and benefits concessions, bringing down labor costs significantly. However, it also means new jobs will pay less than jobs that have been lost.

“They are at the point where they can profitably produce a smaller vehicle,” says Dave Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Mich. “A lot of assets scrubbed from the books aren’t a liability anymore.”

GM, in particular, dumped unprofitable product lines including Pontiac (after 80-plus years, including a great run in sports/muscle cars), Hummer, Saab and Saturn.

The updated plants will be able to produce a wider variety of vehicles, so if sales fall in one category, the plants can raise production in others.

WMB believes the jury is still out on these latest moves.

Although they are to be commended for their efforts, the Big Three’s modernization may be too late for market conditions when compared to Japanese, German, and yes, upcoming Chinese rivals.

It’s not only about production efficiency but technology as well. Moves to migrate from the internal combustion engine to hybrid fuel cells will increasingly be driven by consumers. Function, price and design must be part of the successful equation.

Politicians also need to get on-board to better position the Big Three to battle in a global market. American automakers lost their edge to foreign competition before, so it’s essential that mistake not be repeated.


We do have the chance to get it right this time if there is a coordinated, well-thought effort combined with creativity – a driving force behind some of the best and innovative auto designs from Detroit auto engineers in the 1950s and 1960s.

This post is from TechMan, WMB co-author who blogs about trends, issues and ideas affecting business, industry, technology and consumers. Please share this post!

Toyota: Driven To PR Distraction

Toyota's continuing public relations nightmare serves as a reminder to business, big and small, about avoiding delays of any kind in crisis management.

The world's second largest automaker (after German group Volkswagen-Porsche) is fighting an uphill public relations battle as the U.S. government turns up the heat for Toyota to fully disclose all information in connection with next week's congressional hearing about the company's recalls.

Gas pedals, brakes and steering are all under scrutiny. And, with each daily report about another issue involving Toyota's vehicles, it seems to slip deeper into the quagmire of bad news.
Initially, Toyota seemed hesitant to acknowledge a problem with its vehicles' gas pedals. Instead, the automaker insisted the problem was the direct result of floor mats trapping the pedals, in an apparent effort aimed at minimizing the problem's scope.

The road back for Toyota Motor Corp. appears to be long and winding, filled with bumps and potholes. Yet, even now, TV commercials aside, Toyota's top executives still don't seem to grasp the crisis in consumer confidence.

In Japan, President Akio Toyoda said he did not intend to appear at congressional hearings next week in Washington, preferring to leave that to his U.S.-based executives while he focuses on improving quality controls, The Associated Press reported. Toyoda, grandson of the company's founder, said he would consider attending if invited.

Hello, waiting to be invited? I guess Toyota didn't pay much attention when the top executives of the Big 3 American automakers flew corporate jets into Washington, D.C., to discuss taxpayer bailouts. It's style and substance, folks.

In an attempt to reassure car owners, Toyota said it would install a backup safety system in all future models worldwide that will override the accelerator if the gas and brake pedals are pressed at the same time, the AP reported. Acceleration problems are behind the bulk of the 8.5 million vehicles recalled by the automaker since November.

The emergence of potential steering problems
with Corolla presented another roadblock in the automaker's efforts to repair its image of building safe, reliable vehicles. Dealers across America are fixing accelerators that can stick, floor mats that can trap gas pedals and questionable brakes on new Prius hybrids, according to the AP.

Toyota executives will face scrutiny in America, where the Transportation Department has demanded documents related to its recalls. The department wants to know how long the automaker knew of safety defects before taking action, the AP said.

Reports of deaths in the United States connected to sudden acceleration in Toyota vehicles have surged in recent weeks, with the alleged death toll reaching 34 since 2000, according to new consumer data gathered by the U.S. government, the AP said.

The bottom line: Toyota should be held to the same safety and accountability standards as U.S. automakers. That is the very least American consumers have a right to expect.

As for me, I practice what I preach at writenowworks.com.