Radio Australia Today Editorial

The U.S. Car Industry. The crash continues

22 December 2009

2009 has been the year that the U.S. car industry hit the wall.

It was the year General Motors went into bankruptcy. It was the year Chrysler went into bankruptcy. Both companies were eventually saved, in no short measure because of money that the federal government lent them.

Even Japanese operations in the States have not done too well, despite the move to smaller cars by consumers.

Of the Big Three carmakers, only Ford was able to keep out of the bankruptcy zones, and did it without the help of Barack Obama’s dosh.

So how can we explain today’s announcement that Ford would be offering redundancies to 41,000 of its workers? Clearly, keeping off bankruptcy might be fine and well, but if people are not buying your cars, then no amount of deckchair shuffling is going to keep the icebreg at bay.

Ford is painting a pretty picture on things by using corporate speak, saying that it has a: “surplus of employees in our manufacturing system,” and that the redundancy offer is “part of our continued effort to right-size our capacity and align it with market demand that’s going to be an ongoing effort for Ford.”

Sounds reasonable, but still translates to 41,000 people minus a job.

Meanwhile, General Motors is dealing with flagging sales by hiring one of the wunderkind of the corporate finance world. His name is Chris Liddell, and his previous gig was as the chief financial officer of Microsoft, a company that just can’t lose money, no matter what it puts out in the market. GM will be hoping that Liddell (as its new finance chief), will weave some Bill Gates magic.

Liddell will find the differences between the two companies pretty stark. One has a virtual (irresistible pun) monopoly, while the other is only one of a huge number of companies competing for the consumer dollar. A competition the GM corporation has not been winning.

Chris Liddell obviously likes a challenge.

- Phil Kafcaloudes