Toyota chief fears GM, Ford demise
I thought these comments from the Chairman of the Board at Toyota were interesting.
"Many people say the car industry wouldn't revisit the kind of trade friction we saw in the past because Japanese auto makers are increasing local production in the United States, but I don't think it's that simple," Hiroshi Okuda told a news conference.
"General Motors Corp. and Ford Motor Co. are symbols of U.S. industry, and if they were to crumble it could fan nationalistic sentiment. I always have a fear that that in turn could manifest itself in policy decisions[.]"
Okuda, who as chairman is removed from the automaker's day-to-day operations, raised eyebrows and invited criticism on both sides of the Pacific when he said two months ago that Toyota should think about ways in which it could aid U.S. auto makers -- such as by raising product prices -- as they reel under massive health-care costs and sliding sales.As has been big news recently, GM is in its worst financial position in some time: it's debt was downgraded junk last month, and yesterday the CEO announced plans to close plants and layoff 25,000 manufacturing employees by 2008.
Another interesting twist on this story is the long-term affects the termination of the pension plans at United Air Lines will have on the auto-industry. The UAL plans will now be backed by Pension Benefits Guaranty Corporation, a federal agency, but that agency cannot fund the entire pension liability, therefore retirees will be taking the hit do their benefits. Other airlines are already looking at similar options to get out from under their big-time pension plans...
So how long does it take for the US auto industry to start doing something similar? GM is already readying for a fight with its union over benfits and pensions - and it seems like too much of a coincidence that this massive layoff announcement comes less than a month after UAL gets clear of it's penions liabilities.
Update: from the Chronicle - Underfunding draws heat