Toyota Projects First-Ever Annual Loss; Congress Disses Detroit

Toyota's world headquarters, in Tokyo and Toyota City, Japan is forecasting the first-ever annual operating loss in its 70-year history. And there really is a Toyota City; I've been there.

And Toyota's US division has canceled its 2009 national dealer meeting in an effort to save about one million dollars, says industry journal Automotive News.

Also, the Detroit News reports Toyota's President, Katsuaki Watanabe (also CEO of the worldwide corporation), has canceled plans to attend the North American International (Detroit) Auto Show next month.

Japanese companies place tremendous significance on the visits of "home market" executives to their overseas divisions; Watanabe's decision drives-home the severity of industry problems worldwide, not just for Toyota, but every carmaker. His choice to "stay at the home office, working" speaks many volumes.

(Toyota's Tokyo headquarters; those who have been to Tokyo might recognize this building found in the city's Bunkyo section).

And sadly, for performance enthusiasts down under, Toyota has shuttered their high-performance division, Toyota Racing Development (TRD) in Australia only (at this point).

In other news:

- Land Rover is canceling a global adventure competition to focus its marketing budget on new product launches in 2009. The G4 Challenge would have pitted 18 international teams in a series of off-road driving and adventure sport competitions in Mongolia, in mid-2009;

- US Suzuki dealers won't get floorplanning help from Suzuki's headquarters in Japan ("floorplanning" is financing dealers use to buy cars and trucks from their respective carmakers);

- Chrysler has announced that Deborah Meyer, their chief marketing officer (formerly with Lexus; brought to Chrysler by Jim Press, former Toyota exec now Chrysler's vice-chairman and co-president), and Phil Murtaugh, chief executive officer of Asia operations (who built much of the success GM is enjoying in China), are both leaving the company. They follow the departures last week of John Campi, 64, head of purchasing, and Simon Boag, 43, parts operations chief;

(Chrysler's 2005 Crossfire convertible was, under the sheetmetal, a near part-by-part twin of the Mercedes-Benz SLK, but without that car's coolest feature - a hardtop power folding convertible top. Since then-"partner" Daimler had said no Mercedes parts would ever be used on any Chrysler product, Crossfire was a big indication to the media and other carmakers worldwide how badly the "merger" was doing).

- And General Motors' workers around the world worry what life without GM might be like, reports Associated Press. Unfortunately, 1,080 hourly workers at GM's SUV plant in Moraine, Ohio, a Dayton suburb, are finding out -- today.

GM has pulled the plug on Moraine, which for 27 years made cars, trucks and SUVs, and helped pay mortgages, college educations, and, thanks to the United Auto Workers, provided family health care, retirement benefits you could count on, all-important job security and a dependable security blanket in turbulent times (several things non-union workers at foreign transplant companies, mostly in southeastern states, can not enjoy). It's "Roger and Me" redux, and a catastrophe for the UAW and union members everywhere (including me, my brother, our father before us and dad's brother, too).

On a brighter note (and geez, it's about time), the US Federal Reserve Board has created a $200 billion fund offering car dealers a readily-available, low-interest way to finance the cars and trucks they buy from their brands' factories (aka floorplanning).

If auto loans for consumers will be forthcoming is unknown, though, because Wall Street and banks, which have received hundreds of billions of dollars from taxpayers in outright bailouts, not loans, have yet to report what they're doing with all our money.

(Cars and trucks like this 2002 Buick Rendezvous were built at GM's huge facility in Moraine, OH, now closed as of -- today, and its over-1,000 workers are now unemployed. Could GM have done this at a worse time of year?).

Also, say the AP and CNN, six financial firms that received bailout dollars still own and operate fleets of jets to carry executives to company events and, sometimes, personal trips. Click on this line to read the AP story.

Regardless of one's opinion of the Detroit Three, too much of Congress took perverse pleasure in giving Detroit's CEOs, their companies, and the UAW president, the "third degree," under the bright lights of live TV, seeking, through adversarial questioning, to embarrass and make them appear foolish.

It was a bad performance by all sides, damaging, lousy and unnecessary theater while our country suffers this economic decline.

Never was it clearer that Wall Street's so-called Masters of the Universe (from Tom Wolfe's Bonfire of the Vanities) run this country, always have had their way and don't expect things to change anytime soon.

(Detroit's three CEOs met with President Bush and VP Cheney at the White House in the past year; nothing of any import, apparently, came from this effort by Detroit to try and catch Washington's ear. No matter your opinion of the auto industry, these CEOs, their companies and, especially, the UAW, have consistently received little, aside from disrespect, from Washington during this crisis).

If an executive, Wall Streeters and Congressional Republicans apparently think, is foolish enough to run a company which employs unionized and skilled blue-collars workers, a company which actually makes tangible things, not just money, then those CEOs are not any better or more deserving than the workers on their assembly lines; and anyway, they all live and work in Michigan, not NYC. So who cares, right?

According to the results of a CNN/Opinion Research poll released Monday, 63% of Americans support the government's $17.4 billion automaker loans unveiled last Friday. But if the companies ask the government for any more money, 70% said Washington should let them enter bankruptcy rather than give them any additional assistance. Yet, 65% said they weren't likely to buy a car from an auto company that has entered bankruptcy.

Those results are all over the political, economic and cultural map, What must happen next? Should Detroit get more money, if necessary, and if not, what choices are left besides bankruptcy? How can they prove their "viability," now or in just over 90 days?

(Let's hope President Obama will put a "stop" to all the fighting between Detroit and DC, and help work out the solutions which will best serve the country).

As President-elect Obama said in Chicago, on December 19th, about Wall Street: "The American people are feeling frustrated that there's not a lot of adult supervision out there. We've been asleep at the switch."

Time to wake up.

Comments

[leftLibertarian]

Congress is by nature shameless and this particular one is the very very worst of the bunch and Pelosi is the very very worst Speaker ever. There is no accountability and no personal responsibility. She filled the Wall St bail out with pork so that it would finally pass. The bail out had no accountability. No one was held responsible for nearly One Trillion Dollars of Taxpayer's Money.

But when it came time for the Automakers it was a different story.

That said, I'm in favor of no bailouts - period.

The wall street loot should be returned.

[carrieanna]

Yes, it was embarassing to watch Congress chide the Big 3 with such theatrics. Reminded me of the scene in Scorcese's The Aviator, when DiCaprio's Howard Hughes character is hauled out in front of Congress and is interrogated by Alan Alda's Senator Brewster character.

Of course, I still think the McCarthy hearings were the most ludicrous Congressional action of all time.

[DoesItReallyMatter]

This debate over Union wages, skill vs. non-skill grows tiring. The most fundamental premise of a Union, ANY Union, is to allow people to have dignity in their work/workplace. Wages have always been a necessary but secondary consideration in any contract. I don't mean to sound sanctimonious but all people have "skills" required to do any job successfully, it is not to me as an outsider to judge their value, that is between employer and employee. Although Congress and most people seem to forget, nobody gets anything for nothing in this country, there's always a price!

[XME]

Gee, perhaps unions aren't ones at fault for GM's finiancial problems after all. Imagine that! Perhaps is, oh, I don't know...that the economy is in the cr@pper??

[Ridgemore]

Ford scores marketing coup with thrifty Fusion hybrid
http://www.usatoday.com/money/autos/2008-12-22-ford-fusion-fuel-efficient_N.htm
Most fuel efficient midsize sedan in spring 2009: 41 mpg city, 36 mpg highway.
If the design is problem free, this car could out sell the camry and accord hybrids (if the economy doesn't completely tank in 2009).

[ylpatriot]

And just who will be able to afford this so called gas saving car ?

[ferrarimanf355]

It starts at $27K, which isn't THAT bad. How much is the Camry Hybrid?

[ILibertine]

While Congress enjoys shaming Detroit, I wish there was a significant entity able to hold Congress' feet to the fire. That would be a welcomed weenie roast.

I'm not desirous of excusing the auto maker's ignorance and lack of strategic planning; however, the government should have been involved long ago with more stringent standards. Any government extending laissez-faire attitudes should not expect business to take a "responsible" strategy, vs. short-term gain - that is all the Wall St. rage.

Nor do I understand the willingness of so many to jump onto the anti-UAW bandstand. I don't believe we should be undermining the union and its members because they have been one of the few institutions endeavoring to uphold a middle-class standard of living while so many others get significantly less real income. Rather, we should be contemplating how more can reach the level of the UAW workers - while maintaining a healthy employer. And, it is not the UAW that promulgated the vehicle model policy of the "Big 3". Those workers are no more culpable than I am for the Madoff scandal.

[mattybinks]

I think that significant entity would be the people. I also think the President can do some serious shaming if necessary.

[1murillo]

Good comparison with Madoff.

With all this current nonsense about the UAW, there should be an equal call for all of Madoff's investors to repay the $50,000,000,000.

Wall St is given a pass, Madoff's bail - house arrest and $10,000,000 - is ludicrous, but the UAW is excoriated as representing everything evil.

Call/write your bank to see the terms it's worked out. BofA? CitiGroup? etc.?

Madoff's bail is 0.02% of his alleged thievery. At that rate, a '$10,000' robber should get a $200 bail amount.

Meanwhile, Congress, especially the Toyota Republicans, are given free advertising time (MSNBC, FxNws, etc.) to spread lies about Detroit, unions and the US auto industry. (Shelby), "Ah just don't know why they're not announcing Chapter 11; that's the way our system works."

Taking economic advice during today's Good Depression from Shelby and gang is similar to believing Bush/Cheney when they said we "must" attack Afghanistan, and Iraq, and anyone else that scares us.

[kitchener]

Why are we not offering cash incentives to CONSUMERS who purchase energy efficient vehicles? $3,000 off the purchase of a compact or subcompact 4 cylinder car or hybrid with 80% North American content or higher. It encourages consumers to buy now, fixes cash flow for auto dealers and auto makers, reduces inventories, and encourages the purchase of energy-efficient vehicles. You would have to sell millions of vehicles for it to cost as much as the first of the bailouts, and it would get the big 3 producing the right cars at full capacity.

[ylpatriot]

Indeed bail out American consumers ... not the fat cats with the many million dollar salaries that have destroyed the car industry .... who the hell can afford a new car ?????

[1murillo]

We could even make this a $10,000 voucher for higher ed or vehicles as you describe - available to Americans in steps so that's its an ongoing real stimulus.

If I knew I could count on $10,000 then I'd be more apt to spend a little more freely, businesses would feel better about continuing their products, and it wouldn't be an immediate government cash lay-out (which is never immediate anyway).

[w8aminute]

I wonder how Toyota turned a profit during WWII.

[Javani]

The UAW and Auto Makers should reclassify themselves as "commercial banks."

Then they will get unfettered, underleveraged billions.

For now, they are punching bags for Bush, Frank, Schumer and Dodd to create the appearance of prudent guardians of the public till while shoveling out billions to the financial services sector in a blowout theft at the end of the decrepit Bush years, abetted, actually led, by the Democratic Party Establishment, an arm of finance capital interests.

[legalclubs]

Please keep everything is perspective. Toyota is posting its first lost since 1941. GM has been losing money for years. Toyota's loss is $1 billion for the year, GM is losing that every month.

Good companies survive bad years with their reserve account, as such, Toyota is in no danger. GM burned through their reserve years ago as it was losing money in the "good times".

It sounds like GM is finally on the right track. They will probably need to close 30 to 40% of their factories, renegotiate all their union contracts so that unskilled labor doesn't make 100K per year in salary and benefits, and start producing cars people actually want.

[Viper]

Unskilled labor does not make 100K per year. The average worker who has over 2o years makes 56K per year. Thats the same as a Toyota worker here by the way.. maybe slightly less.


New workers start a12 bucks per hour..about min wage in 1965 adjusted for inflation.

Toyota's balance sheet is loaded with debt...

Regards

[FantasticJuan]

It seems that everyone alternates how much employees make ($56k) with how much each employee with all the legacy costs factored in cost ($100K a year).

And I would love to see someone who keeps calling it "unskilled" labor do the job. A grerter at Wal-Mart is unskilled.

[TheFriendlyAtheist]

Let's keep everything in perspective. Toyota has been protected from competition since the 1930's when Japan banned all foriegn cars. It is still protected today by import quotas on foriegn autos. How many billions would Toyota have lost if Japan had let foriegn car makers come into Japan and undercut Toyota and the other local car makers on their home turf?

[ferrarimanf355]

Nationalizing the auto industry will probably lead to stuff like this.

http://www.autoblog.com/2008/12/23/car-by-congress-the-2012-pelosi-gtxi-ss-rt-sport-edition/

Is that what we really want?

[Overd0g]

God forbid.

[ferrarimanf355]

Because we all know that went REALLY well with British Leyland...

[Pete]

It's those darn auto worker unions!!! Oh wait, Toyota doesn't have unions...

[Overd0g]

As if there's no difference between a quarterly loss, and bankruptcy. Good grief.

[Viper]

They are projecting a loss for the entire year. And if they had been paying for their healthcare as GM does... they would ironically be in the same shape as Detroit.


Nissan and Mazada almost went under severla years ago and were bailed out...

Germany is completely unionized and is the leading exporter in the world with a population of just 88 million.

Regards

[kstuff]

Aaror,

You're not the only one to suggest something along these lines. Unfortunately, it would cost the federal government more money to "support" these workers than it would to give the auto companies a loan for a few years while the industry adjusts and (hopefully) becomes profitable again. Moreover, the Big 3 alone (not including suppliers, etc.) pay roughly 90 billion dollars a year in federal taxes. So give them a loan for 25B and you get 90B back within the first year, plus the principle and interest from the loan in years to come. I'm recalling these numbers from a GM/UAW ad, but if I remember correctly, they're accurate. The real question is: why did Congress waste so much of our time beating up the companies, their workers and all those that depend on the Big 3, when it was easily one of the most common sensical things they've dealt with all year??? That's what really disturbs me. In years past any Congressman willing to stand against the American worker in public would've committed political suicide. I guess the ruling class now represents the working class. This is a recipe for disaster.

[Overd0g]

No, the rest of us "workers" don't want to be impoverished to provide a luxury life style for somebody else.

[Luigi53102]

You may have missed the news, but so far most of the "impoverishing" (700 Billion out of 715 Billion, aka 98%) has been for the benefit of enterprises whose administrative assistants make as much or more than auto workers, and whose middle managers make 4+ times as much money as an auto worker. But I guess it's OK to support an actual "luxury life style" as long as there's no union involved.

[got2Bkidding]

So...

Instead of letting someone else help lift you up, you would rather drag them down?

You do realize of course that if the price of labor is higher, the workers make more money. As the price of labor falls, so do wages.

If we encourage better wages (and benefits) then even lower paid workers benefit.

So you want "everyone" else to come down to where you are, instead of letting them help you to live a better lifestyle.

Now my friend, that is typical republican maroonism.

You can be me, me me all you want. If ever you realize that when, as a society it becomes we, we, we... all of us do better. As individuals, we all do better.

Even republican maroons.

[rasit]

Vote those southen Toyota state politicians who humiliated and belittled the auto CEOs and didn;t care about millions losing their jobs, out of office. They can go on assembly and MAKE THE BIG BUCKS they claim the UAW workers are making!!!

[Clavis]

I want to ask my Republican friends how Toyota could possibly be doing poorly when they have no UAW to destroy their business model! LOL!

[Overd0g]

Who cares? Toyota hasn't come begging for my kids college money, unlike GM.

[bayside]

We have a corp. congress, not a peoples congress. Bought and paid for by the corp.lobbists, crooks..Not to worry, because out of this mess, the people will have a voice again...