A Slow Maybe

[mlhm5]

In 30 days Chrysler has assembled a management dream team while Mulally probably thinks he has years to turn Ford around. Just this week he basically said, not this year.

 

Competition, save GM, is not sitting still and I fear Mulally will be a repeat of so many other Ford CEOs, always promising and never delivering.

[RichardJensen]

Oh, yeah, that's right. Chrysler hired Jim Press.

 

Wow. What a huge deal.

 

Then they gave him the title of co-president.

 

That's going to work out reeeealll well.

 

Sorry, I'm not buying into the Jim Press hype.

 

Frankly, I think everyone else at Chrysler is going to get pretty sick of hearing "When I was at Toyota......"

 

Press is not all he's cracked up to be.

 

He comes up through sales.

 

Toyota has one of the worst dealer networks in the country, -despite- generally solid quality, their dealers routinely score bottom tier on SSI at JD Power.

 

Ask anyone who's ever bought or shopped at a Toyota store.

 

That, friends is Jim Press.

 

---

 

Oh, and Toyota's NA exclusive product has substandard reliability, substandard fuel economy, and is competitively substandard as well (except the Sienna). Also, Toyota has a looming capacity glut between its Princeton & San Antonio plants (as demand for the 4Runner, Sequoia and Sienna tank).

[RichardJensen]

Jim Press on hybrids:

“Hybrid is the enabling technology that makes all of those more efficient. Diesel, gasoline, hydrogen and biodiesel are all fuels that feed through a common system, which is a hybrid. This is the thing we’re developing. Hybrid is the way you gain the synergy of combining stored energy that you store when you don’t need it and release when you do.”

Did you get that? Maybe it's a good thing that Press is going to work for the Detroit company with no hybrid planned.

 

Jim Press on the state of the industry:

“Over time the smaller players are going to have a rough time competing, especially on the investment side,” Press said. “I don’t know when and I can’t tell you how but there’s going to be eight or nine or seven large companies split up the world.”

The top 4 companies (GM, Toyota, Ford & Renault) control over half the world's auto market. The seven largest companies control over 80% of the market. Jim Press apparently is not well briefed on the state of the industry as a whole.

 

Jim Press on his fellow citizens:

“Americans don’t want to pay a premium for anything.”

 

Jim Press on maintaining quality:

“The worry I have is that if you look at the education of our young people, areas like engineering and basic technology don’t have appeal. We’re producing those kinds of kids. If you go to top engineering schools, they are filled with international students. So what’s that do to our future competitiveness?”

 

Jim Press on Chinese women:

“In contrast, look at young people in other countries, like China, where young women are coming out of school so ambitious, aggressive, dynamic and smart.”

 

This guy, off the cuff, is not the sharpest knife in the drawer. All of the above are quotes from a dinner that Press hosted last summer, as reported by the Detroit News (the article is archived and no longer available online).

 

I doubt very much that he'll be able to do anything for Chrysler,

 

Especially since he's just another 300lb lineman in the dogpile at the top of Chrysler.

 

(Which begs the question, who really runs the company, anyway? Nardelli? LaSorda? or Press? then there's that guy from GM China--what's he going to do?)

 

As certain as I am that Lutz will leave a vacuum at GM when he leaves, so I am certain that Chrysler has just given itself about the most bloated upper management team in the industry.

Edited September 8, 2007 by RichardJensen

[LincolnFan]

Someone needs to bitchslap the moron.

[CarShark]

I think you're being a bit unfair to him, RJ, the same way many have been to Mullaly up until now. How they'll work together will be something interesting to see, however I think that all involved are professionals, and will remain so while in charge.

 

I don't think Lutz has really been that good. Everyone wants to see "car guys" at the top, but I think his performance shows that it isn't that easy.

[RichardJensen]

I think you're being a bit unfair to him, RJ, the same way many have been to Mullaly up until now. How they'll work together will be something interesting to see, however I think that all involved are professionals, and will remain so while in charge.

 

I don't think Lutz has really been that good. Everyone wants to see "car guys" at the top, but I think his performance shows that it isn't that easy.

I don't know. Mulally is undoubtedly a better speaker, Press' remarks above were, hopefully, off the cuff (I'd hate to think that stuff was -prepared- for him). Mulally never comes off that tanglefooted.

 

Another thing to consider is that Press has been working for Toyota for 37 years. IMO he should know his business and his customers better than, from those remarks, it appears he does. I mean the guy that oversaw Lexus' rise to top selling U.S. luxury make is on record as saying, "Americans won't pay a premium for anything."

 

While it would be unfair to expect someone who is only the head of Toyota's largest division (not the company itself) to have at his command the market shares of the largest auto makers in the world, it would certainly be fair to expect him to be reticent about voicing an opinion, on the record, for which he lacks sufficient supporting facts.

 

I'm just not impressed by the guy.

 

Unlike Mulally, he's not had to make tough decisions in a hurry before. He hasn't had to change corporate culture either (at Boeing it meant accepting 2nd place in a race of two).

Edited September 8, 2007 by RichardJensen

[BlackHorse]

I don't know. Mulally is undoubtedly a better speaker, Press' remarks above were, hopefully, off the cuff (I'd hate to think that stuff was -prepared- for him). Mulally never comes off that tanglefooted.

 

Well except when he's out there insulting every blue collar work-a-day person that ever bought a Ford by telling them we should all be paying another 50 cents a gallon in tax. That wasn't such a brilliant thing to do. But that's whole other thread and we covered it all to hell and gone as you know.

 

Who knows, maybe that given this Press guy has come over from Toyota and given that the media loves to suck up to Toyota it might well end up resulting in good press coverage for Chrysler. As with many things in this industry, all we can really do is sit back and wait to see what happens. I can recall when there were plenty of nay sayers about Mulally taking the reigns.

[mlhm5]

"Ford’s CEO Alan Mulally went a step further, becoming the latest high-profile executive to suggest that the Federal Reserve should cut interest rates. Mulally said volatility in global credit markets was a “big headwind” to the automaker’s plan to turn around its operations, according to a report in the Financial Times."

Link

 

Maybe, maybe 10%, but his statement is just an excuse for, see I told you so when Ford fails to perform over the next 12 months.

 

I don't see many Fords at Wal-Mart, McDonalds, but I do see a lot of Toyotas and Hondas and the people who are thinking about buying a Camry or Accord are not thinking about buying a Taurus and that is not going to change in the near future.

 

Honda, Toyota and Nissan are the ones responsible for Ford's low sales, not the housing market and Mulally is an idiot for saying that.

Edited September 8, 2007 by mlhm5

[RichardJensen]

"Ford’s CEO Alan Mulally went a step further, becoming the latest high-profile executive to suggest that the Federal Reserve should cut interest rates. Mulally said volatility in global credit markets was a “big headwind” to the automaker’s plan to turn around its operations, according to a report in the Financial Times."

Link

 

Maybe, maybe 10%, but his statement is just an excuse for, see I told you so when Ford fails to perform over the next 12 months.

 

I don't see many Fords at Wal-Mart, McDonalds, but I do see a lot of Toyotas and Hondas and the people who are thinking about buying a Camry or Accord are not thinking about buying a Taurus and that is not going to change in the near future.

 

Honda, Toyota and Nissan are the ones responsible for Ford's low sales, not the housing market and Mulally is an idiot for saying that.

Yeah. You know who else called for a rate cut?

 

Honda.

 

Note too that Mulally is only the -latest- high profile executive....

 

As far as Ford's low sales are concerned, the -entire industry- will likely end the year with 1M fewer sales than last year. That's 4 assembly plants, or about 8-10,000 employees, in UAW terms.

 

Do you think that -only- Alan Mulally wants to see a rebound to 17M+ units per year?

[RichardJensen]

I can recall when there were plenty of nay sayers about Mulally taking the reigns.

Yeah. It's a totally similar situation.

 

Doubts about Mulally center on his past experience.

 

Doubts about Press center on his past experience.

 

The main difference is that Press has spent 37 years in the auto industry working for one company.

[mlhm5]

Yeah. You know who else called for a rate cut?

 

Honda.

 

Note too that Mulally is only the -latest- high profile executive....

 

As far as Ford's low sales are concerned, the -entire industry- will likely end the year with 1M fewer sales than last year. That's 4 assembly plants, or about 8-10,000 employees, in UAW terms.

 

Do you think that -only- Alan Mulally wants to see a rebound to 17M+ units per year?

 

More than one car company's USA sales will increase over the next 12 months, and Mulally's comments don't lead me to believe one will be Ford. With the reintroduction of passenger car diesels, Ford will not have a dog in that fight.

[RichardJensen]

More than one car company's USA sales will increase over the next 12 months, and Mulally's comments don't lead me to believe one will be Ford. With the reintroduction of passenger car diesels, Ford will not have a dog in that fight.

Hey, as long as they're taking market share from Chrysler or GM, Mitsubishi, etc.

 

And the 'return' of passenger car diesels is not going to be all that some are making it out to be. A handful of cars sold in 45 states at a rather sizable premium (or at a loss--either or), and one promised car in 2009 (two years out, minimum) that will be 50 state legal. Again, probably with a rather sizable premium (viz. Jetta diesel was $4k more than the gas engine).

[focus05]

I will say it again for the 50th time, Mulally is Ford's best asset. Why does he need a better team in there? I don't think the competency of the management silo was the problem - it was the culture and who held responsibility for decisions and risk. Most of Ford's top management is very good: Don Leclair and Mark Fields (despite the flack he gets) especially. Mulally has more or less cleared the corporate clutter so that they could do their jobs in the way Mulally saw fit.

 

Look, for all the good he is doing in the company, I cannot believe that Mulally would not have eliminated dead-weight executives by now. He is effective in every other aspect of his job and probably realized that there was talent there, and if he had given people the boot, it probably would have hampered his efforts to transform the company. Sometimes, even within good corporate cultures, internal politics are worth a lot of money. The only glaring unfilled position is the marketing director. Everything else seems pretty good. Even George Pipas who seems sort of unprepared for the sales calls from time to time seems to understand the goal at Ford and when statements are necessary to reign in over-hyped media. He had a couple very good ones on the July sales call.

 

This thread shouldn't be about Press. Press will do well at Chrysler if he is given the political latitiude to make the changes that are necessary. Nardelli (or whatever his name is) will also do well if his moves aren't met with resistence from other executives and leaders due to the internal *politics* of the organization.

 

Management isn't as simple as paying the best person the most money or replacing an entire management team when things aren't going well. Management is far more complex and touchy-feely combined with analytical understanding of where the final quantitative outcome lies and then merging those two successfully. So far, Mulally has my complete confidence. Given what I've been seeing going on at Ford, he and his team of executives are doing a great job with a really difficult problem.

 

We knew going in that this would not be a one year job. It can't be. The problems with finances, product, over-capacity, labor costs, competition, everything cannot be changed in one year. 2009 has been the goal all along. 2009 is still the goal despite the apparent slowdown in the economy. Criticizing Mulally for reassuring us that his original goal is in tact and asking us not to expect miracles next year is a little unfair as statements like that show me he is a better executive than a lot of them we've had in the past. Give the man time to work. Ford couldn't be fixed overnight and is, in fact, finally showing signs of life.

Edited September 8, 2007 by focus05

[FordBuyer]

"Ford’s CEO Alan Mulally went a step further, becoming the latest high-profile executive to suggest that the Federal Reserve should cut interest rates. Mulally said volatility in global credit markets was a “big headwind” to the automaker’s plan to turn around its operations, according to a report in the Financial Times."

Link

 

Maybe, maybe 10%, but his statement is just an excuse for, see I told you so when Ford fails to perform over the next 12 months.

 

I don't see many Fords at Wal-Mart, McDonalds, but I do see a lot of Toyotas and Hondas and the people who are thinking about buying a Camry or Accord are not thinking about buying a Taurus and that is not going to change in the near future.

 

Honda, Toyota and Nissan are the ones responsible for Ford's low sales, not the housing market and Mulally is an idiot for saying that.

 

 

I would argue, especially living in MI, that the recession is already here and rest of country is in early stages of it, and furthermore whatever the Feds do, IT'S TOO LATE. Way too late. Since it takes any rate cut about 18 months to work through the economy, nothing can stop it now. The only question is how deep will it be. I would think in MI it's already a deep one and probably mild recession for rest of country with it hitting hardest in middle of election campaign...bad timing for the Republicans IMO. If you remember back to 1999 when Enron and Qualcom went poof, and the NASDAQ dropped like rock, the Feds again responded after the fact. I don't know what data the Feds use, but it's faulty. Again, they sit in their mahogany paneled offices and pretend they know how the middle class is doing. Now it's 2007, and they are again late to the party as usual. Any rate cuts they do now won't show any results until 2009 at the earliest. The stock market may rally, but that will probably be short term. I want the rate cuts big time, but too bad it didn't happen about 3-6 months ago.

[RichardJensen]

The 2001 recession was probably the shortest on record. I think it lasted all of a quarter, maybe two.

 

Remember that a recession is a year over year decline in GDP.

 

The aggressiveness of the Feds in cutting rates in the 2001/02 actually fueled the real estate credit bubble that has subsequently burst.

 

One could argue, in fact, that the Feds cut rates too low and left them low too long, rather than arguing that they didn't move far enough, fast enough.

 

Unless, as happened in 1998, a global economic crisis arises before the U.S. economy feels its effects, you will see a decline in year over year GDP growth and possibly an outright recession for a short period before Fed rate actions kick in.

 

The assertion that it takes 18 months for a rate change to work its way through the economy is somewhat misleading as well.

 

Usually, unless other factors intervene, borrowing costs for banks drop almost immediately after the Feds alter the target Fed Funds rate, this enables them to reduce the interest charged on loans and other credit.*

 

The problem this time around, is that businesses will need to start borrowing, as consumers are about tapped.

 

* What is the Fed Funds rate? It is the a bank charges another bank for a loan of reserves on deposit at the Federal Reserve Bank

 

How does this affect the economy? A lower Fed Funds Rate makes it affordable for banks to lend more money to customers.

 

How does the Federal Reserve manage the Fed Funds Rate? Indirectly, the FOMC sets a target rate, and then generally uses repurchase agreements (basically identical to a loan with bonds as collateral) to provide funds to banks at or near the nominal Fed Funds Rate. Availability of funds at the nominal rate (or close to it) reduces the overall Fed Funds Rate.

 

Reducing the Fed Funds Rate makes it cheaper to loan money which spurs the use of credit which is, frankly, what makes the economy work (within reason--it's also what makes the economy -not- work).

Edited September 9, 2007 by RichardJensen

[rmc523]

Who knows, maybe that given this Press guy has come over from Toyota and given that the media loves to suck up to Toyota it might well end up resulting in good press coverage for Chrysler. As with many things in this industry, all we can really do is sit back and wait to see what happens.

 

I really don't see good press coverage coming b/c of Press. haha, press from press

[BlackHorse]

I really don't see good press coverage coming b/c of Press. haha, press from press

 

Don't quit your day job buddy.

[rmc523]

Don't quit your day job buddy.

 

I know it was stupid, but it made me chuckle.

[jobu37]

I don't know what this Press character brings to the table in regards to talent. However, from RJ's earlier examples of his ability to speak off the cuff and the fact that his job in the last 37 years has been to basically sit back and ride a gravy train of incremental sales increases that are pretty much more to do with blind loyalty from American consumers and at one time better built product doesn't give one much confidence in him. What can he possibly take from his experience at Toyota and apply to Chrysler? You basically have one company that people will continue to buy the product in spite of massive engine failures that the the company has repeatedly tried to blame on their on customers and on the other hand you have a company that I would imagine has one of the lowest customer loyalty rates in the industry. They basically sell on the massive discount that they are to the competition. I would imagine that last time Press ever had to actually spur demand with rebates was back in the seventies. Of course this doesn't include the recent discount frenzy of the Tundra.

 

Maybe Toyota themselves suggested that he go work at Chrysler. When he started discounting a brand new product to levels of the Dodge Ram there had to be at least mild discomfort at the top of Toyota. Surely the comment "Who the hell does Press think we are, Chrysrer!?" was heard at least once in the Toyota boardroom.

 

I don't know if all of this "talent" at the top of Chrysler will be good or bad long term. But hopefully, in the short term they will make the right decision to reduce capacity so that they can sell a car within $2000.00 of a competing model. I think plans to get rid of the Durango and Aspen were already in place before the transfer to Cerebrus. Now if they are able to reduce some shifts at plants that don't need them it would be a good thing for the industry and Ford as well. I don't know how much of an impact these changes would on retail sales, other than reducing output of the Ram, but I can see an increase in transaction prices to fleets going up due to all the excessive Chrysler volume being pulled off the market. This along with GM reducing their Malibu output to the fleet markets might bode well for Ford's government and commercial fleet business. Of course, GM has their whole Pontiac lineup along with the Impala to pick up any reduction in Malibu fleet sales.

 

I've changed my mind, I can predict the long-term ramifications of putting numerous egomaniacs at the top of a car company. Massive infighting with numerous turf wars and political alliances within the company leading to the selling off of the company's core assets. So the real question is who do you think will be the high bidder for the Jeep brand? Cerebrus' real reason for putting all these idiots together is becoming more apparent, is it not.