A Tale of Two AutoMaker Blogs


Who says corporate blogs can’t be informative? Sometimes what is deemed worthy of a blog post can speak volumes about the companies publishing them.

Let’s look at two companies and their posts. Both employ a lot of U.S. autoworkers. One of them is seeking a massive bailout from the U.S. government. The other is managing OK on its own. Can you tell from their blogs which one is which?

First up is Company No. 1, which announced on its blog today a new hybrid car running on natural gas that will be displayed at the Los Angeles Auto Show this week. The car replaces a gas hybrid’s fuel system with a compressed natural-gas system, giving it a range of up to 250 miles on a fuel whose price has been much less volatile than gas.

And while Company No. 1 stresses it’s just a concept car, it’s one of many alternative fuel applications under study.

This concept vehicle is a statement that we intend to include CNG in our diverse portfolio of future alternative-fuel R&D. Our purpose in building it as a concept is to demonstrate the efficiency and adaptability of Hybrid Synergy Drive, and to demonstrate that we continue to work with a variety of power-train concepts to ensure that we have products that meet the current and future needs of our customers on a global basis.

Not bad! Now, let’s look at Company No. 2. It also posted on its blog today, a rather sneery “open letter” to a national columnist who has been critical of it. This company points to an electric car that also doesn’t rely on gasoline, but goes only 40 miles. It’s an uneasy read: defensive and arrogant in tone, and unwilling to admit to missteps.

What exposes us to failure now is not our product lineup, or our business plan, or our long-term strategy. What exposes us to failure now is the global financial crisis. Please know that you have an open invitation to come and visit…We’ll be happy to brief you and we’ll even show you the cool stuff. Please give us a call. We’re looking forward to your visit.

Company 1, of course, is Toyota. And No. 2 is GM (the columnist is the NY Times’ Thomas Friedman). It’s telling that Toyota’s message is centered on innovation while GM’s is centered on lashing out at critics and deflecting blame.

True, GM is on the ropes, wanting to be heard above the crowd that is against giving it a bailout. But this glimpse at both companies illustrates why the market has been favoring Toyota.


Eric in Santa Fe

The sequence of dominoes that would most likely fall with a GM bankrupcy are:

1) GM declares chapter 11.
2) Consumers dramatically reduce purchases of GM vehicles.
3) GM slashes prices to hold onto sales.
4) GM cuts back sharply on manufacturing new cars.
5) GM cuts back sharply on purchases of parts and services from suppliers.
6) Many suppliers follow GM into bankrupcy or even liquidate.
7) All other automakers in the U.S. experience significant supply chain disruption, including Honda, Toyota, Nissan, F and C.
8) Other automakers have trouble manufacturing vehicles as they search for alternative suppliers and retool factories.
9) The only vehicles on dealer lots are those made overseas.
10) Either F or C follows GM into chapter 11.
11) Cycle repeats and intensifies.
12) Because of the dim prospects and the current credit crisis, GM cannot obtain Debtor in Posession credit, and it is unable to repay dealers for incentives, and it can’t repay suppliers for parts and services.
13) Dealers follow GM into bankrupcy.
14) More suppliers follow GM into bakrupcy.
14) GM moves from chapter 11 to chapter 7 … liquidation.

The second domino is the most important, and it looks like the one you disagree would happen. If I am buying a $35000 machine, I want to expect that I will be assured warrenty coverage and spare parts and servicing. That would push me to avoid an endangered OEM.

I don’t see how any of the domestic production can be expected to survive. The supply chain is very interconnected. This is where the estimates for 2 to 5 million jobs being at risk.

Pick a domino where you think the sequence will stop. I think there are two many reinforcing feedback loops to rein this in after it commences.

Kevin Kelleher


You raised some good points. I’m still undecided on whether a a bailout would help GM or not, but I don’t agree that not doing it would mean we cease to make autos in the U.S. Many Americans work for foreign automakers – not ideal, maybe, but they still make cars here. Also, GM won’t be destroyed, but bankrupt – that is, protected by courts from creditors while it restructures. That will mean a lot of jobs lost at GM and its suppliers, but it won’t mean GM will vanish.

Eric in Santa Fe

It is no surprise that GM’s leaders might become defensive and angry. They have been good supporters of the Republican establishment for decades, and now the GOP has told them it will be a good thing for all concerned if we cease to make automobiles in the United States.

GM is faced with the potential destruction of their entire company, and the collapse of the economies of 3 states, and the GOP is saying that this is a good thing … better for all concerned … in the long run.

Of course GM can’t take that frustruation out on politicians, but Friedman is a handy alternative target since he is playing the know-nothing cheerleader everytime he opens his mouth.

Michigan was already at 18% (U6) unemployment as much as 4 years ago. I haven’t found more recent state U6 numbers, but it must be over 22% by now. Remove GM and suppliers, and we’ll be up to 30% or 35%. It would be far, far cheaper to avert the collapse today than to try to do any cleanup of the aftermath.

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