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This piece in the oped pages of the WPost reminds readers about one conspicuous failure at General Motors, the failure in good labor relations. It quotes columnist Marquis Childs during the booming business years of the war, July 10, 1944. Childs wrote about a visit to Detroit where he saw a broad gulf between business leaders and labor leaders, between management and workers, where he said they could not hear each other except when they raised their voices. By 1958 when the auto sales had dropped and strikes loomed, the union demands during negotiations were described by the WPost in an editorial as extravagant proposals. Elsewhere in the coverage on Alfred Sloan's contribution, one writer describes Sloan's success as a manager but also points to his failure to setup good labor relations. This failure played an important part in GM's eventual failure and filing for bankruptcy on June 1, 2009.

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The situation in the Japanese consumer market. There is a slow decline in Japanese department stores over the last 14 years. Car sales are also in decline. A number of trends are converging. Japan's population is declining. About one third of Japanese jobs are now non-permanent, part-time or contract jobs.The result is a decline in demand and move to lower priced goods. Smaller cars that have engine displacements below 660 cubic centimetres are seeing increasing sales. The cost is less than $10,000, and cost less to run and maintain. These cars were 20% of the total car sales in 1995, now they are 30%, according to the Japan Automobile Manufacturer's Association.

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The Honda Fit sold in 115 countries shows the concentration and focus Honda placed in samll cars that has achieved such impressive results in a small car. It is a small car that gives a quality vibe that penny pinching rivals like the Toyota Yaris or the Chevy Aveo cannot match according to this test driver. It has a lot of things that you find in a refined quality car so this car would appeal to a lot of people in a fuel efficient culture for driving. It has a surprising amount ofspace for seating and for storage for a car of this size and has a lot of features that make this car small but nice car to be in.

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Honda's Insight will compete with the Prius on price, at $18,000 it is priced $4000 below the Prius.

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The situation in Boise, Idaho. Home to many electronics and high tech companies like Micron Technology, Boise has weathered many downturns with unemployment rates well below the national average. This time things are not looking at all like previous downturns, as the unemployment rate in Boise climbed to 6% from 2.7%- it has already approached the national average of 6.7%, and is climbing. This suggests that high tech is also being affected seriously. Unemployment is expected to reach 8% in 2010, about the same as the national average forecast according to Moody's Economy.com. Goldman Sachs forecast is for the 2009 savings rate to be between 6% to 10% by 2009. Families like the Capps and Muirs that have young children or children in teenage years, are now serious savers, as profiled in this description. Down to getting their meat from a calf grown on a family farm in the Rocky mountain region where Boise is located, cutting their own wood in the mountains, buying 11 dozen eggs and freezing the insides of the eggs, buying on deals like $8 winter coats at Old Navy's store, bulk purchases of sugar and staples, growing and canning vegetables, handcrotcheting hats and scarfs for sale on Craigslist and local bazaars. All this from Mrs and Mr Muir including starting a Moneysavers Club, an email group of 30 people. The Muirs are a young family with their first child 5 years ago, who have stable employment, with Mr Muir working as a grape researcher for the state Dept of Agriculture, and his wife a dental assistant. But having taken 2 mortgages to buy their $144,000 home because they could not afford the 20% down payment. The wife's 401K of $3000 going for insulation and fence , and the husband's 401 K savings down to $13,000- reduced to half by the stock market. Suggesting poor decisions on housing debt with low savings for a couple in their thirties. The Capp couple in its forties has also low savings, having $40,000 in student loans, and credit card debt of $11,000 just paid off by using the $10,000 severance package for Mr Capp. The Capps are economizing on everything from skiing to using washable rags instead of paper towels. He worked as a field service engineer for Electroglass, a semiconductor equipment manufacturer based in San Jose which fired two thirds of its field service engineers, including Capp. They also used a $25,000 line of credit on their home to buy a used Toyota 4Runner. Considering their economizing skills, their responding to the downturn by paring down debt as quickly as possible, the information of Mrs Muir's skills at saving, the Capps continuing to use their 253,000 miles Toyota Corolla- these are families that were not crazy spenders, but just families that did not take saving seriously. The Capps made $65,000 from Mr Capps salary and $10,000 from Mrs Capps work at a mental health clinic (after getting a BS in psychology), yet their $2700 in savings suggests no effort was made to save for a rainy day. What this saving and economizing means is that restaurants are closing in large numbers in Boise. Retail stores, including electronics and clothing, are shuttering, All this is leading to higher unemployment, leading to saving measures like those used by the Capps and the Muirs. Meanwhile the numbers for savings accounts at Home Federal Bancorp in Boise, Idaho, a $725 million bank with 15 area branches, shows savings accounts up 26% in December from the previous year. And says the banks consumer banking head, the balances are increasing even as the unemployment rate is going up. Which suggests that Rodriguez and Goldman Sachs may be right (seee link) that the savings rate may reach 10%, and even higher, from what is happening in Boise. Views on currency valuation and the dollar as indicated in the analysis of the article about Rodriguez /Grantham/Scheiff, WSJ, January 2, 2009, may have to be separated from the analysis of what is happening in savings, as the weakening of the dollar relates also to the weakening of other economies and currencies. This steep upturn in saving is likely to affect Chinese exports severely and the Chinese economy. This also affect the German economy, as China imports less from Germany, especially its midsized manufacturers. See links. What is happening on saving, on the other hand, is very real, and happening before our very eyes....

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GM' second largest market is China where it sold more than a million cars in 2007 and sales growth was 21%. Brazil is the third largest market. Russia is the fastest growing market with sales growing 75%, and it has a favorable pricing environment in Russia with growing class of more affluent buyers as Russian economy grows quickly. And India is a market that GM is trying to buildup sales with the introduction of GM's Spark car. Overall this should enable GM to maintain momentum even as sales in N. America declined 6%. Toyota's N. American sales declined 4% so it is seeing a slowdown there also. But compared to GM which has 65% of revenues from N. America, Toyota has 40% of revenues from N. America and 30% of global profit.

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When a Saturn crossover with one name Outlook, and the same crossover with another name Traverse sells at a Chevy dealership does it take sales away from another GM brand. What happens wen marketing budgets and campaigns focus on a car like the Chevy Malibu does it take something away from the Saturn Aura which isn't the focus of marketing efforts and doen't have the financing package of the Chevy Malibu which is part of the marketing focus on the Malibu. The new Pontiac G8 doesn't get much marketing as GM focusses on the Malibu. So the question is whether it helps Toyota to have the Camry one car which benefits from a focussed marketing effort as opposed to the distributed and diffused markeing effort on a coupple of nameplates and brands.

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Honda is now exporting the small compact Fit made at its Chinese plant to Canada. A Honda plant in Mexico will assemble the Fit and export the car to the U.S. and Canada in 2014.

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Ghosn of Renault-Nissan used to be a skeptic about electric cars. Now he is on board. Nissan plans to sell an electric car in the US and Japn by 2010. It will be only hundreds of vehicles at first so it will take more time to take it to mass market, but the goal is to go for mass market. By 2012 Nissan will plan for a lineup of electric vehicles, so it will extend beyond small cars to small minivans and small commercial vehicles and small crossovers. 100% electric cars also are described as zero emission vehicles. But Nissan won't be the only company doing this. Mercedes is moving "very fast" in the direction of emission free vehicles, see the the interview with Daimler's Zetsche. Mitsubishi Motors and Fuji Heavy Industries are testing versions of electric cars. And GM plans to introduce the Chevy Volt in 2010. Toyota plans to have a plug in hybrid about this time. Mercedes will be the first to bring a lithium oin battery in its S400 coming out later this year which will be a hybrid. It is the cooling of lithium ion batteries that has been a major hurdle to development of electric cars and Daimler's Zetsche says they have solved this problem, have 24 patents, and developed a cooling system that works inside the car. Nissan has an electric car project that it is working on with California based Project better Place to produce electric cars for the Israeli and Danish markets. Ghosn has grasped the idea that the market is signalling a major and irreversible change towards smaller emissions and regulators are way behind on this curve. He says that if one is to sensibly participate in the growth of emerging markets which Nissan is doing in North Africa and India and Eastern Europe then one has to think in terms of sustainability and lower emissions, as putting tens of millions of more cars on the road around the world can damage the environment. And the only way this can be done to meet the aspirations of people in emerging markets is to lower emissions and to set this as the overriding goal. One gets the same sense from the Germans, see Zetsche, Daimler....

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The cost of electric and hybrid cars, with the added factor of electricity shortages, make 'green cars' a rare sight on Indian roads. The Prius in India costs $40,000. Only 12,000 battery powered scooters and motorcycles were sold in 2010. With the right economics and convenience the situation could change. About 1 million compressed natural gas vehicles are on Indian roads, according to Asian NGV. This is because CNG vehicles are similiar in price to gasoline vehicles and the switch to CNG is inexpensive for regular vehicles.

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Payne and Applebaum take a look at the Airbus factory in Mobile, Alabama. The $600 million manufacturing facility could have been built anywhere, as parts are made in many different countries. There are no special advantages in assembly at Mobile, that could not be obtained elsewhere. It is mainly the result of a decision at Airbus to make the planes in the large markets, and gaining a larger share of America's military budget. Airbus got $158.5 million in state and local incentives, including a school that trains Airbus workers. The goal is to make it cost not a cent more than it costs to make the airplanes in Europe, even though it costs a lot to ship parts from Hamburg. The non unionized labor makes it possible to have lower labor costs with the starting wage at $16.50 an hour.

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A large increase in fuel efficiency as planned by new EPA rules creates a different environment for electric cars. Current average fuel economy is 26. New rules that raise the average fuel economy to higher than 47 mpg will result in cars that conserve gasoline, reduce emissions, and make these vehicles more attractive to operate than electric cars on a cost basis, without sacrificing too much in conservation and emissions. A new study shows that achieving the increase to 47 mpg with new technologies will cost automakers about $2000 per vehicle. At $4.50 a gallon for gasoline it takes six years for a hybrid to be more cost effective than a 47 mpg car, according to this study. For a plug-in it would take 7 years and a pure electric vehicle 8 years. This suggests gasoline would have to cost more than $4.50 for electric cars to get an economic advantage. Technological breakthroughs and new technologies in electric cars which are a nascent industry at this time are not worked into these calculations. This could result in a different situation and favor the companies doing the pioneering effort to learn these technologies and develop cost effective solutions....

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The U.S. Defense Department awards Boeing a $30 billion contract for aerial refueling tankers. The first phase of this deal requires building 18 aircraft by 2017. EADS, the European supplier that lost out on its bid, had planned to build the planes in Mobile, Alabama, EADS had support of some southern states. Boeing sent a design based on its 767 commercial aircraft. This gives new life to Boeing's 767 program which was launched in 1982 and is seeing declining orders- down to 50 orders. Boeing says this supports 50,000 manufacturing jobs at Boeing plants in Washington and Kansas, and at suppliers around the country. EADS said it would have brought jobs to the Gulf region and keep 48,000 Americans employed.

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Most people hae not heard the name Radhabinod Pal the sole dissenting judge at the Allied Tribunal who questioned its legitimacy in a dissenting opinion. Here we learn that Judge Pal's opinion sealed a friendship between him and Abe's grandfather Nobusuke Kishi charged with war crimes but never tried. Mr Abe visited the Netaji Subhas Bose museum in Calcutta and said that he was determined to strengthen Japanese Indian bilateral relations that Bose wanted to see. Appears to be an emotional bond and a visit that aroused old feelings from a family tie for Abe. Note that India and Japan vowed to seal a economic partnership by December. Small as this seems this may be a big turning point for South Asia. See the details of the Japanese investment plans in India especially in infrastructure projects in related article.

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Ron Pinnelli of AutoData says the main difference between automakers doing well and ones that are struggling is a few big successes and a solid product line. The Detroit automakers need a good hit, a home run like the Honda Civic and some solid sellers. This is what Ford, GM need, one or two good hits and a the rest of the line pretty solid. Note auto sales increase 0.6 % overall for Feb. 2006 and the market is holding up. Note also 1) GM is deemphasizing fleet sales- "taking our medicine and going on." - Good thing in the long run. 2) Toyota sales not up by that much 2.6% in Feb. 2006. 3) Honda's success is a result of new Honda Civic sales which went up by 37% in Feb 2006, and helped increase Honda's market share from 7.8% in the prior year to 8.5%, according to Autodata.

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Detail about Tata's $2500 car. What it looks like- a jelly bean small in front, larger in the back for aerodynamics, 30-35 horsepower, with bearings good for 45 mph, top speed 75 mph, trunk in front to hold a briefcase and battery, rear mounted engine with continuous variable transmission, a hollowed out steering wheel shaft, engine designed by Bosch 600 to 660 cubic centimetres 35 hp. Tata CEO, Ratan Tata, says in a interview the car will do far better on emissions than today's low end cars, and that the emissions standards were much easier to meet than the crash and safety tests, because of the lightness of the vehicle. Todays lower emissions standards in developing countries makes it easier by not having to use more expensive technologies. Electronic sourcing and internet auctions are used by Tata to a greater degree, 30-40 % of parts sourced this way compared to 10-15% by other larger carmakers. This helps meet the aggressive cost target. On the safety isssue its interesting to note that most of the people buying this car will be millions of motorcycle families and individuals (typically a couple of people can ride an Indian motorcycle). They may be safer in a light car than on a motorcycle. This has to be seen in the particular context of India. Renault-Nissan used the experience of lowcost car engineering techniques and secrets from its Logan car made in Romania and transferred it to its other models. Tata started with a clean sheet of paper, asked the quesion what they really had to have and was there some other way. It was Ratan Tata's dream to build a car in 1 lakh or 100,000 rupees or about $2500. The project had all out backing and tested Indian engineers ingenuity. The Tata effort will be studied by carmakers from around the world. Bosch does not underestimate the value of this business, as the car will target a market of hundreds of millions of people in India and China and developing countries. Ariba a supplier to Toyota, and BMW a supplier to Tata, helped Tata buy parts through electronic sourcing. China's Cherry Automobile company, another pioneer, had an Austrian firm help it design its engine for its small car. Tata worked with German company Bosch on the engine. And both must have used cutting edge technology but with a different goals and specifications to achieve unique tasks....

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Efforts to meet the Bank of Japan target of 2% inflation in 2014-2015.

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Carmakers around the world are finally getting it. Customers want vehicles that deliver better mileage and lower emissions and are environmentally friendly. And their is now a race among the automakers to see who can get there first. After the sea change at the Frankfurt Auto Show, the same is expected t happen at the Tokyo Auto Show thats coming up with a large numbert of new technologies, hybrids and environment friendly vehicles on display there. Lawrence Burns, V.P for R&D and Strategic Planning at GM points to this new DNA for the automobile. Maynard says GM plans to introduce a new hybrid version of its lineup every 3 months for the next 4 years, 16 in all. Mullaly of Ford and Juim Press at Chrysler are committed to pushing forward. And Toyota is beginning its development of a vehicle that would compete with GM's Volt which would run on electricity.