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Tuesday
Nov222005

Is the GM era drawing to a close?

logo-general-motors.jpg The recent issue of the Economist reports on the old Detroit carmaker General motors and the company's grave problems and essentially its struggle to stay alive. The obvious question is; what has gone wrong for the world's largest carmaker? Reading the material provided by the Economist it seems that this question might not be so easy to answer.

"Exactly how and why things have gone so wrong is a matter of debate." See Economist article here and the corresponding leader here; both walled for non-subscribers.

There is no doubt that General Motors is facing some serious problems at the moment. First off is the company's inherent inability to perform in as global player in the carmarket.

"Earnings have plunged, especially in its core North American market. The good ship GM scraped even more icebergs lately, the most recent being an announcement last week that it would have to restate earnings for 2001, due to improperly booked credits from suppliers."

cld845.gif The Economist furthermore reports how the company has not managed to follow those trends in the global carinidustry on which other carmakers are now capitalising richly upon.

"GM refused to believe there would be enough demand to justify investment in petrol-electric hybrids. Yet again, it is now racing to catch up in a part of the market where the Japanese overwhelmingly dominate."

However, the GM also faces issues of which it does not have the powers to alter. Especially two issues are important here; firstly, the huge mandatory health bills which are to be paid to laidoff workers threaten GM's future existence although the unions have granted successions on this area. 

"Mr Wagoner was able to put a positive spin on GM's bleak, third-quarter earnings report (losses are $3.8 billion so far this year) by announcing that the United Auto Workers Union (UAW) would grant unprecedented concessions, shaving $1 billion from the carmaker's mounting health-care bill. He has turned his attention to attacking so-called legacy costs. The huge cutbacks of the 1990s saddled GM with nearly three retirees for every active worker."

Secondly, the glooming situation at GM largest supplier and the possible future strike is something which could seriously damage GM's short term operations.

"UAW leaders are threatening to strike if Mr Miller goes ahead. A walkout could disrupt the entire motor industry, but as Delphi's biggest customer by far, GM would suffer the most."

Underlying this awful situation at GM's is the state of the global car industry where, as reported in september by the Economist, (walled for non-subscribers) more is not always better ...

"The strategy of consolidating behind the brands has not been entirely successful: indeed there is an inverse correlation between the number of brands a firm possesses and profitability. GM may still be the big beast of the industry, but it is no longer in any shape to gobble up others."

For another interesting view of GM's troubles; see this post by Thomas Paine 

Perhaps it is really too late for GM to re-cap ?

Wednesday
Nov162005

Copenhagen business school goes BLOG ...

cbs.jpgAbout two months ago even before I began this blog I volunteered to participate in a pilot project of creating two blogs/vlogs on the Copenhagen Business School; one representing my own study program Bsc in business, language, and culture and one representing our Asian sister the Asian Studies Program - ASP. See my sidemenu "Affiliates" for links to the sites.

What are these blogs/vlogs going to deal with then, and who are making them?

It is important for me to stress that the sites both have an internal as well as an external communicative dimension which is well captured in the quote below from the posting policies on the two sites...

"As an internal voice the blogs will serve as a hub for discussion concerning campus events and issues as well as the academic contents of the courses. Externally it is our vision to present the BLC and ASP as international study programs and CBS as an international institution of higher learning. As such we invite everyone to take part in the discussion"

The blogs are administered by both faculty and students and we are currently 11 students assigned as a part of the PPC(Passionate Production Crew) in charge of producing the content of the sites. There are no major strains on the PPC members and the content is not decided and modified by CBS staff.    

I should also take this occasion to thank some external consultants we have had on board during the whole, and sometimes, stressing process of getting it all to work. A warm thank should consequently go to the E-Mediators Jon Froda and Jesper Bindslev for assisting in introducing the PPCs to all aspects of blogging as well as helping with the launch and the actual endeavor of project management; they have even given us a plug in order to give us a flying start into the blogosphere; see their post here. Notable credit should also go to Anders Pollas and guan for contributing with the backbone of the project - the sites themselves. Finally we should thank our friend, the supervlogger, Andreas Haughstrup.

I must admit that I did not know much about blogging and vlogging before I entered this project but I have become a more versatile communications student as a result ... and more is surely to come !  

Saturday
Nov122005

Not all gloom and doom in France

1f826966-4420-11d8-81c6-0820abe49a01.jpg After nearly two weeks of social unrest in France the big European country could well use some good news. The economic growth figures for the third quarter seem to fulfill this objective and shows a healthy development for the French economy despite the riots in Paris.

"The riots will affect confidence and may even affect the pattern of consumer spending but it will be hard to spot any effect on the aggregate growth figures," said Rob Carnell, senior economist at ING in London. See article from Daily Times.

"Two key economic indicators spelled good news for the French economy Thursday.

First, the French economy grew by 0.7 percent in the third quarter from the figure in the second quarter, the official statistics institute INSEE reported on Thursday. Separately, INSEE also reported that French consumer prices fell by 0.1 percent in October from the September figure, cutting 12-month inflation to 1.8 percent from 2.2 percent in September." - See article from Expatica.com

Generally, key indicators of the economy such as inflation, export figures, and consumer confidence seem to be moving slowly in the right direction;

"A 13 percent drop in the euro against the dollar this year has brightened prospects for European exporters such as France's Schneider Electric SA, the world's largest maker of circuit breakers (...)

French consumers stepped up spending as oil prices retreated from a record and government-subsidized hiring pushed down unemployment from a 5 1/2 year high (...)

The French inflation rate slid to 2 percent in October from 2.4 percent in September, Insee, the national statistics office, said today. Crude oil prices have fallen 17 percent from an Aug. 30 record of $70.85 a barrel. They fell today to less than $59."

See article from Bloomberg.

The improvement of the French economy is good news not only for France but also for Europe. However, I think it is fair to say that we have a long way to go and in that view good news in Europe concerning the economy is particularly welcome at a time when the large countries of Europe are showing weak economic figures compared to USA.