popular logistics

Peter Gosselin, writing in the Business Section of LA Times, Saturday, May 24, 2008, writes that Ford, GM, and Chrysler are in serious trouble because of the price of gasoline. He quotes Robert DiClemente, chief U. S. economist at Citigroup in New York “The economic outlook has been taken hostage by the relentless surge in oil prices.” Gosselin adds that Ford Motor Co announced Thursday, May 22, 2004, that it was abandoning any hope of making a profit this year or next now that sales of its gas-guzzling pickup trucks and Explorers have plunged.

Gosselin and Bill Vlasic, writing in the (Click here) (or here for New York Times home) quote Ford CEO Alan Mulally saying the auto industry has “reached a tipping point” where energy costs were fundamentally changing what kind of vehicles Americans buy.

While Gosselin and Vlasic write that Ford, GM, and Chrysler are in trouble, Toyota and Matsushita Electric are investing US $192 Million / 20 Billion yen to build plants to manufacture batteries for hybrids (Click Here).

You can see this by looking at the stock value of these companies. An investment of $2,000 in Ford and General Motors, on Dec. 24, 1999 would be worth Toyota and Honda would be worth about $540 today, not counting the value of any dividends paid, as both Ford and GM lost 73% of their value. On the other hand, An investment of $2,000 in Toyota and Honda stock on Dec 24, 1999 would be worth about $2,860, not counting any dividend payouts because Toyota increased 11.36% and Honda increased 72.53%. These data can be found on the Google financial pages, (click here).

Mr. Gosselin can be reached at Peter.Gosselin (at) latimes.com

(Please Note that I am not licensed to sell investment advice. This should not be construed as such.  It is just an interesting observation. Note also that I have no investment in any of these securities. I do own a ‘99 Chevy Malibu and a ‘99 Mercury Sable. My next car will get 45 mpg, which means it will probably be a Prius.)

From “Speeding Bullet World’s Fastest Train You Can Ride Dumps Energy Like a Prius ,” by Alex Hutchinson in Popular Mechanics:

When the latest model of Shinkansen, the Japanese bullet train, was launched on July 1, more than 1300 people showed up at 6 am on a Sunday to pack the seats for the maiden voyage, from Tokyo to Fukuoka. The Series N700 is billed by Japan Railways as the world’s fastest bullet train in service (France’s faster TGV train has been used only to break speed records), with a top speed of 186 mph.

It’s the first bullet train to be equipped with an air spring-powered active tilting system, allowing it to whip around corners without slowing down. Special fabric hoods cover the gaps between cars, turning the train into one long, seamless, aerodynamic unit.

Despite all these improvements, the 5-hour trip to Fukuoka will be shortened by a mere 10 minutes. More important, though, the journey will be quieter and more comfortable, and it will use 19 percent less energy than current bullet trains.

(emphasis added)

Please bear this in mind the next time someone refers to the United States as the most technologically advanced country in the world.

Congressman Dingell’s loyalty to the US automobile industry is laudable. However, resisting higher mileage standards does not help the industry. It doesn’t help management, it doesn’t help the workers, and it doesn’t help the stockholders. (Click Here or Here) It helps the Japanese, especially Toyota.

Ford Motor Company, for example, started losing the taxi and limosine market to Toyota long before Mayor Bloomberg’s initiative that all new taxis were to be hybrids. All around Wall Street, where the limos pick up investment bankers and hedge fund managers in cars that are driven 50,000 to 100,000 miles per year, you see old Lincolns and brand new Priuses.

Each Prius (Edmunds, Toyota, Car Talk), which gets 45 miles to the gallon, will burn 2,222 gallons as it is driven those 100,000 miles.

Each Lincoln Town Car, (Edmunds, Lincoln, Car Talk), which gets 12 mpg, will burn 8,333 gallons in that 100,000 miles.

At $3.00 per gallon, fuel for the Prius costs $6,222; fuel for the Lincoln costs $23,333. It’s economics not environmentalism. Fuel costs for the Lincoln are almost four times higher than for the Prius.

Even with a new set of batteries at $5,000, the operating costs for the Prius are less than half those of the Lincoln.

GM and Ford act like a man with a toothache who won’t go to the dentist because it will hurt. But unless he takes action the man will lose the tooth. They act like someone with pain that ‘is probably nothing’ who dies of cancer. And Congressman Dingell is saying ‘It’s ok, it’s probably nothing.’

Dingell’s loyalty is laudable. But rather than tell them what they want to hear, he should tell Detroit the hard truth - milage matters. Or to paraphrase Bill Clinton, ‘It’s fuel economy, stupid!’