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.)

There is a tremendous market for photovoltaic modules and wind turbines. Consequently the stock price of companies that make them well are going thru the roof. (Look at Akeena, Evergreen Solar, First Solar, Sun Power, Vestas Wind, World Water and Solar. ) I think these will follow the trajectory of Apple, Compaq, Intel, Microsoft, Sun, etc, (I hope so, because I invested in them, but that’s another story.)

We could buy solar panels made in China, India, Phillipines, Germany, Spain, or - god forbid - the US. The Sierra Club, NJ PIRG, and the Steel Workers want to manufacture turbines and PV Solar mods in New Jersey, which will create 18,600 jobs over the next 10 years. Click here for local news.

The opponents whine that government investment in infrastructure is wasting Tax revenues. I believe that governments, like people, can squander their resources or invest them wisely. For example, the $2.4 Trillion we are “investing” in the war in Iraq could build and install PV Solar modules that produce 1 to 1.5 KW for every man, woman, and child in America. Building and modernizing factories, especially in the nascent clean energy sector is wise and patriotic investment.

Sunpower Corp, which trades using the symbol SPWR, makes photovoltaic “modules” that turn sunlight into electricity. These can be small enough to power a calculator and large enough, when linked together, to power homes, stores, warehouses and office buildings. Johnson & Johnson uses solar power at its Cordis facility in Warren, NJ. As does Whole Foods in Princeton, NJ. and Timberland in various factories around the world.

Sunpower, through its Powerlight subsidiary ‘designs, deploys, operates and maintains the largest solar power systems in the world.’ Other publicly traded solar energy companies include Akeena, Evergreen Solar, First Solar, World Water and Power. They compete with BP Solar, a subsidiary of British Petroleum, Kyocera, Nanosolar, Sanyo, Sharp. Home Depot sells BP Solar’s best panels.

Microsoft Corp, which trades using the symbol MSFT, is a software company. It writes computer programs such as Microsoft Windows, Office, Exchange, SQL Server, etc.

The question is not will Sunpower start writing software, but will Sunpower’s stock price, or that of any of their competitors, follow a tragectory like Microsoft’s. What trajectory? A $3 Thousand investment in Microsoft stock at their IPO March 1986, would be worth something like $1 Million today. Each share of stock purchased in 1986 is worth 288 shares today, after splitting 9 times. (Click Here and Here) Because Microsoft, along with Intel, Apple, Sun, Oracle, Compaq, and other companies, changed the way we work, play, learn, and, think. They shifted the paridigm.
Solar panels turn sunlight into electricity without pollution, toxic wastes, radioactive wastes, mercury, greenhouse gases. There is no fuel, so there are no fuel costs, fuel spills, etc. There are no greenhouse gases as there are with fossil fuels and no security ramifications, as with nuclear power.
And Clean Energy costs less. Solar power costs about $7 per watt not counting any tax breaks or government subsidies. Wind is $3 per watt for offshore turbines, less for land based turbines, altho the maintenance costs are higher. Nuclear is hard to price because it relies so heavily on government subisdies. When you factor in the “externalities,” the time required to build, the fuel costs, nuclear power is probably on the order of $20 to $50 per watt.

So as Otis said, ‘Sittin in the mornin’ sun. …’ I can feel the paradigm shifting.

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In the intrests of disclosure,. I am not a licensed financial advisor and I do not currently work in the financial industry. I do, however, own stock in some of these and other companies.