If Toyota’s hurting, the whole industry is hurting.
The Wizard, looking dapper and trim in retirement.
From this morning’s headlines:
[. . .] The weaker sales outlook also means global production at the parent company would fall 1 percent from 2007 to 8.43 million vehicles, marking the first decline in seven years.
Toyota’s revision underscores an ever-toughening environment for global automakers faced with falling demand for cars, especially higher-margin, bigger vehicles amid rising gasoline pump prices. [. . .]
It’s a simple observation, but Toyota is one of those bellwether companies that beats its industry in good times and bad. So if Toyota’s hurting, the causes of the pain go way beyond the incidents and accidents of (mis)management at, say, Ford or Chrysler. The Detroit auto makers are hurting much worse, but at least some of their woes can be chalked up to general conditions.
So why do I have a picture of a baseball Hall of Famer on this post?
Ozzie Smith is widely regarded as the best defensive shortstop ever. I remember a longtime baseball man once saying something to the effect that, “If Ozzie can’t get to a ball, you know nobody could have gotten to that ball.”
That’s how good Toyota has been. And that’s why its current stumble speaks volumes about the state of the world’s car markets.
(And yes, I do tend to see the world through baseball-tinted glasses as we get to the peak days of summer.)
Please tell me:
What are the companies you look to as industry bellwethers?
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Related posts:
- Company of the Day: Toyota.
- Two quick notes on the car business.
- What does the future hold for the Detroit car makers?
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(Photo by themikelee.)
Category: Transportation8 Comments so far
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Nike, in athletic gear. They’re not perfect by a long shot, but they’re the best marketing company ever. If they struggle, you know that the market is tough.
Bellwether companies:
Intel
MicroSoft
Oracle
Cisco
McDonalds
Walmart
What about General Motors? They have been the leaders in technology for nearly 100 years. Not only is the auto industry so are the American people. If we continue to support foreign automakers,then Americans will be losing their jobs!!
Josie — G.M. is still a very big and very important company, but I don’t think that auto industry watchers would agree that they’re leading in automotive technology today. Toyota has finally passed G.M. in total sales, but they’ve been more profitable than G.M. for some years.
One thing that complicates “support” for foreign automakers: many “foreign” cars are actually made in the United States. Toyota, Honda, Nissan, Mercedes, etc. all have plants here that employ tens of thousands of Americans.
TOY may be hurting but it’s still the exemplar of operational excellence and has added design/product innovation plus marketing savvy to it’s capabilities. This will be a normal adjustment process. On the other hand the fading three is facing threats to their very survival because they sustained a posture of denial and avoidance for decades. Sadly they knew it too - as the recent about face on small cars demonstrates. If they’re capable now why weren’t they a decade ago ? Now they have financial difficulties, product design difficulties, a need to re-engineer their manufacturing and logistics operations and a decade’s worth of hard slogging. Let’s hope they make it because it impacts all our futures. Too many problems to list but consider this archive that walks thru several of these major structural problems:
http://llinlithgow.com/bizzX/industries/auto_industry/
The problem is that it takes decades to build an industry and establish the network of co-participants with complementary skills (cf. Porter, “Competitive Advantage of Nations”). If we lose the Big Three there’s no ready replacement aside from the immediate problem of their being 4% of GDP !
Dave — Here’s what I wonder: Let’s assume for a second that Mulally is as good as Gerstner. Is it even *possible*, given Ford’s legacy of bad decisions, that in fifteen years we’ll look back on his turnaround of Ford the way we now regard Gerstner’s turnaround of IBM?
A two-edged question. Lou admitted at the end of his book he wasn’t able to change the mid-management culture which now, despite 65% of the people being there less than five years, rather resembles the old IBM culture. Ahem….
That said I think Mulally is doing all the right things - starting with instilling honest and open reporting. The real question is can he get airspeed (V1) before he runs off the runway. So, yeah, very possible. Actually all three are doing a lot of the right things and all face the V1 problem. You can quibble your way thru, e.g. VOLT, in each case. But remember as little as 12-18 months ago they were still negotiating with the UAW over un-raveling 60 year old healthcare agreements where the biggest obstacle is that the Union didn’t believe the companies were in trouble. And as of six months ago they though it’d be 15 million car year and that they didn’t need mid-size or small cars. The last six-twelve weeks have seen more facing reality than the last two+ decades.
V1, Runway, V1, Runway,…
Good thoughts, Dave. Honestly, it wouldn’t surprise me if one (or more?) of the Big Three goes into bankruptcy in the next couple of years. In fact, if you told me that your crystal ball revealed that, say, Chrysler no longer existed ten years from now, I would be willing to believe you.