Lost Opportunity

By Serge Truffaut
Le Devoir

Monday 29 January 2007

The automobile manufacturer Ford has just registered a loss of close to thirteen billion dollars, while Toyota registered a virtually analogous amount of profit. Earlier, General Motors had announced a ten billion dollar loss. Result? During the current year, the Japanese automaker will tear away the title of Global Number One from GM that the latter has held since 1931.

In the request that the Big Three recently placed on the federal government's work table, there is more than a suspicion of indecency. Of course they want the money. In fact, they want the authorities to slip them some 500 million US dollars in an envelope, in exchange for which they will commit to engage in research to construct a battery designed for hybrid cars.

Prima facie, one could judge the move by this industrial troika to be well-founded or legitimate. After all, the governments of countries where cars are manufactured hardly ever hesitate to grant direct or indirect support when the wheel of fortune for these important employers turns sour. Except ...

Except that they are demanding today that they be handed a check to build a component they've received quite a bit of money for already. In 1994, President Bill Clinton and the bosses of GM, Ford and Chrysler announced with great fanfare the birth of the Partnership for a New Generation of Vehicles. The objective was to conceive a hybrid engine between then and 2004 that would get 80 miles to the gallon.

During those years, GM and company received subsidies. But voilà, their engineers played hooky - I dare say because the big bosses, paralyzed by the mirage of a low-cost barrel of gasoline, had ordered the mass production of SUVs, minivans and other energy hogs. In 2001, the National Research Council, having observed that the Detroit bosses had not taken the program seriously, came to the conclusion that the goal would never be reached by 2004.

On the other side of the Pacific Ocean, Toyota officials decided in 1994, in fact, the same time as the creation of the program godfathered by Clinton, to direct a good measure of gray matter toward creation of the hybrid, since they properly feared being overtaken by the Americans. We know the result. Toyota has put the Prius on the market - which sells more in the United States than anywhere else in the world.

Even worse, from an American perspective, Toyota has just made a move that could preserve its lead in this domain or even increase the gap. What is that? Toyota has purchased a bloc of Panasonic EV Energy Company shares, becoming its majority shareholder. Since that transaction, GM, Ford and Chrysler have complained about problems they encounter with Japanese battery suppliers.

To better measure the totality of the problems Detroit's giants confront, you must remember the following equation: The loss of nearly thirteen billion dollars by Ford, divided by the number of vehicles sold, equals $4,700 a car last year. Obviously, the poor management that has characterized this company, its absence of vision, and its refusal to offer a range of products responding to the desires of millions of consumers - i.e., an energy-efficient automobile - will result in factory closings, the consequences of which are easy to guess.

As it is obviously not desirable that Ford or GM sink into the region of technical bankruptcy that they presently haunt a little too closely, we must hope for a positive response from the American authorities. But this time it should be on the condition that the bosses be held accountable for their actions. One act of fraud is enough.

Translation: t r u t h o u t French language correspondent Leslie Thatcher.

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