North America’s Auto Capital - Yes I’m writing you from the Windsor side of the Detroit/Windsor border, the auto capital’s of the US and Canada. So you know i have a vested interest in this. This doesn’t make me an expert on the auto industry, but it does apparently mean i know a lot more about the topic than Senator Richard Shelby and NY Times commentator Tom Friedman. After listening to the two of them slander the US auto industry generally and the UAW specifically, I wanted to set the facts straight and let you decide.

The UAW is not the problem here. Toyota, Honda, Mercedes, BMW, Hyundai, Renault, VW, etc. all have Unions in their home countries. The problem here is the US Auto Company’s management. Detroit’s managers have had to manage their unions, as have their competitors, if the union is the problem, then management has failed to manage that part of their business. In fact, since 2005 the UAW has agreed to 2 major concessions in their contract. The first concession established a 2 tier wage system that allows the Detroit 3 to pay new workers at levels matching foreign owned plants in the US, while the second removed medical pension liability from the auto companies to the Union. The effect of these will be to reduce GM’s cost differential with Toyota by 80%, by 2010.

Now that the blame is being placed at management’s feet, just how bad are they? The Detroit 3 still holds about 45% of the US market, while competing against world class competitors that include Toyota, Honda, Daimler Benz, BMW plus companies including VW, Fiat and Renault who are world class in the small car markets. The Detroit 3’s 45% share is larger than that of Toyota, Honda and all 3 German automakers combined. How is this a failure? Does either Coca Cola or Pepsi have a 45% market? The Detroit 3 control 45% of the market against at least 15 large international competitors.

Friedman and Shelby chastised the automakers for not building what people want. Forgive my ignorance here, but weren’t pickup trucks and SUV’s the most popular vehicles in the US, before Oil skyrocketed and gasoline rose from $2 to $5.25? If Friedman or Shelby were right, the current financial panic should not have affected the sales of world beater Toyota? Well Toyota’s sales were down 26% while the US 3 were down 33-45%, the difference is based on the US companies being more focused on trucks and SUVs. So Toyota is down 26% and Ford is down 33% so Toyota is great and Ford is sub par? Let’s get real, whatever the problems the US 3 have, the financial panic which has wiped out sales, has had the effect of accelerating the costs of the US 3’s huge restructuring.

Finally, there is the repeated claim that Detroit is behind the times on technology, which is historically untrue. The Detroit 3 first introduced engine computers, overhead cams, fuel injection, etc. For years Detroit has led the way in spread safety technologies such as Airbags and ABS to mass produced cars. Yes Detroit has fallen behind on hybrids, but it’s important to remember that much of the success of hybrids have been their marketing as being greener than traditional cars. The reality, according to Toyota’s own numbers is that each Toyota hybrid reduces an average of 4.5 tons of CO2 over it’s lifetime (Hybrid Hype), about $5 worth of CO2 at current market prices: www.theccx.com. GM has been launching their Hybrids, which have focused on improving the mileage of their most popular and least efficient products: SUVs and trucks. Management in Detroit may have be unable to compete in small cars, pay themselves too much and lack forward thinking vision, but the truth is their products are demonstrating they still have a major impact in marketplace.

A lot of people have been shocked by a variety of aspects of the current credit/banking crisis and the recessionary conditions that it seems to have created or exhasterbated. I have been warning about the collapse of the US housing and mortgage markets and the potential for a banking collapse since i first heard, a few years back, that over 20% of all US mortgages were Interest only VAR loans. I never imagined that a) it would affect the rest of the world as much as it had and b) that financial firms in Europe were part of this AAA rated crapfest, or c) that people in Iceland, Hungary and other countries in Europe were taking out mortgages in foreign currency that could destroy them financially. I never imagined that Europeans would attempt or even be allowed to make such risky financial descisions, maybe more than in the US, but i was wrong.

Strangely enough, many things that have helped build the productivity of the last 25 years have combined to increase the speed at which economic changes occur and how extreme they are. In the 1970s it took weeks or even months for the automakers to notice that sales were dropping and to cut back production. Today the number are integrated so that if sales drop today, you can cancel a shift of production tomorrow. Ideas of maximizing your business by aggressively using your cash flow to expand your business, lead to businesses with no capital reserves. printers, car dealers, small manufacturers came to rely on credit to ensure they can pay their bills from day to day, so they could maximize their pay. That strategy and it’s associated tactics worked great in strong market. Today it appears that all markets are even more rapidly pulling back as the world sees slacking demand.

The combination of technology, management innovation and rapid communications have combined to allow the various players in the economy to react instantly. This rapid reaction has allowed the economy to turn around from boom to bust in a few short months as word of crisis cause business and consumers to start hoarding cash instead of spending it. We should get used to the speed at which the Economic “bi-polarism” occurs.

I was happy to have been contacted by Washington Post reporter David Fahrenthold for my opinion about how the financial crisis was effecting the offset market.

his article was published today: http://www.washingtonpost.com/wp-dyn/content/article/2008/10/05/AR2008100502518_2.html

While I am happy to quoted, unfortunately he didn’t mention my company 4Offsets.com or link to out site.

Here are my words wisdom

“People still come to the site, but where you used to get people signing up [for offsets] every day, now you’d be lucky to get a few people a week,” said Fred Weiss, a small-time offset seller based in Ann Arbor, Mich., who sends customers stickers that say, “Carbon Neutral Vehicle.” Apparently that isn’t as important now.

“Who cares about the environment? Am I going to have a house next week?” he imagined would-be customers saying.

Well maybe I’m on my way to fame and fortune, but I think it will take a bit more before i join the talking heads of the US media.

Can’t Get Enough of Me? ;>) BUY MY BOOK!

Well i hope someone will do something about slowing this crisis down. I heard/read yesterday that 30% of Prime rated borrowers are being turned down for car loans, vs 10% last year. The number for Sub Prime rated borrowers was a 90% rejection rate, vs just 30% last year, basically the sub prime market is gone. With all the automakers reporting sales down 35% and show room traffic down 45%, we can see these new financial realities hitting the society in many different ways and few if any are ‘good’.

I say let’s call these toxic securities(and i use the term securities loosely) as worth 35 cents on the dollar, for the purpose of “Mark to Market” accounting rule for a 6 to 12 month periods. This will bring borrowers into compliance with loan covenants thus slowing the crisis. In fact had this been the case last january, most of the crisis might not have happened.

The folks in the US media are doing it again with their “shock” and “dismay” of the use of 2 girls to sing and lip sync a solo performance at the Olympic opening ceremonies.

The Chinese, want a perfect show, decided that the best singer was not as “visually perfect”, that is pretty/cute enough to appear on TV. They decided to use a 2nd girl to lip sync while the first girl sang.

While this is offensive to all of us who aren’t pretty and i count myself one of them, it isn’t that surprising. This has been done in hollywood musicals for years. so the media outrage at this unthinkable behavior is either based on ignorance of the entertainment industry or outright decite.

Why not put the spin this way: 2 girls got to share a moment where they performed for, literally billions for people around the world, rather than just one?

Hat’s off to NBC’s Andrea Joyce for the digusting interview of the US Olympic Women’s Gymnastics Team and in particular the 1 on 1 interview with Alicia Sacramone.

How appropriate to continually asked her how it felt about….

1 what went thru your head when you made this mistake?

2. how did you feel when you realized your mistake cost your teamates a gold medal?

3. it seems like your mistake rattled your teamates, what did you say to them after you came back from the balance beam, where you fell?

4. How did you prepare for the floor excercises, that you made 2 errors on?

5. What was your the feeling about being the captain of the team and …..

these are not exact quotes, but they might as well be.

I spent the last few days chatting with a business associate about psychology and human development. My first bachelor’s degree is in Pyschology. Those discussions and some recent stories i’ve read about treating earthquake victims in china and helping people in trauma (physical, emotional/mental). Current thinking seems to be: the most effective way to overcome come the emotional trauma is ask what they need (within reason) not to ask them to replay the event and discuss its implications. Replaying the bad times often results in a reinfliction of pain.

While Andrea Joyce’s job isn’t to be trauma counselor, she could have let Scaramone just talk about her feelings and experiences. Instead Joyce work hard to seem like mike wallace interviewing some tin horn dictator.

Gold Medal for the Most offensive interview: NBC and Andrea Joyce. Contrast that with the way Meridith Viero asked the same questions on the Today show this next morning.

I’m happy to read that their is finally some action in Washington and the various state legislature across the US to deal with this outbreak of businesses operating as Non-Profits claiming that the purchase of their products are “donations”. Nothing could be farther from the truth. This fake charity issue is something i face each day as the CEO of an Offset company. There are a number of my competitors who sell the same services as I do, complete with branding, but their business is organized as a non-profit claiming to be a charity. It’s not true in many cases, rather the Non-Profit is a vehicle to enrich the staff of the non-profit, by offering their clients a tax deduction for the purchase of a product is not in anyway charitable.

Fortunately i’m not just a lone voice in the woods, various governments are starting to look into these businesses to put a halt to what are essentally a tax scam against the government and a confidence scam agains Offset clients. How many people bought an offset from a non-profit that was from the Chicago Climate exchange? Most offer that, so do we www.4offsets.com, nothing wrong with that, except that offset, in most cases, was bought from a commericial business. How is this in anyway a charitable contribution? Say the XYZgreen.org sells 1 ton of offsets for $10, that they bought for $6. What happens to the $4? In some cases i’ve looked into, it goes to pay the staff and not 1 dime is used for charitable works In a charity, it is used for charitable works, giving things to community whether money or knowledge.

Join me in the fight agains this abuse of the non-profit system and is a being used to scam million of Americans into believing someone’s source of wealth is really a charity. Don’t get scammed!
Ask for details of the non-profit’s charitable works and ask for IRS filings
Is the board of directors controlled by people who work at the foundation?
Where is the outside oversite?

The signs promoting breakfast throughout the Novotel in downtown Toronto, on The Esplanade, advertised the Best Breads in The City. Well after eating dinner and breakfast there, their bread may not be the best in the City might be wrong, but i’m willing to accept the supposition that it is.

For all you Englishman, Scots and Welch, who are spending pounds. If you want a cup of coffee to go it won’t cost a pound, but feel free to add a croissant to spend your whole pound. That’s right $1 for a coffee, $2 for coffee and croissant, about 50p and £1 respectively.

OK, first of all, I get to be a Grateful Dead fan, no matter what you uptight Wall Street guys may think. If Roger McNamee (the link is the Rex Foundation), Gary Bettman and Al Gore can be Deadheads, any modern businessman/woman can too.

But seriously my trip to the Green Earth Expo in Orlando was a bit strange. First it was the first booth that i’ve worked at a show since AutoFact 1986. Second it was the first booth/show that was for my own company that i arranged myself. Finally i was heading to alternative energy, sustainable business show it turned out to be more alternative lifestyle and products with a large minority of green energy and recycled products exhibitors. So it wasn’t quite the trip i was thinking it would be.

The event was at the Orange County Convention Center (WARNING - The center’s internet service provider, tells you that their $1000 wireless service isn’t really as reliable as their $1500 service. They don’t tell you they sell a $24 a day wireless, that seems to work fine) which is very large place with a lot of one way roads and driveways. The driving was quite annoying until the second day of driving there. This was my first trip to Orlando as an adult and while i hate paying 2, 75 cent tolls to get from the airport to the tourist area, it was a good experience aside from the driveways.

Now, back to the show.
I’m not against alternative lifestyles and other movements that seek to change people’s behavior. I’m not against hippies either. I’m just not sure we’re going to make much of an impact on the folks who drive SUVs, Fly around the world for fun or business and run their A/C full out any day it hits 75, by linking green with alternative lifestyle. Hell, i’m a guy who meet’s 2 of the 3 criteria above, i think i have a more typical american lifestyle than the alternate sorts. I want to save the world, i try to reduce my usage, but i like to have fun and live well too. I’m in favor of sustainability, not against consumerism and that’s where I think linking alternative living with alternative/green technologies doesn’t work at attracting the vast majority of the Americans that need to be engaged.

Now i don’t want this to sound like an attack at Green Earth Expo, it’s not. My friend went to a show in Chicago, that same weekend and had the same observation. Today i was meeting in Toronto (i’m happy to be able to take a train there) and my counterpart was telling me something similar about some shows he’s been to. I guess in short i’m saying the ‘business’ of fighting global warming should focused on environmentally friendly products not on ways to adapt your life to a world with less. While there is plenty of room for both movements, they don’t seem well matched to share a show.

Here are a bunch of Saturday Night Live videos i’ve found funny.

The Disney Vault

Bush Cartoon

700 Club Gag