Monday, 2 June 2008

Dramatic automakers

Today’s business section of the Toronto Star reproduced a story from The Associated Press describing the big three U.S. automakers as in “Crises Mode” due to a consumer shift away from trucks and SUV’s. In it, the former chairman of American Motors Corp testifies that the industry has been caught flat footed without enough smaller, more fuel efficient cars to sell.

What strikes me odd about this whole thing is how on Earth they didn’t see this coming. While the reality of rising gas/petrol prices may have only set in after current production decisions were made, the issue of climate change has been prominent for years now and one has not needed to be an insider to observe the world moving in an increasingly fuel efficient direction.

It’s one thing to have anticipated a continued demand for big gas guzzlers, but to not have a risk management plan that could address the possibility of an ‘08 demand for more efficiency seems like pretty poor decision making – the kind that might put many companies out of business were they to misread the market environment this way. But this is the auto sector, and we need their jobs, so I’m sure one level of government will soon come along with an “incentive” to get them back on track!
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