'Real Estate' Archive
The answer appears to be “no.” The marriage in question is the 25-year partnership between General Motors and Toyota Motor in a joint venture, New United Motor Manufacturing, Inc. — widely known as NUMMI.
GM this week gave out a brief statement that it could not agree on future product plans with Toyota. The NUMMI plant makes the Pontiac Vibe sport wagon for GM, and production of the Vibe is set to end later this summer — well ahead of the scheduled phase-out of the Pontiac brand.
GM said its 50% interest in NUMMI would stay with “Old GM” — the bankrupt carcass of bad assets and debt that will be left behind when the company emerges from Chapter 11, which could be next week, if the Obama administration’s auto task force can muscle the company’s case through bankruptcy court. “New GM” may be out of bankruptcy reorganization in 40 or fewer days, which would top Chrysler Group’s record of 42 days.
At the NUMMI plant, which is hailed as a highly efficient American implementation of the vaunted Toyota Production System, the UAW-represented workforce makes Tacoma pickups and Corolla sedans for Toyota to sell in North America. What happens to the NUMMI plant now is a big question for Toyota and its new president, Akio Toyoda, the grandson of the automotive manufacturer’s founder.
As the global downturn in the automotive industry took hold last year, Toyota called a halt on completing its new plant in Mississippi, which was going to build the Prius hybrid. Rumors abounded that Toyota would convert NUMMI to Prius production in light of high demand for the third-generation Prius, one of the few car models in the world that’s garnering pronounced popularity. Toyota officially quashed those rumors, however.
Akio Toyoda has a thorny problem in pondering the fate of NUMMI. The factory has long outlived its purpose and value as an experiment in cooperative production. It’s not the traditional practice of the giant Japanese automotive manufacturer to shutter a factory, lock the doors, and throw away the key, as Chrysler and GM did with so many North American plants. (The sprawling NUMMI factory was a GM plant until it was closed in 1982.) Toyota doesn’t do big layoffs. NUMMI is the last car plant in California, it has a unionized workforce of some 4,700 employees, and it’s a highly visible employer in the San Francisco Bay Area. Pulling the plug on NUMMI would be a public-image nightmare for Toyota. Not that it would slow down sales of Toyota vehicles in the US any more than the recession already has, but it would be an international liability to the corporation’s image.
BTW, the NUMMI plant is a few miles north on the Nimitz Freeway from the Great Mall of the Bay Area — a facility that was a Ford Motor plant from 1955 to 1983 and which was redeveloped as a giant shopping mall in 1994. Maybe that could be the future of the NUMMI factory, as well, although the mall business isn’t what it used to be, either.
During financial report filing season, we editors at Hoover’s spend our days pouring over all those often dull, tedious, and downright depressing documents so you don’t have to.
It’s rare to find a bright spot among all the doom and gloom these days. And humor among those 10-Ks, 8-Ks, and annual reports is even more rare. But some business leaders are taking their yearly opportunities to address shareholders as a chance to poke fun at this whole mess. Although economic calamity is far from a laughing matter, at least these folks can manage to evoke a few chuckles. Because if you can’t laugh, then really, what can you do?
Been-there-done-that mega billionaire Warren Buffett is known for his dry wit and easy-to-read chairman’s letters that accompany his Berkshire Hathaway annual reports. This year Warren didn’t disappoint.
“The period was devastating as well for corporate and municipal bonds, real estate, and commodities,” he wrote in Berkshire Hathaway’s 2008 annual report. “By year end investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game.”
Thanks for the visual. Warren goes on to also admit that he did some “dumb things in investments” during 2008. How refreshing.
Over at Vornado Realty Trust chairman and CEO Steven Roth declared “2009 is about the Great Recession” in the REIT’s annual report. He even jokingly suggested ditching the real estate business to start a new bank.
“Think about it,” he wrote. “No legacy problems or bad loans. Demand deposits are the lowest cost liabilities around and spreads are the highest they’ve been in history.”
And after tallying a long list of retail failures — and one-time Vornado tenants — such as Linens ‘n Things, Mervyn’s, and Circuit City, Roth (with a strong dose of sarcasm) wrote, “I don’t worry at all about Vornado’s Retail assets.”
At Bank Leumi USA executive vice president Bob Giordano bid a firm “good riddance” to 2008 in the company’s yearly economic review.
“2008 was not merely an annoyance, it was alarming, shocking, and frightening,” he wrote.
Investors at Leucadia National Corporation also were unimpressed with 2008 after reporting a more than $2.5 billion after-tax loss. Chairman Ian Cumming and president Joseph Steinberg drew comparisons to the economic problems of 2008 with the rocky drama of British royalty.
“In 1992, following a fire in Windsor Castle and marital problems for most of her children, the Queen of England in a speech marking the 40th anniversary of her accession referred to the past year as ‘annus horribilis.’ 2008 was such a year,” the leaders of Leucadia wrote. “Everything came tumbling down.”
Like the “Hooverville” shanty towns of the Great Depression, the homeless encampment along the American River in Sacramento, California, is becoming a national symbol of the financial meltdown and the recession, and the consequences for ordinary people. There are no multibillion-dollar bailout packages for these unfortunate folks.
The Lede blog of The New York Times last week covered the transient village, with its hundreds of residents, and National Public Radio chimed in with a feature this morning.
What makes this tent city stand out is its presence in the capital of California, where home foreclosures are rampant around the state.
As NPR noted, the chronically homeless are represented in this encampment, which has no running water or sanitation, aside from the nearby river, and that may be a public health crisis in the making. There’s also a large proportion of the newly homeless — people who lost their houses to foreclosures after they lost their jobs. As one resident told the NPR correspondent: You can’t get a job if you don’t have a home address. And you can’t get a home if you don’t have a job.
I’ve spent many summer days whitewater rafting on the upper reaches of the American River and its tributaries. It’s a singularly beautiful river, and all too ironically named for these downtrodden times.
The worldwide economic crisis has reached Dubai.
Dubai, the financial center of the Middle East, known for its wealth, its fabulous lifestyle, and the artificial islands called The Palms, has been hit hard by the worldwide economic crisis. Foreigners who flocked to the city, part of the United Arab Emirates, are losing their jobs and have one month to leave the country.
Dubai is known for being the epicenter of the financial services, construction, and oil and gas industries in the Middle East. It was more modern and cosmopolitan than many of its Middle Eastern counterparts and with the money came an easing of the conservative culture that marks most of the nations in the region. Compared to Abu Dhabi, the UAE capital, Dubai had the reputation as the more flamboyant of the two cities.
Remember the Dubai Ports World controversy? That was when DP World agreed to buy and manage six US ports. Coming only five years after the 9/11 terrorist attacks, many in the US objected to a Middle Eastern firm managing US commercial ports. The company withdrew its bid.
Dubai and the United Arab Emirates have also become synonymous with sovereign wealth funds, those giant investment funds that are run by governments and take huge stakes in public companies. According to this article, the UAE’s funds are among the most secretive.
Now the city is under siege from the worldwide economic crisis. The glitter is starting to flake off.
What will happen to the city? Will the Palms sink? (They might already be.) Will the famed moderate nature of the city give way to a more conservative climate?
Or will Dubai recover its high-rise attitude?
Perhaps the most striking image of Dubai now is this one, from the New York Times:
“Lurid rumors spread quickly: the Palm Jumeira, an artificial island that is one of this city’s trademark developments, is said to be sinking, and when you turn the faucets in the hotels built atop it, only cockroaches come out.”
Good-bye, Dubai: It was fun there for a while.
Is the current recession as bad as the Great Depression?
When economists finally admitted we were in a recession according to standard indicators, the punditry started.
Is it as bad as the Great Depression? What is the same? What’s different?
The stories from the Great Depression are devastating, even for those of us who didn’t live through it. My mother remembers people swimming out in the Hudson River to salvage oranges that had been dumped from a freighter — no one could afford to buy them, so they were trashed rather than given away.
We’ve seen the images of breadlines, and of the shantytowns, the lore of the hobos hopping trains, the devastating photos by James Agee (Patrice’s note: photos were by Walker Evans, not Agee; thanks to Pete in the comments box). With hindsight we can see how wealth accumulation in the Roaring 20s may have led to the crash, and before that the Gay 90s, putting great wealth in the hands of the few.
What’s the same? There’s rampant unemployment; more than 70,000 jobs were lost Monday alone. The stock market has tanked, banks are failing, and credit is frozen. The crisis was caused by a bubble, in this case excessive liquidity that manifested itself in a housing bubble. We had our own Gilded Age in the 1990s with the tech bubble, and then in the early part of the 21st century, the real estate bubble.
What’s different? Probably the big difference is deposit insurance. While there were some bank runs, it was nothing like what occurred in 1929. There’s more of a social compact as well, as government safety nets manage to catch people as they lose their jobs. State unemployment coffers are running dry though, and it’s still early days.
Maybe the biggest difference is this. The Great Depression lasted a decade. By contrast, we expect to see a recovery in a year or so. It won’t be pretty, it won’t be painless, and we’ll come out of it literally poorer for the experience. But at least there won’t be breadlines.