'International' 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.
British Airways boss Willie Walsh actually asked the airline’s 40,000 employees if they would do one of the following to help keep the carrier from crashing financially: work without pay for up to a month, take unpaid leave, or drop back to part-time work.
Say what? I think I would be taking unpaid leave. Not getting paid to be at work? Not going to be there! Any of those choices are horrible. Shockingly, about 800 BA workers have agreed to work during July for no pay and several thousand have said they will take pay cuts or unpaid leave. Walsh and CFO Keith Williams also will skip their paychecks in July and even BA’s board members are getting in on the act (just don’t expect them to give up free flights).
Clearly desperate times are calling for such a move. British Airways reported a whopping £401 million ($664 million) loss for the fiscal year ending March 31. Walsh warned employees that the airline’s future would be at risk if they didn’t help out — no pressure.
British Airways hopes these measures will trim a cool £10 million ($16 million) off costs. They had better hope so because there are more than a few rivals out there — not the least of which is Virgin Atlantic’s outspoken Chairman Sir Richard Branson — who might love nothing more than to see BA go down.
The fate of a storied German carmaker lies in the balance. No, we’re not talking about Adam Opel and the ongoing drama of GM Europe. The carmaker in question is Volkswagen.
For all the attention Fiat and GM Europe received in recent months, it should be noted that VW is Europe’s largest carmaker. With some 364,000 employees and annual sales of $160 billion, VW easily outpaces General Motors and Ford, and it is setting its sights on Toyota Motor in the quest for global automotive industry domination.
Porsche Automobil Holding emerged as VW’s controlling shareholder in this decade, and therein lies a tale of more family intrigue than Jon & Kate Plus 8. The families that control the two carmakers are descendants of Ferdinand Porsche, the creator of the original Volkswagen (”people’s car”) Beetle in the 1930s. The two clans have long disliked and distrusted each other. Until recently, the Porsche family appeared to have the upper hand over their Piëch family cousins, as Porsche Automobil took majority ownership in the much larger VW AG. Headlines on the theme of “David Defeats Goliath” abounded.
Since 2005 Porsche piled up VW shares and options for VW shares, and went to court to challenge Germany’s “Volkswagen Law,” which limited private ownership of the giant carmaker, a company that the German government regarded as a strategic industrial enterprise. Once the European Court of Justice struck down the law in 2007, Porsche really went to town on acquiring VW’s shares.
Last fall, Porsche executed some financial maneuvers that squeezed short sellers in VW’s stock, driving up the price of VW’s shares so high that VW briefly became the most valuable public company in the world. The Wall Street Journal proclaimed in a front-page headline: “As Giant Rivals Stall, Porsche Engineers a Financial Windfall.”
The downside of buying those VW options and shares was that Porsche basically tripled its corporate debt, from €3 billion to €9 billion (about $12.5 billion), just as the worldwide credit markets were collapsing. The result was that Porsche this spring had to go, hat in hand, to VW for an emergency loan of €700 million, then apply to the German government for a loan of €1.75 billion. Porsche currently is negotiating a capital infusion with the Qatar Investment Authority.
The way things are going at the debt-ridden Porsche, it looks like Goliath will best David in this match.
BP handed all of us oil and gas analysts and statistical geeks a belated Christmas present last week when it published its Statistical Review of World Energy 2009. This year’s review, the 58th consecutive edition that BP has published, gives a great overview of the world’s energy resources and their utilization by country and region, and covers oil, natural gas, coal, nuclear energy, hydroelectricity, and others.
There are lots of facts to be digested. For instance, according to the report, the US no longer consumes 25% of the world’s energy sources (a number often quoted by politicians and media outlets). In 2008 it only consumed 20.4%, a full 2% lower than in 2007. By contrast, China accounted for 17.7% of the world’s energy, up a dramatic 7.2% from 2007.
Let me stick with China for the purpose of this post, for behind the statistics of the country’s industrial expansion and increased energy consumption lurks a dark and troubling trend. According to the report, coal — the dirtiest, most polluting modern energy source — has been the world’s fastest growing energy source for six consecutive years, and China has accounted for 85% of global growth. The third largest economy in the world, China is also the largest polluter of greenhouse gases — with carbon dioxide, a byproduct of coal burning power plants, being the largest culprit.
Now, here is the really bad news. According to an Investor’s Business Daily report, China has plans to build 2,200 additional coal-fired plants between 2006 and 2020. And so while much of the developed world, under the Kyoto Protocol, is pushing its utilities to cut carbon emissions by switching to greener fuels, or introducing carbon-capture technologies, China is looking to add 12 coal burning plants a month for more than another decade. Sobering stuff.
But wait, it is worse than that. According to an environmental group report from a few years ago, coal mine fires in China burn about 200 million tons of coal each year. These include small illegal fires in the northern region of Xinjiang where local miners set fires in abandoned mines for heat in the cold climate. This translates to 360 million metric tons of carbon dioxide emissions per year, not included in reported emissions statistics.
The silver lining in the growing cloud of carbon emissions? China is also the world’s leader in terms of building clean coal plants that use emission control equipment to remove the sulfur and nitrogen compounds that cause acid rain.
It is also building new plants that use extremely hot steam to power turbines and require less coal per plant. In addition, China is investing heavily in wind power resources and other renewables. But can the new technologies mitigate the pollution caused by the insatiable demand for power that its burgeoning population and economic engine demands? Unlikely.
Just behind China, that other Asian giant, India, is building a large number of coal plants as well.
Speaking for myself (as an energy analyst, stats geek, and greenie living Stateside), the global challenge of controlling carbon emissions and mitigating global warming trends is getting more difficult, not easier.
And that is an inconvenient truth.
Many momentous events took place in 1959. Fidel Castro, Che Guevara, and their communist guerrilla forces took over Cuba. A Raisin in the Sun opened on Broadway. The Dalai Lama fled Tibet and went into exile in India. Khrushchev and Nixon had their “kitchen debate” in Moscow. The St. Lawrence Seaway was opened. Miles Davis released Kind of Blue.
In the world of business, Honda Motor opened its first overseas subsidiary, American Honda Motor, in a Los Angeles storefront. Hitachi established Hitachi America. And National Semiconductor was born.
National Semiconductor makes its headquarters in Silicon Valley, of course, but the company was started in Danbury, Connecticut, on May 27, 1959, and incorporated in Delaware. It was less than a year after the integrated circuit (IC) was invented by Jack Kilby at Texas Instruments, and not long after Fairchild Semiconductor’s Robert Noyce came up with an IC design that was easier to manufacture than Kilby’s design.
National Semi moved its headquarters from Connecticut to Santa Clara, California, in 1967, before Intel or Advanced Micro Devices were established, and about the time people started talking about the Santa Clara Valley, “the Valley of Heart’s Delight” that was covered with fruit orchards (Orchard Supply Hardware got its start there in 1931, and still makes its headquarters in San Jose), as this “Silicon Valley,” filled with companies making semiconductors on silicon wafers.
National’s been around for 50 years, but it’s not half as well known as AMD, Fairchild, or Intel. In fact, it bought Fairchild from Schlumberger in 1987, and then spun off the venerable chip company a decade later. National became famous in the industry for churning out low-cost logic devices, analog chips, and transistors. The company became infamous for a long-standing practice of reverse-engineering its competitors’ devices (an entirely legal yet costly and time-consuming way of designing ICs).
National pioneered many industry firsts in semiconductor products, yet it never really launched a home-run chip, like Intel did with the microprocessor, TI did with the digital signal processor, and ZiLOG did with the microcontroller. It was content to make huge volumes of microchips for its customers and never saw the need for a “National Inside” marketing campaign. National now is pinning hopes on its SolarMagic line of power management devices.
The company is noted for some long tenures among its CEOs. Charles (Charlie) Sporck led National for 25 years, from 1966 to 1991; he helped establish the SEMATECH research consortium. The incumbent CEO, Brian Halla, has held the job for 13 years, which is close to a lifetime appointment in hard-charging Silicon Valley.
Happy 50th, National Semiconductor Corporation! Here’s to 50 more.