“The New American Story” (Bill Bradley)
Speaking of Detroit, former New York Knick and NJ Senator Bill Bradley has a new book out, and in an interview with the NYT, says,
What domestic issues would you like to see the Democrats champion, beyond representation of middle-class interests?We fought two wars on oil in the last 15 years, and yet we are not willing to fight against oil dependence. If we simply had the same gas-mileage average as Europe does, about 43 miles per gallon, we would import no oil from OPEC. Zero.
I take it you don’t drive a mega-S.U.V.
No. I don’t like to sit up like I am driving a tractor-trailer. I drive a Chevy Impala. I need legroom in cars, and a lot of these S.U.V.’s have less legroom than I have in the Impala.
and from the WSJ last week:
New Detroit Woe: Makers of Parts Won't Cut Prices - WSJ.com
Navistar International Transportation Corp. has supplied diesel engines to Ford Motor Co. for almost 30 years. Yet in late February Navistar, embroiled in a financial dispute with Ford, temporarily cut off all engine shipments to its single biggest customer.
The move dramatized a broad shift in the balance of power in the struggling U.S. auto industry. The dispute involved competing views of warranty claims and price contracts. But at its core was the engine supplier's refusal to play an old Detroit game, in which U.S. car makers have deflected the pressure of global competition by repeatedly forcing suppliers to trim their own prices.For the old Big Three of Ford, General Motors Corp. and the Chrysler unit of DaimlerChrysler AG, the case was evidence of a new reality. As the old-line U.S. industry moves into a historic restructuring, it finds itself surrounded by parts suppliers from which it can no longer easily squeeze price concessions. The reason: Many suppliers have already faced, and in many cases painfully adapted to, the harsh changing dynamics of the global auto market.
It was Detroit's relentless past pressure on the suppliers, paradoxically, that ended up leaving some in a stronger position to resist Detroit's current demands. Some parts makers went out of business. Some are on the verge of doing so -- forcing Detroit to back off its demands for fear of losing another parts source. Other suppliers, such as Delphi Corp., have sought bankruptcy reorganization, enabling them to shed unprofitable contracts, high-cost labor and excess factories.
Still other suppliers fell into the hands of private-equity investors, who eschew old habits like accepting money-losing contracts for the sake of keeping up relationships and volume.
Finally, steel suppliers have both restructured and been blessed by growing demand, which endows them with pricing power when they face off against auto makers. North American steelmakers are fewer and stronger, reducing the odds that one firm desperate to keep its mills occupied will knuckle under to price demands from car makers.
way to win friends and influence your uncle's company, Detroit.
Tags: automotive, /Bush_donor, /Chicago, /Detroit, /Energy
... Though car makers “had a lot of leverage historically,” says Steel Dynamics spokesman Fred Warner, “we're just not as tied to the auto industry as we once were.”Navistar evidently isn't either. The Warrenville, Ill., engine and heavy-truck maker has been through extensive restructuring, going back decades to when it was formed out of the old International Harvester. Navistar has long provided diesel engines for Ford's Super Duty F-250 and F-350 pickups, which are among Ford's few profitable products. Navistar brought out a new 6.4-liter engine in January, asking $7,600 each.
Ford thought the price should be $6,100. Ford also claimed the previous model had such problems that Navistar ought to pay some $1 billion to help defray repair costs that Ford bore under warranties. In mid-January, Ford began debiting Navistar's account by tens of millions of dollars, and in January filed suit.
The result was a blunt letter from the parts supplier. Ford, the letter said, was demanding that Navistar sell engines at a loss “to accommodate Ford's desire for higher profits.” The letter from Navistar's general counsel then effectively served notice that the supplier was prepared to fire its biggest customer. Alleging that “we were the victim of Ford's heavy hand,” the letter said, “That is now over.” Four days later, on Feb. 23, Navistar stopped shipping diesel engines to Ford.
A temporary restraining order obtained by Ford got the engines coming a few days later. Ford then agreed on March 9 to reimburse Navistar for part of the debited funds and to pay Navistar's asking price -- $1,500 more per engine than Ford wants to pay -- until Michigan state-court litigation between the two is settled. The price setback for Ford helped prompt Bear Stearns to lower its earnings estimates for the company.
