I am of an age and disposition that is mostly optimistic. I have lived through recessions before, survived layoffs and like to think this time, too, will pass, though not without considerable pain, as all business sectors, and people in most socio-economic groups, adjust to a new reality. But the news this week, especially of the last few days, surely challenges the most optimistic optimist.
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This was a week in which the Reuters news agency totalled job cuts of over 2,000 in non-financial sectors around the world since the start of September – and came up with over 448,000. Run through the j-a abacus, I got to just short of 22,000 at automakers and Tier One suppliers alone. And it ain’t over yet. Just today, Honda UK workers finished off the final cars they will build until June, though they will, at least, get full pay for a couple of months, 60% after that and, assuming the plant does resume output in June, will have the prospect of building a third model line, the Jazz/Fit, for Europe to look forward to, taking over from a Chinese factory.
It was not a good day for the parent company, either, which posted third fiscal quarter profits sharply down, and again revised its full-year forecast. Downwards. And that looks like being one of the better results in this round of Q3 announcements from Japan.
Media polls of analysts there suggest Toyota, Nissan and Mazda will post fiscal third quarter operating losses and reports today claimed Toyota would now forecast a full year operating loss of JPY400bn. Always assuming I got the number of zeroes right, that converts to $US4.44bn, less than Ford lost in its fourth quarter, but, and I hate to put it like this, we have got much more used to reporting ‘red ink’ results from the US Big Three than Japan’s Big Five. Next week’s results will be interesting, but not likely in a good way.
And recalls like this don’t help with the quality reputation much, either.
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By GlobalDataToyota’s 4,500 manufacturing workers here in the UK must be feeling nervous, too. Having seen Honda shutter its plant, they are now in discussions about what happens from next April, when current production slowdown arrangements end.
Though temporary workers are now mostly gone from Japanese plants here, and in Japan, it’s clear the automakers value their expensively-trained and highly skilled permanent staff and will try to keep them on until things improve, if at all possible, and not at little cost.
The big question remains – when will sales pick up? Ford has indicated mid-year and US analysts Edmunds said today that pent-up demand surely is brewing, even while forecasting January sales would be down 30% compared with last year.
Still, there is the odd glimmer of light. As our own Rob Golding noted in his succinct review of the Ford results conference call, CEO Alan Mulally had earlier made some smart moves to secure liquidity when liquidity was still to be had, has further cut costs and has a decent range of European small cars headed to the US, and has not yet had to draw on any federal funds. Ford itself insisted in its results announcement it was still “on track” for both its overall and its North American automotive pre-tax results to be at or above breakeven in 2011.
And the R&D work still goes on, with interesting new products in the works for when better times return. One that popped up this week was the Opel Ampera, General Motors Europe’s variant of the Chevy Volt, a restyled-for-Europe five-door with the Voltec drivetrain.
Something else to look forward to seeing at Geneva.
Enjoy your weekend.
Graeme Roberts
Deputy Editor
just-auto.com
