More trouble in the Auto Sector

From the ABC news website, http://www.abcnews.go.com/Business/IndustryInfo/story?id=2685467&page=2.

Ford Motor Company has announced that 38,000 unionized auto workers have accepted buy-back offers from the company. This comes as an upset to the once proud auto company.

Slumping sales and a decreasing market share have caused many financial problems for the company.

While these buybacks are expected to save the company $5 billion by 2008, Ford faces many obstacles. Eliminating employees will only serve to reduce costs, but what the company needs most is revenues from selling cars.

Swaying to consumer demand, Ford plans to redesign its automobiles. Revisions include new hybrid automobiles and cars marketed specifically towards women.

I think its amazing how the complacency the large automakers have had with the market place. Trouble has been brewing for a while since the introduction of Japanese and European companies, which offer stylish, reliable, and efficient cars. Once thinking that their automobiles will be bought regardless, the three largest automakers are finally shedding the mentality of the 1970’s to invest in new technologies, styling, and ideas.

Hopefully they will not look back

GM hybrids!!!!

Found here (http://tvnz.co.nz/view/page/410965/906020) from the Google Newsite, GM has recently announced that hybrid-electric vehicles are its new priority.

This comes as no surprise due to the recent trend in increasing oil prices, and concerns that GM has been given the reputation of building “gas-guzzling trucks.” Such concerns have landed the automaker into disappointing sales figures, down 9.4% this year.

The company states that it is reinvesting some $9 million from job cuts and plant closures into researching hybrid technologies.

Finally GM has conceded the point that fuel economy and prices have a large effect on consumer demand. Hopefully it will be setting a precedent in new automotive technology that other automakers will follow.

Rising fuel prices and oil scarcity are inevitable. The more preparation we have, the better off we’ll be.

Dell in Trouble?

Taken from the Google News Business Section November 22, 2006.

Dell Computer company may be heading towards financial trouble.

Dell Computers has faced yet another rough quarter with slumping sales and the SEC breathing down it’s neck.

Revenues are only up 3.4% from last years figures and domestic sales falling 4%.

In addition to slackening domestic sales, the company is facing SEC investigations of its accounting techniques as it has yet to file financial statements for the second quarter and doubts that the audited forms will be turned in on time.

kerkorian did what?

Taken from the Google News Business section Tuesday, November 22.

Kirk Kerkorian’s company, Tracinda, has reduced its number of shares of General Motors Company by 14 million shares with the deal being closed on November 24th.

This comes in light of GM’s decision to reject the partnership offers from Nissan-Renault. In response to this, the market’s valuation of GM stock dropped the price to $31.78.

Kerkorian has decided to invest in an additional 15 million shares into MGM Mirage, stating that, “This tender offer demonstrates our confidence in MGM Mirage and its management and our commitment to the company's future.”

Will Kerkorian’s decisions pay off, only time will tell. The drop in stock price for GM bares brutal repercussions that the stockholders may be no longer happy with how the company is being run.

Perhaps it is time for a change?

Another one Bites the Dust!

From the business section in the November 21st, USA Today Newspaper.

U.S. Medical company, Cybernetics, is under investigation because of its controversial compensation packages for managers and executives.

The company has provided executives with $50 million in stock-trading profites while it continues selling a money losing product.

SEC investigatoes also found that insiders have been incorrectly dating transactions for a long period of time. The company has understated its executive compensation packages by $10 million and will have to restate its financial statements from 1999 onward.

In light of this, their current CEO has resigned. This recent development could lead to on e of the biggest financial scandals of recent times, further proving my point that “If you do it, you will get caught eventually.”

Once again corporate greed is proving to build distrust in the American populace with any big business dealings. A very bad business decision indeed.

GM/F?

With the current conditions in the American automobile market, Ford and GM are investigating the possibility of an alliance. (http://library.corporate-ir.net/library/93/938/93888/items/176368/FDO_AR2005.pdf).

Both companies are currently experiencing declining sales and job cuts in order to remain afloat.

The restructuring efforts between the companies and their already excellent product knowledge would not only allow them to cut costs and effectively restructure, but also to manufacture a product of unsurpassed quality.

On Top of Things

As a sort of opposite entry to my last one, Hershey’s Chocolate is doing the admirable deed of recalling millions of products in 25 different lines in Canada due to health risks (http://www.bloomberg.com/apps/news?pid=20601082&sid=a8ATwOuyZDKk&refer=canada).

Evidently candy produced in their Ontario plant from October 15 to November 10 could be contaminated with Salmonella. Unlike the management in the previous blog post, the management at Hershey’s immediately notified the Canadian Food Inspection Agency about the potential of tainted food.

In this case, the Hershey management has done the right thing because they not only voluntarily notified the CFIA, but they also issued a recall on their products as soon as they became aware of the problem. Such management decisions have good business concequences because people will be more willing to purchase from Hershey because of their exemplary safety record. It also makes good sense because they are preventing any harm from coming to their consumers.

I feel they deserve a round of applause

Fatal Lapse of Management

Citations have been issued in a fatal mine fire that took place last year. The information can be found here (http://www.forbes.com/home/feeds/ap/2006/11/11/ap3165220.html).

Evidently a lapse of management is responsible for the death of two miners. The management of Massey Energy Co. did not comply with state or federal safety standards. Their lapse lead to emergency sprinklers not being supplied with water because it was shut off, safety inspections had not been conducted in over two years prior to the fire, and their equipment was not properly maintained.

Managers are responsible for knowing everything that is going on in the business and in this company there was obviously a lack of communication, which lead to fatal concequences.

Not only do managerial decisions have economic concequences, they can also have fatal ones as well.

The final report demands that top officials sign off on quarterly safety reports similar to how Sarbanes-Oxley requires them to sign off and acknowledge financial reports. I believe that this is not enough, I think that these managers should be personally liable for the safety of their employees.