Not sure if I can agree with him about the auto companies. If you look at the leadership at these places, e.g. Ford, they're made up of people who should understand the history of the institutions because they've owned them for a long time. Ford's Board is still dominated by Ford family members. Moreover, the auto companies' behavior in recent years is completely consistent with their behavior in years past: they focused on making mass-market products instead of innovative ones, losing the long term by overinvesting in the short term. Now, why any of this makes us screwed is beyond me. The damage has already been done in the auto industry; it could get worse but that wouldn't be much of a surprise. Nobody's really depending on the auto industry to contribute to this country's economic success any more.
The point of his argument is that our auto industry is losing market share despite its focus on mass market products. Toyota is also focused on mass-market products(the camry) but somehow they do not find themselves in the same shape.
The Executive Chairman (who is also the former President and CEO) is a Ford, and the Ford family controls 40% of shareholder votes, effectively giving them control over the board of directors. The auto industry has been losing market share for years because of its failure to innovate and shitty products. Although Chrysler was famously sold to Daimler, GM and Ford have been governed by insiders in generally the same fashion as always, which is precisely the problem. The management has been too conservative, not too risk-prone. I'm unsure why we're even talking about this, though. It's old news, and it's already been priced into our economic situation. If things get worse because people overestimated the auto companies, then we're in almost humorously deep shit.
um, i dont know what kind of experience you have analyzing balance sheets but unfortunately a 40 percent stake in a company does not translate into dominance of company strategy. bancrofts had about the same, but had very little to do with day to day wsj operations.
Austin 5000, Ford is in its predicament not because of a lack of innovation. That would be the default answer - Ford has made the biggest strides in America in terms of hybrids. GM's OnStar raked in millions for the company.
I think what the professor is saying is that in many american companies there is a lack of long term planning, and the way business is conducted in america at some of our more stalwart organizations has become inherently selfish.
stan o neil made hundreds of millions of dollars knowing full well the institution would be placed in jeopardy. but he made hundreds of millions of dollars, and so did his friends. now a portion of the banks revenue stream goes to kuwait. i think the professor is trying to say it is similar with the car companies.
It's widely accepted that the Fords control the company. See: http://www.smh.com.au/news/business/the-fords-go-into-reverse/2007/01/26/1169788690578.html?page=fullpage#contentSwap1
As for Ford and GM, we can argue about this all night. Ford's predominance among American manufacturers in hybrids doesn't really mean anything, because its decline is caused by market share loss to foreign automakers. In any case, this "innovation" came late enough that it is not going to be profitable for some time; in contrast, Toyota announced that its hybrid division would be profitable by mid-2008. OnStar may have made millions, but millions do not mean anything for a company with revenues exceeding $200 billion, as any balance sheet expert would tell you. I agree about the fucked up incentives provided to many American executives, but I just don't think the argument applies very well to the auto industry, specifically Ford (which I know the most about).
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Not sure if I can agree with him about the auto companies. If you look at the leadership at these places, e.g. Ford, they're made up of people who should understand the history of the institutions because they've owned them for a long time. Ford's Board is still dominated by Ford family members.
Moreover, the auto companies' behavior in recent years is completely consistent with their behavior in years past: they focused on making mass-market products instead of innovative ones, losing the long term by overinvesting in the short term.
Now, why any of this makes us screwed is beyond me. The damage has already been done in the auto industry; it could get worse but that wouldn't be much of a surprise. Nobody's really depending on the auto industry to contribute to this country's economic success any more.
out of 13 board members there are 2 ford family members.
39 out of 40 corporate officers are not from the ford family.
CEO is not from ford family.
The point of his argument is that our auto industry is losing market share despite its focus on mass market products. Toyota is also focused on mass-market products(the camry) but somehow they do not find themselves in the same shape.
he attributes it to malfeasence
The Executive Chairman (who is also the former President and CEO) is a Ford, and the Ford family controls 40% of shareholder votes, effectively giving them control over the board of directors.
The auto industry has been losing market share for years because of its failure to innovate and shitty products. Although Chrysler was famously sold to Daimler, GM and Ford have been governed by insiders in generally the same fashion as always, which is precisely the problem. The management has been too conservative, not too risk-prone.
I'm unsure why we're even talking about this, though. It's old news, and it's already been priced into our economic situation. If things get worse because people overestimated the auto companies, then we're in almost humorously deep shit.
BTW, Cerberus' purchase of Chrysler should provide interesting news in the next few years, even without a strong union to spark fireworks.
um, i dont know what kind of experience you have analyzing balance sheets but unfortunately a 40 percent stake in a company does not translate into dominance of company strategy. bancrofts had about the same, but had very little to do with day to day wsj operations.
Austin 5000, Ford is in its predicament not because of a lack of innovation. That would be the default answer - Ford has made the biggest strides in America in terms of hybrids. GM's OnStar raked in millions for the company.
I think what the professor is saying is that in many american companies there is a lack of long term planning, and the way business is conducted in america at some of our more stalwart organizations has become inherently selfish.
stan o neil made hundreds of millions of dollars knowing full well the institution would be placed in jeopardy. but he made hundreds of millions of dollars, and so did his friends. now a portion of the banks revenue stream goes to kuwait. i think the professor is trying to say it is similar with the car companies.
It's widely accepted that the Fords control the company. See:
http://www.smh.com.au/news/business/the-fords-go-into-reverse/2007/01/26/1169788690578.html?page=fullpage#contentSwap1
As for Ford and GM, we can argue about this all night. Ford's predominance among American manufacturers in hybrids doesn't really mean anything, because its decline is caused by market share loss to foreign automakers. In any case, this "innovation" came late enough that it is not going to be profitable for some time; in contrast, Toyota announced that its hybrid division would be profitable by mid-2008. OnStar may have made millions, but millions do not mean anything for a company with revenues exceeding $200 billion, as any balance sheet expert would tell you.
I agree about the fucked up incentives provided to many American executives, but I just don't think the argument applies very well to the auto industry, specifically Ford (which I know the most about).
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