28 December 2017

2017: A Few Things I Learnt

Life is about learning and if we observe our surroundings, there is no shortage of opportunities. I have observed a few things in 2017 that I deem worth mentioning here.

Co-operation. The auto industry is notorious for burning money, duplicating costs under the guise of confidentiality and independence. Sometimes it is necessary to keep things in house but other times a waste of resources. As the industry faces increasing costs for new technologies, they are being forced to work together more.

Models are being shared. Collaborating on new technology is not an option but a necessity. It could have happened years ago but while there were occasional examples, the car industry didn't bother much. Now it has no choice.

Influence. Business uses its influence in ways that most people do not realise. I would say the majority of wars fought in more recent human history have had commerce behind them to some degree. Religion has in the past been a leading reason but as its influence wanes, so does its effect in that area. Business is still strong and makes the weapons so it makes sense they have encouraged war, even created them. Sick but true.

All this is done behind closed doors so the influence of big business is not noticed. However, a difference I picked up on is with Brexit. The UK voted to leave Europe but wanted free trade to remain. The EU wanted unfettered movement of people or the trade barriers would go up. The car industries reaction has been to pressure the UK to yield to EU demands. They have attacked the weakest component, the UK, to achieve their ends.

Clearly the car industry wants tariff free trade but has very publicly, in an orchestrated way tried to get public opinion on its side with scare tactics. Threats of mass plant closures - when no such outcome is going to happen - is nothing but lies and bluster. All to get their way.

The point I particularly noticed is the public nature of it all. Usually meddling from industry is done surreptitiously but not this time. People have been scared with it all, as witnessed by comments in forums. It's worked.

There is probably more chance of increased UK investment by barriers rather than the reverse. In fact no one knows for sure what will happen, but the uncertainty unsettles CEOs. Had the car industry simply been honest and said that, they would deserve some respect.

 GM. In my younger days, GM was the leader of the world's car industry, It's size, influence and global scope was impressive. No other car company could challenge their leadership.

In 2017, the picture painted is very different. It hasn't all happened this year but several years of losing all of the above mentioned qualities has hit home. Pulling out of markets with haste, including the whole of Europe is something I never thought I would see. PSA took control of Opel/Vauxhall this year, which was most profound.

GM's future now seems to be tied up in just the Americas and China. It does make GM more profitable and retrenchment is necessary at times. However, it's not without risk. Lost economies of scale. Loss of skilled employees. Greater dependence on fewer markets. It doesn't fix poor management either. Let's see if they bounce back from here.

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