Competitive Connection

March 5, 2007

A look at the competition
Toyota’s approach to non-assembly work
Toyota uses lower-paid non-company workers for most maintenance and non-assembly work at its plants, and that cuts the equivalent of an hour of pay from each model or part, the Harbour-Felax study said. Using just one less hour to build the 4 million vehicles GM sold in the U.S. last year would add up to $292 million in reduced salary and benefit costs. –Source: Bloomberg, February 23, 2007
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What Others our Saying . . .
Daewoo helping GM in global small car market
GM took over bankrupt Daewoo Auto & Technology, Korea's second-largest automaker, in 2002. Since then, GM Daewoo has almost quadrupled its sales. The division has turned into the black ahead of schedule by at least a year.

The most important role the Korean unit is playing in GM is in the small-car segment, particularly in emerging markets. Many first-time buyers look for low-priced cars in such countries as China, India, and Russia, as well as in Latin America. GM Daewoo is now responsible for developing new-generation mini and small cars for all GM brands.

"The biggest difference between GM and Ford is GM's strength in small cars and that forte comes from GM Daewoo," says Stephen Ahn, auto analyst at Woori Investment & Securities in Seoul. –Source: Businessweek.com, February 22, 2007
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A look at the competition
Toyota to build Mississippi plant
Toyota said it will build a $1.3 billion manufacturing plant near Tupelo, Miss., that will build 150,000 Highlander crossover utility vehicles annually when it opens in 2010. Toyota said it will employ 2,000 factory workers at a forecast $20 an hour after three years on the job, not counting benefits.

That will bring to eight the number of Toyota's North American plants, capable of manufacturing 2.2 million vehicles a year, equivalent to 86% of the cars and trucks Toyota sold in the USA last year.

Sen. Trent Lott, R-Miss., thanked Toyota at the news conference for the economic boost the plant will provide. "When you're our constituent, we are warriors on your behalf, and I can assure you we will look after your interests," he said.

Tupelo also is a move to insinuate Toyota so deeply into American culture that it's considered a U.S. company. Toyota is an immigrant, not a foreigner, Jim Press, president of Toyota Motor North America, said in a speech in Chicago earlier this month. Immigrants "brought something of value," Press said. "At some point, they are assimilated and cease to be immigrants. In a way, that parallels our company," he said. –Source: USA Today, February 28, 2007
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Then and Now
Total GM U.S. market share (fleet and retail combined)

	Cars	Trucks	Total Share	GM U.S. Vehicle Deliveries
2001	26.9%	29.2%	28.1%	4.90 million
2006	20.7%	27.1%	24.2%	4.12 million
Difference	-6.2 percentage points	-2.1 percentage points	-3.9 percentage points	-780,000 vehicles

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What Others are Saying . . .
In recent weeks many analyst firms have published reports focusing on the "Big 3" earnings potential. Most of the reports speculate solely on health care and the role it will play in the upcoming national negotiations. Last week FitchRatings released their own report citing health care as an ongoing cost burden for GM and Ford. The report concludes that health care costs are continuing to rise and put GM and Ford at competitive disadvantage in the market. The report also states that health care will be the number one issue in negotiations. ****************************************
Then and Now
Companies are struggling to provide health insurance to their employees because of the cost. Between 2001 and 2005, the number of employees who were covered by employer-sponsored health insurance decreased by almost 4 percent (81.2% to 77.4%).
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What Others are Saying . . .
GM is converting the skeptics
When was the last time you narrowed your car choices down to a Honda, a Toyota, and… a Saturn? Never, probably. GM execs have been promising for a while that Saturn is going to get a serious makeover. Industry analysts have been skeptical.

GM is converting many of those skeptics. The Aura is actually what GM has said it would be—a meaningful competitor to the Honda Accord and Toyota Camry, the two standard-setters for midrange sedans for the past decade. There are lots of good cars in this segment, like the Ford Fusion, Hyundai Sonata, and Mazda6. All have merits. And the Aura comes out looking good in comparison. It's been a long time since a GM sedan measured up to the strongest imports. If nothing else, go test-drive one, just to see the proof with your own eyes. –Source: U.S. News & World Report, February 26, 2007
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