Competitive Connection

April 16, 2007

What others are saying . . .
Many industries face health care issues
With their medical costs ballooning, top executives of large companies are starting to speak up again -- and many are calling for a national approach to fixing health care. Few advocate a wholesale shift to government-directed medicine, but most are seeking broad changes in the employer-subsidized health system, which they regard as unsustainable in its current form.

Business executives are motivated in large part by health insurance premiums that are rising much faster than inflation, adding to their costs at a time when many are facing more intense competition from abroad, where companies rely on government-supported health care systems largely financed by taxes. A 2006 study by the Kaiser Family Foundation and Hewitt Associates found that premiums in the United States had risen about 87 percent since 2000.

''Five years from now this problem will have to be cured, or the competitiveness of the United States will be dramatically affected,'' said J. Randall MacDonald, senior vice president for human resources at I.B.M. --Source: The New York Times, April 6, 2007

A look at the competition
Toyota seeks greater lobbying efforts
Toyota has an in-house lobbying office of seven people in Washington and has hired some of the city's top lobbying firms. Toyota spent about $2.4 million on lobbying in 2004. In 2005, its lobbying investment increased to $3.4 million, and last year it jumped again, to $4.6 million.
This year's top issues for Toyota and American automakers include whether to raise mileage standards for cars and trucks. Another key issue: whether carbon emissions should be capped to combat global warming. On both issues, Toyota has the edge.–Source: Gannett News Service, April 10, 2007

A look at the competition
Ford CEO discusses competitiveness
Ford CEO Alan Mulally said Ford does not have specific targets for wage and benefit concessions. Rather, the automaker has identified "an economic envelope for competitiveness" the company needs to achieve to remain viable.

How Ford and the UAW arrive at that target is open to negotiation, Mulally said, but the target itself is not. However, he said there are some specific issues that have to be addressed.

Health care is an issue that needs to be on the table. He said Ford is trying to keep an open mind and is looking at innovative alternatives like a recent agreement between Goodyear Tire and its union that transferred responsibility for retiree health insurance to the union.

Mulally said he is "cautiously optimistic" about the upcoming contract negotiations, but stressed they are only one part of the equation. - Source: The Detroit News, April 5, 2007

A look at the competition
Ford CEO worries about vehicle complexity
"There's so much opportunity to consolidate and simplify all our product development," Ford CEO Alan Mulally said. Ford today is "just nothing but cost and complexity."

He said the company can "get rid of 50-60% of the complexity."

As Ford refreshes its Ford, Mercury and Lincoln lineup through 2010, he said the automaker would use the changeovers as an opportunity to consolidate platforms, parts and purchasing. He also said Ford must work more closely with suppliers up front to achieve its goals.
"There's no thing, technically or physically, that precludes us from taking that complexity out and getting the volume up on every one of the vehicles," he said. "You don't have to look very far to see it, because Toyota is the master at it."
He also said customers are overwhelmed with the unnecessary complexity in the company's products, something he learned while working at a few car dealerships and buying a new Econoline van for his mother's senior center.
Mulally said Ford has "gone amok" with complexity, and when he sent a Ford salesperson to the senior center to handle the van order, center officials were overwhelmed.
"There are 185 different options," he said. "They just want an Econoline for 15 people."--Source Detroit Free Press April 5

Then and Now
Toyota sales gains in U.S. cities
Toyota Motor Corp. outsells GM two-to-one in Los Angeles and by a slightly smaller margin in Miami, according to U.S. data compiled by R.L. Polk & Co. In the New York City metropolitan area, where GM had a 4.5 percentage point lead in market share five years ago, Toyota has surged to a four-point advantage.
Gaining market share in big cities is important to car companies because, like many other consumer trends, car-buying habits are set there. Without significant presence in places like New York, GM can't gain the brand awareness to attract affluent buyers and return to profitability.
Toyota sales have risen 36 percent in the New York, Los Angeles and Miami metro markets since 2002 while GM's dipped about 20 percent in those three markets combined, according to data compiled by Polk. GM's best showing was in Miami, where its sales dropped 1.9 percent.
New York is the media capital of the U.S., Washington is where government policy is developed, Florida is a concentrated Hispanic market, and Los Angeles is both a trend-setting area and a focus of environmental groups -- all populations where GM needs a better image.–Source: Bloomberg, April 5, 2007

What others are saying
Individuals must prepare for retirement
Nearly half (48 percent) of all non- retired adult Americans expect to retire with a pension, according to a new poll conducted by Harris Interactive for the American Institute of Certified Public Accountants (AICPA).

"Despite all evidence to the contrary, pensions are still regarded as a safety net for retirement," said Carl George, CPA, Chair of the National CPA Financial Literacy Commission. "Americans have to understand that many of the entitlements of their predecessors are not guaranteed. It is up to them as individuals to prepare for retirement. Otherwise, they may find themselves working far longer than they had intended." –Source: PR Newswire, April 10, 2007