Saturday, December 13, 2008

Will the Big 3 collapse !

 Legacy, Legacy, and then come the legacy costs (read insurance, retirement funds etc.). Resting on the laurels simply does not get you anywhere. You are as good as your last performace. I guess we would have expected the republicans to oppose the bailout plan unless the worker unions shared the pain, and now  only a piece of the  700 billion USD package can help the Fords and the GMs.

For India, our great success story of the post reform era - the auto component industry may struggle to meet their estimated 40 billion USD turnover for this fiscal by a far bigger margin than expected as exports to the US account for about 30% of our exports revenue.

 But let's spare a though on why none of the Big 3 saw it coming and will a bailout package help any of them. In retrospect, harping on the facts that the product line must have been revamped and better terms should have been sorted out with the union workers on pay scales etc. just will not solve the purpose. Letting the big 3 crumble may result in major ramifications which even the best analysts may come cropper at. The interconnections of the industry and the millions employed by them will only result in heating up the world economy. 

I would suggest consolidation. Why can't the best come together to become better. Chrysler with its premium brands, Ford with its mid range pick ups which still have a huge market in Australia and US and GM with its futuristic portfolio can form an excellent strategic alliance. The operationl brilliance of these companies will be put to test once again, and the stones thrown at them can can be made into milestones. It is only a matter of time or the lack of it, but the White House must act fast.


Badri said...

what do u think of yourself, alan greenspan?

is any of your isb profs reading this?

Philip said...

mergers and acquisitions already racing through your mind?

good good :)

Raghav said...

But don't u guys agree ?

Joydeep said...

Merger or acquisition would additionally cost them a lot. Additionally, when companies merge, the first thing that comes out is the difference of vision/mindset, which is very difficult to handle when the companies are huge.