Dear CSM Client:
As the global recession has intensified, so too have the efforts of lawmakers in Europe, Asia and the Americas to provide critical support to automakers dealt body blows by volatile commodity and energy costs, the credit crunch and plummeting consumer demand.
Certainly, the U.S. Treasury's emergency loans to Chrysler and General Motors, along with the deep government-directed restructurings taking place in- and outside of bankruptcy court, are watershed events.
However, as John Eaton points out in this issue of CSM Insights, the singular focus on the two most distressed Detroit OEMs has masked a more systemic risk: the precarious financial state of the North American supply base.
John's article explores the interconnectedness of the supply base and the distinct possibility that supplier failures could interrupt production at even comparatively healthy OEMs. My personal expectation is that Washington will eventually recognize the severity of the risk, and take additional action to support suppliers.
Another fascinating article, one we plan to share with President Obama's auto task force, comes from Jerry Huang in China. In it, he details how lawmakers in Beijing are aligning tax policy, R&D investment and promoting OEM and supplier consolidation to position their industry for profitable growth in the future. It's an object lesson for other countries in policy alignment and deployment.
Finally, our team in Europe not only addresses efforts to stimulate consumer demand through vehicle scrappage programs, they also take a look at the twists and turns that led to the adoption of new greenhouse gas emissions limits.
These all are weighty subjects and the discussions around them can be pretty grim. But the fact that so many governments and agencies are working the problems in mostly constructive ways suggests that the light at the end of the tunnel isn't a train.
In fact, for companies that are able to successfully navigate through 2009 - 2010, the opportunity to deliver sustained, profitable growth is real.
As always, we look forward to providing you with the strategic market foresight to meet all of these challenges and set the stage for future success.
Thanks for reading,
Craig Cather
President & CEO
