Haviland USA

The battered automaker is in much better shape than when it filed for bankruptcy 6 weeks ago. But it could quickly be tripped up by the challenges ahead.

By Chris Isidore, CNNMoney.com senior writer
Last Updated: July 10, 2009: 3:29 PM ET

GM’s new cars

NEW YORK (CNNMoney.com) — General Motors’ rapid trip through bankruptcy is done. Now comes the hard part.

To start, the automaker has to stem a decades-long slide in U.S. market share.

Despite having made significant progress closing the labor cost gap, GM still faces significant costs, such as those for underfunded pension plans, not faced by its nonunion Asia rivals.

It also needs to turn around consumer opinions about the quality and fuel efficiency of its vehicles, and meet tough new fuel economy requirements.

And on top of all that, it has to hope that the U.S. economy turns around and that the overall industry starts to recover.

Any one of those obstacles would be difficult for a company that has been as weakened as GM (GMGMQ). The need to do all of them is one reason why there are many in the industry who still doubt its long-term viability, despite all it did to shed tens of billions in liabilities, along with unwanted factories, dealerships and brands, during bankruptcy.

“They’re coming out with a clean balance sheet and new cost structure. But they’re going to continue to struggle in the short to medium term, particularly with the U.S. market,” said Stephen Spivey, senior auto analyst for business consultant Frost & Sullivan. “It’s way too early to say if they’ve done enough in bankruptcy.”

GM CEO Fritz Henderson insisted Friday morning that the company has the cost structure and a new focus it needs to be competitive and too succeed again. He said GM management will have the time it needs to focus on the customers and products the way they need to. He and the company’s new chairman, Ed Whitacre, insisted the company will be success going forward.

“For 100 years GM was among the world’s greatest companies. It will be again,” said Whitacre. “I agreed to take this job because I think most Americans want this company to succeed.”

But even Whitacre cautioned, “There’s still a lot of work to be done to get GM where it needs to be.”

Market share declines
Even experts hopeful that the new GM will be competitive admit the company needs to stop the long-term decline in market share. A decade ago, GM sold 29% of all vehicles sold in the United States; today it’s less than 20%.

“The share loss isn’t going to stop overnight, but it has to stop at some point for the company to be truly viable,” said Steve Rattner, the Treasury Department’s chief adviser on the bailouts of GM and Chrysler Group. “GM has to be competitive in the U.S. market for this plan to work.”

While Rattner and Henderson argue that GM does have good cars in the pipeline, not everyone is so confident.

“Can they put out less products but more successful products? The jury will still be out on that for a couple of years at least,” said Bob Schulz, Standard & Poor’s senior auto credit analyst. “A product pipeline doesn’t turn on a dime.”

Others are more confident of GM’s plans, including a new small car due next year — the Chevrolet Cruze — and the plug-in Chevy Volt later in the year.

“Their product portfolio in my opinion was on a good trajectory,” said Michael Robinet, vice president of global vehicle forecasts for auto consultant CSM Worldwide.

But even the Malibu sedan, a critical success that won car of the year honors a year ago, still badly lags the Toyota Camry and Honda Accord in sales. That just demonstrates the problem with turning around GM sales.

“Everybody acknowledges that the Malibu is a superior product, but you can’t just jump from 150,000 sales to 400,000 overnight,” said Tom Libby, president of the Society of Automotive Analysts.

Labor costs
The United Auto Workers union gave GM and Detroit rivals Ford Motor (F, Fortune 500) and Chrysler Group tremendous cost savings in recent contracts. The union agreed to a two-tier wage structure for new hires. It also eliminated a jobs bank that continued to pay laid off workers during the life of a contract.

Most importantly the UAW agreed to a plan to shift responsibility for retiree health care costs away from the companies to union-controlled trust funds. And it then allowed GM and Chrysler to essentially fund those trust funds with company stock rather than cash.

Henderson insisted Friday that GM’s labor costs are now in line with those of nonunion Asian rivals’ U.S. plants.

But the gap GM suffers in labor costs with its nonunion rivals, while greatly reduced, is not forgotten. Health care costs for active employees are still significantly higher than at the U.S. plants of Asian automakers, which have younger workforces, let alone overseas auto plants where the governments pay for health care.

And GM still has obligations for U.S. pension plans that are now underfunded, mostly because the company repeatedly used plan assets to pay for buyout packages for tens of thousands of workers as it slashed staffing in recent years.

The pension plans were underfunded by $13.6 billion at the end of 2008, a gap that may well have grown with some additional buyouts since then.

Many times a company in bankruptcy can save a lot of money by shedding its pension obligations as well, passing them off to the federal Pension Benefit Guarantee Corp. Such a move by either GM or Chrysler would have prompted a battle with the UAW. And the Obama administration, whose funding was keeping both companies alive, didn’t want to go down that path.

While GM said it doesn’t anticipate needing to make contributions to the plans soon, future funding needs could cause problems down the road. It was a pension shortfall that caused GM to sell many of the $27 billion in unsecured bonds that it used the bankruptcy process to shed.

“Maybe it’s the third rail nobody wants to touch, but it’s the key to these companies being healthy long-term,” said Jeffrey Manning, managing director of investment bank Trenwith Securities LLP, specializing in bankruptcy and restructuring. “You’ve left these anchors on both of these businesses.”

Other challenges
Market share losses aren’t the only problem dogging GM. There’s the recession, rising unemployment and continued tight credit.

CSM’s forecast for new vehicle sales calls for 2009 U.S. industrywide sales to come in below 10 million vehicles; that would be the worst sales performance in decades. And it projects sales of barely more than 11 million next year.

GM and Treasury officials insist the cost-cutting will allow the company to break even at those depressed sales levels. But that will be difficult to do, and a strong rebound in profits isn’t likely.

Even before the plunge in auto sales, high gas prices had caused American consumers to start to shun pickup trucks and SUVs — GM’s strength, and its source of profits back when it was making money — for sedans and smaller cars instead. In 2008, cars outsold light trucks for the first time since 2000. That has been the case this year as well, even with lower sales.

“The key for everybody, not just GM, is to consistently make money on the sale of small cars in the U.S. market,” said CSM’s Robinet. “That’s a tall order, particularly for the U.S. automakers.

And if GM does produce a stronger line of competitive fuel efficient vehicles, it will be harder for the company because of the long-held perception that it is primarily a pickup and SUV maker, said Jesse Toprak, an auto sales analyst with Edmunds.com.

“Even if GM had the same portfolio mix as Honda, GM would be at a disadvantage simply because of this perception problem,” he said.

Finally, even if fuel prices don’t rebound to the record $4 a gallon level of a year ago, tougher fuel economy standards being imposed by the Obama administration will require average fuel efficiency of 35.5 miles per gallon.

“Long term, the [fuel economy rules] do move the industry in the direction of Toyota ™ and Honda (HMC),” said Libby.

First Published: July 10, 2009: 3:05 PM ET

Pool Water Sampling Information

Swimming Pool Water Testing

A key to achieving and maintaining great looking water in a swimming pool is water balance and testing. Our employees in the lab perform a wide array of water tests for Haviland customers’ on a regular basis. We do these tests, in most cases, to assist with correcting existing conditions in home owner’s pools. Our laboratory also extends its water testing service to its employees. As Haviland expands in the pool and spa industry, not only does the amount of customers increase, but the number of employees does as well. As a result, a high volume of water samples are being submitted to the lab. For this reason we feel it is necessary to put a few guidelines into place. This is not only for our employees but for those customers who submit water for analysis.
For those who submit water samples:
• Sample containers must be in an unmarked, preferably unused bottle
• Sample containers must be clearly labeled with first and last name
• Please notify us what to test for. Borates, specialty chemicals, etc, etc
• Contact Kevin Vlietstra (Consumer Products) prior to submission

Not all water samples brought into the lab need every test. For example: If you have city water, we do not need to test for metals in the water. If the water is freshly filled we do not need to test for phosphate, dissolved solids, etc.
We would strongly encourage employees to perform periodic tests using a home testing method. Many water balance factors and conditions only need to be tested two to three times a season.
Work in the lab for our customers and other corporate obligations will always take precedence in the laboratory, if you submit a sample, please be patient if you do not receive immediate results. Once testing is completed you will receive your results (typically through email) from Kevin or the lab.
The water testing service that our lab provides is for Haviland employees and their immediate families only.
If you need assistance with interpreting your water analysis, please be prepared to answer the question, “How many gallons are in the pool?” If pool volume has not been calculated recently, we will want to recalculate the volume. We will need to know length, width, and depth of the shallow and deep ends of the pool.)
Any other questions please feel free to contact Kevin Vlietstra.

On this day in 1776, the Declaration of Independence was approved by the Continental Congress, setting the 13 colonies on the road to freedom as a sovereign nation.

As always, this most American of holidays will be marked by parades, fireworks and backyard barbecues across the country.

– In July 1776, the estimated number of people living in the newly independent nation was 2.5 million.

– On July 4, 2008, the nation’s population will be 304 million.
Fourth of July Cookouts

– The chance that the hot dogs and pork sausages consumed on the Fourth of July originated in Iowa are more than 1 in 4. The Hawkeye State was home to 17.6 million market hogs and pigs on March 1, 2008. This represents more than one-fourth of the nation’s total. North Carolina (9 million) and Minnesota (6.7 million) were the runners-up.

– The total production of cattle and calves in Texas in 2007 is 6.8 billion pounds. Chances are good that the beef hot dogs, steaks and burgers on your backyard grill came from the Lone Star State, which accounted for about one-sixth of the nation’s total production. And if the beef did not come from Texas, it very well may have come from Nebraska (4.7 billion pounds) or Kansas (4.1 billion pounds).

– There are six states in which the revenue from broiler chickens was $1 billion or greater between December 2006 and November 2007. There is a good chance that one of these states – Georgia, Arkansas, North Carolina, Alabama, Mississippi or Texas – is the source of your barbecued chicken.

– About 4 in 10 are the odds that your side dish of baked beans originated from North Dakota, which produced 42 percent of the nation’s dry, edible beans in 2007. Another popular Fourth of July side dish is corn on the cob. Florida, California, Georgia and New York together accounted for 60 percent of the sweet corn produced nationally in 2007.

– Potato salad and potato chips are popular food items at Fourth of July barbecues. More than half (52 percent) of the nation’s spuds were produced in Idaho or Washington state in 2007.

– More than three-fourths amount of the nation’s head lettuce production in 2007 that came from California. This lettuce may end up in your salad or on your burger.

– Nearly 3 in 4 chances that the fresh tomatoes in your salad came from Florida or California, which combined accounted for 73 percent of U.S. tomato production last year. The ketchup on your burger or hot dog probably came from California, which accounted for 96 percent of processed tomato production in 2007.

– Georgia is the state that led the nation in watermelon production last year (1 billion pounds). Other leading producers of this popular Fourth of July dessert included California, Florida and Texas, each with more than 400 million pounds.

– More than 74 million Americans said they have taken part in a barbecue during the previous year. It’s probably safe to assume a lot of these events took place on Independence Day.
Fireworks

– The value of fireworks imported from China in 2007 amounts to $207 million, representing the bulk of all U.S. fireworks imported ($217 million). U.S. exports of fireworks, by comparison, came to just $14.9 million in 2007, with Japan purchasing more than any other country ($3.8 million).

– The U.S. manufacturers’ shipments of fireworks in 2002 values up to $17.3 million.
Flags

– In 2007, $4.7 million was the dollar value of U.S. imports of American flags. The vast majority of this amount ($4.3 million) was for U.S. flags made in China.

– $2.4 million was the dollar value of U.S. flags exported in 2007. Mexico was the leading customer, purchasing $1.2 million worth.

– The annual dollar value of shipments of fabricated flags, banners and similar emblems by the nation’s manufacturers was $349.2 million, according to the latest published economic census data.
Patriotic-Sounding Names

– The number of places nationwide with “liberty” in their name is 31. The most populous one as of July 1, 2006, is Liberty, Mo. (29,581). Iowa, with four, has more of these places than any other state: Libertyville, New Liberty, North Liberty and West Liberty.

* Thirty-one places are named “eagle” – after the majestic bird that serves as our national symbol. (Places include cities, towns, villages and census-designated places.) The most populous such place is Eagle Pass, Texas, with 26,401 residents. * Twelve places have “independence” in their name. The most populous of these is Independence, Mo., with 109,400 residents. * Nine places adopted the name “freedom.” Freedom, Calif., with 6,000 residents, has the largest population among these. * There is one place named “patriot” – Patriot, Ind., with a population of 192. * And what could be more fitting than spending the Fourth of July in a place called “America”? There are five such places in the country, with the most populous being American Fork, Utah, population 25,596.

The British are Coming!

– The dollar value of trade last year between the United States and the United Kingdom was $107.2 billion, making the British, our adversary in 1776, our sixth-leading trading partner today.

Data courtesy of the U.S. Census Bureau

BAGHDAD, Iraq (CNN) — Iraqis celebrated in the streets Tuesday, the deadline for U.S. troops to pull out of Iraq’s towns and cities — a long-anticipated date marked by street festivals in Baghdad.

Iraqi soldiers join in a parade Tuesday in Karbala to mark the withdrawal of U.S. troops from cities and towns.

Celebrations were tempered, however, by fears of renewed violence as insurgents seek to use the date to stage new attacks.

At least 30 people, including women and children, were killed Tuesday in what security sources called a “huge bombing” in the northern Iraqi city of Kirkuk.

More than 100 also were wounded in the attack on a busy shopping area in a predominantly Kurdish part of Kirkuk, a disputed oil-rich city about 235 miles north of Baghdad. Rescuers are searching the rubble for people who might have been buried, a local police official said.

President Obama said Tuesday that street celebrations in Iraq for the withdrawal of U.S. troops from cities and towns were a testament to the sacrifices of U.S. troops in the country.

In brief remarks at a White House event on technological innovation, Obama said the drawback meant that Iraq’s future was now in the hands of its leaders and people.

“The Iraqis are rightly treating this day as a cause for celebration,” Obama said, calling the “important milestone” the result of the good work by U.S. forces who first entered Iraq in 2003 and toppled Saddam Hussein’s regime.

Hundreds have died in a series of dramatic attacks in the past 10 days after months of relative quiet.

The top U.S. general in Iraq insisted shortly before the Kirkuk bombing that much of the country is safe.

“There is not widespread violence in Iraq,” Gen. Ray Odierno told reporters in a videoconference from Baghdad. Watch as Odierno notes the deadline marks an “important day” in Iraq »

“There’s still gonna be bumps in the road. There’s still gonna be violence here,” he said.

U.S. combat troops will remain in Iraq — in bases and outposts outside of major population centers — after Tuesday’s pullback.

The 130,000 remaining U.S. troops are tasked with supporting Iraqi troops and police and will require Iraqi permission to launch operations in the cities

Odierno said the cities would feel “significantly different” without U.S. battalions, even though there will still be Americans there as military trainers and advisers.

Odierno testily refused to say how many there would be.

“I don’t know,” he said in response to a reporter’s question. “It will be different every single day. I don’t want to say a number. It will be inaccurate.”

He later apologized, saying, “Sorry, I lost my temper a little bit on the numbers.”

To mark the the U.S. pullback, newscasters on state TV network Al-Iraqiya draped Iraqi flags around their necks as an on-screen clock counted down to midnight Monday (5 p.m. ET). Earlier Monday evening, hundreds of people danced and sang in a central Baghdad park.

“I feel the same way as any Iraqi feels — I will feel my freedom and liberation when I don’t see an American stopping an Iraqi on the street,” said Awatef Jwad of Baghdad. Watch Iraqis celebrate in the capital »

There were no columns of tanks rolling out of Baghdad or thousands of troops marching out of other cities as the deadline approached. The U.S. military gradually has been pulling its combat forces out of Iraq’s population centers for months, and they already were gone by the weekend, Pentagon spokesman Geoff Morrell told reporters.

But Iraqi Prime Minister Nuri al-Maliki and other officials had warned of an increase in attacks around the withdrawal date as insurgents attempt to reignite the sectarian warfare that ravaged the country in 2006 and 2007.

While many Iraqis publicly said they are glad to see Americans out of their neighborhoods, some cited worries about what the future may hold without the U.S. military nearby.

“Without the Americans, we were afraid of each other,” said Hanaa Abdul Hassan of Baghdad.

“And now that the Americans are leaving, we will be more afraid. We knew the Americans were holding them back, so now I don’t know what’s going to happen,” she said, without specifying who “they” were.

But U.S. officials said they believe Iraq’s police and army can keep a lid on the violence, which Morrell said was at the lowest point “in the history of this conflict.” iReport.com: Spirits are high as Iraqi troops prepare for handover

Thomas Ricks, a senior fellow at the Center for a New American Security who has written extensively about Iraq, said he was not convinced Iraqi security could keep violence under control.

“No one knows whether the forces can handle it. It’s a leap of faith we’re taking here. My concern is we’ve taken this leap of faith before and it hasn’t worked,” Ricks said.

“The real thing for Iraqi security forces isn’t whether they’re trained or better equipped than the militias and the insurgents. The question is whether they’re better motivated. The militias and insurgents knew what we were fighting for. The question has always been — do Iraqi security forces know what they’re fighting for?” he said.

Four U.S. soldiers serving in Baghdad died Monday of combat-related injuries, the latest of more than 4,300 Americans to die there since the U.S.-led invasion in 2003.

A Web site associated with Hussein’s deposed Baath Party posted a statement Tuesday attributed to the late dictator’s former deputy, Izzat Ibrahim al-Douri, calling the American pullout a “historic victory” for the insurgents.

“The 30th of June 2009 is your precious and glorious day that embodies your historic victories,” the statement said. “For your enemy and the enemy of God decided to flee the battlefields dragging the tails of disappointment and defeat to protect its fleeing soldiers in a few and limited fortified bases, where they think they will find safety from your heroic charges and Godly strikes.”

Al-Douri, the highest-ranking member of Hussein’s government to remain at large, is believed to be a top figure in the insurgency. His urged Iraqis to keep fighting Americans “wherever they may be in Iraq.”

U.S. troops rolled into Baghdad in April 2003, less than three weeks after launching the invasion that toppled Hussein. President Bush said the invasion was necessary because Hussein’s government was concealing nuclear, chemical and biological weapons programs and could have provided those weapons to terrorists.

After the invasion, U.S. inspectors found that Iraq had dismantled its weapons programs under U.N. sanctions in 1990s. But the Americans soon found themselves facing an insurgency from several quarters, including ex-members of the Baath Party, a Shiite Muslim militia led by anti-American cleric Muqtada al-Sadr and Sunni jihadists loyal to al Qaeda in Iraq.

By mid-2006, the conflict had become a low-level civil war, marked by the dumping of bodies in the streets on a daily basis. The conflict began to subside in late 2007 after Washington committed extra troops and supported a turn against the jihadists by Sunni Arab tribal leaders.

Under an agreement signed in the waning days of the Bush administration, all U.S. forces will be out of Iraq by the end of 2011. Most will be gone by August 2010 under the withdrawal plan laid out by Obama.

CNN’s Jomana Karadsheh and Michael Ware in Baghdad contributed to this report.

Financially strapped states consider a ‘mutually beneficial’ deal.

June 29, 2009: 10:20 PM ET

Both states are struggling with huge budget gaps.

Now, Michigan Governor Jennifer Granholm has offered California some of the state’s prisons that are slated to close at a yet-to-be-determined cost.

In a letter Monday to California Governor Arnold Schwarzenegger, Granholm formally offered to house California inmates, noting their “mutual interest in resolving budget and corrections problems, perhaps in one fell swoop.”

“I believe this opportunity has great potential and could be mutually beneficial at a time when states need to rely on each other like never before,” Granholm, a Democrat, wrote to her Republican counterpart.

A copy of the letter was provided to Reuters.

“It would allow California to address some of its immediate needs for additional prison beds and prisoner preparation for release and would permit some of Michigan’s very talented correctional and program staff to continue working as they face the likelihood of layoff,” she added.

Michigan’s corrections department announced earlier this month plans to close several prisons this year in order to save $120 million.

California faces lawsuits over the poor state of its prison health system, which a panel of federal judges has concluded is largely the result of state prisons filled to twice their capacity.

Schwarzenegger last week said California’s state government could not afford to spend $2 billion to upgrade prison health facilities while preparing for potentially deep spending cuts to education and state health programs to help fill a $24.3 billion state budget shortfall.

Schwarzenegger’s office has proposed easing prison overcrowding by transferring inmates who are undocumented immigrants to federal custody.

Prison officials in California, which already has more than 7,000 inmates housed in private correctional facilities in Arizona, Tennessee, Mississippi and Oklahoma, are intrigued by Granholm’s offer, said Seth Unger, a spokesman for California’s prison system.

“We are interested in exploring the possibility if Michigan can offer the same level of security at competitive cost,” said Unger, adding that a team from California’s prison system will travel to Michigan next month to review the offer in greater detail.

A spokeswoman for Granholm said talks about prison space began between the two states earlier this month.

New president Akio Toyoda outlines his vision for the company’s future in his first interview with an American publication in his new role.

By Alex Taylor III, senior editor
Last Updated: June 26, 2009: 5:46 PM ET

(Fortune Magazine) — Even though he has the same last name as five of the 10 previous presidents of Toyota Motor, Akio Toyoda is nothing like his predecessors.

Item: He has spent seven years in the U.S., holds an MBA, and speaks flawless English.

Item: He likes to race cars and just completed a 24-hour endurance competition with three other team members in a Toyota supercar at Germany’s famed Nürburgring.

Item: At age 53 he is 14 years younger than the man he is succeeding, and he believes that his relative youth “can make a unique contribution” to the company.

Toyoda takes office two months after Toyota ™ reported the biggest annual loss in its history — $4.4 billion. He thinks that his family’s company — at last count, the Toyoda clan owned approximately 2% of the stock — suffered because of a “once-in-a-century crisis” brought on by the global economic slowdown, as well as Toyota’s own internal problems, some of them at its U.S. operations. He vows to rein in overcapacity, reorganize operations to strengthen control, and get the company back to basics. He especially wants to reinstill dedication to one of the pillars of Toyota’s production system: genchi genbutsu, meaning “go and see for yourself.”

Akio Toyoda is a grandson of Toyota’s founder, Kiichiro Toyoda (the family changed the spelling of the company’s name for greater euphony) and the son of Shoichiro Toyoda, now honorary chairman. After getting a law degree from prestigious Keio University, he went to the U.S., where he received an MBA from Babson College (the alma mater of another auto scion, Edsel Ford II). He joined Toyota in 1984 and returned to the U.S. for a two-year stint as head of NUMMI, the California plant that is a joint venture with General Motors (GMGMQ). At ultraconservative Toyota, Toyoda is considered a bit of a radical. In the early part of this decade he headed the development team for an Internet venture, Gazoo.com, which provides information on new and used vehicles and which morphed into a lifestyle cybermall.

If Toyoda is fazed by the challenges awaiting him, he didn’t betray it during an hourlong interview at the Four Seasons Hotel in Washington, D.C., his first with an American news organization in his new role. Instead of traditionally bland Japanese business attire, he wore a blue tattersall shirt, red-patterned tie, and black loafers. On his left wrist was what he described as his lucky charm, a bracelet with his birthstone inset. Toyoda took questions from Fortune’s Alex Taylor III in English and answered, in traditional Toyota fashion, in Japanese through a translator, circumspectly.

Fortune: Toyota presidents typically worry about the company growing so large and bureaucratic that it becomes infected with “big company” disease. Has that happened yet?

Toyoda: The company is a little bit infected. But if we look at our company as three 3-million-car companies rather than one huge company of 10 million cars, I believe we will be able to figure out ways to avoid being infected. A lot of conditions and situations are different, so we need to develop cars best fit for the conditions in each region: Japan, the U.S., and Europe.

Toyota has been very successful, but it is perceived as stuffy and conservative. Do you intend to change that?

Well, we do not want to be too light, but we have to be stable and step fast. I believe I can make a unique contribution because I am a young president by Japanese standards. The age difference between myself and associates in my company is smaller.

Has Toyota responded quickly enough to the economic downturn, and should it be doing more?

We may have to slightly change some of the ways of doing business, depending on the changes of the market. Some of the good things we did, and also not-so-good things we did, may not completely fit the situation. So while preserving our good DNA, I would like to have the courage to change some things if those things have to be changed. Our philosophy of “Customer first” has to be stronger.

Several of your competitors have been speeding development of electric cars. Does Toyota need to do more?

Electric cars’ battery life is limited, and that has not been solved. We would like to utilize our hybrid technology because we have accumulated quite a bit of knowledge about battery usage for hybrid cars. Depending on how electric cars are used or how they are found to be valuable, for the time being Toyota would like to focus on hybrid technology.

Your new hybrid Prius became the bestselling car in Japan after you priced it aggressively against the hybrid Honda Insight. Why are you pushing it so hard?

We have a desire to popularize hybrid cars so that more people can enjoy them. And under current market situations, we would like to be able to produce more hybrid cars. That would make us happy.

How long do you think the sales downturn will last?

There are 250 million cars in the U.S. The industry is selling 10 million units a year, which means the market turns over every 25 years. I believe 25 years is too long, and we should make efforts so that a 10-year cycle is more appropriate. The current market size of 10 million is too small and too unusual. It may not go back to 16 million, but I believe it will recover to 12 million or 13 million.

Has Toyota been growing too quickly in North America?

Toyota had a strong desire to become a U.S. car company. I believe that decision was correct, and we will try to strengthen even more. Of course, looking at the current situation, I would say our production capacity may be a little bit too much.

Today individual functions in North America, like manufacturing and sales, report back to Japan. Do you plan to change that?

In the U.S. we have a 3-million-car company, and there may not be only one person who heads the entire operation. But we would like to make sure the U.S. can complete its own operation and become a fresh American company for its own sake.

What do you think is the future of the Detroit Three?

GM has been in a leadership position for many years, and we learned many things from GM and the Big Three. We hope the auto industry in the U.S. will grow and continue to be healthy and prosperous. The auto industry is crucial, and it takes up a very big portion of the economy.

Is government aid appropriate under these circumstances?

I don’t have too much information, so I am not in the position of making any specific comments on that point.

What is your outlook for sales in Japan, where the population has been shrinking?

The Japanese government launched some incentive programs for cars more than 13 years old. If owners buy so-called eco-cars, such as hybrids, the buyers get scrappage incentives. Ever since the Japanese launched this incentive system, cars sold very quickly. But concerning capacity, we need to downsize a little bit, and right-size.

Who do you most worry about as a future threat, Korea or China?

China has been catching up with very great speed. I believe that it will come close to us very quickly, and from there on we will engage in very severe competition with it.

You have had a number of jobs at Toyota. Which one was your favorite?

Rather than being in a supervisory position, sitting in an office, I most enjoyed it when I went out and worked with the factory guys on the assembly floor, when I implemented kaizen [continuous improvement] ideas and worked together with the front-line workers to implement them. That gave me the most gratitude and helped me the most in my career.

You lived for seven years in the U.S. What were the biggest differences for you between America and Japan?

Language [laughs]. Also, Japan is small, and many people live in small areas in the country. So we always have to pay attention to other people, and you always kind of have to consider others. In a way, you get tired of paying attention to others.

The U.S. tends to have a higher degree of freedom. You can do whatever you like in a way. But in Japan you have to always consider various conditions and circumstances of others. In this circumstance, of course, I am kind of nervous and not feeling too free … [laughs].

What product trends do you see developing in the auto industry in the next five or 10 years?

We are talking about a once-in-a-century transformation of the market. I believe the auto industry is now trying to face the challenges of presenting a solution to this once-in-a-century change. And what is clear to me is that what is going to happen will not just simply be an extension of the past.

Last year was the 100th anniversary of the invention of the Ford Model T and the 100th anniversary of GM. I don’t believe this was an accident. Industrial revolutions were experienced for 100 years as the position of workers improved so that they became able to buy cars. However, these conditions that supported the prosperity of the auto industry started to disintegrate. I believe it is an important time for Toyota to present some answers for the coming 100 years. It is Toyota’s mission to find out how we can utilize available energy resources and technology for the future.

First Published: June 26, 2009: 5:41 AM ET

Mahindra & Mahindra’s small diesel-powered trucks to go on sale here by the end of this year, while Tata Motors’ Nano car is slated stateside in 2011.

By Peter Valdes-Dapena, CNNMoney.com senior writer
Last Updated: June 24, 2009: 9:46 AM ET

NEW YORK (CNNMoney.com) — It wasn’t too long ago that the thought of buying a reliable car from Korea seemed laughable. Today, Korean vehicles are common fare and automakers from India are getting ready to invade the U.S. market.

Experts say their vehicles are no joke. Plus, Detroit’s turmoil could give Indian automakers a foot in the door here.

With General Motors and Chrysler both looking to save money, in part by trimming their dealer ranks, hundreds of new-car dealers could be ready to sign up with new competitors like these.

By the end of 2009, U.S. auto shoppers will be able to buy a mid-sized Mahindra pick-up truck and already almost 350 dealerships have signed on to sell it nationwide, according to Georgia-based Global Vehicles U.S.A., Mahindra’s North American distributor. As a serious towing-and-hauling truck, Mahindra’s small pick-up is aimed at taking a chunk of America’s big bread-and-butter market.

In addition, Tata Motors has said it intends to begin selling its Nano microcar here by 2011 for those seeking an ultra-cheap and fuel-efficient vehicle.

Who’s going to drive Indian? While it’s targeted at a core part of America’s vehicle market, Mahindra’s truck is unusual by American standards. Global Vehicles hopes the trucks’ unique features will appeal to cost-conscious but open-minded truck buyers.

The typical customer will be an “independent thinker” with an active lifestyle, said Larry Daniel, Global Vehicles’ vice-president for sales.

“They don’t really care what people think of what they drive,” he said.

The trucks are much smaller than full-sized rigs like the Ford F-150 and Dodge Ram. They are closest in size to mid-size trucks like the Dodge Dakota but their cargo beds are about as big as the big trucks’. With high ground clearance, a tall cab and large bed, the trucks look oddly proportioned compared to competitors.

Most importantly, the Mahindra trucks are diesel-powered. Diesel engines produce more pulling power than gasoline engines while getting better fuel mileage. Mahindra boasts that it’s truck, with its 4-cylider diesel engine and 6-speed transmission, will get 30 miles per gallon on the highway and will also be able to haul more than competitors’ V6-powered trucks.

The relatively high cost of diesel engines, combined with the additional technology required to make dirty diesel emissions conform to air quality rules in all 50 states, has so far kept major manufacturers from offering diesel in smaller trucks, Levine said.

Currently, diesel engines are used only in the biggest pickups sold in America, ones intended for strictly commercial use.

Buyers of smaller trucks would probably snap up diesel-powered ones, some analysts say, because truckers understand diesel.

“They realize what both the power fuel economy benefits of diesel are,” said Mike Levine, an editor for the Web site Pickuptrucks.com.

Mahindra insists it can sell its truck here in the low $20,000 range. That’s in spite of a 25% tariff on imported pick-ups that has even foreign companies like Toyota and Nissan building their trucks here. Mahindra might open its own factory here, too, in order to beat the tariff, but only if sales take off.

India’s key to success. Mahindra’s truck sales may benefit from the fact that, in rural markets, the name is already well known, said Levine. Mahindra is already one of the biggest-selling tractor manufacturers in the American market and even sponsors a Nascar team.

The first couple of years will be critical to Mahindra’s success, said Levine. If other truck manufacturers decide to offer diesel engines in their better-known small truck models, that could undercut Mahindra’s main selling point, especially if they can do it at a similarly low price.

Beyond that, Mahindra just has to keep an eye on quality.

“The two questions will be final pricing and the trucks’ reliability and dependability,” Levine said.

If the Mahindra trucks aren’t rock solid, they will be quickly shrugged off, he said.

Mahindra trucks probably won’t sweep the market right off, said Jeff Schuster, an analyst with J.D. Power and Associates. With so much on the line, the trucks will probably get a slow-rolling, toe-in-the-water introduction he said.

“I think it’s likely to be in limited quantities and with limited fanfare, at least initially,” he said.

Global Vehicles, for its part, insists that there will be a strong retail market for these trucks, but Levine and Schuster both argue that commercial fleet buyers, focused on functionality and cost over style, will be the more likely buyers for these vehicles.

Despite changes to improve the trucks’ interior amenities and exterior design for the competitive U.S. market, the Mahindra truck will still be more of a rough-and-tumble work truck than the nearly car-like conveyance American buyers are used to, said Levine. Global Vehicles really ought to concentrate on commercial buyers, he suggested.

“I think fleet is an optimal way for them to get in and have them win,” he said.

Schuster agrees that ordinary, non-business truck buyers will be slow to warm up to a new entry.

“The small commercial use person or contractor or someone that just needs a truck for hauling,” is how Schuster describes a likely customer, not the fun-loving, motorcycle-carrying young man Global Vehicles’ Daniel said the importer envisions.

Still, by entering the market with a diesel-powered mid-sized truck, a product that strikes at a weak spot in the market, Mahindra is smartly treading the path of least resistance, said J.D. Power’s Schuster. Americans like trucks and they’re becoming more interested in fuel economy.

When Tata Motors enters the market later it will be trying to sway buyers toward a much smaller car than Americans are used to at a price that will compete against larger used compact cars from well-known brands.

“The risk associated with the Nano is much greater than Mahindra’s risk with the truck,” he said.

First Published: June 24, 2009: 5:47 AM ET

The factory that makes the Dodge Viper sports car is the first to reopen after bankruptcy.

By Peter Valdes-Dapena, CNNMoney.com senior writer
Last Updated: June 16, 2009: 8:09 AM ET

NEW YORK (CNNMoney.com) — Chrysler will soon be making cars again.

Chrysler Group announced Monday that it is restarting a factory, after shutting down all of its manufacturing for nearly seven weeks following the bankruptcy of Chrysler LLC. Chrysler Group is the new company that emerged last week with most of Chrysler’s assets and a new ownership structure.

The first plant to reopen is the one that makes the Dodge Viper sports car.

The Viper has a 600 horsepower V-10 engine and a price tag that starts at about $90,000. The Viper was introduced in the 1992 model year, and only 25,000 have been sold since then.

The Conner Avenue Assembly Plant in Detroit that makes the car employs 115 people.

Chrysler LLC had announced last year that it intended to sell off the Viper brand. The high-performance, 10-cylinder sports car sells in low numbers. Ultimately, Chrysler said it had not received any bids that met its requirements.

Chrysler’s other plants remain idle.

“At this time, we cannot give exact timing in regards to the start of production at our other manufacturing facilities,” Chrysler Group said in a statement.

The Viper brand and the plant that makes the car, the Conner Avenue assembly plant in Detroit, were taken over by the “new” Chrysler that emerged last week from bankruptcy.

The Chrysler Group is owned by a combination of the Italian automaker Fiat, the United States government, the United Auto Workers union’s retiree trust and the Canadian and Ontario governments. To top of page
First Published: June 15, 2009: 5:27 PM E

Congress approves a measure to subsidize car purchases – consumers can get as much as $4,500 to trade in old cars. Vehicles bought after July 1 eligible.

By Catherine Clifford, CNNMoney.com staff writer
Last Updated: June 19, 2009: 3:53 PM ET

To buy or not to buy?

WASHINGTON (CNNMoney.com) — A $1 billion Washington program to give vouchers to consumers who replace junky cars with fuel-efficient models is likely to ramp up very soon.

Congress passed the “cash for clunkers” measure late Thursday night as part of the $106 billion war spending bill. President Barack Obama plans to sign the bill into law.

“We are gratified that the Congress delivered on this administration priority, and President Obama looks forward to signing it into law,” according to an administration statement.

Vehicles purchased after July 1 will be eligible for the refund vouchers worth as much as $4,500 to turn in gas guzzlers and buy new cars that are more fuel efficient.

The agency in charge of administering the program, the National Highway Traffic Safety Administration, will work out all the details within 30 days of enactment, according to Rae Tyson, spokesman for NHTSA.

Meanwhile, car dealers may honor rebates starting July 1. The federal agency needs the 30-day window to implement regulations to safeguard the program from fraud and abuse, Tyson said.

Among the issues regulators might address: Does the consumer hold a valid legal title to the car he is seeking to trade in? Will the clunker be appropriately disposed of so that it can’t be cashed-in again?

The agency on Friday was scrambling to launch a Web site, www.cars.gov, to provide consumers with information about the program.

The bill’s passage comes as welcome news to automakers, which are struggling from a dramatic plunge in sales.

“We really appreciate Congress’ efforts to move this quickly across the legislative finish line,” said Mike Moran, spokesman for Ford Motor Co (F, Fortune 500).

Boosting the economy: Cash for clunkers proponents in Congress said the subsidies will spur sales.

“The simple fact is that we need to get Americans into car showrooms and this is the bill that will do it,” said Rep. Candice Miller, R-Mich., in a statement.

Michigan’s unemployment rate, the highest in the nation, hit 14.1% in May, the government reported Friday.

“This program will provide an economic stimulus at a time when hardworking families need it most,” Stabenow said in a statement.

Still, cash for clunkers drew opposition from lawmakers who were opposed to spending more money on the auto industry.

The move deepens the federal government’s involvement in the auto industry. The Obama administration has said it will provide General Motors (GMGMQ) with another $30 billion in addition to $19.4 billion previously provided.

How program will work: Clunkers eligible for the program must get 18 miles per gallon, or less, in combined city and highway driving.

The subsidy ends up benefiting more owners of light trucks, SUVs and mini-vans more than it would owners of regular old passenger cars, auto experts say.

A $3,500 subsidy can be used to purchase cars and vans that are more fuel efficient than the older clunkers by four miles per gallon. A $4,500 subsidy can be used toward purchasing cars and vans that are more fuel efficient than older cars by 10 miles per gallon.

However, cars that have not been insured for the past year, or those that are older than 25 years, are not eligible to be traded in for vouchers.

The supplemental bill approved Thursday sets aside $1 billion through fall. The program could make available as much as $4 billion in subsidies.

The House passed a cash for clunkers plan Tuesday by a vote of 298-119. Congress could appropriate more funds for the program in the fall.

Environmental lobbying groups had been pushing for a tougher bill sponsored by Sen. Dianne Feinstein, D-Calif., geared more toward cutting carbon emissions.

-CNNMoney.com’s Jennifer Liberto and CNN’s Lisa Desjardins contributed to this report.

Prices have doubled since February, but that’s probably not the end of it. Asia’s recovery is igniting demand.

By Brian O’Keefe, senior editor
June 16, 2009: 10:40 AM ET

NEW YORK (Fortune) — Ask a group of oil analysts about the recent surge in crude costs and here’s the consensus answer you’ll get: Prices have run up too far, too fast and they aren’t supported by the fundamentals.

Ask them about where prices will be two years from now, however, and the majority will offer this prediction: A lot higher.

“We’re concerned about oil prices rising so rapidly in the near-term,” says Hussein Allidina, head of commodities research at Morgan Stanley. “But the bet in the long-term is one way, and that’s just up.”

Oil shot past $70 a barrel last week, meaning the cost per barrel has doubled since hitting a low in mid-February. And the swiftness of that move has plenty of observers wondering if we’re headed toward another period of even more dramatic price gains.

Among the oil insiders worried about such a scenario is Royal Dutch Shell CEO Jeroen van der Veer, a 38-year veteran of the energy giant, who is scheduled to retire June 30. “If the oil prices stay volatile I’m afraid there will be too much slowdown in investment,” he said at an energy conference in Abu Dhabi in early June, according to Reuters, while reiterating that Shell would follow through on its spending plans for this year. “I think too low capacity means the next price spike is to come.”

The last spike, of course, was a year ago at this time, when oil zoomed all the way up to $147 per barrel and Congress began holding hearings to discuss whether speculators were manipulating prices. Then a market correction that began in the middle of last summer was accelerated by the global financial crisis. Oil plunged to multi-year lows, with the price of benchmark West Texas Intermediate crude dropping under $35 in December and again in February.

To understand the odds of oil moving back above $100, it helps to first examine the reasons that the price has rebounded so strongly in recent weeks.

Much of the recent rally actually has nothing to do with the oil market’s current supply-and-demand situation. The latest estimate from the International Energy Agency (IEA) projects that worldwide oil use will be almost 2.5 million barrels a day lower on average this year than in 2008. And despite the fact that OPEC has been cutting back on production since last September to boost prices, oil inventories around the world are still high compared to historical levels.

“Considering that supply seems ample and demand is weak, the fact that oil is going up looks kind of weird,” says Adam Sieminski, chief energy economist at Deutsche Bank. “But those factors are being overwhelmed by a huge sigh of relief that we’re not going to have the Great Depression. A lot of money is coming out of mattresses.”

That inflow is lifting stocks and commodities alike. Research by Morgan Stanley found the correlation between crude oil prices and equities has recently been at a record high — with both rising strongly on the hope that the economic cycle has already bottomed.

“Historically, equities have been a leading indicator of economic growth and commodities have been a coincident indicator,” says Morgan Stanley’s Allidina. “Right now you’re seeing commodities and equities move up together as money comes back in at the same time.”

Just as important, Morgan Stanley found that the inverse correlation between a weakening U.S. dollar and rising crude prices was also closing in on a record high. Because oil is priced in dollars, when the value of the dollar falls it makes oil cheaper in other currencies — simultaneously boosting consumption outside the U.S. and motivating non-U.S. producers to raise prices to make up for the purchasing power they’ve lost in the currency conversion.

Concerns about the ballooning deficit in the U.S. have caused investors to begin fleeing the dollar. The U.S. dollar index, which measures the value of the greenback against six major world currencies, has dropped 9% since the beginning of March. As it falls, oil prices are rising. If it falls further, they’ll rise higher.

But just how high oil prices go from here — and how fast they get there — will ultimately depend on the ability of producers to meet future demand. And any robust rebound in consumption is sure to put a strain on global supply.

The investment cutbacks warned about by Shell’s Van der Veer only make that more likely. In its World Energy Outlook 2008, released last November, the IEA warned that production declines from existing supplies would keep the market tight and called for $26 trillion in new infrastructure spending worldwide over the next two decades. Right now, the opposite is happening. In May, the IEA said it expected a 21% drop in oil and gas investment budgets globally in 2009 compared to 2008, or nearly $100 billion less. A cautious OPEC has said that a lot of its member countries’ new drilling projects remain on hold.

Meanwhile, there are signs that a demand recovery could be on the way in Asia. China’s crude consumption averaged 7.6 million barrels per day in April, according to Allidina, the highest level on record, amid reports that the government was stockpiling commodities. Goldman Sachs was confident enough of a demand rebound to come out in early June with a price target of $85 a barrel for West Texas Intermediate crude by the end of 2009 and $95 by the end of 2010.

Deutsche Bank’s Sieminski agrees that prices are going higher over time. “Our forecast has been that oil will be at $100 in 2015 and it could happen faster if the economy recovers,” he says. Because oil is generally considered an “inelastic” commodity — meaning it takes a big increase in price to produce a small change in demand — the chances of a spike increase once supplies get tight.

“If you get close to the balance, prices can go haywire very quickly and there’s very little that can be done about it,” says Sieminski. “Something happens on the margin to put pressure on the market and instead of the price adjustment being gradual it’s a step change. Last time gasoline had to go to $4 a gallon and crude had to go to $150 a barrel to rebalance things. And that’s how we could get there again.”

Let’s hope we don’t get there for a while.