Jay, I am reconsidering my "bottom has been reached" statement and backtracking. Everyone trying to loot everyone else for sheer survival!
The food chain -where the big fish lived off the small fish, that lived off the smaller fish until the tiniest down to the protozoa- is being disrupted in a scale not known before. The big fish is squeezing the smaller one to an extent that it will depleted the pond of anything it can eat.
Without the food provided by the small fish the giant fish will starve to death. The solution -obliviously- would be for the giant fish perish so that less giant fishes would still could survive off the small fish. That -less giants as predators of the small fishes- is consolidation of industries with overcapacity and less money to the giant governments gorging on every fish it encounters as if there were infinite number of fishes out there.
Carmakers squeeze suppliers
Airlines squeezes its employees
Governments squeeze eveybody else
...
Deflation may make cuts easier at Chrysler
By Jeremy Grant in Detroit
Published: June 15 2003 22:16 | Last Updated: June 15 2003 22:16
Chrysler, the US unit of Germany's DaimlerChrysler, said signs of deflation could make it easier to seek price concessions from its suppliers as the carmaker struggled to achieve a small operating profit this year.
The company shocked markets earlier this month by saying it would suffer a second-quarter loss of €1bn, against an earlier forecast of a $2bn (€1.69bn) profit, because of rising vehicle pricing discounts and the associated drop in the value of inventories.
Chrysler predicted that about $1bn in extra cost savings would let it report a small full-year operating profit, before restructuring costs.
Dieter Zetsche, chief executive, said most of the $1bn would come from reducing material costs - vehicle parts and other purchases related to manufacturing.
In an interview with the FT, he indicated that a softer pricing environment could help in negotiations with suppliers. "You might say that the overall economic environment and . . . discussions of deflationary risk certainly give you some ease on the discussion about economics. This is something where we are probably in a better environment now than we thought two and a half years ago."
Many suppliers are anxiously waiting to see the scale of price cuts the Detroit carmakers will seek as part of the drive to cut costs and improve margins.
The Big Three have said they will achieve most of these cuts by collaborating with suppliers to eliminate inefficient procurement and by continuing to reduce component types.
Mr Zetsche said Chrysler would continue to seek additional material cost cuts from within the company without compromising quality. But he acknowledged: "When you are at a level of about 15 per cent [savings] after three years the low-hanging fruit are gone, so it's not as if you stumble upon some really simple things you've never thought about.
"This is very systematic, hard work - investigating all of your components, materials and what-have-you and then looking for opportunities with some tools that you have developed before."
Mr Zetsche saw growing signs of an improvement in the overall US economy, which amounted to "not a safe bet but at least a growing sentiment".
He also believed it was possible that the aggressive price discounting prevalent in the US vehicle industry might ease.
"To the extent that we are moving fast and, hopefully, faster than our competitors on the cost side, another forecast might be that this price aggressiveness might slow down somewhat, basically because you hit rock bottom." |
