Pushing metal and buying metal

Pushing it... In the United States, GM, Ford and their fellow carmakers are increasingly creative in their efforts to "push metal" out of their factories. For instance, on Monday, GM announced, among other things, 6-year 0% car loans aimed at slowing the decline in some its previously most-successful models, which have now become unattractive due to their fuel requirements and consumer demand sluggishness. The GM share price recently hit a 26-year low: maybe the market does not really believe these measures will help much?

Buying it... Audi, part of the Volkswagen AG group, warned on Sunday that it may need to raise prices faster than inflation in 2009 due to higher raw material and other costs. This will depend on what competitors do. Nissan said that steel groups (e.g. ArcelorMittal, world #1) were bound to raise their prices significantly, perhaps in 2009: the carmaker is therefore planning to reflect this in its car prices, starting with markets where Nissan is strongest, such as +2% or +3% in Japan. The timing will depend on when its competitors start to announce similar intentions. Conversely, Fiat's spokesman said today that its Auto division did not plan an increase its prices, especially in the current market of sharply declining Italian car registration numbers. A Credit Suisse analyst estimates that raising prices by 5% to 10% would result in a 10% to 20% loss in volumes and therefore (additional) over-capacity. Are we going back full circle with carmakers desperately trying to "push metal" at any cost again?

Fathers' Day

As many countries around the world celebrate Fathers' Day, I ponder on father-son relationships in the business world.

Today also happens to be the 58th birthday of Lakshmi N. Mittal, chairman and CEO of ArcelorMittal. There was an interesting article in the Sunday Times two months ago:
http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article3778499.ece I cannot envisage CFO Aditya Mittal (32 or so) going head-on against a decision made by his father. Let me quote only part of one sentence: "[Aditya] is already seen as likely successor to his father Lakshmi at the steel giant they created two years ago". There you go... Could this have anything to do with the fact that the family controls some 45% of ArcelorMittal's capital?

Similar examples are countless: Pinault, Bouygues, Agnelli, Baring, (late) Michelin, Riboud, to name but a few. Depending on the ownership structure, quasi-hereditary successions at the helm of a company can be viewed skeptically by shareholders and public alike. Why would the CEO or chairman's offspring be more talented at becoming the next CFO, managing director or CEO than a gifted peer who has a proven track-record within the company or in the competition? Indeed, some children's personalities pale in comparison with fathers that were ebullient, extrovert company-founders. And it surely requires a fair bit of assertiveness and self-confidence to suggest, let alone force through, changes in strategy or business practices.