Old fogies like me remember when BMW's GM-sourced automatic transmissions caused sturm und drang. Brand dilution! How can we Germans rely on a foreign competitor [at least in theory] for a key technology? So much for that. So why all the hubbub when BMW reveals they'll share engines with another carmaker? At last weekend's annual shareholder meeting, CEO Norbert Reithofer caused an uproar by announcing that the next-generation 1-Series will have a four-banger developed with PSA (Peugeot/Citroën). Reality check: BMW's MINI started life with a Brazilian-built Chrysler-designed Tritec engine. The MINI One D used a Toyota-built diesel engine. From November 2006, the MINI Cooper and MINI Cooper S models have been powered by a 1.6 litre engine co-developed by BMW and PSA Peugeot-Citroën. But propeller-heads don't want a Bimmer-badged car to mix genes with the French. The Financial Times Deutschland calls the move a "taboo breaker," while shareholders bemoan the brand's move from "class to mass." Ever the beancounter, Reithofer prefers to focus on saving money: "A car's engine is responsible for 25% of the car's total manufacturing cost." So that's alright, then.

Canada (like most other developed countries) has a hard time attracting/keeping auto manufacturing jobs due to high labor and tax costs. To counteract these competitive disadvantages, provincial governments often offer car companies tax holidays and other incentives. The problem with these handouts is that they do not guarantee a long-term presence by the bought-off manufacturers. Exhibit A: GM got handouts worth nearly $250m in provincial tax money (and about $200m in federal funds) for its Beacon project aimed at revitalizing its Canadian production facilities. Now, a few short years later, they're cutting some 1400 jobs at their Windsor transmission factory, with another 900 lost due to production cuts at the Oshawa truck plant. Having spent some $7b on various automaker subsidies without receiving a single job guarantee, Ontario Premier Dalton McGuinty is coming under fire. "The more money this government invests in a company, it seems the more jobs are lost," says Progressive Conservative MPP Bob Runciman. But McGuinty ays he "doesn't regret" giving the money to GM (at least until the next election). Report on Business tells us that GM is set to ask the Ontario government for another $140m to build transmissions at its St Catharines plant. Oh, and don't expect GM to offer any job guarantees, either.

Some say it's bad enough that Porsche sullied its brand by building an SUV. Automotive News [sub] reports that Porsche is looking to add sacrilege on top of brand defilement; Cayennes may soon be produced stateside. Word first came out in Handelsblatt magazine, which cited "internal sources." VW spokesman Andreas Meurer confirmed the gastric rumor. "When we discuss whether to build the [VW] Touareg and [Audi] Q7 in the USA, we also talk about the Cayenne." Previously, we'd heard that the new U.S. plant would produce Jettas. But since The Land of the Free is the major market for the VW/Audi/Porsche SUV triplets, and the dollar's weaker than the V6 Cayenne's on-ramp acceleration, there's a compelling case for bringing VW Group truck production stateside. Germanophiles note: all three utes are currently built in Bratislava, Slovakia; BMW builds (and exports) their SUVs in South Carolina while Mercedes does the same in Alabama. As Big 2.8 supporters will tell you, as long as Cayenne profits end up in Zuffenhausen, it's still a German car. Technically speaking. On both points. 

Last November, we told you the RV industry was tanking. Back then, Winnebago put a happy face on looming disaster, saying "we still have the demographic wind at our back." Fast forward four months and Winnebago's hanging on by the skin of its Vista. The Wall Street Journal reports that two smaller RV manufacturers have gone Tango Uniform; the big boys are in big trouble. "Coachmen Industries Inc., whose sales have declined 40% over the past three years, is borrowing against the value of life-insurance policies it holds on employees and retirees." Unlike GM's purchase of it's H.Q., "Fleetwood Enterprises Inc., which has posted five straight years of losses, recently sold its Riverside, Calif., headquarters and is seeking buyers for other properties, in an effort to raise $100 million to finance a looming bond redemption." The industry's set to take another hit, thanks to 145k trailers and mobile homes purchased by the U.S. government before and after Hurricane Katrina (shelling-out $2.7b in no-bid contracts, no less). Now known as Toxic Trailers— thanks to their high formaldehyde levels– the products are sure to inspire a class action lawsuit that could be a knockout blow both financially and PR-wise for the whole RV industry. 

Industry Week's David Blanchard offers an analysis of Just In Time (JIT) manufacturing's dangers, from Boeing's delayed Dreamliner to Motown's supplier woes ("woes" as in torpedoes aimed straight the mothership's hull). Blanchard says JIT is fine in theory. "Some Japanese automakers have done quite well with that type of win-win relationship, often symbolized by the idea of the keiretsu, or joint partnership. The Detroit Three automakers, on the other hand, apparently see greater promise in pursuing lose-lose relationships… Look at the relationship (if you want to call it that) between Chrysler and one of its Tier One suppliers, Plastech, who had fallen on hard times. Rather than offering assistance to a key supplier, Chrysler canceled its contract with Plastech, which not only led Chrysler to temporarily shut down production at four assembly plants, but also caused Plastech to file for bankruptcy protection." While that's not the way it went down– Chrysler bailed and bailed until it bailed– Blanchard's wider point is valid. "The key word in supply chain management is management, and when relationships aren't managed properly (or at all), then there really isn't much of a supply chain. What you've got instead is a mad free-for-all, and ultimately, a lot of unhappy customers." And, we might add, employees, shareholders and dealers.

Buried in a CTVnews.ca story about the upcoming launches of the Ford Flex and the 2009 F-150: Ford's view of the future. Reporter Jeremy Cato spent some QT with Ford execs (including FoMoCo CEO Big Al Mullaly himself) to find out if there's a future in their Ford. Once again, Ford's top brass tout their forthcoming product revamps to predict a return to operationally profitability by the last financial quarter. In that vein, Ford intends to release models that will be "polarizing" for most consumers. Huh? "That's is exactly what we want," proclaims the Flex's design chief. By the end of the article, Cato remains unconvinced that the Flex will be relevant. (Not everyone can– or should– be Chris Bangle.) Cato declares that all Ford's marketing-speak, brand sell-off and quality initiatives are essentially Big Al's push to turn Ford into Toyota. You know: one global brand, a solid reputation for quality and billions in profits posted like clockwork every quarter. Yeah. that one. Meanwhile, The Blue Oval Boyz concede a porno style loss for the fiscal year. Yes, "it will be a big one."

GM's Rick Wagoner clone, Fritz Henderson, recently told the AP's Tom Krisher that the U.S. auto industry is in a recession. (Insert "Duh!" here.) Regular, non-lobotomized reader of Frank Williams' By The Numbers series would have come to that conclusion two months ago. Fritz trots out the usual explanations for GM's woes: "troubled housing market, tight credit and higher gasoline prices that are sending consumers from trucks to cars at a rate much faster than the company has ever seen." The last part is particularly odd and GM-centric, because the truck-for-car swap hits GM a lot harder than Toyota or Honda given each company's respective product mix ratios. Fritz then goes on to confirm what many have speculated: "The 11-week strike at parts supplier American Axle and Manufacturing Holdings Inc. has had only a minimal effect on the company's retail sales, largely because it had built up a large inventory of pickup trucks and sport utility vehicles at a time when the market shifted to smaller vehicles." By minimal, of course, Fritz means $800m in lost EBT (earnings before taxes, which in this case, is sales to dealers) as the AP diligently reminds us. Be careful Fritz, $800m here, $800m there, and pretty soon we'll be talking about real money.

We've reported that Delphi was a little tardy on making its required pension contributions. Some $323m short, to be precise. Even so, Delphi said it wouldn't be transferring its obligations to the Pension Benefit Guarantee Company (PCBG). The Detroit News reports that the PBGC is switching into proactive mode. "We will act forcefully to protect Delphi's pension plans," the PCBG's director warned. "Especially in light of the company's decision not to seek renewal of its pension funding waivers." Charles E.F. Millard ain't just whistling Dixie. "We will draw down certain letters of credit and keep liens in place on the company's assets until Delphi has successfully emerged and made its pension plans whole." As Delphi won't be seeking an extension of it's pension-funding obligation waiver from the IRS, the PBGC will cash some $173m in Delphi credit when the deadline expires (23rd of May). Delphi spokesfolks say the company "expects to be able to meet its pension funding strategy through a combination of cash contributions and transfers of certain unfunded pension liabilities to a plan sponsored by GM." Delphi's skipped $2.3b in pension contributions since declaring bankruptcy in 2005. At the end of 2007, the former GM parts division was carrying an unfunded pension obligation of $3.3b. So who's gonna end up with that hot potato? 

Automotive News [sub] reports that Opel is moving upmarket. It's GM's attempt to "democratize technology" and emphasize their Euro-brand's "traditional German manufacturing attributes." The new strategy is designed to move Opel away from its image as "the European Chevrolet"– so that Chevrolet can become the European Chevrolet. "Opel and Chevrolet will be bookends with a clear position for both," GM-Europe President Carl-Peter Forster promises. "Over time, we will emphasize Opel's German heritage, engineering and design." But don't worry: GM plans to keep the German domestic affordable. "We are not talking about a premium price for Opel," Forster said, "but a one percent to three percent increase is foreseeable." Design, technology and image are all part of the brand touch-up– not, Forster insists, a "reinvention." Yes well, Europe is facing a premium small car glut as Fiat, MINI and others seek full-sized profits from compact cars. With GM dependent on overseas sales to keep the wolf from the door, Opel had better hope this gambit pays off.

It ain't easy being a small independent sportscar maker. Just ask Spyker. The Dutch firm lost $110m and a Formula One team last year. While Lotus knows exactly what hard times look like, they reversed the curse by eschewing flashy F1 campaigns in favor of a profitable technical consultancy and contract manufacturing (including the Tesla Roadster). The Motor Authority reports that Spyker and Lotus are facing the future under the umbrella of a "Parts and Platform Commonality Agreement." Lotus will  source parts and assist in the design of forthcoming Spyker C8 Aileron and D12 Sports Utility. Spyker will… pay for it. The two firms have worked together in the past; Spyker considered buying Lotus back in the day. With a Lotus-fettled Spyker at the top end of the market, is there still room for a new Lotus Esprit? No.

CTV reports that General Motors is closing its transmission plant in Windsor, Ontario by 2010. The plant currently employs 1400 workers producing ye olde four-speed automatic transmission. GM Canada's Stew Low offered an explanation that made no mention of a warning shot over the Canadian Workers Union (CAW) bow, in advance of contract negotiations. "With the dynamic of our changing portfolio, there just wasn't a new transmission to put into there." Translation: four-speeds are so 1939 and you guys cost too much. The announcement caused some political scuffles. The provincial (left-leaning) NDP party implored Ontario Premier Dalton McGuinty to step in and stop the rampant job losses in the automotive industry. As The Big 2.8 have shuttered plants and moved production to cheaper jurisdictions, investments from Asian automakers have not risen to produce employment break-even. It's a shame too, since Windsor was on a roll. On the plus side, given Ontario's more diversified economy, it appears it can shelter a contraction of the NAFTA-zone's automotive industry with less pain than Michigan. But, unless a career at GM provides a good stepping stone to working on Bay Street, that won't soothe any of the CAW members' worries.

Nissan's GT-R recently raised some eyebrows by lapping the famed Nürburgring Nordschleife in a tidy 7 min 29 seconds, just barely missing the record held by the Pagani Zonda F. And now Cadillac, once known for its bewinged boulevardier behemoths, has stepped into the Green Hell. Caddy's 542 hp CTS-V emerged with a 7 min 59 second lap time, a feat claimed as the best ever for a production four-door car. Of course, everyone knows production-spec cars are strictly for suckers. So what's the fastest four-door to ever lap the 'ring? According to Wikipedia's list of Nordschleife times, it's a BMW X5 LM: a limited edition sport ute with a Le Mans racer V12 shoved under the hood. Back in 2005, that bad boy clocked a 7:50 lap. For reference, the CTS-V's 7:59 is the same as a Viper SRT-10, Carrera 997S, R33 Skyline GT-R, and STi Spec C. Quite what all this has to do with luxury cars is not clear, but it's good to be King. Isn't it?

Automotive News [sub] reports that Toyota is delaying opening its $1.3b Tupelo, Mississippi production plant from early 2010 to… sometime later that year. Toyota cites weakness in American sales and a tight credit market for the delay– which it downplays as a relatively minor adjustment. "We made adjustments within a certain range of time," Toyota Executive VP Mitsuo Kinoshita soothed. "The change wasn't that critical." The plant will employ some 2k Mississippians building about 150k Highlander crossover utilities. Toyota has seen its sales drop for seven of the last nine months, and recently announced an estimated 28 percent drop in profits. Toyota's San Antonio Tundra plant has already seen its production trimmed, as the global leader in auto sales volume struggles with North American overcapacity. With small, efficient Toyotas continuing to sell well, from the Prius to the Yaris and even the Camry, could Toyota simply switch production over from Highlander's to something that will, y'know, sell?

Big trucks have meant big profits for Detroit. Thanks to cheap oil, personal paranoia, a desire for an outdoor life that only the drudgery of daily commuting  could provide, the fairer sex' natural desire to see ten miles ahead at all times and a federal fuel economy regulation loophole big enough to drive an Expedition through, The Big 2.8 managed to convince Americans that body-on-frame vehicles were just dandy for personal transportation. With gas price increases showing no signs of slowing, one of Detroit's biggest truck chassis addicts is looking at kicking the habit. Bloomberg reports that GM, yes GM, is developing a lighter replacement for its biggest SUVs (Yukotahburbelade) that won't tow jack shit rely on a heavier pickup-truck frame. This, according to "people familiar with the effort." (Familiarity breeds PR.) It should be said (and soon will be) that GM has been relying on the same basic Silverado full-size truck platform its "light trucks" since 1965. Even if truck-framed transportation isn't about to disapper overnight, at least GM has taken the first steps to beating its addiction to "easy" profits. It has admitted it has a problem. 

The Wall Street Journal [sub] reports that Cooper Tires is (once again) in big trouble. Sales are down, costs are up, and the recalls just keep on coming. There's no way Cooper can continue as an independent tire company. The market is saturated with well-funded, technology-rich competitors with big brand names and major automaker OEM contracts. Cooper is a throwback from the golden era of US tire makers as the budget-priced, small-dealer-supported alternative to major brands. Other than Goodyear, all the rest of the US tire companies went bust and/or sold out to the Japanese and Europeans. Most tires today are sold in big chain stores, be they Wal-Mart or America's Tire… and Cooper isn't there. Kumho and Hankook of Korea have swooped in to take the bargain tire business while the likes of Michelin, Bridgestone, Goodyear, Pirelli, Dunlop (Sumitomo), Yokohama and Continental fight it out for market and mind share. Look for Cooper's joint ventures in China to turn around and swallow the company and the Cooper name to become another old American brand slapped on a Chinese product, like a Westinghouse toaster.