In 2009 the American auto industry was in a dire economic state. Chrysler is in, GM is on the brink of bankruptcy, and Fords future is at best uncertain. The demise of the U.S. auto industry will have a devastating impact on our national economy and specifically the economies of Michigan and Ohio.

Economists occasionally use Porter's five forces framework when making a qualitative evaluation of a firm's strategic position. According to Porter, his model should be used at the industry level, defined as a marketplace in which similar or closely related products or services are marketed. This research paper requires the application of Porters Five Forces Model to the auto industry.

Porter's analytical framework consists of those forces that affect a producers ability to serve its customers and make a profit. A change in any of these five forces requires a re-assessment of the marketplace. The five forces include:

The threat of substitute products: The existence of close substitute products (i.e., high elasticity of demand) increases the propensity of customers to switch to alternatives in response to price increases.
The threat of the entry of new competitors: Unless there are significant barriers to entry, profitable markets that yield high returns will attract firms (i.e., perfect competition), effectively decreasing profitability.
The intensity of competitive rivalry: As in the case of oligopoly markets, rivals may choose to compete aggressively, non-aggressively or in non-price dimensions.
The bargaining power of customers: The ability of customers to put the firm under pressure due to availability of existing substitute products, buyer price sensitivity, uniqueness of the products, etc.
The bargaining power of suppliers: The cost of factors of production (e.g. labor, raw materials, components, and services such as expertise) provided by suppliers can have a significant impact on a company's profitability. As such suppliers may refuse to work with the firm or charge excessively high prices for unique resources.

References
Porter, M.E. (1979) "How competitive forces shape strategy", Harvard Business Review, March/April 1979.
Porter, M.E. (1980) "Competitive Strategy", The Free Press, New York, 1980.
Porter, M.E. (1985) "Competitive Advantage", The Free Press, New York, 1985.

Develop a detailed paper applying Porters Five Forces Model to the American automotive industry.

1. Abstract
2. Introduction to the Auto Industry
2.1. Industry Definition
2.2. Industry Profile
2.3. Industry Structure
2.4. Future Outlook
3. Porter's Five Forces Strategy Analysis as it applies to the Auto Industry
3.1. Bargaining Power of Buyers
3.2. Bargaining Power of Suppliers
3.3. Competitive Rivalry in the Industry
3.4. Threat of New Entrants
3.5. Threat of Substitutes
4. Conclusion

Customer is requesting that (Oriented) completes this order.

I) Interest Group Lobbying
Researching the interest group or PAC lobbying on a particular policy decision at the state or national level (within the past 5 years), including:
**a detailed analysis of the arguments, tactics, financial contributions, and activities of the group(s) involved in the bill.

My paper topic is going to focus on the original bailout bill of the car companies in the America. The bills name is the Auto Industry Financing and Restructuring Act and what I am going to attempt to prove is how the various interest groups, some that had be odds with each other for most of their history came together in order to lobby congress in order get this bill passed. The focus needs to be on the United Auto Workers and the 3 major car companies in America GM, Ford and Chrysler and how they all went about lobbying members of congress to get this bill passed. Sources to look at include congressional testimony, campaign donations to political leaders and grass root efforts use to mobilize voters in order to get members of congress to support this bill While some history and back ground of lobbying is needed a majority of the paper must focus on the bill and the efforts to get it passed but these groups.

The paper needs a bibliography page and footnotes are needed too.


This is my last term paper in college I need some real help, My family has come into some real trouble and my professor is not be helpful and I need to get this done. So please if you could put your best effort into this.
There are faxes for this order.

Please describe political pressures faced by President Obama leading up to and during the automotive bailout process. Discuss President Obama?s view on why the automobile industry should be saved. What actions did president take to save the companies, was his actions popular in America? Discuss the Environmental Protection agency?s new standards set by Obama - what this means for the future of the auto industry. What are the criticisms did he face by saving the auto industry, and did his popularity increase after the move to save the automotive industry. Please provide sited sources

Compile findings on the key ideas in the systems theory and its application to find problems in the auto industry, the issues related to stocking solutions and return on invested capital to find solutions to problems in the auto industry, and state the methods to establish an organizational global presence and overcome resistance to globalization within the auto industry.

List each problem, solutions, resources, and Metricsstate the assumptions and evidence from external research that supports your decisions.

dear writer
subject : supply chain management about ( auto industry)
need : report about benefits and risks/cost of supply chain practices in the auto industry ( be sure to keep all sources and be able to explain the practices that you find the benefits and risks for )
- also : warehouse management systems, warehouse design and management
please I need it very clear explain each part
-need sources
-single space please
-if you can add more information about this industry it is okay but please write about what I want first
Thank you

Identify an industry of choice (Auto Industry, Healthcare, PC or Telecommunications). Using the PESTEL analysis from the readings, discuss and analyze the factors that may impact the industry and the successful marketing of a company?s product, for example Ford Motor Company over the next five years. Which factors are perceived to be the biggest weaknesses of the industry? Which factors play to the industry?s strengths? What are some opportunities for growth that could be capitalized upon over the next five years?

Develop a three to four-page paper in the correct APA writing style. Include a minimum of 2-4 resources; 1 resource must be peer reviewed.

Need to be an original work that can run through turnitin


In 2009 the American auto industry was in a dire economic state. Chrysler was in Chapter 11, GM was on the brink of bankruptcy, and Fords future was at best uncertain. The demise of the U.S. auto industry would have a devastating impact on our national economy and specifically the economies of Michigan and Ohio.
Economists occasionally use Porter's five forces framework when making a qualitative evaluation of a firm's strategic position. According to Porter, his model should be used at the industry level, defined as a marketplace in which similar or closely related products or services are marketed. This research paper requires the application of Porters Five Forces Model to the auto industry.
Porter's analytical framework consists of those forces that affect a producers ability to serve its customers and make a profit. A change in any of these five forces requires a re-assessment of the marketplace. The five forces include:
1) The threat of substitute products: The existence of close substitute products (i.e., high elasticity of demand) increases the propensity of customers to switch to alternatives in response to price increases.
2) The threat of the entry of new competitors: Unless there are significant barriers to entry, profitable markets that yield high returns will attract firms (i.e., perfect competition), effectively decreasing profitability.
3) The intensity of competitive rivalry: As in the case of oligopoly markets, rivals may choose to compete aggressively, non-aggressively or in non-price dimensions.
4) The bargaining power of customers: The ability of customers to put the firm under pressure due to availability of existing substitute products, buyer price sensitivity, uniqueness of the products, etc.
5) The bargaining power of suppliers: The cost of factors of production (e.g. labor, raw materials, components, and services such as expertise) provided by suppliers can have a significant impact on a company's profitability. As such suppliers may refuse to work with the firm or charge excessively high prices for unique resources.


References
Porter, M.E. (1979) "How competitive forces shape strategy", Harvard Business Review, March/April 1979.

Porter, M.E. (1980) "Competitive Strategy", The Free Press, New York, 1980.
Porter, M.E. (1985) "Competitive Advantage", The Free Press, New York, 1985.

Develop a detailed paper applying Porters Five Forces Model to the American automotive industry.

Your paper should be between 2000 and 3000 words, in APA format and structured as follows:
1. Cover page with a running head
2. Abstract
3. Introduction to the Auto Industry
3.1. Industry Definition
3.2. Industry Profile
3.3. Industry Structure
3.4. Future Outlook
4. Porter's Five Forces Strategy Analysis as it applies to the Auto Industry
4.1. Bargaining Power of Buyers
4.2. Bargaining Power of Suppliers
4.3. Competitive Rivalry in the Industry
4.4. Threat of New Entrants
4.5. Threat of Substitutes
5. Conclusion
6. References

TOPIC FOR RESEARCH: COMPARING AUTO & LIGHT TRUCK SALES BETWEEN GM & FORD MOTORS.
Up until data or statistical analysis section, the research paper should focus generally on the auto industry. In data or statistical analysis and finally the abstract the focus should narrow down to comparing GM & FORD auto and light truck sales.
Requirements for research project
The written portion of the paper should include the following:
Abstract and Table of Contents ??" Abstract should be written in past tense.
1. Statement of the problem including a rationale for the study: Paper should not use personal pronoun. The paper should be written in formal tense. Here introduce nature of the topic, and then why are we doing the study. Who is benefitting from the study??
2. Background information: History of the problem, relevant secondary research, etc, through a review of literature (called literature review), research articles found through databases like proquest, lexis nexis, etc ( Must review at least 3 articles or publications other than the required textbook and online sources).
3. Description of the methodology ??" How you collected your data, e.g experimental design, surveys, data @website, data @work, etc.
4. Statistical Analysis (include print outs in appendix): Establish and test hypothesis and make a decision.
5. Conclusions: Decisions drawn from your statistical interpretations, the ramification of your research and recommendations for the future. Decide your choice of using sampling with replacement or without replacement and why have you chosen it.
Reference Page
Appendices
Please set the paper with these 5 topic headings and double space at least, with 12-14 font size. Please number the pages. Include graph and statistical print outs in the appendix after the bibliography. APA should be followed for all citations.
Also do include the raw data of your primary research.
I have located the relevant information on raw score from http://oica.net/category/production-statistics/2008-statistics/
Please let me know if there are any further clarifications needed.

Should the federal give TARP fund money to the American automobile industry?

Yes the Federal government should give the TARP fund money to the American automobile industry.
Economic
Part (B) of the Troubled Asset Relief Program (TARP) says - any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress."
Of the $1.1 trillion in authorized bailout funds ($700 billion TARP and $400 billion for Fannie and Freddie) over $450 billion is still uncommitted and unused. (That doesnt count the $68 billion that was repaid by bailed out banks the week of June 15th)
70% of Chrysler bond holders were four major U.S. financial institutions which each had received TARP bailout funds from the U.S. government.
GM is carrying a $172.81 billion debt burden, with nearly billions per year in interest costs. If bondholders have their stakes swapped for common stock (equity) which pays no interest, GM's debt and interest burden would be substantially reduced.
Estimates are that a Big Three shutdown would cause a decline in personal income of $151 billion the first year, and $398 billion over three years. The federal, state and local governments would lose tax revenue, and instead spend on welfare programs a total of $156 billion over three years.
The bailout has been successfully exercised in the past and can be considered part of the revised market capital model. The most recent example - the airline industry (2001).
The government is making an investment that in the long run will be profitable, thus beneficial to everyone involved.
Even if the bankruptcy is unavoidable it is still will not be able to recover the industry. Automotive industry relies on the brand power which is built over years and can be lost in a blink of an eye. In order for revised versions of the companies to be sustainable and make sales it has to meet its current, past and future obligations to it primary stakeholders in the current situation - vehicle buyers / owners.

Social
Some banks were opposed to receiving the money and had it forced upon them by the government. Auto companies are on-their-knees requesting funds and are having a hard time getting them.
Closing the Big Three would mean loss of 240,000 very highly-paid jobs at the Big Three, a loss of 980,000 highly-paid jobs at the suppliers and local dealers, plus the loss of 1.7 million additional jobs throughout the economya total loss of 3 million jobs. Plus an estimated two million people rely on the industry for health care and 775,000 retirees collect auto-industry pensions.
Throughout US auto industrys most recent history it has been a great contributor to the US prosperity. In contrast to its counterparts in the rest of auto-producing world, the US autoworkers were paid the most (higher taxes at the expense of GM, Ford, and Chrysler added to the budget and guaranteed a prosperous retirement for hundred thousands of US citizens
The bailout has been successfully exercised in the past and can be considered part of the revised market capital model. The most recent example - the airline industry (2001).
Political
On December 19, 2008, President Bush used his executive authority to declare that TARP funds may be spent on any program he personally deems necessary to avert the financial crisis, and declared Section 102 to be nonbinding. This has allowed President Bush to extend the use of TARP funds to support the auto industry
On June 1, 2009, the court gave interim approval to GM's request to borrow US$ 15 billion as debtor-in-possession funding, the company only having US$ 2 billion cash in hand. The United States Treasury argued in court that it was the only source of such debtor in possession funding, and that without the money from the loan General Motors would have no option but liquidation.
Vehicle Acquisition Holdings LLC is a limited liability company formed in Delaware to purchase the assets of General Motors that will become the "New GM" as part of the General Motors bankruptcy.
At the time of the GM bankruptcy filing, Vehicle Acquisition Holdings was owned by the United States Department of the Treasury. It is planned that approximately 60.8% will continue to be owned by the Treasury, and other shareholders will include a new United Auto Workers Voluntary Employee Beneficiary Association to act as the retiree healthcare fund (17.5%); the government of Canada and government of Ontario (11.7% together); and the "Old GM" in order to represent the interests of some of the original GM bond holders (10%).


Research Paper Format:
1. Your essay will be based on your debate topic and consist of a footnoted research article, six to ten pages in length, single-spaced, not including the page of footnotes that appears at the end of your paper.
2. Your paper should follow MLA format using MS Word default settings (Times New Roman, 12 pt. font, single spaced, standard margins).
3. Citations for your essay should be gathered by way of a library search. It is not sufficient to simply gather your information from an internet search, particularly if the information in those web sites is not supported by scholarly research. No more than 20% of your sources should be web sites, not including those sources which also appear as government documents or in scholarly publications. At least three of your sources should be from scholarly texts, such as a refereed journal article. All supporting facts and quotes should be identified by use of endnotes.
4. Footnotes should appear as endnotes on a separate page at the end of the paper. A well researched paper should have a minimum of six or more different factual sources to draw from. Your paper does not need to include a bibliography.

I am requesting writer Amber111 for this.
Here is the assignment (please make this a 10 page paper):

" ECON 600 Research Project 2

Develop a detail paper applying Porters Five Forces Model to the American automotive industry.

Your paper should be between 2500 and 4000 words, in APA Format and structured as follows:
1. Cover page with a running head
2. Abstract
3. Introduction to the Auto Industry
3.1. Industry Definition
3.2. Industry Profile
3.3. Industry Structure
3.4. Future Outlook
4. Porter's Five Forces Strategy Analysis as it applies to the Auto Industry
4.1. Bargaining Power of Buyers
4.2. Bargaining Power of Suppliers
4.3. Competitive Rivalry in the Industry
4.4. Threat of New Entrants
4.5. Threat of Substitutes
5. Conclusion
6. References "

_____________________________________________________________________________________

Here is the introduction of the assignment from the instructor:

" ECON600 Research Project 2

In 2009 the American auto industry is in a dire economic state. Chrysler is in Chapter 11, GM is on the brink of bankruptcy, and Fords future is at best uncertain. The demise of the U.S. auto industry will have a devastating impact on our national economy and specifically the economies of Michigan and Ohio.

Economists occasionally use Porter's five forces framework when making a qualitative evaluation of a firm's strategic position. According to Porter, his model should be used at the industry level, defined as a marketplace in which similar or closely related products or services are marketed. This research paper requires the application of Porters Five Forces Model to the auto industry.

Porter's analytical framework consists of those forces that affect a producers ability to serve its customers and make a profit. A change in any of these five forces requires a re-assessment of the marketplace. The five forces include:
1) The threat of substitute products: The existence of close substitute products (i.e., high elasticity of demand) increases the propensity of customers to switch to alternatives in response to price increases.
2) The threat of the entry of new competitors: Unless there are significant barriers to entry, profitable markets that yield high returns will attract firms (i.e., perfect competition), effectively decreasing profitability.
3) The intensity of competitive rivalry: As in the case of oligopoly markets, rivals may choose to compete aggressively, non-aggressively or in non-price dimensions.
4) The bargaining power of customers: The ability of customers to put the firm under pressure due to availability of existing substitute products, buyer price sensitivity, uniqueness of the products, etc.
5) The bargaining power of suppliers: The cost of factors of production (e.g. labor, raw materials, components, and services such as expertise) provided by suppliers can have a significant impact on a company's profitability. As such suppliers may refuse to work with the firm or charge excessively high prices for unique resources.

References
Porter, M.E. (1979) "How competitive forces shape strategy", Harvard Business Review, March/April 1979.
Porter, M.E. (1980) "Competitive Strategy", The Free Press, New York, 1980.
Porter, M.E. (1985) "Competitive Advantage", The Free Press, New York, 1985. "
_________________________________-

Here are my requirements:
1) this should be a 10 page paper in APA format for a masters level Managerial Economics course. Please use 9 online sources (with a direct online links if possible) that do not require a password to be accessed (exception: I have access to ebscohost, so u can use sources from there) such as BusinessWeek.com, WSJ online, etc. One source must be the text book Managerial Economics, 6th ed, William, Samuelson, please cite this book two (2) times in the paper (one of these citations should from the small section about Porter's five forces framework starting on page 328).
You can access the textbook, Managerial Economics, Samuleson at https://online.vitalsource.com/signin, email: [email protected],

2) Please use three (3) real-world examples (i.e. Ford, GM, Chrysler, etc..) as they relate to the American auto industry. One or two paragraphs for each real-word example in this section should be enough.

3) I will use turnitin.com so the sources should not be more than 15 to 30% of the total paper- use a combination of quotations and paraphrasing please. When citing a reference please incude the page number so I can find it. Also below is the grading rubric provided by the instructor, please follow accordingly (I will send it to you as a resource since it did not copy well below).

_______________________________________
Grading Rubric provided by instructor:


ECON 600 Research Project 2 Rubrics

Score Criterion Unsatisfactory Satisfactory Exceptional
15% Identification of auto Industry Did not fully identified the auto industry structure Identified the auto industry structure correctly. In addition to meeting the requirements of satisfactory, provided an analysis of market structure requirements including number of firms, uniformity of products, ease of entry and exit.
35% Identification of Porters Five Forces Did not identify all five forces. Identified all five forces. In addition to identifying all five forces provided the detail for relating them to the requirement of market structure.
15% Identification of Application of Porters Five Forces to auto industry Did not clearly identify an appropriate application of each concept identified in the scenario. Clearly identified an appropriate application of each concept identified in the scenario. In addition to meeting the requirements of satisfactory, for each concept identified, defined at least one future opportunity.
10% Demonstrate Critical Thought in Analyzing Information Does not demonstrate critical thought in the analysis of the information, or analysis is disjointed Demonstrates critical thought in analyzing the information by presenting various perspectives on the concepts In addition to meeting requirements of satisfactory, synthesizes information across concepts effectively
10% Demonstrate Quality and Effectiveness in Written Communication Written communication is ineffective, with numerous spelling and grammatical errors or poorly constructed sentences Written communication is effective In addition to meeting the requirements of satisfactory, the paper is engaging to the reader with concise and clear communication
10% Adhere to APA Writing Style Requirements Numerous errors in format, style, or reference citation Few errors in format, style, or reference citation Virtually no errors in format, style, or reference citation
5% Citation Did not provide an appropriate citation. Provided an appropriate citation N/A






There are faxes for this order.

Customer is requesting that
There are faxes for this order.

Customer is requesting that (amber111) completes this order.

Discussion Questions

1. During 1965-72 the average return on equity of the world's 12 biggest auto manufacturers was about 10 percent; during 1993-2003 it was about 4.5 percent. What changes in the structure of the world auto industry have caused profitability to decline?
2.how is structure of the world automobile industry likely to change over the next 5 years?
3.As a result of these changes, is the industry likely to be more or less profitable over the next 5 years as compared with the last 5?
4.Which companies are likely to be most successful over the next 5 years?
5 what should Ford do to improve its profitability over the remainder of the decade?

Corbett, B., (2002). Southern hospitality. Ward's Auto World, Detroit, 38(8), 45-49. Then answer the following question. From a logistical standpoint, why is the southern U.S. an attractive location for the auto industry? Use at least 3 different sources of information. Make you case clearly as you discuss the factors that show what makes an attractive location. Additional articles and reference:Leposky, G. (n.d.). Choosing a Business Location. Accessed August 10, 2009, at http://www.ampersandcom.com/ampersandcommunications/location.html This one talks about some of the most logistics friendly cities in the U.S.:King, B. (2002, Oct.). 100 America's most logistics-friendly cities. Transportation & Distribution. Cleveland, P 14-28. This article discusses what one city is doing to make itself a good location for logistics:Hyland, T. (2002, May). Louisville leads the way in logistics. Transportation & Distribution. Cleveland, 43(5), 38-41. Available in the Trident Online Library.Now take a quick look at why Columbus, OH, would make a good location as a distribution site:Trunick, P. A. (2002, May). Heartland gateway to the world. Transportation & Distribution. Cleveland, 43(5), 34-37. Available in the Trident Online Library.

Data collection steps and Procedures
a. Describe the source or steps you will take to gather your data related to your research problem
b. Outline the methods you will employ to evaluate your data
c.Discuss the techniques and procedures you will employ to evaluate your data,i.e., content analysis, comparative analysis, or statistical analysis? If so, in what specific ways?

Findings Summary and Conclusion:
Conduct the experiment or treatment. Then respond to instructions and/or questions
a. Outline the results of the study
b. Are the results in line with the hypothesis?
c. Based on the preliminary
d.Provide recommendations for future studies in this area
e. outline any factors which deserve attention which may not have been outlined or discussed under one of the major heading

Use the profit figures that are available publicly from the annual reports of the Big Three automakers.(Ford, General Motors, Ford).Unemployment rates for Detroit ffrom the Bureau of Labor Statistics. Direct industry employment in Detroit. Varibles should be subjected to statistical tests, mainly in the form of regression analysis Two regressions should be done,to test each of the independent variables, in order to evaluate their links to Detroit unemployment.
Hypothesis is that there is a significant link between direct auto industry employment and unemployment in the region, but only a moderate link between auto industry profits and unemployment in the Detroit region.

What led to the collapse of America's "big 3" auto makers because of the rise in oil prices from 2003-2008 and the auto industries failure to change from high profit margin Sport Utility Vehicles during this time to more energy efficient vehicles that were becoming more in demand.

I need numbers and formulas: determining price through demand and supply, maximizing profit with marginal revenue and marginal cost, price elasticity of demand, inelastic, elastic, TC = wL + rK (L = labor) (K = capital), perfect competitive market, profit maximizing equilibrium, elastic demand, inelastic demand, one or two graphs demonstrating inputs and outputs, curves, MRP (marginal revenue product), etc.

Ford Motor Company: Supply Chain Strategy

1) Describe how the auto industry might work differently if it were designed in accordance with the Dell Model.

2) Using Microsoft Visio/Ms Word tool, create a flow chart of a supply chain process for Ford Motor company based on the Dell model.

1. US Auto Benchmarking Research

In this assignment, you will work collaboratively to create a rich source from which you will individually develop alternative solutions for US Auto.
Step 1
Individually, identify and research two companies that have faced specific issues related to those you identified in the scenario. For each company selected, discuss the following in a 350-word synopsis: (A) issue identified in the scenario that is also facing the company, (B) how the company responded to the issue, and (C) outcomes of the companys response to the issue. Thus, I should have two 350-word synopses, one for each company, which provides the information identified.

(((US Auto Scenario)))

SCENARIO: USAUTO

COMPANY OVERVIEW

USAuto
A former frontrunner in car manufacturing, USAuto now struggles to maintain a foothold in the industry it helped pioneer. Its old line plant assets are outdated, and labor contracts negotiated in the company's heyday have ensured that inflated labor costs will put a squeeze on profitability for years to come. As if that weren't enough, USAutolike many American businesseshas lost significant market share to foreign auto producers who have built domestic plants to keep pace with U.S. demand. To date, foreign carmakers have not expanded into Central or South America, but given the ease with which they entered the U.S. marketplace, they assume local manufacturerssuch as AutoMexwould provide little resistance.

In the past 10 years, USAuto has pinned all its hopes and committed most of its available research and development funds to delivery of the hybrid gas-electric engine. Other than that, the company has no strategic advantage, and relies heavily on domestic loyalty to stay afloat.

AutoMex
AutoMex is a major player in the Central and South American auto marketplace. Unlike the U.S. auto industry, which has been led by large manufacturers, AutoMex began as marketer of new and used U.S. autos in the Mexican marketplace.

This experience of marketing products that are manufactured by other firms has both underscored the value of the marketing function, and at the same time created a strong desire at AutoMex to have a product of its own to market rather than just sell the products of others. AutoMex satisfied that desire to some extent with manufacturing, but quickly realized that its corporate comparative advantageas viewed by other firmswas its ability to marshal low-wage, limited-skills workers in assembly locations.

AutoMex has come to believe that low-wage is not really a comparative advantage, because any other competitor can beat it by simply investing in productivity-enhancing equipment. This belief on the part of AutoMex has driven it to seek relationships that create skills-transfer to its workforce. AutoMex concludes that if it can become a leader in manufacturing in a high-technology environment, it will transform itself into a world-class competitor in auto manufacturing and marketing.

THE PLAYERS

Linda Henderson: USAuto's Executive Vice President (EVP), Linda is not a USAuto "insider." She joined the company as VP of Planning four years earlier, and was promoted to EVP just two years ago. Even without her strong analytical background, Linda would have easily deduced that USAutos high labor cost could sink the company if not drastically reduced. Her plan: Share the hybrid engine technology with AutoMex in exchange for a partnership deal. The hybrid engine would improve everybodys product, and the partnership would decrease overall labor costs and provide stiff competition for foreign dealers entering Central and South America.

Mary Sackrider: USAuto's General Counsel (GC), Mary has filled varied legal and corporate roles at USAuto for the past 10 years. Before that, Mary was an assistant U.S. Attorney working to enforce anti-racketeering statutes; during that time, she developed a knack for negotiating and plea bargaining. While she is not an intellectual property specialist, she is familiar with key elements of patent law.

Luis Alvarado: AutoMex's Chief Executive Officer (CEO), Luis has worked in auto manufacturing in both the U.S. and Mexico for the past 20 years. He signed on as Chief Operating Officer at AutoMex five years ago, but has only held the CEO position for three months. Luis believes AutoMex needs to advance technologically in order to grow, and is committed to that vision.

Juarez Delgado (JD): A sharp attorney with well-honed negotiating skills, JD left a senior partnership at a major law firm to become the AutoMex in-house counsel.



MAY 18, 2004

To: USAuto Officers
From: Linda Henderson, EVP
Re: Our decision to enter into discussions with AutoMex

If the buzzing around the water cooler is any indication, youve no doubt all heard that Mary and I are about to begin preliminary partnership discussions with AutoMex. As the talks progress, well be asking many of you for help and input, so I want you to have an understanding of our position.

The cornerstone of our bargaining power is our hybrid engine; we hope that in sharing it, we can convince AutoMex that together, we can build a new generation car for both the North American domestic market and the new Central and South American markets. The benefit to us, of course, is that expanding to the south and employing lower cost Mexican labor will help alleviate some our crippling high labor costs and enable us to remain competitive.

I will admit to being a little apprehensive about these negotiations. The hybrid has been USAutos baby for a long time, and Mary and I have discussed how careful we need to be about protecting our invention and its patents. At the same time, the engine is all we have to offer, and without this partnership and accompanying expansion, Im afraid USAuto wont survive the decade.

I'm enclosing three documents to help you get up to speed. First, I'm providing tabular data on the engine cost, which makes it clear that spreading the engines R&D cost over both a domestic and Latin American market will result in lower overhead. The second document is an analysis of the LAFTA market, which illustrates the potential for sales of the hybrid engine car in Latin America. Finally, I've enclosed a legal summary that Mary has prepared to explain Intellectual Property and legal aspects of our patent and invention concerns.

Let me know if you have any questions. Thanks, guys!

Linda


Attachment A: Table showing (1) per-unit engine cost with/without additional units in Central/South America, and (2) vehicle labor cost with/without lower labor cost in Mexico

If sold in U.S. Domestic Market Only (Note 1) If sold in U.S. and Central/South American Markets (Note 2)
Per-unit engine cost (incremental) (Note 3) $2,512 $1,855
Per-unit engine cost (loaded for R&D and other related costs) (Note 4) $3,178 $2,235
Per-vehicle manufactured cost (FOB Final Assembly Plant) (Note 5) $21,100 $18,250

(Note 1)
Per-unit engine cost (both incremental and loaded) is based on market analysis and forecasting of 100,000 units sold in year 1, followed by 200,000 in year 2, and thereafter an increase of 5% per year in market share for demographic projections of vehicle demand for U.S. domestic market in contiguous 48 states. Sales for Alaska and Hawaii are included, but assumptions for these states are different than for other states, and are contained in the Pacific Region sales forecast.
(Note 2)
Per-unit engine cost (both incremental and loaded) is based on domestic analysis and forecasting of units sold as described in Note 1, plus individual country forecasts for markets in Central and South America. Central and South American market sales volume assumes that the Mexican market is enhanced by production of non-engine assembly for both domestic and Central and South American markets at auto plants in Mexico, with concomitant special demand factors. If production is moved from Mexico, forecast demand for Mexican market will decline by additive (not multiplicative) 5% of forecasted amount.
(Note 3)
Incrementa per-unit engine cost recognizes direct variable costs plus direct fixed cost of production facility only.
(Note 4)
Loaded per-unit engine cost recognizes direct variable costs, direct fixed facility costs, R&D, and overhead costs. R&D includes cost of developing hybrid engine, amortized over projected market cycle of hybrid engine. Overhead costs include non-R&D non-direct costs of corporation that are charged to hybrid engine project. Overhead also includes cost associated with establishing presence in Central and South America, to the extent that such costs are recognized to the hybrid engine program.
(Note 5)
Per-vehicle manufactured cost includes all chassis, power train (engine) and other final-assembly items as needed for road worthiness in U.S. (for domestic market) and for all target market countries (for domestic and Latin American market). The average cost is derived using the weighted average of all models at first-year target sales for the domestic market. The same mix of weighted average of all models is used for Latin American and domestic composite. In actuality, the model mix would change to reflect smaller, lower priced autos on average. The same mix is used, however, for comparison purposes. Actual average cost would be lower.
(The information provided above is confidential intellectual property of USAuto, Inc and subsidiaries. All Rights Reserved. This information is not to be transmitted to other parties without the express written permission of USAuto, Inc.)


Attachment B: Analysis of LAFTA market

Summary of economic and econometric analysis of Latin America (Central and South America) trade market:
Sum of Gross Domestic Products of LAFTA market nations
The market nations of LAFTA include both fully industrialized and partially industrialized economies, but all share the common attribute of emergence. The economy of these nations is stimulated by a world demand for natural resources at current extraction costs and a labor workforce that is becoming increasingly competent in automated manufacturing. The natural resources have a strategic advantage of being relatively geographically adjacent to the high-demand U.S. market for wood pulp, certain agricultural products, and mineral products. These natural resources are all high-density mass, with concomitant transport costs, and therefore the Latin American market will tend to outperform other low-cost commodity providers, primarily in Asia and Africa.
The labor workforce is increasingly educated to the level of competence required for semi-automated and automated production facilities. Again, the relatively short distance from commodity and manufactured products (e.g., 3000 statute miles from Brazil to U.S. port at Jacksonville, FL, compared to 8000 statute miles from China to U.S. port at Los Angeles) creates a strategic advantage for production of goods in Central and South America. The location of Mexico, within 1,500 miles of 80% of all U.S. consumers, is particularly noteworthy for the production of high-mass, high-density products.
The governments of nations in Latin America are becoming more business-friendly and stable, and they retain a willingness to not have as many costly environmental regulations as the U.S., permitting additional cost advantages.
Disposable Income of LAFTA market nations
The increase of production and skilled labor jobs in Latin America assures that incomes of workers in these markets will continue to increase. These incomes are increasing at a rate greater than the rate of increase in the cost of housing or of taxation by the LAFTA member nations. The result of these dynamics is the growth of income faster than taxes and housing costs, realizing a rapid increase in disposable incomes.
At the same time, these nations are building and improving roads and highways, initially to enable the free flow of commercial vehicles to production plants and agricultural and mining facilities, but with unintended beneficiaries in the person of workers, who are purchasing any cars they can manage to locate.
The result of the increase in disposable income is a rapidly increasing demand for personal autos that are needed to transport workers to factories in areas of highly diversified industrialization, and for non-business purposes for an increasingly affluent populace. The demand for autos will exceed the locally available supply for the foreseeable future. In addition, the demand for autos that are of a quality higher than that locally available will rise particularly.
Finally, the Latin American continent has yet to develop a system for transporting fuels for autos, and the cost of fuel reflects that lack of infrastructure. While the local populace will purchase any car available, it will particularly value autos that have the high-mileage attributes that are appreciated in economies with a high cost of petrol (gasoline) at the pump.
(The information provided above is confidential intellectual property of USAuto, Inc and subsidiaries. All Rights Reserved. This information is not to be transmitted to other parties without the express written permission of USAuto, Inc.)


Attachment C: Memo to Corporate Officers, USAuto, Inc. from Mary Sackrider

As we prepare to negotiate with AutoMex, Id like everyone to have a laymans understanding of intellectual property and copyright law so that were mindful of how we can protect our hybrid engine technology throughout the discussions.

There are two key elements in discussing anything related to patents, copyrights and trademarks: income generation and identity. Income generation -- making money -- is the number one reason for developing patented and copyrighted material. There may be other reasons -- artistic expression or a desire to create new methods -- but they take a back seat to income generation when were talking about lawsuits. If somebody stole your tractor or your computer, he would be depriving you of at least one way that you earn money; theft of the concepts in a patented or copyrighted idea works the same way.

Now, if there were no protection of these income-generating ideas, it might be unethical to steal the ideas, but it wouldnt be illegal. That kind of risk would certainly deter businesses from spending millions to develop new ideas. If there were no protection of patent, we could all let a pharmaceutical house spend billions inventing a new drug to cure a horrible disease, then copy it and sell it for less.

For most of the past 200 years, America's patent law was the best in the world, but a changing world has made the law less effective. In the past two decades, aggressive new legal tactics have often put American inventors at a disadvantage compared to their foreign competitors. Sometimes all it takes to disarm an inventor is a lawsuit challenging his patent; often, the inventor simply doesnt have the resources to fight. Some American inventors, thinking they were first, invested their life savings in a new "patent-pending" idea, only to discover years later that someone else had secretly beaten them to the Patent and Trademark Office (PTO). (There are patents being litigated today whose claims were kept secret for more than 40 years.) Most infuriating, foreign entities have begun to secure U.S. patents on U.S. manufacturing processes and trade secrets that had been in use for years.

For the past six years, a coalition of manufacturers, academics, patent professionals, and individual inventors have been working to bring patent laws up to date. The result of their work --the American Inventor Protection Act of 1999 (Senate Bill 1798) -- finally passed Congress in December 1999 as part of the Intellectual Property and Communications Omnibus Reform Act of 1999.
The new law has made three important changes:
1) It allows settlement of validity disputes in the PTO instead of in the courts. Typically, an inventor could spend $2 million in legal fees to re-establish the validity of his patent. The new reexamination procedure should do away with most of this cost.
2) Patent applications that are also filed abrad -- and this is of particular interest to us regarding the hybrid engine -- are made public 18 months after filing. In the past, an application could be held secret in the PTO for decades so that inventors had no way of knowing if someone else was already in the process of patenting the same invention.
3) It establishes a "first-to-invent" defense, a prior user right much like a "grandfather clause." Under the old law, such patents were arguably enforceable if the technology in question had not been published. Now, business methods cannot be patented by anyone after they have been in use for more than a year.

While the new law is a step in the right direction, protestors have succeeded in leaving a few loopholes open. For starters, reform opponents managed to slip in a provision allowing U.S.-only applications to be kept secret forever. This means ambushing -- writing a patent application and keeping it secret until others have invented and commercialized a similar technology -- can still happen.

Identity may also become an issue in copyright law. When we talk about identity, were talking about a trademark or brand name. Companies like Band-Aid spend a lot of money protecting their brand name, so that every bandage out there does not generically get called a Band-Aid. Companies that dont take these steps -- like Escalator -- eventually lose their status as the inventor of a particular product and eventually become genericized.

If there were no protection of identity, in the form of trademark, anyone could manufacture an athletic shoe with a "swoosh" on it and call it "Nike." The market, the idea, the effort that Nike has put into its product could be gone with a "swoosh" (sorry!). A fraudulent producer could make substandard shoes, hurt Nike's reputation, and indirectly damage Nike's financial state. The "swoosh" is not an income-producing asset in the strict sense, but it is nevertheless a major marketing feature that has value.

Private inventors have to have protection to allow them the opportunity to recoup their invention development expenses, or they won't invent, and society will not advance.

(The information provided above is confidential intellectual property of USAuto, Inc and subsidiaries. All Rights Reserved. This information is not to be transmitted to other parties without the express written permission of USAuto, Inc.)



MAY 20, 2004

USAuto Negotations Prep meeting minutes

Present at meeting: EVP Linda Henderson (meeting chair), GC/SVP Mary Sackrider, USAuto Corporate Staff Officers (SVPs, VPs), plus R&D Engineering, Labor Relations Division Director/East, and Government Relations officer.

Ms. Henderson opened by announcing the two key topics on the agenda: (1) Negotiation goals and strategies, and (2) Preparation tasks, deliverables, and lead for each task.

She went on to list the goals of the negotiation process:
(1) Protect from disclosure any trade secrets. (Some of our technology was intellectual property relating to the hybrid engine that was disclosed as part of the patent process, but other process elements were not disclosed in the patent and remain trade secrets.)
(2) Secure agreement for AutoMex to produce non-engine parts of the auto and retain engine assembly in the U.S. (to protect our intellectual property).
(3) Gain access to the Central and South American markets to sell our hybrid-equipped cars.

The officers then brainstormed strategies likely to achieve these goals. The following were selected as most viable:
Emphasize to AutoMex the benefits of the hybrid engine, particularly in the Central and South American markets. For example, the hybrid gasoline engine is not a high-performance engine; it merely powers the electric motors. As a result, it operates with myriad internal combustion fuels, including locally distilled alcohol-based fuel.
Focus on AutoMexs commitment to produce as many of the non-engine, labor-intensive parts of the auto as possible, in order to reduce our total labor content cost.
Clearly detail how many additional car sales AutoMex can realize in the Latin American market because of our superior engine.

Mary Sackrider outlined Negotation Preparations.

Outline specific objectives that will enable us to reach our goals.
Identify the choices that we have that will get us to our goals/objectives, along with the benefits and costs of each choice.
Determine what AutoMex's opening positions will likely be, and prepare arguments about why our approach is better.
Determine the most likely objections that AutoMex will raise, and prepare feasible counterarguments. Identify fallback positions.

Note to participants: The meeting adjourned at 2:30 p.m. Follow up will be by e-mail.


MAY 25, 2004

To: Mary Sackrider
From: Linda Henderson

Mary:
As the supporting material we requested comes rolling in, I realize that there is going to be a LOT of information, and I'm not sure how we can best assemble it so we can get what we need quickly during negotiations. Any suggestions?
Linda

To: Linda Henderson
From: Mary Sackrider

Hi Linda:
There are several ways to do it. My preferred method is to use a "bargaining book" that uses three-hole punch binders, tabbed for topic with an index by topic. That way, we can get to the info we need in short order. Id suggest tabs for the following:
*Each of our goals, with sub-tabs for each possible course of action which describe benefits and cost.
*Each of AutoMexs anticipated goals, with sub-tabs outlining our position for each, as well as guidelines for deviating from our positions.
*Deadlines and timeframes, which will include information on how important timely outcomes are to each of us.
*Issues we wish to avoid, and ways to avoid them :)
Does this help?
Mary

To: Mary Sackrider
From: Linda Henderson

Mary:
This is a start. I also want to be sure that we have the financials of our various scenarios and choices -- what things will cost us, what cash flow outcomes, etc. Also, because we're doing this as a rush job, I'm worried that some of the numbers may not be reviewed as carefully as we'd like. What can we do to better assure the numbers supporting the alternatives and choices are good?
Linda

To: Linda Henderson
From: Mary Sackrider

Linda:
Good ideas; Ill put some thought into them. Anything else we're missing in preparation?
Mary

To: Mary Sackrider
From: Linda Henderson

Mary:
As possible fallback material, you may want to insert tabs about our Just-in-Time linkage technology that works with suppliers, and also our SCAM technology that produces the new-generation paint for the cars. Both of those technologies are valuable, but if sharing them gets us the partnership, it would be worth it. Of course, I still worry that if AutoMex decides not to partner with us, weve given them enough information to become a major player and competitor...
Linda


JUNE 3, 2004
First meeting between USAuto and AutoMex -- 10:00 a.m., AutoMex headquarters.

Present are USAuto EVP Linda Henderson and General Counsel Mary Sackrider, and AutoMex CEO Luis Alvarado and in-house counsel Juarez Delgado

HENDERSON: Thank you for welcoming us into your offices, and for agreeing to hear our proposal for a possible partnership. We believe this is a an opportunity for both of us to generate a win-win outcome. If youre ready, I will begin my presentation.

ALVARADO: AutoMex shares your belief that this proposal carries much promise. Please, summarize what you believe to be the game plan.

HENDERSON: USAuto has been working for years on a commercially viable hybrid gas-electric engine. We have the patent application, and we are the first. These engines are highly efficient, using the gas motor to power the electric motor, in much the same way diesel-electric engines power rail locomotives and non-nuclear submarines. They are designed to capture kinetic energy as well; for example, the auto applies the brakes by linking a dynamo to the wheels to capture part of the energy that is usually lost when brakes are applied.
ecause the hybrid engine technology continues to evolve and because so much of the development infrastructure is in place in our plants, we anticipate building the new engine at our facility. We would like AutoMex to manufacture as much of the remainder of the auto as possible, because we recognize the comparative labor cost advantage that you bring to the relationship.
With our engine, and your labor costs, together we can build an auto that will meet emerging consumer demand and permit a very satisfactory profit margin. That profit can first be applied to compensate USAuto for the R & D investment made to create that engine, and then the remainder can be shared between us based on what each of our organizations has invested. Our analysis suggests that if we share the workload as proposed, USAuto will receive 75% of the per-auto profits, with AutoMex receiving 25%. This difference reflects the substantial up-front money that USAuto had to spend to develop the engine.
That profit sharing will be enjoyed on an expanding market base, because beyond the value of our hybrid engine, we see the opportunity to market our auto in markets that are new to USAuto, primarily in Central and South America. With your labor cost advantage and exposure in Latin American markets, and our engine and market share in North America, we can work together for the benefit of both our organizations.

ALVARADO: Your plan brings up many valid points. We agree that the opportunity is great, and that we at AutoMex can play an increasing role in bringing the best autos to the Americas. We believe, in fact, that we can prove to be a valuable partner in all auto assembly, including assembling the new hybrid engine.
While there may be additional R & D efforts needed on the engine, we are confident that we can successfully apply that knowledge in a Mexican assembly plant. I can think of no vehicle assembly plant that uses two plants to make one car, let alone two plants in two different countries. Everyone knows it is more efficient to use one plant.

We also thank USAuto for recognizing the value of our highly efficient and inexpensive labor. We view that as a major resource. In fact, it is just as much a resource as the financial backing that USAuto supplied to develop the engine. We believe that the profits should be split 50-50. USAuto gets a share of the profits for the investment it made, and AutoMex gets the other share for the investment it now must make in training workers to be ready to assemble the automobile. Your R & D. Our workforce. Two assets working as partners, paid as partners -- 50-50.

SACKRIDER: Mr. Alvarado, USAuto has legitimate concerns about the protection of our engine patent. We cant risk having the technology shipped to another country, where it can be copied by anybody who chooses to copy it. Im afraid we have to insist that the engine assembly be performed at our plant, as originally agreed.

DELGADO: Ms. Sackrider, we have no agreement; Ms. Henderson has merely proposed a possible scenario. I thought we were here to negotiate. We believe it is reasonable to train our workers to build the hybrid engine here in Mexico. If we dont build it here, we are no more than convenient labor for you, labor easily replaced if you find some other nation willing to do the work for less. If we are true partners, then we sit at the same table; we are not master and servant.

SACKRIDER: Are you saying you dont want the job of building the auto of the future? Surely, there are other nations willing to supply the labor on our terms.

DELGADO: I note that we have not yet built one auto, and you are already threatening to take away the work, which proves my concern!

ALVARADO: Senor Delgado's issue is not that we don't want the work, because we do. But I have to side with him: Unless we have the opportunity to work with and build the new engine, AutoMex is nothing more than labor, with no stake or interest in the outcome of this partnership. We might see increased profits but they could disappear in the blink of an e-mail if USAuto decided to outsource labor to any other nation, or even a U.S. plant. If we build the engine, we have assurance that we are true partners.

HENDERSON: Well, we've probably exhausted the productive elements of this meeting. Why dont we take a few days to consider the issues weve raised and why weve raised them. I'll start the acknowledging that our insistence on keeping the engine assembly in the U.S. is solely about protecting our intellectual property. If there is a rock-solid way to protect our intellectual property rights while producing the engine in Mexico -- and Mary does not seem to think there is -- I'll consider a proposal.

ALVARADO: Thank you for your candor, Ms. Henderson. I agree that we need to return to work, reflect on our respective interests and stated positions. We will be in touch in upcoming weeks.


JUNE 20, 2004

Linda Henderson, EVP, USAuto
Anytown, USA

Dear Ms. Henderson:

I would like to thank you once again for considering AutoMex as a partner for USAuto. Since your presentation, Senor Delgado and I have reviewed the scenario many times. Unfortunately, try as we might, we cannot perceive the proposal as equitable for AutoMex

AutoMex has been in business for three decades; we are a solid company with a lot to offer -- much more than the cheap labor you so obviously covet. On the other hand, Senor Delgados research tells us that USAuto may not be on such solid financial footing. Given this, we feel that the counterproposal we made at the meeting -- equal profit-sharing and AutoMex manufacture of the hybrid engine -- is the only arrangement we can possibly consider. As such, we respectfully decline your offer of partnership.

Sincerely,
Luis Alvarado
CEO, AutoMex

cc: Juarez Delgado, General Counsel, AutoMex
Mary Sackrider, General Counsel, USAuto

CONSIDER researching the airline industry, the auto industry, the electronic industry, or the pharmeceutical industry.

1. Describe or diagram a process or procedure that is similar between the organizations. Explain the process or procedure from beginning to end.

2. Explain why the process or procedure produces a competitive product or service in the domestic and global markets.

3. Explain how quality management affects the position of the companies in the domestic and global market.

?Roger and Me? ? Film ? By Michael Moore - The basis and resource for this essay.

Background - If I were to begin a lecture with the sentence Political power has widespread consequences, I would probably not be off to a good start with some of my audience. After all, everyone knows that widespread consequences are the business of politics. Yet most people seem generally unaware of just how far-reaching the results of political decisions can be. For example, many American families are today experiencing problems caused by a declining standard of living. Perhaps a parent becomes unemployed, develops emotional problems, and then gets reports from school that the kids are not doing well. We tend to interpret these as personal problems--and then to stigmatize them and ostracize their sufferers--without asking whether the problems might have resulted from political decisions such as giving tax breaks to American corporations that relocate operations--and jobs--abroad. So we apply counseling solutions to the problems but may never get at their roots. Indeed, we may see the problems get worse despite our best efforts.

What some films and novels have in common is that they trace connections between the exercise of political power and everyday situations in which we find ourselves: auto workers being laid off ("Roger and Me"), people dealing with their own and others' racism ("Do the Right Thing," Invisible Man), workers wanting better working conditions and benefits ("Norma Rae"), and people trying to make sense out of life when a single missile can X-ray and evaporate half a million people (Fail Safe).

Sometimes the consequences of political decisions become evident with a little thought; sometimes they are quite effectively concealed.

Use the ideas of this material to gain a picture of how politics works and affects everyone.

Like All the President's Men, this work is a departure from fiction in film and in novels. Rather than portraying fictional characters in a contrived plot, "Roger and Me" takes us into the lives of actual men and women dealing with the all-too-real problems of the decline of the United States as a world industrial power.

The focus is on the automobile industry, in particular, on one of the early centers of that industry, Flint, Michigan. Major automakers like General Motors have for years been cutting back on production and employment. Now, many of the older plants that have been running at reduced capacity are being closed for good and their workers let go permanently.

Because Flint was heavily dependent on automaking, the effects on the local economy are disastrous. Flint seems to be in the process of turning into a postindustrial ghost town, but the agonies endured by its ordinary people make for a riveting drama.

In stark contrast to the grim realities of the little people are the lives, attitudes, and actions of the auto-industry elite: the pious but elusive Roger Smith and lesser GM officials; the privileged ladies on the golf course discoursing on the welfare system and its abuses; and local political leaders, who sometimes seem to be seeking solutions to Flint's problems and sometimes merely to be looking for palliatives--from entertainment to religion--to take people's minds off their realities.

This contrast between the situations of the relatively powerless masses and the more powerful elites is the stuff of which social satire is made. Chronicling the filmmaker's attempts to interview Roger Smith about Flint's problems and including footage of daily reality in Flint, "Roger and Me" is sometimes hilarious, sometimes outrageous, and always insightful.

As you watch this film, think about a central theme that the exercise of political and economic power (it is sometimes difficult to draw a line between the two) affects everyday life.

Key inclusion elements - Did the events in this film more or less have to happen, or did they become inevitable because of decisions that could have been made differently? Could this film be a preview of what awaits much of the rest of this country?

What is the comparative market size of the auto industry in each of the BRIC countries by 2015? (Hint: Use something like the number of passenger car registrations to size the automobile industry, other metrics for other industries) and how might that impact your decision on prioritizing the countries in your global business strategy?

We are recommending CHINA to GM (General Motors) as an investment choice 1 country. This brief essay should support that. (between 11/2 to 2 max).


use this source or/and relevant one

http://www.goldmansachs.com/our-thinking/topics/brics/brics-reports-pdfs/brics-dream.pdf

Current news and politics is full of concern about the environment, particularly as it is related to oil use and the auto industry. There are a number of ethical considerations that arise out of these issues. Please be sure to answer all of the following questions:
? Some propose that these concerns could be alleviated if our use of cars was limited by increased gasoline taxes--if gas is more expensive, we will use less of it and, as a beneficial by-product, improve the environment. What do you think of this proposal and what theory would support your position? Are there injustices built into such measures? If so, is there any practical way to avoid them?
? What about the possibility that the US auto industry, encouraged by its partial owner, the US government, will no longer produce large gas guzzlers (think Hummer)? Is it ethical for the government to essentially prevent a US company from producing a legal good? What ethical theory supports your position?
? Finally, what are the possible ethical considerations of banning or restricting the developing world's access to the same cheaper technologies (fluorocarbons, coal burning plants, etc.) that made the US what it is today?
REMEMBER, YOU MUST USE YOUR SELECTED THEORY TO SUPPORT YOUR POSITION (Egoism, Utilitarianism or Kant)
Must be in a APA format with citation.

Hi, I will be sending a .doc file containg the research I have done thus far. It is primarily in point form and some of it may be incoherent (you can e-mail me if anything needs clarification). The essay needs to cover three major points in its body (as stated in the .DOC file)

(1) Should the U.S. government now consider a bailout for the casino industry -- not to help the industry, but to save all those American jobs, which is the rationale for bailing out the auto industry (about 1 page, but could be intermingled with the other two questions)

(2) What is the single most important application of Pfeffers article to the growing call from corporations to readjust payroll costs? (about 1 pages)

(3) Identify the most likely defects in decision-making that we should avoid making when it comes to the issue of public bailouts of troubled corporations? (about 4 pages)

I can be emailed to help with the report as needed.
There are faxes for this order.

Using your text, the internet and other sources, write a 900 to 2000 word paper where you do the following:



Select an industry that does business in the United States and likely to be impacted by macroeconomic changes in the economy. Examples would be the auto industry, housing industry, appliance industry, steel industry, wireless phone industry and the retail industry. You are not limited to these examples.



Give a brief overview of your selected industry.



Define economic indicators in general terms. Then define each of the following economic indicators: Gross Domestic Product, Unemployment Rate, Inflation Rate (CPI), Personal Income, Interest Rates, and the Producer Price Index.



Provide a graph showing a trend line for each indicator over the last few months or years.



Provide a graph showing an 18 month forecast for each indicator. Each forecast should begin with the current quarter and projected out 18 months. Your sources of the forecast should be specific.



Describe how your selected industry would be affected by changes in each of the economic indicators.

From a logistical standpoint, why is the southern U.S. an attractive location for the auto industry?

Write a 4-5 page paper answering the question above.

//////////////////////////////////////////////////////////

Southern hospitality
Ward's Auto World; Detroit; Aug 2002; Brian Corbett



Abstract:
In one of the most dramatic changes to the US factory network since the Industrial Revolution introduced mass production and power-driven tools two centuries ago, the auto industry is shifting output to the Southern countryside and away from regions home to generations of assembly line workers. The auto industry is leaving behind logistics nightmares, unions and higher tax and property expenses for centralized locations in right-to-work states where land values are low and government incentives are extraordinary. When plants are up and running, there are fewer environmental issues. Activism is not as prevalent. Industry also is relatively new to the South. So new assembly plants do not have to over-compensate for older factories contributing disproportionately to emission totals. Furthermore, utilities costs are lower. After the products have been assembled, the South's location is superior to the Midwest or the East Coast for delivery.

Full Text:
Copyright PRIMEDIA Business Magazines & Media Inc. Aug 2002
[Headnote]
The auto industry is migrating south



In one of the most dramatic changes to the US. factory network since the Industrial Revolution introduced mass production and power-driven tools two centuries ago, the auto industry is shifting output to the Southern countryside and away from regions home to generations of assembly line workers.

The relocation of automotive manufacturing is threatening the economic future of East Coast and Midwestern states and creating a whirlwind of investment from Mississippi to South Carolina.

"I refer to it as the `Manufacturing Revolution," says Tony Grande, Tennessee Economic Development Corp. director.

The auto industry is leaving behind logistics nightmares, unions and higher tax and property expenses for centralized locations in right-to-work states where land values are low and government incentives are extraordinary.

Midwestern states - and Canada's Ontario province - are struggling to hold on to an industry that delivered national prominence and a large, well paid middle class. "The trends are not positive," says Canadian Auto Workers union President Buzz Hargrove.

However, it's North America's East Coast that is getting hit the hardest. A number of auto factories have closed there since the 1980s. General Motors Corp. facilities in Tarrytown (now called Sleepy Hollow), NY, Clark, NJ; and Framingham, MA, are just a few.

There is a chance six more East Coast assembly plants could be shuttered by 2005.

As part of its revitalization plan, Ford Motor Co. will idle its Edison, NJ, plant. GM's Ste. Therese, Que., Canada, facility goes dark this fall, and plants in Linden, NJ, and Baltimore will close in 2005 unless new products are assigned. That's more than 13,000 jobs lost, not including those from the supplier ranks and other spin-off employment.

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Worker inspects a new BMW X5 SUV in Spartanburg, SC

It could get worse. GM's Wilmington, DE, facility has dodged death a couple of times and currently makes only one vehicle - the slow-selling Saturn L-Series - on one shift. The Chrysler Group's Newark, DE, plant could be a goner, too, if the Auburn Hills, MI-based company needs to cut capacity again.

Meanwhile, the auto industry is flocking southward like migrating birds in the fall. once known for producing cotton and tobacco, Dixieland today might be better recognized for producing cars and trucks.

Car factories are replacing farms and the auto industry is supplanting a textile industry, which has long-since withered.

Like an American manufacturing version of the ancient world's Fertile Crescent located between the Tigris and Euphrates rivers, southern automotive growth first sprouted between highways I-65 and 1-75. "We've been watching the trend of automotive employment pour south between 1-65 and 1-75 since the mid-1980s," says Sean McAlinden, director-Economics & Business Group at the Ann Arbor, MI-based Center for Automotive Research.

Nissan Motor Co. Ltd. ushered in the new automotive manufacturing era when it opened its first US. plant in Smyrna, TN, in 1983. "That is largely attributed as the spark that started the automotive manufacturing revolution and the birth of the southern automotive corridor," says Grande.

GM's Saturn Corp. followed Nissan to Tennessee later in the 1980s. Toyota Motor Corp. moved into Kentucky BMW AG set up shop in western South Carolina. DaimlerChrysler AG, Honda Motor Co. Ltd. and Toyota built plants in Alabama and soon will be joined there by South Korea-based Hyundai Motor Co. Ltd. Nissan is building another plant in Mississippi. Suppliers are relocating south, too.

There are many reasons for the auto industry's geographic shift, a trend most experts predict will continue. The most controversial motive is labor. "labor is just cheaper (in the South). It's by far and away the most powerful variable," says McAlinden.

It's not unusual for about 30% of the workforce to be unionized in Midwestern and Northeastern states and Quebec and Ontario. In southern states, the average is 4% to 5%.

No unions mean no strikes, lower pay and health expenses and fewer job classifications. Southern states aren't shy about advertising their lack of unions. "Right-towork status, non-union status continues to be a big attraction, particularly for foreign manufacturers," says Grande.

The United Auto Workers and Canadian Auto Workers unions in recent years have accepted reduced job classifications and improved productivity But that isn't convincing some auto makers. After fighting off organizing drives at its Vance, AL, plant, DC is looking at Florida and Georgia for a site to assemble Sprinter vans. "How far south do you have to go to dodge the UAW - the (Florida) Keys?" says McAlinden.

However, not all auto makers expanding in the South are looking to escape the UAW. GM, for example, currently is in the middle of a big expansion of its unionized pickup truck plant in Shreveport, L.A.

The facility has been one of several GM plants building S10 and GMC Sonoma compact pickups since it opened in 1981. After the expansion is completed next year it will build the next-generation products, the Chevy Colorado and GMC Canyon, and likely will become the sole source for those vehicles. Shreveport also will build the Hummer H3 - a smaller version of the H2 now hitting the market - if GM gives it the green light

"If there is a Hummer H3, it's coming to Shreveport," says David Berzina, senior vice president of the Greater Shreveport Chamber of Commerce. He says "11 or 12" new suppliers are building facilities in the area now to support the expanded assembly plant.

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North American Vehicle Producing States and Provinces
(Ranked by 2001 Standing With Growth Compared to 1991)

He's hoping for more, because suppliers locating in northeast Louisiana also can feed the brand new greenfield plants sprouting in the South, especially Nissan, which is only three hours away In fact, he says at least one of Shreveport's GM suppliers already has won a Nissan contract.

The jobs being added at GM's assembly plant will definitely be UAW, but Berzina says whether or not the new suppliers in the area also will be unionized has not been determined.

With a considerably older workforce and higher wage scale north of the MasonDixon line, the auto industry does find a larger and cheaper labor pool to draw from in the South. "In Michigan, you've got 1 million people already working in manufacturing," McAlinden points out. "So if you open a new plant, you're sort of reaching toward the bottom of the barrel. In Alabama, with not much going on and the prospect of making $24 an hour, you're going to get people who probably would've gone to the University of Alabama. You get the best."

Eager to attract auto makers and high paying jobs, a few Southern states in recent years have pulled out all the stops - as well as their wallets. Nissan received $360 million from Mississippi for a 3.5 million-sq.ft. (325,000-sq.-m) factory that will employ 5,300 workers. With lower unemployment and higher wages, Midwestern and East Coast states have shied away from the high stakes incentives war

Michigan offered $118 million for Mercedes' first US. facility But Alabama, which ranks 43rd out of the 50 US. states in per-capita income and has an average hourly wage of S 11. I 1.81, snagged the plant with incentives totaling $253 million, or $169,000 for every job Mercedes initially promised.

When taxes are paid, southern levies are lower than most Northern states. GM's Hamtramck, MIG, plant, for instance, has one of the highest property tax millages in the US. at 88 mills. "Michigan is not the cheapest state to do business in," admits Doug Rothwell, director-Michigan Economic Development Corp.

Property is less expensive to buy in the South and more available for future expansion. Construction labor is cheaper, too "Greenfield is always easier. Greenfield down South is easiest of all," says McAlinden.

When plants are up and running, there are fewer environmental issues. Activism isn't as prevalent. Industry also is relatively new to the South. So new assembly plants don't have to over-compensate for older factories contributing disproportionately to emission totals. Furthermore, utilities costs are lower. "It is 5 cents a kilowatt down (South)," McAlinden notes. "You try to get industrial rates for under 7.5 cents in Michigan or Ohio. You can't get it. That's a huge difference per kilowatt."

Tennessee has some of the lowest industrial power rates in the US., anywhere from 20% to 50% below other states, Grande points out.

After the products have been assembled, the South's location is superior to the Midwest or the East Coast for delivery If labor isn't the most important reason for the South's manufacturing rise, then it's location. "The old theory was that you built close to market. The new theory is to centralize manufacturing," says Mike Flynn, director of the University of Michigan's Office for the Study of Automotive Transportation in Ann Arbor.

Tennessee is within one day's drive of 75% of all US. markets, and its road system is one of the best in the nation. Other southern states are improving infrastructure. Besides 1-65 and 1-75, which are straight shots to the Midwest, highways I20 and 1-35 provide quick access from the South to Mexico's burgeoning auto industry. Meanwhile, Michigan, for example, is a peninsula state with roadways that generally are in bad shape. The East Coast has fewer major parts suppliers. Components coming from the Midwest and the South add significant shipping costs to vehicle programs.

The traditional manufacturing states realize they're on the ropes, but so far haven't been dealt the knockout punch. "I guess the best way of saying this is Michigan grew 60,000 manufacturing jobs in the last decade, while the nation lost 600,000 manufacturing jobs," says Rothwell. "We're the only state in the nation with three assembly plants under construction" or recently opened, he adds, referring to GM's greenfield factories in Lansing and Delta Twp. and Ford's brownfield project at its Rouge complex in Dearborn.

Michigan also is home to 98% of North American auto research and development and the fourth greatest concentration of high-tech workers of any state.

New York, Ohio and other states also are courting white-collar jobs with some success. But diversification efforts are hurt by the regions' smokestack image. And in the end, attempts to halt the exodus of assembly plant jobs might be futile. "If the Big Three continue to lose market share, jobs will continue to go south," Flynn predicts. "They lose share, we lose jobs."

- with Alisa Priddle and Drew Winter

Enlarge 200%
Enlarge 400%

Regional Share of North American Production
[Sidebar]
Capacity Shifting to the South

[Sidebar]
Most of the new capacity on tap for North America between now and 2006 will be located in the East South Central Region (ESC) of the U.S., which includes Alabama, Kentucky, Mississippi and Tennessee. But that new plant construction and expansion won't be enough to stem the overall decline in North American capacity over the next four years, an analysis by Ward's shows.
Currently, U.S., Canadian and Mexican plants have straight-time capacity to assemble 18.11 million vehicles annually. Ward's is forecasting that to fall by 1.4% to 17.85 million cars and trucks by 2006.
The ESC's share of North American capacity will rise from a current 11.0% to 16.6% by 2006, the result of growth in the region and decline in vehicle-building capability elsewhere on the continent. The biggest boosts will come from a new plant under construction in Mississippi by Nissan Motor Mfg. Corp. U.S.A. - slated to open in 2003 - and from Hyundai Motor Co. Ltd., which will have a plant up and running in Montgomery AL, by 2006.
Furthermore, Honda of America Mfg. Inc. opened a plant late last year in Alabama and will be increasing capacity there. DaimlerChrysler AG's Mercedes unit will hike capacity at its Alabama facility, as well. Nissan also is expanding capacity at

[Sidebar]
its plant in Smyrna. TN. The other big manufacturer in that area is Toyota Motor Mfg. North America Inc., which builds cars and minivans in Georgetown, KY.
With these increases, the ESC will have straight-time capacity to build an additional 1 million units.
Areas that will lose capacity include Canada: the Eastern seaboard of the U.S. from New Jersey to Georgia; the East North Central (or the Great Lakes States) region, and the West North Central (WNC).
Production in the eastern seaboard - or Mid-Atlantic and South Atlantic regions will be reduced by some 700,000 units, mostly due to anticipated shutdowns of General Motors Corp. and Ford Motor Co. plants in New Jersey and a GM plant in Maryland. The WNC will lose share when Ford closes its facility in St. Louis, which has estimated straight-time capacity of about 200,000 units.
In Canada, planned plant closures by each of the Big Three will cause production capacity losses of some 300,000 units, leaving the country with a 15.7% share of North American straight-time capacity, vs. 17.3% in 2002.
Meantime, Mexico will continue to increase its share of production capacity, but more so due to losses in other regions than new brick-and-mortar.



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Return to Module 3 Case Assignment

THE PART I AM SUBMITTING IS ONLY a portion OF THE PAPER. I WILL GO OVER IT WHEN I RECIEVE IT AND MAKE IT CORRESPOND WITH THE PORTION I AM DOING. THANKS. HERE IS THE INFO:
DAIMLER DIVESTITURE OF CHRYSLER
Field: Corporate Finance
Pillar: Globalization
490 Seminar in Finance
Guidelines for Completing the Paper
1. Papers are due Wednesday, December 5. This will ensure the timely submission of a grade when grades are due to the Registrar.
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Tristan van Gendt (201)741-4280 Daimlers divestiture of Chrysler
THIS IS THE 'OKAYED' OUTLINE WITH WEIGHTS
FIELD: CORPORATE FINANCE PILLAR: GLOBALIZATION
This is your portion. The intro and conclusion stuff are in my part. I'll put the two together when I recieve yours. thanks.
3-4pgs 15% III. Auto Industry
A. Major Players
1. Market share of each
B. Daimler
1. Who they are (pre-merger)
2. Brief History
3. Issues
a. Globalization
b. Off shoring
c. Cost of labor
C. Chrysler
1. Who they are (pre-merger)
2. Brief History
3-4pgs 20% IV. Creation of DaimlerChrysler
A. Foresight of merger
1. Globalization
2. Increased Asset Value
3. Increased ROI
4. Increased Shareholder return
5-6pgs 30% V. Divestiture of the two
A. Reasons Leading up to Divestiture
1. Graph of stock price
2. S&P 500 comparison
3. Industry comparison
B. Divestiture
1. Announcement
2. Mechanics and future owners
a. Cerberus Capital Management
b. Stephen Feinberg
3. Finalization

PROFESSOR 'OKAYED' REFERENCES. ALL/SOME CAN BE USED. ANY OTHER REFERENCES MUST COME FROM AN ACCREDITED FINACIAL SOURCE
WALL STREET JOURNAL, BUSINESSWEEK, NYTIMES, FINANCIAL TIMES, THE ECONOMIST, CNN MONEY. INFO ON HISTORY, MERGERS, DIVISTITURES CAN COME FROM ANY SEMI-ACCREDITTED SOURCE. CHARTS AND FIGURES-YAHOO FINANCE, CNBC.COM, REUTERS.COM, BIGCHARTS.COM. NO MIN OR MAX NUMBER OF CHARTS AND GRAPHS REQUIRED.
BELOW IS A COPY OF POWER POINT SLIDES I USED AS A PRESENTATION. USE WHAT YOU NEED AS A REFERENCE.
DAIMLER DIVESTITURE OF CHRYSLER
Field: Corporate Finance
Pillar: Globalization

Presented by:
Tristan van Gendt
TO BE COVERED
Summary of topic
Daimler-Benz/Chrysler histories
Overview divestitures
Merger of Daimler-Benz & Chrysler
Dark days at Daimler-Chrysler
Leading up to divestiture
Sale of Chrysler
Conclusion

SUMMARY
On November 12, 1998 Daimler-Benz and Chrysler became one. Known as Daimler-Chrysler, the trans-Atlantic pair became the 4th largest in the auto industry. Unfortunately, after years of misfortune together, Daimler announced the sale of their Chrysler division. It was purchased by Cerberus Capital Management on May 14, 2007 and the individual companies are now known as Daimler AG and Chrysler LLC.
HISTORY
Daimler-Benz
Formed on June 28, 1926
Merger of DMG and Benz & Cie.
Necessity for survival after WWI
Three pointed star: land, water, and air
Flagship brand: Mercedes-Benz
To left: 1929 Model S Tourer

HISTORY
Daimler-Benz (contd)

Public company
Traded on NYSE, TYO. Both under DAI
Based in Stuttgart, Germany
Current Chairman: Dieter Zetsche
Produce auto and truck
Mercedes-Benz, Mercedes-AMG, Maybach, Smart, Western Star, Freightliner, Orion Bus, and many more
270,000 employees



HISTORY
Chrysler

Created in 1925 by Walter P. Chrysler
Purchased Maxwell Motor Corporation
Acquired Dodge, DeSoto, and Plymouth in 1928
Known for engineering advancements
First mobile and stationary HVAC systems
Alternators replaced generators
Introduction of 180 HP V8 HEMI in 1951



History
Chrysler (contd)
Purchased AMC in late 1980s
Included JEEP brand
Private company
Based in Auburn Hills, MI
CEO: Robert Nardelli
Produce autos, light trucks, vans
Over 130,000 employees
Divisions: Chrysler, Dodge, ENVI, Jeep, Mopar, Chrysler Financial
OVERVIEW
Divestitures

Sale, spin-off or closure of an asset by a company
Asset is unrelated, unprofitable, unmanageable
Taking away from the core business
Most common reason for divestment: Financial
Companies worth more as separate entities
MV(AB) < MV(A) + MV(B)
Return focus to activities that give a competitive advantage


MERGER
Daimler-Benz & Chrysler
Announced on May 7, 1998; Completed on Nov. 12, 1998
Biggest cross-boarder deal of the time
$36 billion takeover of Chrysler by Daimler-Benz
Pre-merger stock prices: Chrysler $48, Daimler-Benz $108
Reasons for merger:
Immediate access to N. American mass market- the worlds largest market
Increased production capacity
Increased knowledge on quick decision making and prompt intro of new vehicles


MERGER
Daimler-Benz & Chrysler (contd)

Reason (contd):
Ability to introduce middle class sedans
Greater economy of scale
Cost Savings of $1.4 & $3 billion in the first and first few years, respectively
Expected $130 billion in annual revenue
Daimler-Chrysler
Dark Days
Introduction of minivans and SUV's from Japanese producers
2001- stock trading at half its peak in 1999
2001- operating earnings fell 49% to $4.9billion
2003- $1 billion 2nd quarter loss at Chrysler eats up five quarters of combined earnings
High costs, aging line-up, and no market buzz


Daimler-Chrysler
Dark Days
Big losses in market share: 13.5% in 2006 compared to 17% in 1998
Gas prices hover around $3 a gallon
Lose SUV and large car sales
Increased foreign competition
2003 Chrysler management overwhelmed with issues suc as unpopular models, inefficient factories, weak image
Continued broken promises by then CEO Jurgen E. Shrempp
2003 & 2005 DaimlerChrysler market cap falls to $38 billion compared to Daimler-Benzs $47 billion pre-merger
Chrysler Group Chief Executive Dieter Zetsche promises profits by demanding concessions from unions and scrapping plans to build new plant in Canada.

Daimler-Chrysler
Dark Days
2005 - MB quality sacrificed
Dropped to bottom of J.D. Power & Assoc reliabilty survey
Lost buyer confidence and sales
$600 million in warranty costs
July 28, 2005 Deutsche Bank sells down its 10.4% stake to 6.9%
DB sells remaining stake before years end

Daimler-Chrysler
Dark Days (1/99-12/06)
Leading Up
to Divestiture
Daimler continued attempts to save Chrysler
1/06 - Dieter Zetsche replaces Jurgen E. Schrempp as CEO
1/06 - Announcement of 6,000 white collar jobs cut. 30% from management level
Would save $1.8 billion by end of 2008
7/06 Chrysler profit only $65 million compared to $695 million one year earlier
Due to having the highest inventory of unsold vehicles in the industry paired with raising interest rates
Lost sales in SUV, large truck and minivan segments because of high gas prices
2006 - $1.5 billion 3rd quarter loss
10% decrease in sale for the first half of 2006
Did not slow production quick enough, could not reduce high inventories
Analysts start suggesting a spin-off of Chrysler
Inventory turnover reached 100 days. 1/3 more than the industry average
Cost of materials increased by as much as 60%
Dec. 2006: 20% -30% of 06 models still held (industry average: 10%)



Leading Up
to Divestiture
Leading Up
to Divestiture
2006 End of year production cut by 16%
705,000 cars and trucks to be produced
Highest medical costs of the Big Three
UAW president not willing to cut costs
DaimlerChrysler hoped to save $340 million/$600 per car

Sale of Chrysler
February 14, 2007: No option is being excluded. Stated by DaimlerChryslers advisory board
April 05, 2007: Talks with potential buyers of Chrysler take place.
3 Preliminary offers are made-Blackstone Group, Cerberus Capital Management, and Magna International
Analysts estimate a sale in the $5-$7 billion range
Hilmar Kopper departs from advisory board
Former chief of Deutsche Bank and supporter of merger
Risk increases on both sides of the pond
Americans face possibility of a fire sale
If purchased by a private equity firm, massive layoffs could take place and the remainder sold for a profit.
Germans vulnerable to corporate takeover

Sale of Chrysler
A buyer is chosen
In May 2007 Cerberus Capital Management agrees to acquire an 80% stake at $7.4 billion for the Chrysler brand
$5 billion will go toward Chrysler auto operations
$1 billion toward finance arm
$1.4 billion directly to Daimler.
Daimler must cover another $1.6 billion in losses before end of deal therefore paying out $650 million to finish the deal.
Daimler also estimates a $4 - $5.4 billion dollar profit hit due to other related charges

Daimler
The Road Ahead
Freedom from unpredictable sales, ongoing losses, health care costs, and retiree benefits. All adding up to the $18 billion range.
30% stock price increase in three months since announcement.
Retains 20% stake in Chrysler Holdings.
2007 2nd quarter Mercedes profit double- $1.65 billion

Daimler
The Road Ahead
Operating margins predicted to go to 10%
Look to overtake BMW 7% to 8% Operating margin
Now known as Daimler AG.
Much opposition from Karl Benz supporters
Paid final costs of $3.4 billion to complete sale.
Down from the estimated $5.4 billion.
Profits down 14% to $2.5 billion due to Chrysler final losses.


Plan stock buyback to strengthen earnings and cash flow
underlines our trust in the future of the new Daimler and all its divisions. CEO Dieter Zetsche
Purchase of $5.2 billion of treasury share by end of 2007
Purchase of additional $5.9 billion of treasury shares by end of 2008
Big increase in share price since announcement. Feb. 14th about $69. Week after sale - $110. Current - $100

Daimler
The Road Ahead
Chrysler Holdings
The Road Ahead
Off to a rough start.
$10 billion debt carried by 5 banks, led by JPMorgan Chase.
Investors unwilling to accept terms. Deterred by collapse of home mortgage market.
Banks agree to take on debt and sell it at a later date.
Need to find investors to help fund trust to take over health care liabilities. Could reach $70 billion.

Chrysler Holdings
The Road Ahead
Friday August 3, 2007 Cerberus Capital Management takes control of Chrysler Group. Robert Nardelli named chief executive. Former Home Depot CEO and top executive at GE.
Restructuring includes cutting 13,000 positions in the U.S. and Canada by 2009
Return to pentastar logo.
Ground breaking of two new plants in Trenton, Michigan for axels and fuel efficient engines. $700 million each.


LAST WORDS
Daimler AG: Analysts have recommend buying or holding DAI for the past 3 months.
Personal Opinion: Daimler will succeed with the burden of Chrysler off their hands. They will have the ability to focus on their flagship brand, Mercedes Benz. With the importance of bringing the value back into the company, they will make necessary changes to prove themselves to their shareholders and customers. This will be accomplished once they return their image back to pre-Chrysler. Hopefully, previous quality problems were really caused by their focus being turned toward Chrysler.

LAST WORDS
Chrysler Holdings: Now in the hands of a private equity company, Chrysler has the ability to cut costs and make changes more freely then it had before. While they still have to deal with some of the constraints of the UAW, they did receive the Chrysler brand at a discount giving them room to re-invest in other areas as well. In the next couple years we should see a re-inventing of the brand in the size of their cars, engines, and change of image. Also, with their new freedom, they will have a major advantage over GM and Ford and could possible re-join the top three in the U.S.
THE END!

Select an industry that does business in the United States and likely to be impacted by macroeconomic changes in the economy. Examples would be the auto industry, housing industry, appliance industry, steel industry, wireless phone industry and the retail industry. You are not limited to these examples.



Give a brief overview of your selected industry.



Define economic indicators in general terms. Then define each of the following economic indicators: Gross Domestic Product, Unemployment Rate, Inflation Rate (CPI), Personal Income, Interest Rates, and the Producer Price Index.



Provide a graph showing a trend line for each indicator over the last few months or years.



Provide a graph showing an 18 month forecast for each indicator. Each forecast should begin with the current quarter and projected out 18 months. Your sources of the forecast should be specific.



Describe how your selected industry would be affected by changes in each of the economic indicators.