WCA September 2011

From the americas

Mr Hirsch offered a current status report on Volkswagen in the US, where recently the company has recovered some ground. According to Autodata Corp, the VW brand sold 256,830 vehicles there last year, a 20% gain from 2009 but only about half of the annual total during the boom years of the 1970s. Over the first four months of this year, the company’s US sales were up 17%. The VW nameplate ranked 29 th of 34 brands in the J D Power and Associates’ 2011 reliability rankings of cars after three years of ownership. It ranked 31 st of 33 brands in Power’s 2010 initial quality survey of vehicles three months old. ❖ But, as Frank Fischer, chief executive of Volkswagen Group of America, Chattanooga Operations, told Mr Hirsch: “We have really tried to draw our lessons from the Westmoreland experience.” The Chattanooga plant, in a 1,400-acre complex on the site of a former explosives factory, has a different management structure from that at VW’s previous location. As described by Mr Hirsch, managers of the failed factory closeted themselves in Detroit and were rarely present in Pennsylvania. This time, he wrote: “VW pulled in more than 200 company experts from operations around the world, including its high-end Audi and Bentley divisions, to work at the factory.” ❖ As for the product, present plans call for Chattanooga to produce 56,000 vehicles during its first year of operation, although VW officials say the number could change. The Passat to be built there was designed specifically for the US buyer and will not be sold in Europe. It has an additional three inches of rear seat room, and the standard model offers options believed to be expected by Americans, such as Bluetooth wireless and dual-zone climate control. It starts at 170 horsepower, providing the type of merging and freeway acceleration American drivers often associate with safety and security. The sticker price of a model with manual transmission will be about $20,000. Automatic- transmission models and versions with larger engines, including a turbocharged diesel expected to allow 43miles of highway driving per gallon of fuel, will be priced at about $26,000. The Los Angeles Times ’s man in Chattanooga observed: “VW needs [this] vehicle to be a success.” ❖ Honda Motor Co, the third-largest Japanese car maker, said on 27 th May that its North American production would return to normal in August as parts suppliers recovered from the tsunami and earthquake that hit Japan in March. In the US, only production of Honda’s Civic cars will continue to be slowed by limited supplies of some parts, the Tokyo-based company said in a statement. Production of the 2012 Civic, which reached US dealers’ showrooms in April, will be at about 50%, Honda said. Elsewhere in automotive . . .

Economics

Does the US offer a more favourable economic climate for small and new businesses than appears from Paris? Recently, the “Economix” blog of the International Herald Tribune looked at some new data from the Organisation for Economic Cooperation and Development. The Paris- based OECD, a forum of 34 democracies dedicated to the promotion of world trade, found the small-business presence in the United States to be somewhat weaker than in peer countries. Catherine Rampell, who posted the blog, begged to differ. She wrote: “By many measurements America appears to have an economic environment that is far friendlier to small and new companies.” (“Nurturing Start-Ups and Small Businesses around the World,” 30 th June). Ms Rampell cited the administrative burden required to start a new company, which by the OECD’s own reckoning is relatively low in the United States. A composite measure of the “procedures, time, and costs necessary to incorporate and register a new firm with up to 50 employees and start-up capital of 10 times the economy’s per-capita gross national income” was applied. This metric found Mexico and China to be the most restrictive; Ireland and Germany, the least. The US is on the less-restrictive end of the spectrum. And, according to a Brussels-based agency of the European Commission and an OECD neighbour, entrepreneurs are looked upon especially favourably by Americans. The latest annual survey by the Directorate General Enterprise and Industry was conducted between 10 th December 2009 and 16 th January 2010, and covered 36 countries. In response to a request for “your opinion about entrepreneurs (self-employed, business owners),” 73.4% of Americans polled said they had a “rather favourable” attitude toward this group. That was among the most positive responses gathered by the survey. ❖ In closing, “Economix” asked: “Given a climate so favourable to entrepreneurs, what might account for the fact that self-employment and other measures of entrepreneurship are lower in the United States than in many other developed countries?” Many American companies too young or too small for access to capital markets in the US are finding investors overseas A possible answer to the rhetorical question posed at the end of the previous item may be that, however favourable their other circumstances, fledgling and small American enterprises need money – and this essential commodity is in tighter supply at home than abroad. Graham Bowley of the International Herald Tribune has written: “Nearly one in ten American companies that went public last year did so outside

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Wire & Cable ASIA – September/October 2011