Why is it that when the Bears` Tom Waddle plays, that`s good; but when the Bears` William Perry waddles, that`s bad?
Not that the sporting world has a lock on confusion. Events in the auto industry can be equally mind-boggling.
For example, when the Cubs said they`d pay Ryne Sandberg $7 million per annum to stand in the sun three hours a day for the next four years, the fans cheered; but when General Motors Corp. said it would pay former Chairman Roger Smith $1 million a year to sit in the sun for the rest of his life, consumers jeered and the board of directors opted to reduce his retirement payout by a few hundred thousand dollars.
When Ross Perot proved to be a disruptive force at GM, he was considered a man of great stature and someone to be looked up to for his wealth, which he accumulated through business acumen; but when he proved to be a disruptive force on the political scene, he was criticized for everything from his lack of height to his haircut to his wealth.
When Ford Motor Co. and Chrysler Corp. reported dramatic improvements in second-quarter results last week, the pair was praised for business savvy for the ability to come back from huge losses only a year earlier; but when a year earlier the pair scaled back production and laid off workers to cut costs so they could post profits this year, they were soundly criticized for being insensitive to workers.
Several analysts also praised the automakers for announcing that Ford will hold 1993 price increases to a mere 2.9 percent on cars and Chrysler to 2.6 percent on cars. Many of those analysts were then surprised to find that 2.9 percent at Ford means an average of $599 and 2.6 at Chrysler translates into about $403. That $403 was arrived at, incidentally, by a member of the news media multiplying 2.6 percent by the 1992 average base price of Chrysler cars, because Chrysler said it had no way of knowing what 2.6 percent meant in dollar terms.
Mercedes-Benz boasted that it will hold the line on 1993-model prices, a gesture that put a smile on consumers` faces-until Mercedes said that by holding the line it has frozen 1993 stickers of its two lowest-priced 190-series models at 1992 levels, but that its 20 other offerings will go up in price.
Chrysler introduced the Jeep Grand Cherokee in April, and consumers eagerly awaiting the larger, more luxurious Jeep took such an instant liking to it that demand exceeds supply and dealers are able to ask-and get-full sticker for the vehicle. And the reward to those legions of fans beating at dealership doors to get their hands on a Grand Cherokee? Chrysler, the outfit that says it`s unable to calculate that a 2.6 percent increase equals $403, announces in July that Grand Cherokee prices will go up by $720 this fall, only six months after the vehicle was introduced.
Finally, the benchmarks for success in the auto industry are car production, car sales, car prices, car incentives and the ability to meet car emission and safety regulations. Yet the two top-selling vehicles in the industry for almost a decade have been trucks, the vehicle that saved Chrysler from bankruptcy was a mini-van, the most profitable vehicle at Chrysler since the late `80s has been the Jeep, and the vehicle that has Detroit steamed because Toyota wants to sell it in the U.S. is a pickup.
Lions, Tigers, Ford
Lately there`s been talk that Edsel Ford, 43, president of Ford Motor Credit Co., has been negotiating to purchase the Detroit Tigers baseball team. There`s speculation that if he owned a team, he might not want to advance at the automaker. That eventually would leave open the top job at Ford for his cousin William Clay Ford Jr., 35, general manager of Ford`s Climate Control division.
William Clay Jr. is the son of William Clay Ford Sr., who owns the Detroit Lions. William Clay Jr. is the football team`s treasurer.
”Even if he (Edsel) were to run the Tigers and I was to run the Lions, we`d never disengage ourselves entirely from the company,” William Clay Jr. told us last week during a quick visit to Chicago. ”Where I`m going to end up careerwise is anyone`s guess, but it would be catastrophic to the family and to the company if he and I ever split.”
While an avid sports fan, the younger William Clay leaves little doubt where his allegiance lies in any career choice between the Lions and the automobile business.
”The Lions are lots of fun, but sometimes I think the inmates are running the asylum,” he said. ”If we were making sewing machines, this wouldn`t be as much fun. But I love to get behind the wheel of a car and drive.”
Price reaction
Some analysts were not pleased that Chrysler announced sharply higher prices for the 1993 models coming out this fall to help ensure profitability, then announced improved results for the second quarter, long before those `93s appear.
”It seems a bunch of dumb accountants got together and said, `If we get $250 to $300 more per vehicle and multiply that by 1 million vehicles, then we`ll really make some money.` But $200 to $300 could stall the market,” said Thomas O`Grady, who heads his own research and consulting firm.
”We aren`t even into the full (sales) recovery, when they`ll
(automakers) really be rolling in money, so why run the risk of possibly slowing down the market and risk reducing the capacity utilization that`s been responsible for them making this money, by raising prices?”
Quotables
Despite Ford`s and Chrysler`s reports of sharply higher results last week (GM reports this week), one industry executive made a most astute observation about not becoming overly optimistic.
”The U.S economy, while improving, is still fragile. It will continue to be difficult to achieve healthy results in today`s environment. Although we`re pleased with the improvements achieved so far this year, we recognize the rest of 1992 will remain challenging.”
Those words of wisdom came from Ford Chairman Harold Poling, the same man who approved the 2.9 percent increase on 1993-model cars this fall.
Yet another quote:
”What more experience do I need? I`ll tell you after this job. You know, if I don`t do good at this I could be out in the streets for a while.”
That was William Clay Ford Jr., reacting to his promotion. He had been executive director of automotive business strategy at Ford.
Notes
Analysts in Tokyo are of the opinion that Isuzu will stop building cars and focus instead on trucks, such as the highly popular Rodeo, built in the U.S. The problem with that scenario is that Isuzu supplies Chevrolet with the Geo Storm, a popular entry-level car for young people. Isuzu denied the analysts` speculation.
