Smart Products

I was reading an old copy of Wired magazine and found this article on transparent circuitry. With quotes like 'window glass is wasted real estate" the inventor and author envision a computer utopia in less than 20 years where everything that is clear today is a network of super computers in the future. Now I like the idea of utopia close at hand to balance the stories of impending doom and gloom, but we can't even apply the computer power we have today in useful every day products.

This brings me to my loathing of stupid stop lights. I'm not talking about all stop lights, but the ones that actually seem almost evil. Possibly starting a conspiracy theory, but there are stop lights I encounter on a regular basis that appear to actively maximize the amount of fuel wasted by cars sitting at idle before the light. Its as if they were made by someone who owns a lot of stock in oil companies! The light at the entrance/exit of my neighborhood is just such a light.

When I come to the light I can see that their is no traffic in either direction for about 1/2 mile. Yet it is red, and it stays red for minutes until a car approaches on the intersected road. Then it turns red for that car, and turns green for me to go at the worst possible time for traffic flow and fuel use. There are two resources being wasted by these lights, one is the fuel, the other is time. As we all know time is money, and the free flow of traffic is very important to the U.S. economy.

So while a super computing utopia might be around the bend, I would be happy if we could just apply a little standard logic to traffic lights to save me time and money. (Or is that money and money, while reducing the consumption of hydrocarbons?) Seems like traffic flow is something driving American's should make their local politicians think about.

Trucks

Last week I wrote about the end of the SUV Profit Party. Really that is predicting the past, which is pretty easy to do. The profit party was over a few years ago, its just obvious to everyone now, except perhaps a few executives in Detroit.

Today I am going to explain what I think is almost as obvious about the future. Over the next 5 years Detroit will see the Japanese start eating a bigger and bigger share of the US truck market. With full size pickups Toyota and Nissan are already starting to make serious in roads in the pickup truck market. The Toyota Tundra and the Nissan Titan are poised to become the standard pickups of choice. (Yes Honda has a truck, but I don't expect to see it parked at any construction sites.) Eventually they can be expanded into the more esoteric models that Detroit still dominates.

If you look at it as a military battle, Detroit is no longer in a dominate position. They have virtually retreated in the passenger car market, offering token resistance. They are in pitched battle for the SUV's which might be made irrelevant by high fuel costs. And their last large market of trucks is under attack. I give them near 50/50 odds, perhaps 55/45 odds because now I think pulling for Detroit is pulling for the underdog. Of course America likes underdogs.

Detroit's SUV Profit Party is over

Detroit's SUV profit party is over, and it is not just because of high gas prices. Even if gas prices were to fall to $1.20 the profit party is still coming to an end.

The profit party has attracted competition and Detroit's SUVs are not going to stay on top for long. Almost all import car companies have a medium to "huge" sized SUV in the offering. Honda has the Pilot and the Acura MDX. Toyota has the 4Runner, Highlander , Land Cruiser, and Sequoia; not to mention the 3 Lexus SUVs. Not to be left out BMW, Mercedes, VW, and even Porsche have SUV models. As a result the days of easy profits and only domestic competition in the SUV market are over.

Ford and GM are facing many problems with new ones cropping up every day. Like this past weekends Delphi bankruptcy. This change might force GM to do something different with their profit making division, GMAC. GM has made more money selling auto and home loans than building cars and trucks since 2002.

Its not smooth sailing at Ford either, with two top execs leaving. I'd like to know more details around that news with one of them being former head of product planning at Mazda (which in my opinion sales the most interesting "Ford" cars in the U.S. consumer market). I can only hope that the results of the management shake up mean that the company will do something more aggressive to regain passenger car market share. That there are rumors of a Lincoln coupe based on the new Mustang shows hope.

In dealing with their other problems, GM and Ford need to focus back on passenger cars. They will not be able to count on fat SUV profits to keep them going, regardless of the price of gas.

BizWeek article on Domestic autos

BusinessWeek has an article about problems facing Domestic auto companies. Not much new here, but a run down of the problems facing Ford and GM in the passenger car market (a lack of Boldness).

In other words, domestic models with a good fuel-economy story do exist. But if the rest of the car doesn't really break through with the mass market, it will be tough to capitalize. Dan Gorrell, the automotive partner with Strategic Visions, which does research on why consumers gravitate to different cars, is fond of saying, "Delight or die is what Detroit has to live by."

Quality over Quantity

Being a long time believer in quality over quantity I will start to practice it on this blog. Instead of writing half finished thoughts daily, I plan to start doing updates a couple of times a week. If I find news items supporting (or disputing) previous topics I might post a quick set of links like I did earlier today.

Storm Links

Just a follow up to yesterdays post. I will update this one as I see news throughout the day.

• Cruise Ship illness investigation provides evidence of warming oceans. Could that be due to global warming?
  
• Predications of 2 more hurricanes for October.
  
• Tropical storm Tammy hits the U.S. with another storm forming.
• BusinessWeek thinks Detroit gets it. Although reading the article still drives home the point that importers have more solid plans for high mpg autos.
  

Political Denial

In the past I have mentioned hurricane cycles in this blog, I even mentioned them yesterday. I brought hurricane cycles up to a friend who was discussing investing in some re-insurance companies, because if the "re" companies haven't taken worsening hurricane seasons into account it will bite them VERY hard.
Weather you blame hurricane cycles or global warming, there is evidence that storms are getting worse. And to deny the effects regardless of the cause is to be in deep and dangerous denial. Wired magazine has a good article on stronger storms and the actions we should be taking to deal with them. Some facts from the article:

• Large hurricanes pack the equivalent power "of hundreds of nuclear weapons" (for more on that see this page).
• The annual average in property losses since 1987 is $23 billion. Yet in 2004, $45 billion in losses came from a quartet of Florida hurricanes -- Charley, Ivan, Frances and Jeanne. Some estimates of insured losses from Katrina and Rita are at $70 billion!
• "In June, Congress and the White House slashed the U.S. Army Corps of Engineers' latest request for levee improvements in New Orleans from $105 million to $42.2 million." Seems like a bargain next to the estimated $200 billion clean up effort after Katrina. Now granted $60 million might not have been enough, but suppose $600 million was enough to keep New Orleans from flooding, its still a bargain.

It makes you think that maybe we need politicians that are a little more proactive instead of slowly reactive.

For more information on the power of storms I recommend reading the book "The Perfect Storm". While the movie is entertaining, the book is outstanding. You will put it down understanding much more about monster storms.

SUV Profit addiction Killing Detroit

Really I just want to post the following news item in response to the analysts who think Americans still want SUV's. Big S.U.V.'s Lag in Sales

In September, industrywide sales of large S.U.V.'s were down 43 percent from a year earlier, according to Ward's AutoInfoBank. That is particularly bad news for General Motors and the Ford Motor Company, which are dependent on truck-based S.U.V.'s.

Last month, G.M.'s overall sales fell 24.2 percent and Ford's declined 20.3 percent, compared with the same month a year earlier.

In contrast, Japanese carmakers reported increases last month, propelled by passenger cars and smaller S.U.V.'s known as crossover vehicles. Toyota's sales rose 10.3 percent, Honda's increased 11.7 percent and Nissan's, 16.4 percent.

For years I think GM and Ford have been addicted to the profits from SUV's and gave up the passenger car market to Toyota and Honda. That reliance on SUV's with little to no development effort spent on passenger cars is going to kill them as long people remember $3 a gallon gas. Sure it might be "just a temporary issue" having to do with bad hurricanes, but hurricane season happens every year. And we are on the up swing of the hurricane cycle that could last 10 or 20 years! Makes you think...

Suprising news on energy front

One of he most e-mailed stories on Yahoo today is about G.W. Bush advocating energy conservation. (I never thought I would see that day.) This article has the "good" news that we only expect a 52% increase in natural gas prices this year. That is much better than what I expected when I wrote this posting. It appears Bush will encourage the use of fluorescent lights.

In related news it appears more Americans are biking as a result of high gas prices. All of which makes you wonder what these analysts are thinking.