Rise of a Giant?

Almost 3 years ago I wrote 3 blog posts (1, 2, and 3) about what direction I thought Ford needed to take to reverse their decline as an automaker in the North American market. It appears that Ford is finally considering this plan. I applaud Mr. Mulally for his decision to take this approach, even though I wonder what has taken Ford management so long to get here.

Granted Ford had problems with cars it introduces as Merkur models. But since then, Honda, Toyota, and Nissan has shown how to introduce a new style of autos as Acura, Lexus and Scion, and Infiniti. Part of the problems with the Merkur XR4ti model may have been the sale of it with an American engine available in 2 other Ford cars at the same time. Another was its radical design that was not as conservative as what American's were used to seeing from Europe. Certainly this time around trying existing North American engine options will doom the approach to failure. We need the European cars with most if not all of the European engine options to provide for the range of fuel economy vs. performance that will make the cars appeal to a public paying $4 a gallon for fuel.

There are 2 to 3 approaches that Ford can take with this. I will be anxiously awaiting the coming announcements from Ford to see if buying Ford stock (currently worth just a little more than a gallon of gas) is a worth while investment.

Two Diesel Hybrids

There are two diesel hybrids in the works. The some-what more conventional of them is coming from an Indian automotive producer. Arriving in 2009 first as a standard diesel, the 150hp pickup will be followed by a diesel-hybrid version in 2010.


The less conventional of the two US options is a kit car from Robert Q. Riley Enterprises, LLC. According to the web site:

The XR-3 Hybrid is a super-fuel-efficient two-passenger plug-in hybrid that achieves 125 mpg on diesel power alone, 225 mpg on combined diesel and electric power, and performance like a conventional automobile. . . . At just 1300 pounds, this high-performance design combines lightening-fast acceleration, a maximum speed of 85 mph, and fuel economy of 125- to over 200-mpg.

US Unemployment

USA slowly turns into unemployed nation
I don't buy the extreme head line of the article linked to above, although the contents seem factual enough. Take this quote "The nation's unemployment rate held steady at 5.5 percent." In the 1990's the Fed tried to keep the unemployment rate above 5%, the idea was a basic fear that if unemployment fell below 5% then inflation would increase according to the Phillips or Fisher curve.

Morally I feel if the government established policies to maintain unemployment above 5% then it is obligated to provide a safety net for those who are unemployed because of that policy. But the bottom line is that 5.5% unemployment isn't historically high.

There are problems with the employment picture in the US. One of them is that too many of the jobs are low paying service jobs. Related to that is the apparent policy of some service industry employers to keep employee hours below the minimum where they would get benefits. Another is that decision makers in business believe that paying as little as you can for employees not quiet qualified to do their jobs is the best way to boost corporate profits. You have experienced that the last time you got rude or poor service from a company.

The biggest problem facing the American work force today is that unemployment is rising at a time of rising inflation (violating the Phillips curve) leading to a demoralization of the consumer. This could lead to a serious downward spiral in spirits and the economy.