Saturday, February 21, 2009

Why Ford > GM > Chrysler

Oil and Gas Companies

Company, 2008 Market Cap, CEO Educational Background
1) ExxonMobil $366 B: Civil Eng.
2) BP CEO $133 B: Geology
3) Chevron CEO $131 B: Chemical Eng.
4) ConocoPhillips $ 75 B: Business
5) OXY CEO $ 37 B: Chemistry
6) Encana CEO $ 32 B: Petroleum Eng.
7) Devon CEO $ 32 B: Geology

Notice a common thread?

Oil and gas companies are defined by their ability to explore and produce. E&P is the lifeblood of the company. Notice how the largest oil and gas companies, integrateds and independents alike, are run by either engineers or geoscientists?

At its core, a vehicle company is defined by its vehicle engineering. I'm wondering, perhaps vehicle companies should be run by engineers?

Toyota's ascent to become a global vehicle superpower occurred under two engineers

Toyota: (Engineer) (Engineer)

Whereas its recent disastrous expansion into pickups as well as its construction of factories in Japan on the basis of short term currency foreign exchange rates that has contributed heavily to the first loss in dozens of years was the result of (Economics major)

Notice how Ford has performed far better than Chrysler and GM?

Chrysler: (Business major)

General Motors: (Economics major)

Perhaps because you have this engineer at the helm, Ford has outperformed: (Engineer)

As soon as Alan Mulally came to the helm at Ford he mortgaged all the assets at the height of the credit boom, because of liquidity concerns, whereas the CEO's of Chrysler and GM sat on their laurels...

Speaking of Chrysler, someone at Daimler had the foresight to jettison the brand before it took down the maker of the Mercedes-Benz:

Daimler AG (Mercedes Benz): (Engineer)

Oh but wait we also have:

BMW: (Engineer)

Porsche: (Engineer)

Renault AND Nissan: (Engineer)

I'm seeing a bit of a pattern here.

It would be nice if someone could do a comparative study of vehicle company management under engineers versus non-engineers.... or maybe take a different industry that has a greater number of companies, say independent oil and gas, looking at geoscientists/engineers vs. other ceos.

Friday, February 20, 2009

Reap as ye shall sow

Page A3 if you have the hardcopy:

Californians Get a Budget That Leaves Few Happy

"A broad range of Californians will feel the pain. The plan to balance the state budget -required by law - will slam the poor, as well as the middle class, some economists said. For a household earning $150,000, the tax increases will almost wipe out the $800 per couple tax credit in the stimulus package signed by President Barack Obama this week, according to California's Legislative Analysts Office. The state taxation plan and the federal credit "work against each other," said Legislative Analyst Mac Taylor."

Comment: US Senators and Congressmen, see diagram and commentary in the post below to understand what you've done. You just made huge regressive tax increases an inevitability. I know you didn't bother to read the 1,000 page bill you passed, but I've made the diagram simple enough that even you can understand it.

U.S. Aid Won't Save Big Apple Budget from Bloomberg's Ax

"Stimulus aid must be used in specific areas, such as federal education programs, Medicaid payments, and construction projects, it can't be used to cover the cost of the city's large work force....To eliminate the gap in the city's 2010 budget, Mr. Bloomberg in last month proposed cutting social services, aid for the elderl, emergency personnel and cultural activities. That could mean reductions among fire companies and firefighters; children's services, such as child care and foster care; and cutting 1,000 police officers"

Comment: I've said it before, and I'll say it again, this earmarking of funds, especially state aid, is a fundamental problem with the stimulus package. The stimulus dollars should be disbursed to the general funds of state and local municipalities so the state and local governments, such as Bloomberg and the California state legislature, can allocate the funds instead of having their hands bound to a set of earmarks.

Now we're going to have a surplus of hole diggers and a reduction in police and fire fighters in NYC. I hope those hole diggers can save me from a burning building or fight crime. I also hope they can take care of any elderly relatives, and perform CPR should any of us have a heart attack.

But hey, what do I know? I'll just let the market speak for me.

Thursday, February 12, 2009

Only took the WSJ an extra month to realize this...

On January 10th I wrote: "The economy is like a massive pendulum, it does not stop on a dime. The boost to income (or as Larry Kudlow likes to say, massive tax cut) created by the precipitous decline in crude and gasoline prices has worked its way into the economy, possibly preventing a disastrous shopping season from being the apocalypse, but there isn't much meat left in gas prices, so further boosts to disposable income from gas are not happening."

On February 12th, the WSJ publishes: Falling Gas May Be Gone as a Stimulus -

Better late than never.

In other news, I've included a crude representation of what a real stimulus package would look like and what our current magical stimulus package is composed of. Its added in my tirade post.