Mike Manley makes a whole bunch of money, Goldman Sachs thinks oil is going to go up, and Honda Civic production is leaving the UK. All that and more in the Morning Shift for February 25, 2019.
1st Gear: Dollar Dollar Bills
After former Fiat Chrysler Automobiles CEO and Chairman Sergio Marchionne died from cancer last year, a guy by the name of Mike Manley was promoted to be CEO of FCA. And FCA will aim to pay Manley, who can be seen above gently caressing the single car more responsible for making him oodles of money more than any other, and who is described by his Wikipedia page as “not fond of the media” (hey Mike), a lot of money, Reuters says:
The company paid its new CEO 600,442 euros ($680,240) for 2018 and he will receive a bonus for 2018 of $367,000 to be paid this year.
Manley also was granted FCA 180,364 shares for his work in 2018, which will vest in 2019 if the company meets certain targets. The fair value per share on the date those were granted was $16.61, FCA said.
His target annual compensation consists of a base salary of $1.6 million, and a bonus of $2.4 million and an equity award valued at $10 million, both linked to the company hitting certain performance targets.
Marchionne, for what it’s worth, was paid $15.35 million in 2017.
And while I’m sure Manley works hard (his Wikipedia page also describes him as a “workaholic”) know in your heart that as long as FCA keeps making Jeep Wranglers and gas stays cheap, it will continue to make oodles of money in perpetuity, no matter what Manley does, and thus he is eminently replaceable.
What I’m saying is, I’m sure he’s a nice guy and all, but his pay coming in mostly equity only further increases his ownership of the means of production, and labor is entitled to all it creates. No one is worth $14 million to any one company.
2nd Gear: Gas Will Not Stay Cheap
The nature of human fickleness means that certain commodities will always face price swings, and while oil has been cheap for a while, the Great American Bubble Machine says that oil is about to spike, Bloomberg reports:
Oil prices could potentially rise as much as 13 percent from current levels, though the rally may prove fleeting, according to Goldman Sachs Group Inc.
Top OPEC member Saudi Arabia is cutting output faster than U.S. shale drillers can fill the gap, leaving a void in the market that may push global benchmark Brent crude to $70-$75 a barrel in the near future, bank analysts led by Jeffrey Currie said in a note. At the same time, supply disruptions in Venezuela are likely to accelerate in coming months, they wrote.
Goldman Sachs also thinks that the price of oil will come down to $60/barrel by the end of the year, Bloomberg says, which is slightly cheaper than the current price of $65.91 per barrel.
It’ll be over $100 eventually anyways, but I’m just Cassandra over here don’t mind me.
3rd Gear: The Honda Civic Is America’s Gain
Honda is ending production of the Civic in the United Kingdom, which despite coincidentally being perfectly timed with the realm’s exit from the European Union, is definitely NOT because of Brexit, according to Honda. Which, okay, whatever Honda, we believe you, sure.
But that means that Honda will be making up for the loss of production in the U.K. with increased production in the U.S.A, Automotive News reports:
When Honda ends production in the UK and Turkey in 2021, the automaker will shift reliance to its U.S. and Canadian plants to meet Civic demand there.
That increased factory responsibility was just one outcome of the European overhaul announced last week here by Honda CEO Takahiro Hachigo. Honda’s Swindon plant in the UK makes the Civic hatchback for the U.S. Although U.S. Civic sales were down 14 percent to 325,760 vehicles in 2018, nearly a third of that volume was imported.
“Given our efforts to optimize production allocation and production capacity on a global scale, we have concluded that we will produce the Civic for North America in North America,” Hachigo said.
Now, I know what you may be thinking, because you, reader, have now taken on the form of a strawman I just invented. But bear with me.
“How can it be that Honda is moving production out of the U.K., just as a nativist policy that makes no goddamn sense whatsoever is pushing auto manufacturing out of the country left and right, to a country that is also suffering from nativist policies that are also hurting American auto manufacturing?”
And that’s mostly because the American car market is much bigger than the U.K. car market, so it makes sense to build cars in the American market for America rather than in the U.K. for America.
4th Gear: That GM Plant Is Still Closing, It’s Just Got a Slight Stay of Execution
A few months ago General Motors announced it was closing its Hamtramck plant, which makes the Chevrolet Impala and the Cadillac CT6, in June 2019. That’s now been pushed back a bit, to January 2020, according to Reuters:
“We are balancing production timing while continuing the availability of Cadillac advanced technology features currently included in the CT6-V - the Blackwing Twin-Turbo V-8 (engine) and Super Cruise (driver assistance system),” GM said.
The plant has already discontinued production of the Buick LaCrosse sedan and Chevrolet Volt electric hybrid car.
It’ll be a slight relief for workers, hopefully enabling at least some of them a bit more time to find new jobs.
5th Gear: Now Dead-Dead: The Chevrolet Volt
We proclaimed the Chevy Volt, Chevy’s advanced-but-weirdly-kinda-pricey-and-never-quite-as-good-as-the-Prius hybrid, dead back in November, when GM said it would be ending production.
But now it is dead-dead for real, as the last Volt has rolled off the line, the Detroit News reports:
On Tuesday, the last Volt was built with little ceremony at a Detroit factory that’s now slated to close. Sales averaged less than 20,000 per year, not enough to sustain the costly undertaking.
RIP in peace, Volt. I’ll always remember you as the car seemingly only bought by municipalities who wanted to “buy American” but look environmentally friendly at the same time.
Edwin Sewell just wanted to sell Major James Richer a new Daimler automobile when they went for a demonstration drive in west London on this day in 1899. Instead, he ended up killing himself and ultimately his passenger after losing control of the vehicle while descending Grove Hill.
Neutral: Hey Whatcha Driving?
It’s almost the car time. Driving anything fun this Spring?