Mitsubishi’s long-time chairman steps down at a tough time for his personal health, Tesla’s battery supplier is making bank, and there’s drama with aluminum supplies. All that and more in The Morning Shift for Friday, August 7, 2020.
Osamu Masuko, a 15-year veteran of the executive suite at Mitsubishi, has abruptly stepped down over health concerns, Automotive News reports. It’s not immediately clear what condition he’s in, or why it’s so sudden.
From Auto News:
Osamu Masuko, the chairman of Mitsubishi Motors Corp. and one of Japan’s oldest and longest-serving automotive chiefs, has abruptly resigned citing health reasons.
The 71-year-old executive stepped down effective Aug. 7, the Japanese automaker said in a release.
The company did not give details about his health condition but said that Masuko would be staying on as a “special advisor” to the company he has led for 15 years.
Current CEO Takao Kato will take over as temporary chairman, the company said.
Masuko managed to hold on to a spot in the company’s leadership through multiple scandals after joining in 2005. In 2016, the company CEO under Masuko took responsibility for a scandal involving misreporting fuel economy figures. That pushed the share price of the company low enough to open the door for investment by the Renault-Nissan alliance. In 2018, the alliance’s chairman, Carlos Ghosn, was arrested for alleged financial misconduct in Japan and fled to Lebanon.
Somehow, Masuko made it through all of that at the top of the company without taking too much flak, but his time at Mitsubishi has now come to an end. He may have taken the Evo from us, but nobody deserves poor health. I wish him well.
LG Chem, the supplier for battery cells in some of Tesla’s electric vehicles, is sitting quite happy with its gamble to work with the automaker and invest in production together. As Tesla moves to other suppliers after sparking growth in the segment, LG Chem expects to diversify its customers with other automakers and make a lot, a lot of money.
Sales at LG Chem jumped 83% to 10.5 gigawatt hours, lifted by rising demand for Tesla’s Model 3 sedans in China as well as for Renault SA’s Zoe cars, SNE Research said. That helped LG Chem, whose stock has more than doubled this year to a record high market value of about $44 billion, take the market lead over China’s Contemporary Amperex Technology Co. Ltd. The Korean company’s shares rose as much as 11.5% Friday morning after Bloomberg published the first version of this story. CATL fell as much as 4.4% amid general weakness in Chinese stocks.
“The point is how much LG will be able to get orders from Tesla, because everyone agrees Tesla will lead the electric-car market,” said Hwang Kyu-Won, an analyst at Yuanta Securities Korea Co. “However, if other automakers catch up with Tesla, that might be good news for LG Chem too, because of its diversified customers.”
Company executives expect the “penetration rate” for electric vehicles in the car market will grow from its current level of three percent to as much as 10 percent by 2025. That’s a lot more EVs selling, which means a lot more batteries.
As global automotive supply chains continue to struggle to recover from disruption due to the Covid-19 epidemic, the new USMCA North American trade agreement is causing some problems. That includes strangling American aluminum production due to cheaper metal flowing in from Canadian suppliers.
To save the metal producers, the Trump administration has moved to reimpose previous tariffs on Canadian aluminum imports. Since a lot of aluminum is used in cars these days, Bloomberg explains how that will drive up costs:
The tariffs will drive up costs for end users such as automakers and suppliers.
Bill Long, CEO of the Motor & Equipment Manufacturers Association, in a statement on Thursday said the tariff will “place greater financial hardship on U.S. vehicle parts manufacturers at a time when the industry is trying to recover from plant shutdowns and a declining economy.
Autos Drive America, which represents import automakers, said in a statement the auto industry is “making slow but steady progress toward recovery” amid the pandemic.
“New tariffs on aluminum imports from Canada will not aid in this recovery and are not justified on national security grounds. We urge the immediate reconsideration of these tariffs so the industry can continue to ramp up production, make the significant adjustments required by the U.S.-Mexico-Canada Agreement and continue to provide competitively priced vehicles to American consumers.”
That sentiment was echoed by the U.S. Chamber of Commerce.
“These tariffs will raise costs for American manufacturers, are opposed by most U.S. aluminum producers, and will draw retaliation against U.S. exports — just as they did before,” the group said in an emailed statement. “We urge the administration to reconsider this move.”
Boeing, the planemaker that pretty much admitted to improperly evaluating flight safety systems that allegedly contributed to two fatal air crashes of its 737 Max aircraft over the last few years, may or may not get another small slap on the wrist from the government, The Seattle Times reports:
The Federal Aviation Administration (FAA) on Wednesday proposed a fine of more than $1.25 million for Boeing, alleging that senior managers exerted undue pressure or interfered with the work of employees designated to represent the FAA in safety inspections.
According to an FAA charging letter, at least four senior Boeing managers at the company’s plant in South Carolina — including the vice president of 787 operations, the senior quality manager and the director of delivery — pressured engineers and inspectors charged with overseeing quality control in production of the 787 Dreamliner.
Those managers should not have been directly involved in the process of signing off on quality and safety, which is the purview of a specific team of Boeing employees who are designated to represent the FAA and to perform independent inspections of aircraft production on behalf of the safety agency.
The FAA letter accuses these senior managers of “pressuring,” “harassing,” and “berating the performance of” engineers, inspectors and managers in the oversight program, known as Organization Designation Authorization (ODA).
Hundreds of people die and a company that is awarded billions in federal funding is asked to return a million and change—a fractional percentage—of it back. Is this justice? Is this progress? Is the problem solved? I don’t think so.
If you’re ever thinking about how the virus has maybe made you realize that essential workers are not, like, cops and congressmen, but actually restaurant cooks, garbage collectors, bus drivers and about a million other positions that qualify much higher on their contributions to society, then you will be sad to hear that’s basically the model for the entire world.
With that in mind, all the shipping crews that were suddenly halted from work due to the shutdown of global supply lines to mitigate the spread of the virus are now overworked to try and make up lost time, Bloomberg reports:
“The Covid-19 pandemic has made crew changes extremely difficult, and we’re starting to see fleet inefficiencies emerge,” Braemar ACM Shipbroking Ltd. said in a report dated Aug. 6. “A huge number of seafarers on merchant ships have been unable to disembark once their contracts have ended, facing excessive times at sea and away from home.”
In addition to Pacific routes becoming less efficient for bulk carriers, there’s been a pickup in shipowners opting for lengthier deviations to places such as Kochi in southern India, Braemar said, referring to merchant ships that transport cargo such as grains, coal and iron ore. Atlantic supply doesn’t seem to have been impacted too heavily, it added.
According to the International Chamber of Shipping, about 250,000 seafarers are stuck at sea at increasing risk of physical and mental exhaustion. This could have an impact on safety as fatigue raises the risk of human error and accidents, said Ralph Leszczynski, head of research at shipbroker Banchero Costa & Co.
Your overnight parts from Japan may be delayed because a shipping crew has effectively been held hostage at sea since April. Keep that in mind next time you track a shipping update.
On the one hand, Masuko did his job. He found a way to make the business work, and he managed to do it through a financial crisis and every nightmare that’s happened since. On the other hand, I would really enjoy a new Evo.
Yes, Masuko killed the Mitsubishi cars we knew and loved it, but also that company was dying. The new Mitsubishi is much healthier, with a solid product lineup focused on its target market, which is no longer the U.S. How do you feel about that?