Aston Martin’s CEO is out, Hertz is in a world of hurt, and Volkswagen is having a time. All that and more in The Morning Shift for May, 26, 2020.
1st Gear: Andy Out At Aston!
It is extremely exciting when an automaker CEO is ousted, kind of like when the head coach of an NFL franchise is fired. Automaker CEOs all exist in a space in which there is pretty much no way to win. Even the ones who “win”—like Elon Musk, for now—have to sell their soul to the devil or eventually flee to Lebanon. The rest of them—the Mary Barras, Jim Hacketts, Herbert Diesses of the world—exist in some gray zone of mediocrity, neither brilliant nor particularly bad.
Aston Martin’s CEO Andy Palmer is more on the brilliant than bad side of that spectrum, having brought Aston back from the brink in 2014. But he’s now out, as part of a shakeup orchestrated by Lawrence Stroll, who put millions into the company earlier this year. The new guy is from Mercedes, which has been inching closer to Aston through some engine deals and shares.
From the Financial Times:
Mr Palmer departed on Monday and will be replaced by Tobias Moers, the head of Mercedes-AMG, who will join the ailing luxury carmaker on August 1. The FT first reported the management shake-up on Sunday.
The carmaker also said that three of its directors — Richard Solomons, Imelda Walsh and Tensie Whelan — who were due to stand down in June, left the board on Saturday.
The changes were led by Lawrence Stroll, the Canadian billionaire who became chairman through a £540m rescue deal earlier this year.
Mr Stroll said: “The board has determined that now is the time for new leadership to deliver our plans.”
It’s all a bit of a letdown I’m sure for Palmer, who very likely was looking forward to seeing how the DBX fares. I am too. A cursory search on the new guy didn’t turn up anything too juicy, which means he’s perfectly boring enough to be the CEO of an automaker.
2nd Gear: It’s A Big Week For Renault And Nissan
Plant closures, layoffs, cost cuts everywhere: It’s all happening, in an effort to turn things around.
From Automotive News:
The announcements begin Wednesday when the heads of the three automakers, Renault, Nissan and Mitsubishi, detail the new leader-follower strategy they hope reignites profitability across the alliance. Nissan follows on Thursday with its full fiscal year earnings and a deeper look at its own midterm plan, and Renault rounds out the week with its earnings and plan on Friday.
The reset comes amid plunging earnings and sales at the three automakers, following the 2018 arrest of former alliance Chairman Carlos Ghosn. Mitsubishi reported a net loss for the fiscal year ended March 31, and Nissan has warned it will do the same. Nissan’s loss will be its first in 11 years.
A French official said last week that Renault could “disappear” without big changes, which seem forthcoming. At Nissan, meanwhile, jobs will be lost.
Nissan’s updated plan is being devised by COO Ashwani Gupta in conjunction with CEO Makoto Uchida. It is expected to entail cost cuts in tune with the 300 billion yen ($2.87 billion) announced last July, when then-CEO Hiroto Saikawa introduced the midterm plan in the face of plunging profits. Under the existing plan, Nissan targeted 12,500 job cuts worldwide. The new goal could be as high 20,000 workers, Japan’s Kyodo News reported.
A person familiar with the plan said much of the adjustment is likely to come through attrition and natural job rollover.
“The U.S. is going to play a very important role,” Gupta said. “In addition to the leadership team, I’m going to oversee it myself personally to make sure that the U.S. gets all the attention which is needed, in terms of products, in terms of technology, in terms of resources.”
The U.S., as a target of future investment for growth, is expected to be spared much of the aggressive cutting under the new plan.
3rd Gear: Hertz Explains Its Bankruptcy
Hertz, which filed for bankruptcy Friday, says that it did so because of coronavirus, and the attendant drop in revenue. Also, it was particularly vulnerable to any sudden downturn because of the way it acquired its cars.
“The overall impact of the COVID-19 crisis devastated our revenue,” according to a court filing dated Sunday signed by Jamere Jackson, an executive vice president and chief financial officer of Hertz. The company, whose counters are common in airports across the globe, said the pandemic not only hit its revenues but also placed “substantial new demands” on its cash.
In April, the first full month after the health crisis took hold in the U.S., its global revenue dropped 73% from the same month in the previous year, according to Hertz. The bankruptcy filing in Delaware allows Hertz to keep operating while it forms a plan to pay creditors and turn around the business. While all travel-related companies have been hurt by the pandemic, a big factor for Hertz is its strategy of owning or leasing a large portion of its fleet outright instead of acquiring them through buyback agreements with manufacturers.
4th Gear: Volkswagen Still Feeling The Sting Of Dieselgate
The company lost a big decision in federal court in Germany.
Via the Financial Times:
In the first Dieselgate claim to be heard at the Bundesgerichtshof (Federal Court of Justice) in Karlsruhe since the company was found to be cheating on emissions results more than four years ago, the court found in favour of Herbert Gilbert, who bought a VW Sharan in 2014 for about €31,500.
It ruled that the 65-year-old was entitled to return his vehicle and receive a partial refund, plus interest.
The precedent will de facto force VW to compensate claimants in at least 50,000 outstanding cases.
Volkswagen has been busy settling legal claims all over the world over Dieselgate for years now, though the FT notes that the process in Germany has been slow.
While VW swiftly reached a €10bn settlement with US owners, and has been forced to set aside more than €31bn in Dieselgate costs, it has taken years for drivers in Germany to receive any compensation en masse.
Instead, tens of thousands of individual cases have wound their way through the country’s legal system, often overwhelming local courts, before the law was changed to allow for a collective lawsuit.
“Today we have made history,” said Claus Goldenstein, whose law firm brought Mr Gilbert’s case.
“The ruling means legal certainty for millions of consumers in Germany and shows once again that even a large corporation is not above the law.”
5th Gear: Auto Workers Jobs Are Different Now
Automotive News has an interesting story on how assembly line workers at auto plants are adjusting to new safety protocols while also doing their jobs. I continue to wonder how safe this all is, but it sounds like the workers themselves are making the best of it.
From Automotive News:
Everything about David Sokol’s work routine has changed. Even his lunch hour.
The third-generation Ford Motor Co. employee puts fasteners on Super Duty pickups, Expeditions and Lincoln Navigators. Since walking into the Kentucky Truck Plant in Louisville last week for the first time since the coronavirus halted auto production nationwide in March, Sokol has had to adjust nearly all the habits he’d become used to since being hired eight years ago.
He now sits in the parking lot a few extra minutes before each 10-hour shift to fill out a health survey on his phone. He slips a mask over his mouth and nose and tries to stay 6 feet from other employees without falling behind on the steady stream of trucks coming down the assembly line. And he eats in relative solitude at picnic tables where black plastic partitions wall him off from his co-workers.
“It feels like you’re in elementary school trying to take a test and they don’t want you cheating,” the 33-year-old said.
The masks seem to be an issue though:
Face masks have been a sore point among workers. The automakers require masks, as do some states, including Michigan, but the issue has become politicized nationally, despite studies showing they slow the spread of the virus.
“The problem is it gets really hot under the masks,” said Malik Ferguson, a 40-year-old machine operator at a GM powertrain plant in Romulus, Mich. “It’s really difficult to breathe because you have the mask that presses down on the nasal cavities, and you’re breathing in warm air.”
The discomfort is prompting workers to take more breaks outside. “The cool air [helps] this kind of free flow through the mask,” he said, “and it doesn’t feel like it’s a mist of yuck that you’re inhaling and inhaling while you’re in the plant.”
“The issue has become politicized nationally, despite studies showing they slow the spread of the virus” is a very 2020 clause. My most G-rated fantasy is that one day the experts will reign.
Neutral: How Are You?
I installed some new windshield wipers over the weekend, the previous ones not even lasting two years before giving way, smh. I spent some coin on the good ones, or maybe they are all bad, hard to tell. I also made a lot of progress in Fire Emblem: Three Houses. How are you holding up?