Summit Notebook

AUDIO – Mornings with Ron: A Reuters Autos Summit tradition

A few years ago, there was a book out called “Tuesdays with Morrie.” At Reuters, though, we spend our Tuesday mornings during Auto Summits with Ron.

It wouldn’t be a Reuters Autos Summit without our yearly visit from United Auto Workers head Ron Gettelfinger … at the crack of dawn.

Gettelfinger is not one to loaf around and show up at our summit at a leisurely hour of, say, sometime after the sun rises. Oh no. Gettelfinger was scheduled to kick off our Tuesday slate of guests at 7:00 am. But by now we know better.

In fact, when coming into the building this morning sometime after 6:00 am, Gettelfinger was already in the lobby of the Detroit Chamber of Commerce building doing a radio call-in program on his cell phone.

The sun would rise shortly thereafter.

But despite the hour, Gettelfinger is always an interesting person to interview, as he has his eye on all parts of the autos industry. And he didn’t disappoint this year, either.

Upstarts!

The U.S. government has pumped more than $100 billion into Detroit over the past year to keep automakers General Motors and Chrysler alive. But some of the sector’s remaining capitalists are having a hard time stomaching a $25 billion Department of Energy loan program intended to spark new developments in electric cars. 

Start-ups Fisker Automotive and Tesla Motors have won about $1 billion in combined funding, while longtime players Ford and Nissan have received substantially larger loans from Washington to work on vehicle electrification — a technology the White House and many in the industry hope will reduce the United States’ dependence on imported oil and lower emissions of carbon dioxide, a leading greenhouse gas. 

Funneling federal money to new entrants to the automaking world does not sit right with Tim Leuliette, chief executive of parts supplier Dura Automotive. 

“If there’s a real market for electric vehicles, the OEMs will do it,” Leuliette said, using industry jargon for automakers. “We don’t need to have people who have never built a car in their life take $1 billion of our tax money and say ‘I can do it too.’” 

Government funding muddles market signals, Leuliette argued at the Reuters Autos Summit in Detroit.

“When government writes a check, it says the smart money investors are hesitant to fund it,” Leuliette said. “When markets say it’s now wise enough … there’s more than enough money.” 

For his part, the founder of Fisker Automotive — which aims to build plug-in hybrid cars at a former GM plant in Wilmington, Delaware — said government funding is a logical way to kick start a technology that private U.S. companies have been slow to focus on. 

AUDIO – Commercial real estate: The auto industry’s next big (bad) thing

The U.S. auto industry has had one heck of a year.Sales have fallen off, credit has been pretty much nonexistant and two of the major U.S. automakers were bankrupt. Other that all that, things were fine.But Bill Diehl, chief executive of advisory firm BBK, said at the first day of this year’s Reuters Autos Summit, that one of the main concerns for 2010 (if it’s not THE main concern) is the industry’s overall exposure to commercial real estate.We have been hearing about the problems with commercial real estate in many other sectors of the U.S. economy and Diehl gave the strongest statement so far about the auto side.(To hear Diehl\’s comments, please click here)The Reuters Autos Summit continues through Thursday in Detroit and Paris.

The secret lives of auto executives

Ed Whitacre sneaks off to breakfast at a Detroit greasy spoon. Sergio Marchionne’s attention to detail extends to the condition of his factories’ bathrooms. And Bill Ford helped save his great-grandfather’s company by hocking the blue oval. 

These are just a few of the glimmers of top Detroit auto executives’ lives that you get when you sit down with Ron Gettelfinger, head of the United Auto Workers union. 

Marchionne, the chief executive of Italian automaker Fiat — which pulled Chrysler out of bankruptcy this year, seems to be “extremely respectful” of his workforce, Gettelfinger told the Reuters Autos Summit in Detroit on Tuesday. 

“I know he’s went out into the facilities and one of the things that he did was walk into the restroom to inspect it. Now you don’t normally see that happen,” Gettelfinger said. “But he truly believes in the power of the people, the value they add to the process.” 

General Motors chairman Whitacre is also a fan of unannounced factory visits, a detail Gettelfinger may have picked up at one of their morning meetings. 

“There’s a little dive up the street that we go up here and have breakfast sometimes,” Gettelfinger said. 

He also recalled a call that came from then-Ford CEO Bill Ford three years ago, when the automaker was preparing a major debt offer — a move that helped it to be the only U.S. automaker to avoid bankruptcy this year. 

AUDIO – The ‘new normal’ for the U.S. auto industry

A few years ago, one of the guests at our annual Reuters Autos Summit — Tom Stallkamp from Ripplewood — pretty much stopped everyone dead in their tracks by predicting that auto sales in the United States was likely to fall to an obscenely low level of 14.5 million.

Those were the days.

Of course, Stallkamp was making that prediction at a time when U.S. car manufacturers were selling in the neighborhood of 16 to 17 million a year. If the number hits 14.5 million in 2010, people will be wild with enthusiasm as most now expect something in a range of 10 to 11 million.

That would be about flat to a little higher than sales this year.

On the first day of Reuters annual sojourn to Detroit for the Reuters Autos Summit, defining what the “new normal” is going to be for everything about the auto industry is much on everyone’s mind. What will happen with the big manufacturers, the dealerships, the suppliers.

It’s a lot to assess all at once.

Bob Carter, head of Toyota’s U.S. operations kicked things off for the summit by talking about what he sees for the coming year.

BMW keeping wary eye on rivals

After a year of unprecedented turmoil in the auto industry, BMW’s U.S. head smells blood in the water.

Changes in ownership at some of its historic European rivals may present the German luxury automaker with a chance to grab market share. 

But even as Jim O’Donnell saw weaknesses to exploit, he raised the worry that one of Detroit’s most storied car brands, Cadillac, could take out of the market of the company that calls its vehicles “the ultimate driving machine.” 

As Cadillac’s parent company, General Motors Corp, went through a bankruptcy that forced it to cut thousands of jobs and shed brands, BMW picked up Cadillac customers and dealers. But a slimmed down GM could present a renewed threat, said the president of BMW’s North American unit. 

“Going forward, I actually see Cadillac as one that could be potentially a serious rival,” O’Donnell told the Reuters Autos Summit in Detroit. “Now that GM is only going to concentrate on four brands, if I was at GM, I would concentrate on Cadillac and really try and reestablish it. But if you look at the last year, and no wonder because of the turmoil in the marketplace, has been losing sales quicker than the market.”

Even as he sees a renewed threat from Detroit, O’Donnell said he thought European rivals could become more vulnerable. BMW sees a chance to snatch customers from Saab — which GM aims to sell to Swedish luxury car maker Koenigsegg — and Volvo — which Ford is negotiation to sell to Chinese automaker Geely. 

“Where are all the Saab customers going to go? And there’s a great deal of uncertainty over Volvo. Where are all the Volvo customers going to go? Even though they’ve done well these last three months, I still think as they come under the ownership of Geely, will they have the same believe in the brand? I don’t know,” O’Donnell said. “But we will try to exploit it.”

Exclusive look inside Sweden’s greenest paper mill

For most of us, printing e-mails or making copies is just part of the daily routine in the office. But, the paper we use does come from somewhere. Last week, we had the opportunity to visit Stora Enso’s Nymolla Mill in southern Sweden to get an exclusive look at how MultiCopy paper is made. Nymolla is an integrated mill (it produces pulp and paper on the same site) and most of the wood used is sourced locally. Also interesting, the mill is the only one I could find in the world that emits zero carbon dioxide from fossil fuels during the paper making process. Check out my look inside the Nymolla Mill.

Inside Sweden's greenest paper mill from Reuters TV on Vimeo.

AUDIO – The Spiral

This has not been a cheerless week — after all, Chicago is a pretty fun place to be.

In reviewing many of the stories, though, from this week’s Reuters Manufacturing and Transportation Summit, one gets the idea that all was gloom in the Windy City.

So, while there have been many discussions this week about opportunities for growth and hopes of better things to come, the situation at many of the nation’s largest manufacturing companies remains pretty serious.

Such was the case presented by Brad Bell, chief financial officer for Nalco Co, a global provider of water treatment services, chemicals and equipment programs for industries.

The company’s products and services are used ito prevent corrosion, contamination and the build up of deposits in production. Essentially, there’s not a single sector of the manufacturing world that doesn’t have something water-related that is, or could be, made by Nalco.

So that’s a pretty good space to be in … when times are good. It creates some unique challenges (a popular word this week) during tough times.

While Bell sees some positives, he also thinks that this is not the end of the crisis and more tough days are ahead.

AUDIO – For Nordson — “Get ‘em right, or get ‘em out”

Throughout the current recession, many of the companies’ executives at this week’s Reuters Manufacturing and Transportation Summit have found an opportunity to review, pare back and possibly add on to their existing business mixes.

Such is the case for Edward Campbell, chief executive of Nordson Corp, which has a uniquely diversified set of businesses under its umbrella and is looking at what makes sense for them going forward.

Campbell makes the clear point that if something isn’t working for Nordson long term, the company has a responsibility to really consider whether that is a business they should be in.

Nordson makes a wide range of precision dispensing, testing and inspection, surface preparation and curing products. Its products can be found in everything from appliances to autos to bookbinding to furniture. It operates in three segments: adhesive dispensing systems, advanced technology systems and industrial coating and automotive systems.

Campbell said all of its businesses were subject to review, but did mention a couple that might be pared back in the attached audio clip.

Campbell was one of the featured speakers for the third day of the annual Manufacturing and Transportation Summit, which continues through Thursday in our Chicago offices. The Summit program is in its fifth year, and in 2009 will include top-level executives from  industries and sectors including everything from Infrastructure; to Mining; to Investing in India, China, Japan and Russia; to Food and Beverages.

AUDIO – Staying the course at CAT — But it’s a rough row to hoe

Caterpillar Inc Group President Ed Rapp knows that 2009 has been a tough one for his company, but he still thinks they can hit their numbers on revenue and earnings per share.

Speaking at the Reuters Manufacturing and Transportation Summit, Rapp (who, incidentally, has been with Caterpillar for almost 30 years and is still considered something of a “youngster” there!!) said that while there are still many hurdles for the company to avoid in the short term, he thought CAT’s previous guidance was within reach.

Rapp said he remains worried about the state of the credit markets and said government efforts to stabilize banking had yet to cut the cost of borrowing for captive finance companies. But his optimism comes from the sometimes painful steps the company has made in the past few months to cut costs and realign their business thinking.

Rapp is one of a team of six executives under CEO Jim Owens who run CAT’s day-to-day operations.

His presentation was one of the Tuesday highlights at this year’s summit, which runs through Thursday in our Chicago offices.

The Reuters Summit program is in its fifth year, and in 2009 will include top-level executives from  industries and sectors including everything from Infrastructure; to Mining; to Investing in India, China, Japan and Russia; to Food and Beverages.