Toyota Motor is no stranger to cost-cutting. In recent years the automaker has slashed expenses by as much as $3.3 billion annually by implementing thousands of changes suggested by employees and keeping a tight rein on spending. In light of facing its first loss in 70 years, Toyota is trying to squeeze out an extra $1.4 billion in savings, and it looks as if nothing is sacred.
Workers are being encouraged to take the stairs rather than elevators, to save electricity. The heat in factories has been turned down, so workers are now wearing extra sweaters to stay warm. And on Jan. 19, Lexus engineer Takayuki Katsuda and two colleagues drove from headquarters in Toyota City to Tokyo for the Japan launch of the Lexus RX sport-utility vehicle. Though the trip took four hours, vs. 90 minutes on the Shinkansen bullet train, they saved about $300 in train fares. Source: Businessweek
The global financial gloom is at the top of the agenda as political heavyweights, big thinkers and, yes, even some powerful financial types roll into Davos, Switzerland, for this year’s World Economic Forum.
DealBook, The Times and the International Herald Tribune are covering the conference, which formally kicks off on Wednesday, on the Davos Diary blog. Check DealBook’s website for coverage of who’s there and what they are saying on the ground. Davos 2009 Diary.
People often talk about financial markets as if they were casinos, but reflexivity makes them much more dangerous than any gambling den. The numbers on a roulette wheel never change, but markets offer no guarantee that yesterday’s odds will be the same tomorrow.
Wanna see how the recession has affected GDP, house prices, rates and inflation. BBC published an analysis on stock markets and government rescues here (Global Downturn). In light of this the Financial Times has published a special report on how to fight a global downturn here (Managing in a Downturn).
Has it ever been more vital for corporations to ditch the greed and embrace generosity? After all, giving is the new taking, and sharing is the new giving.
“GENERATION G | “Captures the growing importance of ‘generosity’ as a leading societal and business mindset. As consumers are disgusted with greed and its current dire consequences for the economy—and while that same upheaval has them longing more than ever for institutions that care—the need for more generosity beautifully coincides with the ongoing (and pre-recession) emergence of an online-fueled culture of individuals who share, give, engage, create and collaborate in large numbers.”
Three trend-drivers for GENERATION G are:
1. Recession and consumer disgust
2. Longing for institutions that care
3. For individuals. giving is already the new taking, and sharing is the new giving
A complete report on Generation G can be found here.
Shortly after midday on January 20th, Barack Obama will sit for the first time at the desk where the buck stops. The American presidency is always the world’s hardest and most consequential job, but it seems particularly so this month. A global recession of a severity not seen for perhaps 80 years; a new war in the Middle East and old ones in Africa; missions very far from accomplished in Iraq and Afghanistan; a prickly Russia and a rising China.
These international challenges must jostle for the president’s attention alongside noisy domestic concerns like rocketing unemployment, the desperate need for a better health-care system, exploding deficits and failing cities. The burdens, surely, are too many for one man to bear.
“TOO big to fail, too shit to buy” is the way some Citigroup insiders describe their employer. Not for much longer. On January 13th Citigroup announced that it had reached a deal to spin out Smith Barney, its broking arm, into a joint venture with Morgan Stanley’s broker. The agreement presages even more dramatic changes. The bank has brought forward its fourth-quarter results to January 16th and expectations are high that Vikram Pandit, Citi’s chief executive, will unveil plans to slim the bank further and faster.
Full coverage of Citi’s transformation can be found here “DealBook”
What lesson can be learned from Citi’s faillure:
“Universal banking need not fail. But smaller, focused organisations are easier to run than large, sprawling ones—Citigroup has more employees than the American navy and, apparently, greater destructive power. Mr Weill’s creation, backed by a host of executives, directors and investors ever since, has proved horribly flawed. Unlike HSBC, another giant, Citi has been built through deal making and it shows. Acquisitions were poorly integrated. Cultures overlapped rather than melded (the resilience of the Smith Barney name is one telling indicator). Risk management was dismal. The big balance-sheet was deployed recklessly. It may be inevitable that some banks are too big to fail; but the lesson of Citi is that they can also be too big to manage.”
“The second shift in thinking signalled by Citi’s manoeuvres concerns policy. November’s dramatic government intervention may have quelled fears that the bank would go under. But it has not stopped the bleeding at Citi, which remains focused on survival rather than on ramping up credit. Red ink laps around a host of other banks too. Full-year earnings at American banks are likely to be awful. Many eyes are on Bank of America, whose levels of tangible equity are also thin and, with Merrill Lynch and Countrywide to digest, is seeking billions of dollars in additional capital from the government. In Europe Deutsche Bank revealed a fourth-quarter loss of €4.8 billion ($6.3 billion) on January 14th, thanks in part to misplaced trading bets.”
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