Toyota Motors Likely To See Fall In ProfitsToyota Motors Likely To See Fall In Profits

It's time for world's largest automaker to work on its continuity plan to minimize the hard effect of the earthquake on its earnings

After the earthquakes shook the southern parts of Japan, it interrupted the parts supplies to Toyota Motor Corporation. As a result, the world’s largest automaker is expected to see a decline in its operating profit by around $277 million (U.S. equivalent for 30 billion yen).

The $173 billion organization has cited in a statement that at Toyota’s Kyushu factories, the production shift has been halted and it is likely to be extended to other Japan assembly lines throughout the week. The most devastating earthquake since March 2011 have, in addition to the automaker, halted the production of other companies’ products as well including motorcycle output for Honda Motor Co., engine and parts production for Asian Seiki Co., and chip manufacturing for Mitsubishi Electric Corp. and Renesas Electronics Corp.

The recent earthquake now calls for the “business continuity plans” which the automaker and its national peers may have drafted after the encountering a natural catastrophe around five years ago which highly interrupted the activities of the company for months. The risk is higher for the Japan’s automobile giant as it puts great reliance on the domestic manufacturing in comparison with its peers. Last year, along with its associates, the company was able to manufacture a humungous 4 million –which accumulated to 40% of the worldwide output. Honda Motor Co. and Nissan Motor Co.’s share of domestic auto production were 16% and 17% respectively.

Analysts at Nomura Holdings Inc. said in the report: “Owing to the lessons learned from the Great East Japan Earthquake, the automakers and their suppliers have together built up strong procurement networks for components that can be rapidly restored following disasters.” Therefore, the analysts envision that even after the production is halted for several weeks, the Japanese automaker can promptly think of a way to steer the company into normality again and will likely minimize the hard negative impacts to full year earnings.

In the current year, Toyota Motor’s domestic assembly lines are getting closed down for the second time. In February this year, the company had to withhold the production at the factories as the fire and explosion at a factory operated by Aichi Steel Corp. highly interrupted transmission, engine, and chassis component supply.

The future will tell whether the company was able to pull itself out of the vortex of declining profit. It will also be essential to find out to what extent the company takes notice of draft a sound business continuity plan.

Ford Motors Overhaul Plans

The automaker giant is undergoing a renovation to centralize its over 30,000 workforce

This month, the automaker, Ford Motors Co. will commence the decade long revamp of its traditional headquarters and engineering campus at Dearborn, Michigan. The initiative intends to modernize a set of 60 year old buildings established at the center of the States’ auto-industry expansion.

The company initially plans for reconstructing 7.5 million square feet of space and building a couple of campuses –one at its world headquarters and another at its current design and engineering center. The automaker is likely to converge its massive 30,000 employees –which are currently sprawled through seventy distinct buildings –to two main campuses. The major chunk of the existing architect will be destroyed and overhauled by slim, sleek, and asymmetrical buildings with wide areas of grassy land and glass in between.

The company hasn’t unveiled the project cost yet.

A Managing Principal at Axis Advisors Inc. –a real estate advisory firm, Steve Morris has roughly calculated the project cost to be ahead of $1.3 billion. Mr. Morris’s estimation is based on the construction pricing in the metro Detroit area for similar office structures.

Since their construction, Ford’s Dearborn Michigan buildings haven’t had a considerable renovation, excluding several minor interior updates. Regarding the revamp, automaker’s Chief Executive, Mark Fields cited: “The key element of our transformation plan is to consolidate our fragmented footprint and replace it with a centralized campus.”

The reconstruction is also likely to include modification in the automaker’s storied headquarters building which is 1956 structure and is dubbed as “Glass House” because of its glass-clad, boxy modernist architecture. The company expressed that it will only bring about few minor interior changes with modernized cafeteria and new workspaces in an attempt to preserve the quintessential look of its headquarters.

The Michigan based car manufacturer had recently expanded its research lab in Palo Alto, Calif. and is currently looking forward to new offices worldwide including India and Middle East.

Since the day Ford was founded –which marks for over a century –Dearborn had been the company’s center of gravity, home to the company’s classics Thunderbird and Mustang and other generations of vehicles which took the company on the rollercoaster of boom and busts. Ford’s 12-story headquarters and several other buildings have been furnished by using mid-20^th century furniture –a period when Detroit was the frontrunner in the auto industry worldwide.

Since Ford is currently at the most profitable points in history therefore it is spending billions in order to construct factories, respond to Silicon Valley rivals, invest in new product programs, and to renovate its premises.

The company anticipates that the new engineering campus’ construction is likely to be completed by 2023. The new campus will provide new research and development facilities, construction of new design dome, and updated workspaces. Ford remarked that the work on the second campus is likely to begin in 2021 and will take around five years to be completed.

Rival General Motors Co. has also been reported to overhaul its Warren, Michigan based technical campus, a place which has been the company’s hub for engineering and vehicle design. The initiative –which is likely to be completed in 2018 –will create around 2,600 salaried jobs .

Contrary to the objectives of GM, Ford has said that the anticipated renovation is only being done to centralize the workforce and it will certainly not create new jobs.

Toyota Corporation to Set Up Third Research Facility in Michigan

The auto-maker is challenging the auto-industry as it plans to be the largest producer of autonomous cars.

All the automobile companies along with Silicon Valley technology giants are all after the autonomous cars technology; presently the only auto-maker who has driverless cars figured out is Toyota Motors Corporation. Forbes reported the auto-maker is all set to open up a third research center in Michigan; mostly because the company has gained popularity in terms of high-tech auto development.

Earlier this week, the automobile organization made viral the news that under its Toyota Research Institute (TRI) Program, it has planned to open a third facility as a part of its autonomous riving projects. The other two research facilities that are working for the same purpose are situated in Palo Alto, California at Stanford University and the second one is at MIT in Massachusetts.

Toyota is aiming at becoming the largest autonomous driving technology in the industry while being the largest car seller in the world and in addition to that it also plans to increase its research facilities which will ultimately work in its favor in comparison to all the other auto-makers in the industry. The purpose for opening these research facilities in different localities is that it wants to tap the top talent from the top universities to come work for them. Furthermore, it also wants to test its self-driving cars in various weather and environment conditions because of which it has chosen these different places to conduct its research.

Presently, many companies including tech giant Google is testing its self-driving cars in warm and sunny weather condition, apart from a few exceptions, the autonomous cars have performed fairly well in such environment conditions however things get tough when these cars are made to drive in cold and freezing weather conditions as sensors and cameras in these cars find it difficult to function. The sole purpose for setting up a research facility in Michigan is because the weather there is slightly cold which makes it the perfect place to conduct tests in the specific location.

Forbes has further stated that Toyota’s Michigan research facilities is scheduled to start functioning in June and is likely to open with 50 people initially. Since the past few months, the automobile business has maintained its focus towards autonomous cars due to which they have set up this research program for the sole purpose to test and conduct research on the specific technology. The act of hiring all the top talent from Jaybridge Robotics in Cambridge shows how interested the company is to excel in this technology.

In addition to that the Wall Street Journal reported that Toyota all hired two autonomous driving researchers Ed Olson and Ryan Eustice to work with the company while last year it announced that it will invest as much as $1 billion to integrate its product with artificial intelligence for the development of the specific car. It plans to include Internet support in its cars because of which it collaborated with Windows maker and Microsoft, the software giant so that they can collectively work on Toyota Connected. This will be yet another revenue stream for the auto-maker.

Ford To Establish Assembly Plant In Mexico

Ford has plans to establish an assembly plant in Mexico worth $1.6 billion

Ford Motor Company has revealed its plans to establish a new assembly plant in Luis Potosi, Mexico. The company is all set to make an investment of almost $1.6 billion for this assembly plant.

The automotive giant has plans to establish an assembly plant in Mexico since the operating cost in the state is relatively low. This would help them to increase the profitability factor and will result in low costs. The construction of such a plant will start in summers and the company will start to manufacture vehicles in the start of 2018. This initiative in general is going to give birth to employment opportunities for 2,800 individuals by the end of the fiscal year of 2020.

General Motors Company and Toyota Motors Corp have already made investments in Mexico so that they can come up with vehicles with low profit margins. The region is the best possible option for an automotive assembly plant since the labor cost are cheap and the export  laws are rather flexible.

The company has come up with this plan since it had to deal with a lot of criticism from Mr. Donald Trump, the Republican Presidential Candidate. Mr. Trump has passed a threat of implementing an import tariff of 35% on every vehicle manufactured in Mexico being sold in the United States.

Joe Hinrichs, the President of Ford Motors made a statement regarding the company’s investment of almost $10.2 billion in the United States. They have also given 25,000 jobs in the region in just a matter of five years. This is not it, but the company is all set to invest almost $9 billion in US by the ends of the fiscal year of 2019. This will be done in compliance to a four year contract signed with United Auto Workers.

Mr. Hinrichs stated, “The facts bear out that our investment in the US continues to be substantial. The investments in Mexico are not having an offsetting effect in the US; we’re not losing any jobs at Michigan Assembly Plant or southeast Michigan.”

The automotive giant is making investments worth $170 million in South Africa. The driving force behind the investment is that the company wishes to increase its operations in Pretoria’s Silverton Assembly Plant. At this particular power plant, the company will manufacture the all new Ford Ranger and Ford Everest which was debuted by the end of 2015. This venture will lead to the creation of 1200 job opportunities in South Africa. The company will start the production of Ford Everest in the third trimester of the fiscal year of 2016 (3QFY16). Moreover, the first units of the car will reach the markets in the fourth quarter of the fiscal year of 2016 (4QFY16). These models produced in South Africa will be retailed locally and will also be exported to the Sub Saharan automotive market.

The company is striving hard to remain on par with its global expansion plans and the recent move adds weightage to their efforts.

Tesla Motor Gets a Golden Opportunity in France To Open Its Production Facility

After the overwhelming response Tesla's Model 3 received, it has gotten yet another offer by the French energy minister to open a production facility in France.

Tesla Motors Inc. chief executive officer Elon Musk received a suggestion from French energy minister, Segolene Royal that in the location of France’s oldest nuclear power plant, the automobile giant should build a European electric vehicle factory; as the old power plant facility is scheduled to close this by the end of the current year.

The nuclear power facility by the name of Fessenheim nuclear plant is located in Alsace and has been formally offered by Ms. Royal to Elon Musk, so that he can start Tesla’s very own electric car manufacturing vehicle facility. A local news agency reported that the Francois Hollande, the French President has already stated he will be shutting down the facility however this move by the President has received a lot of resistance from a number of local political parties and also labor unions. People fear that they will lose their jobs if the nuclear plant shuts down.  

Presently, over 850 people are employed at the retired nuclear plant and 250 are contractors; if the facility shuts down, all these people are expected to lose their jobs however in Tesla’s case, opening an electric car manufacturing factory in France is going to be a smart move as the region has been a big supporter of electric cars. In Europe, France is the biggest market for the auto-maker as it provides a bonus up to 10,000 euros which is equal to $11,000 to people who own electric vehicles.

On the contrary, the CEO of Tesla has also hinted numerous times that the automobile organization needs to make its print in the European market. Earlier when Elon Musk visited France, he held an event for Tesla owners at the French Headquarter in Chambourcy, where he repeated that the automobile business needs to build a car manufacturing facility in the European region.  Furthermore, sources suggest that he specifically said something about opening such a facility in Alsace where the nuclear facility is located. This region is on the River Rhine plain and shares boarders with Germany and Switzerland.

At this point, the auto-maker is in dire need to open a production facility as it is facing a lot of production issues lately. The CEO stated earlier this week that the company failed to make a significant number of deliveries of its Model X and Model S during the first quarter of the current fiscal year. He stated that they managed to deliver fewer-than-expected vehicles in the first quarter however they are planning on not making the same mistake with their latest Model 3. It reported that the company delivered over 2,400 units of Model X and over 12,420 units of Model S during the quarter.

In a press release, the company admitted its mistake of lagging behind in the production of Model X mainly due to supplier parts deficiencies especially in the first two months of the year. Mr. Musk even admitted the mistake and stated that too much technology and features were put into one vehicle due to which the production of the car became too difficult – he further stated that it is one of the most difficult cars to manufacture in the world.

Finally, if the company goes forward with building a facility in France, it will only increase demand in the European region and its production lag issues will be solved as well especially the latest Model 3, that has received an overwhelming response.

Ford Upgrades Bullet Proof Safety In Police Vehicles

Ford is improving the bullet proofing of its police cars to protect cops from being harmed by bullets.

Ford Motors Company said that upgraded security in doors of its police cruisers could protect cops from armor-piercing bullets. With higher levels of danger, assault or high-powered assaults with bullets through vehicles doors, officials of the American automaker told it is an enhancement that police have been seeking.

Police typically duck behind the doors of their vehicles during very risky traffic stops to use them as defenses. The automobile manufacturer is the leading police pursuit vehicle manufacturer. After leading its Crown Victoria sedan market, the carmaker successfully migrated numerous departments to its Ford Explorer SUV, which according to the company has been sold in large numbers.

Officials of the company stated for over 12 months, they’ve been trying to upgrade bullet proofing. It was achieved by developing dual layers of security, including a Kevlar-type material and ceramic tiles to stop bullet attacks. From engineering perspective, it was quite tricky. Not only doors have little room for more panels, but also the additional shield adds to the weight of the vehicle, stated an official of the organization, Randy Freiburger.

The doors of the vehicle were examined on machineries through over 100,000 slams to ensure that hinges will hold up. Officers of the Michigan State Police conducted a test of the added protection by firing at doors with powerful rifles. The objective was concerned with meeting what the Department of Justice has defined as IV protection: the capability to resist armor-piercing bullets of .30-caliber.

A former police lieutenant who was hit by bullets 15 times in a firing in 2012 said the shield is required. Ford has planned to begin receiving orders from police next week. Pricing has not been revealed. In other news, Wall Street Journal reported that sales of its new automobiles in the European region increased by 17% in February as the vehicle manufacturer keeps pivoting towards the rising demand for SUVs.

In all of its 50 European vehicle markets, Ford sold 104,500 automobiles throughout the month. It outpaced the growth of industry. The carmaker saw an increase in its market share by 0.4% to 7.3%. Inside its 20 major markets, it delivered 91,700 automobiles, an increase by 18% over 2015. It aimed to cease manufacturing some less-profitable models to concentrate on SUVs higher-profit vehicles to compete in the European region – an automobile market that has been loaded for a long period with overcapacity and price battles, the WSJ reported.

Ford aims to introduce many refreshed and new automobiles in 2016 like Edge SUVs and Kuga. 

Tesla Enjoys Extension In Indiana Bill With Direct Sale Model

Tesla can directly sell its luxury cars to its customers in Indiana for at least a year due to delay in bill.

Last week, Tesla was on the verge of suffering from a major setback when talks about a proposed bill, which would have rebuked Tesla’s license of “direct dealership” in Indiana, hit the streets. The luxury electric carmaker can now take a sigh of relief for as long as a year as the bill, which it accused General Motors for putting the pressure on the Senate, has been delayed for a year. Hence, at least for a year now, it can sell its premium electric cars directly to consumers.

For several years, the company has been under a lot of criticism and opposition relating to its practice of direct sales. More recently, General Motors, in collaboration with local auto dealers, took the lead in trying to influence the government for bringing about alterations in the legislation to deter the auto-tech titan to carry out its direct sales methodology.

In compliance with the existing law of Indiana, the sellers can sell electric vehicles directly to customers without the inclusion of any third-party dealerships. Had the amendment in the Indiana Senate bill been carried out, Tesla would have to be deprived of direct sales to customers. The bill would have been in effect from 30 months after the date of issue, which would tentatively have been by the end of 2017.

The bill, related to auto dealer regulations and licensing, is still under discussion. The bill itself does not hold much gravity for the direct sales methodology. While appreciating Indiana senators after they removed the language, Todd Maron, Tesla General Counsel, expressed, “Existing Indiana law supports free markets by providing a level playing field for all manufacturers.”

Although the license paves the way for the company to set up stores in the state, numerous auto dealers fear that the direct consumer sales model would allow the manufacturers to cut the auto dealers out of the sales process. Tesla earlier stated that a car could not be sold if maintenance and other services are not provided to the consumers, which auto dealers cannot provide. Nevertheless, the company has to gear up against the battle of rights between the local dealers and itself.

To express its point of view, GM said that it wants Tesla to come across the same regulations and restraints, which GM is going through pertaining to the inclusion of independent dealers during the sale process. According to state franchise laws, those manufacturers, who happen to have independent franchisees, are abstained from executing their manufacturer-owned stores.

GM said, “We will continue to work on this issue in Indiana and nationally and will continue to express our concern anywhere we find market participants are operating under different rules.”