I spent twelve years in the automotive manufacturing industry, including four years as the Environment Director for the Canada Automotive Parts Manufacturers' Association (www.apma.ca). It is a great industry in which to learn continuous improvement, creativity and how to make car seats with moody robots.

I have commented recently on the demise of Detroit, but today's news really makes me worry more about Detroit than ever before. I want Detroit to survive and thrive, but they have to turn it around very fast!

GM and Chrysler recently announced that they are getting out of the leasing business. Why? Because the after lease residual value of their vehicles have plummeted recently. Why? Because no-one wants to buy a four year old SUV today. Why? Because the price of gas is very high? Why? Because demand is going up on the other side of the Pacific. Why? Because North Americans are buying lots of stuff from the other side of the Pacific. I think that is enough why's.

Automotive leases have been attractive for years because they reduce the cost of use for consumers. Lease payments cost less than loan payments because at the end of four years, you essentially give the vehicle back to the dealer. The trouble is that the lease you signed in 2005 assumed a residual value of $15,000 on a vehicle which is now only worth $11,000 - the car company is left holding the bag.

When I heard the news today I did a less than scientific study of two four year old vehicles - a Prius and a Ford Explorer.

A brand new Prius today costs a Canadian $27k to $30k (yes, I know they are much lower in the U.S.). A quick trip on Autotrader.ca tells me a 2004/2005 will fetch $24k to $28k; that is more than a brand new Prius in the U.S. In other words - if you leased a Prius in 2005, you got great gas mileage and when Toyota gets it back, they are going to make a good margin flipping it again.

Now let's look at a 2005 Explorer. My less than scientific study brings up a cost of about $15k for a four year old Explorer. A new Explorer will set you back $38k to $50k. Do the math...how much is Detroit losing on bringing back after lease SUV's? It has to be in the billions! Ouch!

I promised myself that I am going to start writing about solutions to climate change - useful information, focused on solutions. But...this subject really bothers me (can you tell).

One more thing before I sign off...have you seen the ads on TV and billboards at some vehicle dealers - guaranteed $2.99 per gallon of gas or $1,000 worth of free gas with your vehicle...argh, did you think you would ever see the day that vehicle dealers would do something like that!

To quote one of the greatest philosophers of our time, Forrest Gump, "That's all I have to say about that".

Please Detroit - turn it around, start manufacturing vehicles that will take on the Prius and Civic Hybrid; you will sell a whole bunch of them. Competition is good.

Remember Henry Ford - he built and priced cars that his employees could afford to buy - brilliant. Let's hope, one hundred years later that Detroit continues to manufacture vehicles that North Americans can afford, will want to drive and most importantly, respect the environment.

Peter Corbyn

Tale of Two Car Companies

Have you read the news today?

Honda just announced a record quarterly profit of $1.7 Billion and Ford announced a record loss of $8.7 Billion ($8,700,000,000). Turmoil in the automotive industry - you bet! Are all of the manufacturers losing money? Apparently not.

Honda is the home to the fuel efficient Accord, Civic and Civic Hybrid. Ford is home to the Expedition and Lincoln Navigator. In Ford's defence, they have been proactively green for a number of years, such as dictating minimum percentages of recycled content in their vehicles from their suppliers. But in reality - how well has that Focus (no pun intended) translated into sales?

I would like to think that the people leading Ford in Detroit should have and would have seen higher gas prices and raised consumer awareness of climate change coming. Why didn't they? Profit margins on SUV's 3 or 4 years ago where high, now they can't give them away. I bet they are thinking that the margin on a hybrid Focus (which doesn't exist yet) would be looking a whole lot healthier now than the margin on an Expedition today.

Who gets hurt in this scenario? Not the consumer - they can go across the street to Honda or Toyota, or even GM (by the way, check out the new fuel efficient Camaro - who'd a thunk it!). My heart goes out to the Ford employees who are losing their jobs. I have visited a few Ford plants - these are people that should still be working today if upper management wasn't asleep at the wheel (ok, another pun).

There is a lesson here for companies in other sectors - please take note. The times they are a changin'...look ahead and figure out what your new 'greener' products and services will look like one year, two years and three years from now. If you don't, your competition will.

Peter Corbyn

GreenNexxus

The Politics and Spin of Energy Independence

The term 'energy independence' is getting a lot of play in North America lately. Gas prices are high (not as high as Europe) and will not likely come down as long as China and India stay on their path - in other words it could be a while, if ever!

Google 'energy independence' and you get 1.8 million hits - notice the term 'North America' - translation - Northern Alberta :)

Energy independence is being talked about by liberals/democrats and conservatives/republicans. To the conservatives it means a direct line to the Alberta tar sands and subsidizing Big Oil to ramp up oil shale production in Colorado (yes, you read that right) and poking around Alaska. To the liberals it means weaning ourselves off fossil fuels and moving forward with renewable energy sources.

To T. Boone Pickens (ex oil man) it means installing a whole bunch of wind turbines in the middle of America - he makes a convincing point. Take five minutes to watch his video calling for more wind power, it is very interesting.

The point of this piece - please be careful when you read / listen / watch news about energy independence - it is a good thing for North America, as long as it means moving off fossil fuels, not digging more holes in the ground.

The way we use energy and produce energy has to fundamentally change FAST...the sooner our leaders in Washington and Ottawa realize that fact the better. And how do we help them wake up? With our votes!

Blogged with the Flock Browser

Solving Climate Change One Kilogram at a Time

Google 'carbon calculator' sometime - you will get about 233,000 hits. Carbon calculators help estimate your carbon footprint.

I would like to take this opportunity to publicly wonder whether these types of carbon calculators are the best means to help you actually reduce your footprint.

I think my household carbon footprint is about 17 Tonnes per year based on my utility bills and how far we drive (and the size of our vehicle). This took me about 5 minutes to calculate by converting my annual Kw x Kg of CO2 per Kw and knowing that gasoline emits 2.36 Kg/litre. Realistically, does it matter if we are at 15.5 tonnes or 18.5 tonnes when what we really need to do is reduce it anyway?

I know that someone driving a Hummer 20,000 km per year has a much higher carbon footprint than a Yaris driven the same distance...do I know what the exact amount of each is - no? Do I know the Yaris is better - yes.

What's my point? The reality is - reducing your carbon footprint (or basically your energy consumption) means taking action - changing light bulbs, insulating attics, driving less or not at all, buying locally produced food, using power bars to turn off the TV/DVD/Stereo 20 hours a day, etc, etc, etc. And when all of that is done, doing more...it is an iterative and ongoing process for everyone - individuals, companies, you name it.

The GreenNexxus Green Energy Pledge helps you identify ways to lower your carbon footprint and save money - it focuses on action. Collectively GreenNexxus members have pledged to save about 475,000 Kg (just over 1,000,000 lbs) of Greenhouse Gas emissions to date. One million is a big number - it will not tell you exactly what your carbon footprint is, but it will certainly help reduce your carbon footprint by making the big number grow! Sign up, add your pledge and be part of the team that makes this number grow, grow, grow!