How does an American pronounce Pallagoundenpalayam ?

The most unlikely of bedfellows can come together in the business world. Consider this rather unusual "marriage".

The bride is the city of Detroit. We shouldn't be uncharitable to a bride, but the immediate words that come to mind when you mention Detroit are decay, dilapidated, joblessness,  decline, etc etc. Can any good news come out of Detroit these days ?

The groom is Sakthi Group. Sakthi who ? - even my Indian readers are entitled to ask. It's an unknown, small conglomerate from the South of India. They were essentially a sugar company, but have dipped their fingers into a bewildering array of businesses. They are still small by global standards - some $2 bn in size. One of their businesses is Automotive Components - a business in which Indian companies have excelled and are starting to lead the world. 

Sakthi announced a $ 31 m investment in a manufacturing facility in Detroit to make aluminium castings. GM and Ford are big customers for them and their logic for this investment is being close to customers.  Of course they have milked the incentives and subsidies - some $4 m.  But Sakthi has played the PR angle perfectly. The castings will substitute imports from China. The facility will create 650 jobs over 2 years. They have committed to hire at least 2 ex felons a month ( both a brilliant and a movingly human move). And the site they are developing is a historic school, now closed and left in ruins. Can there be a better feel good story ?

The sight of Michigan Governor Rick Snyder, waving a casting, as he welcomed Sakthi makes interesting viewing. And the Sakthi's chairman calling the marriage a Catholic marriage (meaning,  for the long term), is equally interesting Whether Sakthi will succeed in the most challenging location of all in the US remains to be seen. But you have to give it full marks for daring and boldness. It may fall flat on its face. But it will still have been an interesting experiment.

Meanwhile the American employees have to learn to pronounce Mukasi Pallagoundenpalayam ! That's where Sakthi's auto component headquarters is located in India. Even my good friend Sriram is going to struggle with that !

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Buy Property - Gangnam Style

Remember Psy and the megahit video Gangnam style ?  Yeah, I know, two years is the equivalent of a full Jurassic Age in pop music circles, but still ..... While you were trying to prance about like a horse, did you wonder what Gangnam style really meant ??

Gangnam is actually a suburb in Seoul, inhabited by the mighty and wealthy. The song was a parody of the lifestyles of those mighty men and women. Today Gangnam district came back into the news, with a property deal that raised my eyebrows so much that they vanished into my hairline (such as it is !). A 79,000 sq metre plot was up for sale. Thirteen bidders emerged, including two of Korea's biggest corporations , Hyundai and Samsung. Hyundai won it ; apparently they want to build their corporate headquarters there. The price tag ? A cool $ 10 bn. If you do the math , that is $126,000 per sq mtr. Or if you are an Indian, preferring ancient British metrics, Rs 7.6 lakhs per sq ft !!!

What sort of a crazy world do we live in where the price of a piece of land just enough to plant your two feet in and stand still, is more than the annual income of 99% of the population of the planet. Well, that is Gangnam style.

There is an ancillary question to be asked. What is Hyundai doing trying to build a corporate headquarters for $ 10 bn ? Investors are asking that question too. The shares of Hyundai were beaten down by 9% when news of this transaction broke out.  After all Hyundai didn't make a profit of $ 10bn last year. The pundits believe that Hyundai overpaid by about 3 times !  Hyundai defended it with typical corporatespeak - "Internally, we think we offered the appropriate price, considering various factors such as our global business plan and its future value ".

This blogger bought a Hyundai car a little while ago, for about the same price as would have fetched 1 sq ft of the land in Gangnam district. He is now unclear as to whether he should have opted to buy the land instead. You see, he is somewhat ( OK severely) dance challenged. However that has not deterred him from dreaming of some delectable dance moves that would make a dozen redheads swoon (Sriram please note !). So maybe, to get the right inspiration, he should have perhaps done the property deal and stood on his 1 sq ft plot of land in the middle of Gangnam district. And then practiced some intricate moves under the watchful tutelage of Psy. Trying to contort himself inside 1 sq ft may have perhaps cured his dance challenged status !

No use crying over spilt milk now. The car is there in the basement (for some hilarity on what this blogger is doing to it, read here). However he is intending to write to Chung Mong-koo, the patriarch of the Hyundai family offering to exchange his new car for the equivalent plot of real estate in Gangnam district. After all you see, its not very obvious which is overvalued more !!

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Lights, Camera, Action

This post is about a movie !  It takes some gall for a blogger who knows zilch about movies and doesn't see them, to do a post on something his readers are masters of. But that's the beauty of this medium - you can fearlessly propound  on things you don't have a clue about.

I am told actors are key to movies ! This one stars a legend as a hero. Across continents, this man is reputed to be with the midas touch - anything he touches turns into gold. There are assorted villains, but the beauty of the movie is that you often don't know who the real villain is. There is a faceless foreign government, who everybody loves to bash these days (not America - in movies, America is all mom and apple pie). The only slight trouble is that there isn't a very pretty heroine. There is a lady actress who comes roaring to defend the hero , but alas, she will not set Zeno's heart go flutter flutter and her role casts her as a Minister. She does manage to be exotic though, speaking in French.

The song and dance sequences are a bit metaphorical. There is a lot of song and dance made, but there isn't actual singing and dancing - if you know what I mean. I am told that song and dance sequences are strictly the preserve of Indian movies and this being a foreign movie, its absence is apparently pardonable.

Being a foreign movie, it has to have a story , I believe. I am reliably informed that such a condition is not an absolute necessity for an Indian movie. Anyway this one has a great story full of twists and turns. Enter the successful hero, who is already a legend. He has vanquished villains as far away as Japan, until even the Japanese have embraced him as one of their own. He now makes a bold plan to revolutionalise the world with a great invention.

Now come the villains. A foreign government, known to copy everything, is trying to steal his invention. Three of his associates are apparently tempted by spies from this government to sell their secret. They are caught, and executed melodramatically, even though they loudly protest their innocence. Cut to the heroine. She comes riding on her white steed, sabre rattling to this foreign government. She wishes to slay the dragon to save her hero. The foreign government scares her off threatening dire consequences if she rode any further. She retreats after a memorable dialogue sequence about economic warfare.

The hero now has some doubts if he has acted heroically. After all the three were honourable men. Could they have let him down like that ?? He starts to have self doubts. He retreats back with that constipated look on his face (a look made popular by those who act in Indian TV soaps). Then it is established that the three might not have been guilty after all. It looks like it might be curtains up for the hero. But then his two trusted aides fall on their sword and sacrifice themselves for the hero. The hero is saved after all. The movie ends rather abruptly - surely the producer has left enough hints that there is to be a sequel.

I felt the movie direction left a little to be desired. An expert such as Gils would have done a better job of it. Cinematography could also have been improved if they had hired RamMmm.  Still it's a good movie to watch on a lazy Sunday.

The movie is called Renault. You can read a better version of the movie plot here.

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The itsy bitsy spider

Businesses have to anticipate and plan for all sorts of eventualities. A business continuity plan for an ebola outbreak or a response to gang warfare in the Niger delta may raise an eyebrow as to the extremes businesses go. But surely, planning a national response to an itsy bitsy spider takes the cake. And yet this is precisely what Mazda is discovering it ought to have done in the US of A.

The problem is this. Apparently a common spider called yellow sac spider has taken a distinct liking for Mazda cars. Or more precisely, the rubber hoses that are connected to the fuel tank. The spiders being rather fond of a long siesta during day time, find the inside of a tube the perfect place for somnolence in the hours of light. For some reason, the Mazda car tubes seem a superior choice to a Chevy tube, for instance.This apparently can lead to pressurisation or ventilation problems and in extreme cases could also crack the gas tank. So, Mazda has a problem on its hands.

Reportedly 20 such instances of "arachnid infestation" have been reported (surely a candidate for the Nonsense English award). Enough is enough. Mazda is having to recall 65,000 vehicles in the US for an investigation as to whether an eviction of the resident yellow sac spider is required.

Accusations are flying thick and fast. Mazda says these spiders have got in at the owner's garages. Some owners (and no doubt lawyers drooling on the prospect of a class action suit) are stating that they got in at Mazda's warehouse. Dealers who have to check these vehicles are figuring out what insurance they can take for the eventuality that some technician or the other may be bitten by one irate spider not amused by its summary eviction from its house. Mazda is no doubt issuing such pearls of wisdom as "Beware of spider before opening the car".

Meanwhile researchers are having a field day. They are getting their kicks researching why this spider has taken a liking to only the V6 Mazda, And not to any other model or any other brand. Some may deduce that the spider has a great taste in choosing cars - someday Mazda might even feature an ad that its car is the favourite of not only homo sapines, but other species as well.

Meanwhile Mazda is presumably busy trying to appoint a "Chief Entomology Officer". Anybody fancies this new job, which also carries the CEO tag ???

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The bribery mess at Daimler

The bribery mess at Daimler makes sorry reading. Every party involved is showing up in the worst possible manner. Whatever promoted a global corporation of the standing of Daimler to be in this situation ?

The case is as follows. Daimler is accused by the US authorities of paying bribes of tens of millions of dollars in over 22 countries over a 10 year period. Daimler, it is reported, has agreed to pay a $185 m fine to settle civil and criminal charges. Daimler, it is alleged, set up shell companies to channelise the bribes, Bribes have included gifting an armoured car to a Turkmenistan official, siphoning of funds to the bank account of the wife of an official in China, 10% kickback to Iraqi government under Saddam Hussein, and so on and so on. It makes sordid reading.

First culprit is Daimler , of course. This has been going on systematically over a number of years. A lot of people have turned a blind eye to the goings on. At best, this can be calculated ignorance, and at worst, active encouragement. The amount of money involved has not been much. It is estimated that through all this bribery Daimler earned a profit of $50 m which is a drop in the ocean that Daimler is. Did this really matter so much to stoop to the level of blatant bribery. Why did they do this ?? Why on earth would an organization of the stature of Daimler take such risks for such a measly reward ?

The affair came to light through a whistle blower, in the then Chrysler wing of Daimler. An internal auditor at Chrysler blew the whistle. He went to his boss. His boss told him to keep quiet. He went to his boss’s boss. Who also did nothing. In due course, he was transferred and then sacked. Classic fate of whistle blowers. So much for whistle blowing mechanisms, hotlines, Sarbanes Oxley provisions, etc etc. Total muck on the faces of the people who handled the whistle blower. And equal muck on the face of those responsible for running Daimler’s ethics practices.

Lets turn to the position of the German government. Normally the German authorities are at the forefront of actions against bribery and corruption. They acted famously in a case involving Siemens a few years ago. Daimler is a German company. But they have been prosecuted by the US government. The German authorities have not yet brought any charges. What were they doing. A charitable explanation is that they were sleeping. At the very least they should look sheepish – a German headquartered corporation’s behaviour in 22 countries has been acted against in the US, not Germany.

The only party coming out of this without a stink is the US authorities. They are usually very rigorous in pursuing acts of wrong doing relating to bribery and corruption. They went after Daimler through a variety of laws that gave them jurisdiction, even though Daimler is German company and these acts happened outside the US. Other countries would do well to emulate the US authorities who simply do not compromise on such matters.

This affair makes this writer wring his hands in despair. Multinational companies are accused of all sorts of things all over the world. The very world multinational is construed to be a very dirty world. The majority of such accusations are blatantly false. They are the product of jealousy, misguided nationalism and downright lies. For the large part, multinationals behave honourably across the world and often much better than their local counterparts. I have some credentials to say so – I have worked in multinationals all through my career, and seen very many of them operating across many countries. But then there are also cases like Daimler. They deserve to be given exemplary punishment – not only because of the shame of what they did, but also because mud sticks on very many other more responsible companies because of their actions.

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The millionth Maruti

You may have noticed the news item that Maruti announced that it had rolled out its millionth car in a single year ; apparently it joins global giants like Toyota, GM, Ford etc ; a handful of companies to have achieved this. For non Indian readers of this blog, Maruti is a Suzuki controlled Indian car company that’s the market leader in India. Such statistics mean little except dubious PR value. But it certainly set me off to wax nostalgic about when Maruti first came.

Readers of this blog are refreshingly young. Teenagers like AJCL, Gils, Deepa, Sandhya, et all, were hardly born when the first Maruti car rolled out on Indian roads :) Being slightly elder to this sprightly young lot, I have some credentials to a “those were the days” kind of post.

This is the late seventies; early 80s. India was firmly a socialist country. This was the time we actually amended the preamble to the Constitution to include the words socialist India (it still sits in the preamble). The Taliban would have been very comfortable in that setting – anything that even remotely connoted luxury was considered unethical. No colour TV (poor nation cannot afford it). Entertainment meant watching Sholay for the 37th time. No credit cards – not allowed. No foreign travel – daily allowance of forex, even if you did, was $20. In this wonderfully socialist state, a car was basically considered indecent.

So you had a choice of an Ambassador(Morris Oxford, which was discontinued in the UK in 1959) or a Premier (Fiat 1100 – god knows when it was discontinued in Italy). You had a scintillating choice of colours – black or white. They were considered “rugged” and “for Indian roads”. Every 20kms or so, you stopped your car , opened the hood, let out the steam, poured some water in, waited for some time and then drove off.

Sanjay Gandhi, an Indian politician, (or more accurately the son of a Prime Minister) was a car nut. He started Maruti. Of course that went against every fundamental grain of socialism. But Sanjay Gandhi being Sanjay Gandhi – he could do what he wanted. So this was positioned as a car for the masses. Our enlightened leaders, being what they are, agreed that this was very socialist. Sanjay Gandhi passed away in an air accident before the first car rolled out but by then the project had gone far too ahead to be reversed. So, on came the JV with Suzuki. Out rolled the Maruti 800 in 1983.

The sight of a Maruti 800 on the Indian road was a turning point in Indian’s economic history. It was a small car – a tiny car in order to keep with the socialist aspirations. But it was a car that was light years ahead of the Ambassador and the Premier. It was derided and mocked at for not being rugged enough to handle the Indian roads. It was joked that at the slightest touch, it would crumble and crush the occupant. It was jeered that at the smallest puddle usually found on the road, it would drown. But surprise, surprise, it actually was the more robust one. It broke down the least. It rarely stalled even in the Bombay rains.

At first it was a luxury symbol. Only the very rich bought it. Therefore the hilarious sight of a chauffeur driven Maruti 800 which, as it passed, usually generated hoots of derisory laughter from cab drivers driving the battle tanks that the Ambassador (in Calcutta) or Premier (in Bombay) were.

But slowly and surely, it became a hit. It changed India. Ambassador and Premier are blessedly no more. Maruti Suzuki itself is still the largest player in the market. But the Maruti 800 itself is now being phased out as newer models galore have taken to the streets. But it deserves a special place in India’s recent history. It heralded the takeoff of India. India would never be the same again.

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Bravo Ford

Much of the press on the calamitous state of the US auto industry centered around General Motors. Spare a thought for Ford, which has quietly done some amazing things.

Ford was the only one among the Big Three that did not take the US government bailout. They also were the only one that did not go into Chapter 11 bankruptcy. And yesterday, they announced pretty good 2009 results. They made a profit of $ 2.7 billion in 2009. Yes, t-h-e-y m-a-d-e a p-r-o-f-i-t- i-n 2-0-0-9 ; one of the most brutal years for the auto industry. They gained market share in the US. Their fourth quarter volumes were up 26%. By any standards, an impressive performance.

Sure the numbers hide some real worries (as they always do). Their main business of selling cars actually lost $1.4 bn in 2009. That loss was offset by their finance arm – Ford Motor Credit which made a profit of $1.9 bn. (just goes to show that taking a loan to buy a car is for suckers). But in Ford’s favour, in the fourth quarter, the car business too made a tidy profit. But by not going into bankruptcy, they are left with a huge debt on their balance sheet - GM and Chrysler have much lesser debt now as they “restructured their debt” (read shafted creditors). Such are the advantages of not choosing to go into bankruptcy.

And their endemic problem with the massive pension obligations of retired workers remains an intractable problem. Its an irony of sorts that companies can be ground to dust in paying large sums to keep the retired folks in comfort. Whoever invented the concept of a defined benefit for retired employees based on their last drawn salary for the rest of their retired life ought to be shot. As should the accountants who decided not to create a fund for it, but leave it unfunded for future generations to pay “somehow”.

But suddenly Ford is looking good. GM is still debating the merits of hiring an “outsider” as a CEO (the last refuge of a company bankrupt of ideas of how do run a business well). It decided to shelve this idea at least for now. Toyota’s woes in the US are making the headlines daily. Chrysler has virtually gone absent. The other Japanese giants are also wobbling a bit. Ford is gaining market share.

Detroit and the automakers have had nothing but bad news and abuse for many years now. Every bit of good news ought to be celebrated there.

Bravo Ford. Take a bow.

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Drive on the left or the right ?

You drive on the left side of the road in some countries and right in others. Except , of course, if you drive in India where you drive on the left, right, up, down, under, over, fifth dimension, whatever.

Now this is no big deal. Except for some some confusion if you travel between countries which practice the opposite system. Typically in the UK and its former colonies you drive on the left. And in Japan. Everywhere else you drive on the right. Why this is so, is history – if you are really interested in how this came to be, click here. As is the reason with everything that is non standard in the world – voltages, plug pins, mobile frequencies, etc.

There are however a few countries in the world which decide to change ! Now , why they do this, is beyond comprehension. But they do. Nigeria was one famous case decades ago (left to right) – easy to speculate why ; some car companies must have made some people very rich. Since 1970, things have been pretty much stable. But on Sep 7th, this benign and stable way of life will change. The citizens of Samoa, who currently drive on the right , will shift to the left.

No why on earth would the Samoans want to do this. The stated reason is that its two biggest neighbours Australia and New Zealand drive on the left. Therefore if Samoa would drive on the left, it would be easier to get cheap second hand cars from these countries! Double take !!. Once more !!! And because there will be cheaper and more cars, more people can escape tsunamis !!!! (I am not making this up; this is officially stated by the Prime Minister of Samoa).

Now let me state absolutely categorically that this decision was entirely taken for logical reasons, and that the used car industry in Australia did no lobbying, paid no bribes, did absolutely nothing wrong and the entire decision making process was dictated by high logic and forceful arguments and with no other motive.

Such are the perils of decision making by governments.

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Cash for clunkers - a bad idea

Germany started this and other countries picked it. The US had its “cash for clunkers” programme this month and is closing it on Aug 24 after “a wild success”.

Cash for clunkers, is a dole the US government gives Americans for trading in their old car and buying a new one. The subsidy that Uncle Sam is willing to give could be as much as $4500 per car. The US government has just spent $1.9 bn on it.

In Germany, it was “successful” in that auto sales went up by some 20% or so. It is estimated that it cost Germany some $ 3.5 bn and it is claimed that it saved “thousands of auto jobs”.

The moral justification under which politicians have sold this idea is that carbon spewing clunkers will be replaced by fuel efficient cars and that this is helping the environment. Balderdash. They are doing this because its wildly popular as everybody loves a subsidy, if its given to them. And in car crazy countries like Germany and the US, that's pretty much everybody.

I can’t fathom the economic rationale for throwing money like this. Why is the auto industry so special ? Why not cash for clunkers for TVs, washing machines, dishwashers, or for that matter, kidney machines (Readers of Yes Minister will understand this allusion) which are all suffering similar declines of demand themselves. And how will this help ? A three month increase in demand is going to save “thousands of jobs”? Really ? And what do you think will be the demand in the next three months, pray ?

The problem with tinkering with an ecosystem is that you can hardly predict what the effects would be. Even in the auto industry, car repair shops have been severly hit by this programme. In Germany, general retailers have complained of falling demand - while people bought cars, they scrimped on buying groceries. So, is it the government's role to ensure that the car manufacturer benefits and Helmut Schmidt who runs the neghbourhood garage closes down ?

Governments spending money by investing , in say infrastructure, during times of recession is understandable. Governments lending money to prevent bank collapse (these moneys have to be repaid you know) is also understandable. But just doling money out to help “scared cow industries” ? When massive deficits are being run ? Taxpayers’ money is not meant to be spent like there’s no tomorrow, you know.

I’ve heard the argument that governments cannot sit idly by and let the recession ride. Sure it cannot fiddle while Rome burns. But equally, following the “politicians’ logic” (from that masterpiece Yes Minister), is downright foolhardy. Sir Humphrey, explains the politicians’ syllogism as follows – Something must be done. This is something. Therefore this should be done !! Cash for clunkers seems to be a scheme Jim Hacker would be proud of.

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