In a stunning example of the plight of the world economy, the Toyota Motor Company – which passed General Motors in 2008 for the record of most vehicles sold worldwide – posted an annual loss of 436.9 billion yen, or $4.4 billion dollars for the fiscal year ending March 2009. This was Toyota’s first annual net loss since the good old days of 1950.
How much did things cost in 1950? According to http://www.thepeoplehistory.com/1950.html,
- The yearly inflation rate in the USA was 1.09%
- A new house averaged $8,450.00
- Average wages per year: $3,210.00
- Cost of a gallon of Gas: 18 cents
- Average Cost of a new car: $1,510.00
- Stromburg black and white television: $249.95
- Ball point pen: $0.25
- Samsonite case: $25.00
- Clock radio: $59.95
To make matters worse, Toyota is predicting it will lose another 550 billion yen or $5.5 billion dollars for the fiscal year ending March 2010, while global sales drop by almost 15%.
It’s interesting to note that in 1950 the average cost of a new house in the US was about 2 1/2 times the average wage. In 2007, the average wage in the US was about $40,000 and the average cost of a new house was about $300,000 – about 7 times the average wage. It was this housing bubble that played a large part in setting off the global financial crisis as millions of people find themselves having purchased homes they can no longer afford, forcing a chain of foreclosures, bankruptcies and massive derivative losses.
Toyota also cut its annual dividend by almost 30%, the first cut in at least 15 years after its sales in the US for the year ending in April were down a stunning 42%.
However, things could be worse, as US automaker Chrystler heads into bankruptcy and General Motors appears poised to follow. What makes matters worse for the poor sap of an American taxpayer is having to sit by while the criminal cronies in the US government throw billions of dollars at these money losing businesses. Didn’t China used to do things like that before they discovered Capitalism? Or has the US passed China for the depth of corruption that exists throughout its government and industry?
General Motors, for example, lost $10 billion dollars in the first quarter of the year after the US government handed it a neat little $15 billion dollar bailout package. Oops. Soon we’ll all be driving those thrifty $2500 subcompacts planned for production in India by Renault-Nissan and India’s own Tata Motors.
Toyota was on a tear as it became the global automotive powerhouse, and along with everyone else failed to forsee the global depression. As they say, the bigger they are the harder they fall; it remains to be seen if the automotive giant can resist laying off any of its full-time workers who now enjoy lifetime job guarantees. Since when were lifetime job guarantees compatible with capitalism?<!–nextpage–>
The good news is that the incoming Mr. Toyoda, who will replace Mr. Watanabe as President and CEO, will focus on “green” technology to help boost sales by taking a long-term view of our current energy and environmental predicament.
New York Times columnist and The World Is Flat author Thomas Friedman, in his new book, Hot, Flat, and Crowded: Why We Need a Green Revolution — and How It Can Renew America, argues that the convergence of global warming, global flattening (the rise of middle classes from Internet globalization of talent), and global crowding are driving key trends that will define the 21st century.
Essentially, it’s how we handle our energy needs in a world that has already sustained massive environmental destruction that will largely determine our fate in “the energy climate era.” Go green or go home, says Mr. Friedman. Toyota is trying to lead the way while relics like GM still pump out huge 4-wheel drive pickup trucks to beer-guzzling Marlboro Man wannabees who never manage to put a scratch in the paint of their shiny studmobiles.
In just a few years, it will be too late to fix things–unless the United States steps up now and takes the lead in a worldwide effort to replace our wasteful, inefficient energy practices with a strategy for clean energy, energy efficiency, and conservation that Friedman calls Code Green.