2004 Traverse City Coverage Page 2

August 4, 2004

A Car in Microsoft’s Future?

On Wednesday, Microsoft will announce a new joint venture with the Center for Automotive Research, one of the primary sponsors of the annual Management Briefing Seminars. Together, the partners will conduct a series of annual surveys designed to focus on key trends in the auto industry, said John Fikany, head of the Washington-based software giant’s automotive “vertical.” The initial survey will focus on three issues, including warranties, he explained, noting that automakers are desperate to cut what amounts to a $22 billion annual cost — about $2000 a vehicle. Microsoft is making major assault on the U.S. auto industry. It already dominates demand for factory-floor control software, and its MSN Auto site is one of the larger online retail outlets. It’s also expanding its role in the vehicle, especially with a push into telematics. The house that Bill Gates built recently signed an agreement to provide all the navigation and other telematics software for the struggling Italian automaker, Fiat.

Daily Edition: Jul. 16, 2004 by TCC Team (7/15/2004)
Bernhard not going to VW, profits could be good in Q2, Microsoft/Fiat alliance.

Not Sexy, But Critical

Manufacturing dominated the first two days of this year’s Management Briefing Seminars, and the main message was simple: it may not be a sexy topic, but it’s a clear differentiator that automakers — indeed, the U.S. as a whole — ignore at their own peril. “Manufacturing is a competitive advantage and many companies are using it as a key differentiator,” said Laurie Felax, vice president of Harbour & Associates. U.S. automakers have made an especially strong push in recent years, reporting gains in both productivity and quality, she said, quickly cautioning that Japanese automakers operating in North America still remain the productivity leaders. And that can add up to a cost advantage of as much as $800 a vehicle.

Healthcare at “Tipping Point”

U.S. automakers have long complained about the burden of health care, which now adds an average $1200 to the cost of a typical Ford and General Motors vehicle. Finally, there seems to be momentum for real change in the troubled U.S. health care system, Ernst & Young’s Mark Finucane told an audience at the Management Briefing Seminars. “There’s new consensus the thing is really busted,” he asserted, though he immediately emphasized that despite the chaotic nature of the medical system, “It’s the most organized system in the world when you try to make a move on (change) it.” But Finucane, the leader of the consulting firm’s medical center practice, said the debate has reached what is often called the “tipping point,” where consensus demands that critical steps be taken.

Delphi Says It Is Delivering

After posting an unexpectedly strong, second-quarter performance, Wall Street analysts are taking a cautious look at the future for giant supplier Delphi. The one-time General Motors subsidiary is working hard to improve its fortunes, said Vice Chairman Don Runkle, during a speech at the Management Briefing Seminars. The one-time GM executive revealed that productivity jumped 17 percent last year. And Delphi has been aggressively pursuing its goal of expanding ties beyond its former owner. It generated a record 45 percent of its business from non-GM customers during the second quarter, and added Runkle, “We expect to cross the 50/50 point sometime next year.”

Delphi Looks at Losing in Q3 by Joseph Szczesny (7/19/2004)
But with labor cost reductions coming, supplier sees black for the year.

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