02.14.08
Posted in Clean Technology, Exchange Rates, Strategies at 5:30 am by Administrator
GM posted this week a record loss of $722 million for last quarter. But digging into it further the loss was from the sagging North American operations where the company is rapdily losing market share to Toyota, Honda and other international manufacturers. For 2007, GM’s revenue was flat in North America compared to the 50% gain in Latin America and 20% growth in Asia Pacific. The company continues to lose automotive U.S. market share–falling from 23.6% in 2006 to 23.1% in 2007. GM barely held on to its title as the largest automaker in the world, beating Toyota by just 3,000 vehicles.
This result came at a time when the dollar was at record lows against the Euro and was relatively weak against the Yen. Yet international carmakers figured out how to cut prices of exports to the US. Most of the international auto makers also have operations in the US and they also managed to profit despite the rise in prices for imported components due the weaker dollar.
GM, like most US manufacturers, exports relatively few cars. It chose a strategy after the Second World War of having local assembly or manufacture. In fact, GM cars in Europe bear little resemblance to the ones produced in the US. There is some sourcing of parts from the US but most of the content is local.
Over the past two decades, GM and Ford international operations have been more efficient and profitable than the domestic counterparts. But it leaves the auto makers unable to take advantage of a weak dollar since they export little. On the other hand, when the dollar is strong, imports are more competitive.
The US automakers have vigorously fought the new high fuel efficiency standards. They now must retool to produce more efficient engines. The international manufacturers, particularly the Japanese, have already made the investments in clean technology.
GM has much to do with ”right-sizing” its domestic operations. It also faces challenges in “greening” its fleet. However, if the company loses such money in weak dollar environment, watch out if the dollar suddenly strenghens.
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01.19.08
Posted in Clean Technology, Government Resources at 10:17 pm by Administrator
Clean technology will certainly be one of the fastest growing international markets over the next five years. Both governments and consumers are demanding reductions in emissions and more environmentally friendly products. New products will be created around the globe and good ideas created in one place will quickly migrate worldwide. One good example of the flow of ideas and technology is between the United States and Germany due to a common effort of governments, associations and private sector producers.
Germany recognized early on that it needed to lessen dependence on imported oil and gas, not only for national security reasons but also for environmental health. The country started a research program through its research laboratory system in the late 1970’s. With reunification, ordinary Germans were confronted in the former East Germany with the consequences of governments ignoring environmental impacts. The research programs continued producing number of interesting advances in both wind and solar generation, but the costs were still far above conventional generation. When the SPD came into power in 1998, the government instituted subsidies for solar and wind installation and set up a system that allowed producers to sell back to the grid.
Having demonstrated that renewables could be competitive given the right regulatory framework, the German companies turned toward the US market as a way to allow greater efficiencies of production. I accompanied Sigmar Gabriel, then Minister-President of Lower Saxony and current Environment Minister of Germany on a visit in 2000 to Boston, San Francisco and Silicon Valley. Accompanying him were the manufacturers of solar and wind generation equipment. In addition, German companies started their own marketing efforts.
When I came to live in the Bay Area in 2002, I joined the fledgling German American Business Association of California. GABA early on focused on clean tech, providing a platform for German companies to meet US customers and to understand the regulatory environment. It is not surprising that the leading international companies in renewable energy are German.
The takeaway from this discussion: To develop international clean tech markets, we need to put together coalitions of governments, associations and producers. Those efforts will only be successful in so far as technologies are price competitive, given the right incentives from the regulatory structure.
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01.17.08
Posted in Clean Technology at 10:40 pm by Administrator
The Cleantech Group LLC just released some interesting information on worldwide VC Markets. As reported on Cleantech.com VC investments in developing countries, most notably in solar, have upticked sharpkly in 2007:
“Venture capital investment in cleantech for 2007 hit new highs as deals in North America and Europe totaled $5.18 billion, according to data released today.
“Energy generation took the lead in last year’s cleantech investments, according to a year-end roundup from Ann Arbor, Mich.-based Cleantech Group, which has been tracking cleantech sector investment since 2001.
“The report counted 172 deals in energy generation in 2007, totaling $2.75 billion invested into the sector. North American companies continue to receive the lion’s share of cleantech venture investing, with North American-based companies receiving over 3x the investment of European-based companies.
“Within the energy generation subsector, solar made a strong showing.
“In 2007, solar emerged as a significant investment theme, and it was notable to us that of the top five solar deals of the year, three of the largest were solar investments in China and India,” said Cleantech Group Managing Director of Global Marketing Kristina Messdaghi.
“With three successful crystalline silicon IPOs, China attracted investor interest for solar companies, including Yingli Green Energy, which received $118 million, and Shunda Holdings, which received $82 million. In India, top cleantech investments of the year included solar company Moser Baer Photo Voltaic with $100 million.
“We always knew the emerging markets of China and India were going to be significant economic forces. It’s clearly now happening,” said Messdaghi.”
Both China and India, like developed economies in Europe and North America, are major oil importers. The incentives to move to renewable technologies is greater than ever and companies in those markets have the competitive advantage of knowing the idiosyncrasies in China and India. Clearly, cleantech is the growth sector for this decade in terms of international trade, but although many developments are taking place in the US (particularly California) and Europe (especially Germany), no one country can claim ownership of the sector.
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12.02.07
Posted in Clean Technology, Strategies at 6:26 pm by Administrator
My fellow board member on Clean Tech Bay, Olaf Groth (http://www.linkedin.com/in/olafgroth) sent around a provocative question about what would be the impact of higher auto fuel efficiency standards. One point that he made was that he felt that despite the efforts of the auto makers to fight the standards that the efforts of the Western states would lead to the higher fuel efficiency and that in any event people will drive fewer conventionally powered cars in the future.
What would be the implications for international business?
- My guess is that US car makers would be the least agile in responding to shifting market demand and that the Japanese would be come out best. The German auto makers have not responded much to higher fuel efficiency but have shown a better track record of accomodating market demands.
- With more non-conventional cars and with better fuel efficiency, oil demand will gradually drop. This will shift back again the advantage to non-oil exporting countries and allow greater consumption by consumers.
- If there are breakthroughs in electrical storage, electric cars will have a tremendous advantage – fewer parts, lighter, maybe eliminating transmissions, etc. This will eliminate the traditional barrier to entry (a expensive motor and transmission) for existing manufacturers (note each has the word motors in their company name – Ford Motors, General Motors, Toyota Motors, Bayrische Motor Werke,). With those barriers gone, we may see new entrants to the market (China, India, Google Auto? )
- For those on the venture capital side, I’d be looking for innovations in storage technology and electric motors/controls. Those won’t necessarily come from the US, but anywhere in the world.
What do you see as the implications?
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11.26.07
Posted in Clean Technology at 4:55 am by Administrator
Developing clean technologies is a personal interest of mine. I’m on the founding board of CleanTech Bay, which is a trade association of companies in the San Francisco Bay Area interested in promoting clean tech. I also have worked with a number of renewable energy technology companies in my “virtual incubator” at the Santa Rosa Chamber of Commerce. One company www.1-solar.com won first prize in the renewable energy category at the California Clean Tech Open last month (see also http://guntherportfolio.blogspot.com/2007/10/2007-california-clean-tech-open-final.html for a video on the electrical inverter technology).
For the planet to cope with the greenhouse gas effects on climate, we’re going to need innovative solutions for generating and storing energy and for conserving resources like water and open spaces. The solutions will likely be a mixture of ideas – some from academia, some from big business and many from small companies around the globe. Our environment is a global responsbility and we need to develop global businesses that will find and implement the solutions to the crisis that we are facing.
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