High pump prices are a good thing

My compliments to John McElroy (see WAW — March '02, p.15) for saying clearly that the price of fuel is far too low in the U.S. for the good of the country and the world.

As an American in France, I have come to realize the $4/gallon fuel is a good thing.It forces people to make choices, it drives technology to save energy and it provides the money to take care of the roads — three things we need much more of in the U.S. If the U.S. were to tax fuel the way it should be, they would have the money to subsidize the poor and the single mothers who can't afford a newer car or live where no one has provided public transport. It would also provide additional funds that could be used toward building roads that will last beyond the next election.

If we dream a bit, it might also provide the incentive for people to start moving back in to the communities near where they work, cutting down on congestion and bringing our cities back to life. But this is all a dream. No one has the political will to do what needs to be done. Thanks again for saying it well.
Brian

Japan's banks export their problems here

Katherine Zachary's article, “Is a falling yen an unfair advantage or nothing more than sour grapes?” (see WAW — April '02, p.24), sheds little light on root causes and prospective solutions to the problems caused by Japanese government intervention in currency markets.

“Sour grapes?” Hardly. Plain and simple fact: This continuing action interferes with natural competitive forces resulting in the yen falling to about 20% below its fair market value. The resulting significant pricing advantage for the Japanese has had a strong influence on marketing strategy.

Over the last two years, the Bank of Japan has spent more than $100 billion on currency interventions. By keeping the yen below its free-market value, the Japanese are avoiding the restructuring needed to heal their chronically sick economy, and in effect, exporting their problems here. Higher U.S. unemployment levels and profitability pressures are a directresult.

If product is the only true competitive factor, why then has the Japanese government been so persistent in maintaining the value of the yen at artificially low levels? Why not let the yen rise to its market value?
G. Mustafa Mohatarem
Chief Economist
General Motors Corp.
Detroit, MI

Code of conduct? Fugidaboutit

Our advice to the Original Equipment Suppliers Assn. would be to completely forget about creating a formal code of conduct (see WAW — April '02, p.17). Instead, we believe that OESA should be advising its members not to participate in online reverse auctions. If there is no other alternative than to create a code of ethics, then the following paper is a must-read: http://www.clbm.org/ora/caux2.pdf.
Bob Emiliani
Professor
Rensselaer Polytechnic Institute
Lally School of Management and Technology
Hartford, CT

Safety shouldn't be an option

General Motors has lost its way. How else to explain its decision to make standard antilock brakes optional for model year '03. Apparently GM thinks it's acceptable for some customers to be “less safe” than those willing to spend the extra $160 for ABS.

This simplistic pricing decision will come to haunt GM. It is a product-liability and public-relations nightmare waiting to happen.
Stephen C. Wennes
Minneapolis, MN

CTS is beautiful

A comment on Cameron Bennett's letter (see WAW — April '02, p. 8) about the new Cadillac CTS TV commercial. He obviously doesn't get the point of this beautifully done commercial and it wouldn't be worth the time to try to explain it to him. The CTS design is definitely stealth and is just the opposite of the Japanese JellyBean look. I say, hats off to Cadillac for having the guts to put this beauty on the street.
Dean Thomas
Venice, FL

Steel doesn't need help

Steel mills don't need help (see WAW — April '02, p.41). They fooled Bush and your writer, Brian Corbett. Before 201 ink was dry, the mills backed out of contracts, drastically increased lead times and, with phony allocations, jumped prices by enormous amounts. They will make material available to the highest bidder and are building inventory to release at a later date to coincide with higher prices. Brian either doesn't understand the market or his dad owns an old mill.

Let supply and demand make the world go round — not politics.
John R. Bickel
Tier 2 supplier

April 2002<br />Question of the Month

In automotive safety, which has accomplished more?

Legislation 50%
Threats of Legislation 50%