Professor Elam

Jerry Flint  has reports on the auto industry since the 1950s. In this column he gives as good an explanation of managerial accounting as I have ever read. Once we exceed break even , fixed costs are covered and we can make some real money, that is the point of the entire exercise.  In this column he suggests that the high prices of gasoline are driving consumers to more fuel efficient cars, which is what the environmental types have always said.  Please read this column to understand why we study managerial accounting.

Another huge component of business is strategy.  Nightmare on Woodward Avenue examines how the pickup SUV strategy of Detroit has failed. Keeping a long term focus (remember Dr. Deming?) has resulted in cars that address the fuel crisis for foreign auto makers.EvenToyota blew it here with the ill timed Tundra.  Guess who is making more money?  I suspect Chrysler will be toast in perhaps 18 months. They do not have a ‘compact’ to sell or anything remotely economical.  Perhaps Navistar will buy their RAM truck line. I do not see that Chrysler has anything else to sell that anyone would want. While the car mags love the new 425 bhp Challenger, who wants it in big numbers. And in fact the high performance cars have never sold in large numbers. A two ton muscle car from Chrylser is late to the market just at the original Challenger was in 1970, again at the start of a fuel and emission crisis. The world will no longer tolerate the same mistake twice in a row.

Saving GM  mates strategy with managerial accounting.  In this column Mr. Flint analyzes past and current mistakes. now what to do?  Managing is a process of continually evaluating outcomes to improve delivery of product and service. The Americans have chosen short term profits over long term pursuit of strategy, now time is running out. GM and Ford are each down to maybe two years of operating cash. Ford just today reported yet another $9 B loss.  How long can this go on-about tow more years. It may be startling to think that all these giant Ford and Chevy dealerships could be left without a company in two years, a blink of an eye in car terms, but I am telling you and the cash flow statements are telling you, it could happen.  Two years and counting….