Wednesday, December 24, 2008

What to expect in 2009

As we move to the end of the year most people reflect on the year gone by and mull over the ups and downs in their lives. I think it would be more relevant to do some crystal ball gazing into the future...
This is how I visualize the year 2009

Change : Barack Obama has promised the US that he would bring change; and through his change he would bring change to the world at large. I see the world being so entwined financially and hence politically that every country (almost) would be impacted by the moves of the other-- which is a good thing as most contries would want economic prosperity and that would drive better economic cooperation.

Auto Bail out: The US has decided to bail lout the ailing auto industry. Who are they bailing out? The North American auto companies, namely the BIG THREE ( GM, Chrysler and Ford). These companies are in trouble because for years now their assembly lines have been churning out cars that no one is buying. The companies arguably provided jobs and sustenance for approx a million plus citizens in US & Canada and its any ones guess how this spilled over to the ancillary industry which was surviving because of the auto industry. To my mind the bail out will stabilize the situation for a few months but as the consumers continue to buy better cars from Japan, Korea & Germany the Big Three will be in trouble again. More fuel efficient, more green, more hybrid is the need of the hour. It's not difficult to guess who is winning on this score currently. Infact I urge you to google a company by the name " Better Place". This company ( surprisingly American, based out of PaloAlto in CA) is selling mileage in place of cars. A bit like you sell talk time on your cell phones. You dont buy a car any more you buy a mileage plan ( like talk time), the car comes free. I think the US is bailing out the wrong auto industry!!!!
Canadian Auto Connection: Connceted with the US auto industry is the Canadian arm of the Big Three. These Canadian workers also face a bleak future incase the US firms go down. The Canadian Govt has done well to bail out the Canadian arm else the US companies would have been forced to close their Canadian operations. Remember what i said before, incase these North American auto companies do not make better products, sooner or later they will be faced with the same situation once again.
Canada: Canada is impacted by the US recession as 90% of our exports go to the US. A receding US economy implies the export volumes go down which implies that Canadian manufacturing and assembly lines need to slow down so that they do not build beyond inventory/ stocking limits-- which leads to closures/layoffs. Though this is largely beyond Canadian control what otheralternative does Canada have?
Mackenzie Gas Project: Ever heard of the Mackenzie Gas Project? Apparently there is tonnnnnns of oil under the frozen grounds of NWT ( North West Territories). A proposal to build a 1220 kms piple line connecting the oil feilds in NWT to the North American markets has been doing the rounds in Ottawa but has been embroilled in red tape. This project if sanctioned would open up the economy in Canada( like a game of scrabbles when some one provides an opening to a whole new side of the board) . It would not only provide new jobs but also build infrastructure for the vast open spaces of Canada's northern states. This project is so vital that it could kick start the Canadian economy and also provide an alternative to the "Better Place" technology ( I talked about earlier) - at least in the short term by giving a shot in the arm for the North American auto industry while they revamp their operations to take on the Japanese / German cars on quality. In effect the Mackenzie project would
  • Open the economy by providing new jobs
  • Build Infrastructure for the vast undeveloped open Northern provinces
  • Provide the North American auto industry a chance to survive and revamp operations inspite of superior auto products coming from outside the North American region

I hope, some one in Ottawa is listening!!

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