Tag Archives: china

When Branding and Politics Collide

It is the worst timing possible to open a Tesla dealership.

 In Kelowna, the western Canadian city I live in, a new 30,000 square foot Tesla dealership is scheduled to open their doors any day now.  When they do, I’m guessing business will not be brisk. It takes a lot to get Canadians worked up (hockey games aside) but the Trump administration has managed to do something I haven’t seen before in my lifetime – uniting Canadians in a passionate rage. Between picking a totally unjustified trade war with us and continually threatening to make us a 51st State, Donald Trump hasn’t made any friends in my country. And – by extension – that includes his hatchet/chainsaw man and the face of Tesla, Elon Musk.

This is not just happening here in Canada. Tesla owners are having a rough month everywhere. Their cars are being customized with swastikas. Their daily drive is regularly punctuated with middle finger salutes. They are being verbally accosted at Tesla charging stations. And, if they happen to have to go to their dealership, chances are very good that they’ll have to navigate past a pack of protesters. According to the website Actionnetwork.org, there are 101 TeslaTakedown protests scheduled across the US and around the world in the next few weeks.

That is a dramatic turnaround for a car brand that single handedly made driving an electric vehicle cool. The TeslaTakedown campaign is urging drivers to dump their cars and shareholders to sell their stock. A recent survey out of the Netherlands says that one in three Tesla owners are considering selling.

This has nothing to do with whether Teslas are good cars or not. They’re the same vehicles they were 6 months ago. This is simply about branding, and right now, the Tesla brand and Elon Musk are one and the same. That brand is not popular with the majority of the world right now, especially here in Canada.

Like I said – it’s really bad timing to open a new dealership.

As this is all playing out, it got me thinking about another car brand that got on the wrong side of politics 80 years ago. In 1945, Volkswagen was not the 2nd largest car manufacturer in the world, as it is now. It was a shuttered factory in Wolfsburg, Germany that was set to be dismantled by the Allied occupiers, led by the British.  

Volkswagen was founded in 1937 by the Nazi Party’s German Labor Front as a prestige project to show that German workers could produce the world’s best “People’s Car” (which is literally what “Volkswagen” means). That vehicle would be the first prototype of the now much-loved Beetle that we of a certain age immediately associate with Volkswagen. In 1938, Hitler himself christened this the KdF-Wagen, which stood for “Kraft durch Freude” – Strength through Joy. Even the car’s name was a banner for Nazi propaganda.

Eight years later – in 1945 – it was a different story. The Wolfsburg factory was to be dismantled as part of the de-Nazification of German industry and the equipment was to be sent to a British car manufacturer, but none of them wanted it. Three things saved Volkswagen:

  • The design was solid. The wartime version of the VW – the Kubelwagen – was exceptionally reliable
  • There was a desperate need for military transportation in the now occupied zone and there was no manufacturer able to fulfill that need
  • There was a factory ready to go and a skilled workforce who were in danger of starving if they didn’t go back to work

These three things convinced the British trustees to reopen the Wolfsburg plant. By March of 1946, the plant was producing 1000 cars a month.  In 1947, Volkswagen began exporting passenger vehicles to other European markets, including the Netherlands, Switzerland and Denmark. This export model became the Beetle in the form I first knew it.

By the end of the 1950’s, Volkswagen had expanded through Europe and was ready to take on the US, a market dominated by the Big Three (Ford, GM and Chrysler) domestic manufacturers. At the time, almost no imported vehicles were sold in America.

Thanks to an inspired “Think Small” advertising campaign, created by copywriter Julian Koenig and Art Director Helmut Krone from Doyle Dane Bernbach, Volkswagen became the US’s favorite import. The campaign used humor, honesty and irony to spark a love for the VW brand. This branding and the oil crisis of the 1970’s placed VW in the perfect position to capitalize on a sudden market for smaller, more fuel-efficient vehicles. In 1961, Volkswagen passed the 1 million vehicles manufactured per year milestone. By 1972, that had more than doubled to almost 2.2 million cars made per year. Three quarters of those were sold in export markets.

As I said, today the Volkswagen group is now the number 1 or 2 auto manufacturer in the world, depending on which yardstick you use (per unit sales or total revenue). They do fall short on the list of most valuable car companies in the world, based on market capitalization.

So, what is the most valuable car company in the world? Tesla.

For now, anyway.

The Problem with Leaders Who Make Stuff Up

Note: The writing of this post has been challenging because of the unpredictability of Trump’s “in the moment” trade policies. For instance, late yesterday Trump “paused’ the tariffs til March. If anything else is out of date by the time you read this – well – I tried.

The US has a $100 Billion Trade Deficit with Canada

Correction: The US has a $200 Billion Trade Deficit with Canada

Correction: The US has a $250 Billion Trade Deficit with Canada.

Correction: It’s not a trade deficit. It’s a subsidy.

Correction: This isn’t about the economy, it’s about protecting America from the flood of transients and fentanyl coming across the Canadian border.

None of that is true. But they are all things that Donald Trump has said at one time or another. Those statements are his justification for a 25% tariff on Canada which he imposed this past weekend. And the reason the numbers keeps changing is that he just made them up. He pulled them out of thin air. Like his toupee, those numbers flew from the top of his head.

This is the way Trump operates. There is no need for the truth when you’re negotiating. And in the Trump Playbook, it’s all cool because it’s part of a negotiating strategy called “anchoring.”  Here’s the rational. Throw an outrageous number out there and it suddenly becomes the baseline for negotiating, rather than any starting point based on rationality or logic. It’s classic Trump.

If you’re in the US, you might say, “Good for Trump! If it gets a better deal for us, what’s the harm?”

There’s a lot of harm – billions of dollars’ worth – on both sides of the border. And it’s all completely useless. This bogus trade war is total waste of time that impacts real people and will cause extreme financial hardship.

And it’s all because Trump doesn’t believe in the truth.

Here are the facts. The US does have a trade deficit with Canada. Last year, according to TD Economics, it was about $45 Billion dollars. And a lot of that was due to exports of crude oil to the US to be refined in US refineries. That created US jobs. If you take that out of the mix, Canada actually has a trade deficit with the US, not the other way around.

The US trades with a lot of countries. We (in Canada) are the US’s second biggest trading partner, behind China. And – given that – the imbalance is pretty minimal. If you look at China, who is the biggest trading partner, the deficit is actually about $250 billion.

Also, it’s a deficit, not a subsidy. It’s simply a difference between what was exported to Canada and what was imported. No one in the American government is writing anyone in Canada a check. Calling it a subsidy is just wrong.

And the total amount of fentanyl seized trying to get across the US/Canadian border for most of last year? About 43 pounds. Compare that to the 21,100 pounds seized coming across the Mexican border. It’s not nothing, but it’s definitely not justification for starting a trade war.

So, let’s get to the harm done by Trump’s bluster, bullying and bullshit. Given that the US and Canada are each other’s biggest export markets, our economies are intricately intertwined. Putting a 25% tariff on Canadian imports, which has been met with a retaliatory set of tariffs on US exports to Canada, is like trying to do open heart surgery with a grenade. It’s insanely stupid. Everyone in the Canadian government gets that. Most people in the US government get that. Almost every economist in the world gets that. The governors of the 36 states that have Canada as their biggest export market get that. The only one who doesn’t get it is Donald Trump.

What is also sheer insanity is the fact that when Trump pulls these numbers when he’s in front of a camera, he backs himself into a corner. If he threatens something, he loses face when he doesn’t follow through with the threat. In Canada’s case, someone obviously told him about the whole crude oil thing, because he eventually dropped that tariff to 10%, making it marginally less stupid. But otherwise, he’s ploughing ahead with a trade war for no other reason than because he made some shit up.

The US and Canada does about $1 trillion in trade. And in that total, there are millions of small businesses on both sides of the borders. They don’t have the option of looking for another market. This will put them out of business. It will tear apart families. It will inflict untold suffering. All for absolutely no reason other than that Donald Trump wanted a meaty soundbite.

We can’t accept this, because to accept it is to normalize it. This is just one example of the real harm done when a leader loses all regard for anything resembling the truth and imposes policies on an ignorant whim. That harm will cause trillions of dollars in economic damage and untold personal suffering. We all deserve better – whether we’re Canadians, Americans or any other nationality.  We must demand better.