The Wall Street Journal’s Alan Murray is rethinking the conventional wisdom with regard to Hewlett-Packard’s much-criticized 2002 acquisition of Houston-based Compaq Computer Company that many believe cost former HP CEO Carly Fiorina her job:

At a meeting of H-P’s board not long ago, Chief Financial Officer Robert Wayman did a retrospective look at the merger. The results were so compelling that even some board members were stunned, some attendees say.
At the time of the merger in 2001, the company set three broad goals: to strengthen its market position, to improve its competitiveness and to increase shareholder value.
H-P was in third place in the personal-computer market in 2001 and posting losses. Today, it is a strong second, breathing down Dell’s neck for the lead and posting profits — though still not as much as it would like. In the industry standard computer-server business, H-P was then in fourth place and bleeding red. Today it is No. 1 and nicely profitable.
On competitiveness, the company’s total operating expenses came to 21.5% of revenue back in 2001. Today, that is down to about 16% — and all but one percentage point of the decline happened before [current H-P CEO] Mark Hurd’s cost-cutting campaign took hold.
As for shareholder value — well, at the time Ms. Fiorina left office, there was little to boast about. But recently, H-P has surpassed all of its rivals. Total return to shareholders since the merger has been almost 50%. Dell has been almost flat in the same period, while IBM shareholders have lost substantial sums of money.

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Texas is a big business battlefield in the automobile wars, and this excellent Lee Hawkins Jr. – Norihiko Shirouzu/WSJ ($) article reviews the competive advantages that Toyota Motor Corp. enjoys in building trucks in its new San Antonio manufacturing facility over General Motors Corp’s reliance on its 50 year-old Arlington manufacturing facility. Not only does Toyota enjoy the advantages of newer equipment and more expansion room at its facility in comparison to the landlocked GM plant, a brief review of the cost structure of the two plants speaks volumes about GM’s current problems:

Two decades ago, GM factories suffered from a sizable gap compared with similar Toyota factories, as measured in the number of hours it takes workers to build a vehicle. Recent Harbour surveys show that this gap has narrowed substantially. But GM’s productivity gains are offset by higher hourly labor costs and the burden it carries for benefits owed to retirees.
In Arlington, GM pays union-scale wages of $26.50 to $30.50 an hour to its 2,800 hourly workers there. On average, GM pays $81.18 an hour in wages and benefits to U.S. hourly workers, including pension and retiree medical costs. At that rate, labor costs per vehicle at Arlington are about $1,800, based on the Harbour Consulting estimate of labor hours per vehicle.
In San Antonio, Toyota will use non-union labor and will start its 1,600 hourly workers at $15.50 to $20.33 per hour, which will grow after three years to $21 to $25. Harbour Consulting President Ron Harbour estimates Toyota’s total hourly U.S. labor costs, with benefits, at about $35 an hour — less than half of GM’s rates. The brand-new plant won’t have any direct retiree costs for many years. So if the San Antonio factory does no better than match the Arlington plant in productivity, it could still enjoy a labor cost advantage of about $1,000 per vehicle, a substantial sum in industry terms. That’s money Toyota could translate into extra standard features — such as stability control — that could make its trucks more appealing.

Read the entire article. Despite GM’s troubles, the company can still produce a pretty slick commercial.