White Sun of the Desert

Last week’s Economist carried a lengthy briefing on the troubles of Toyota, one of which is identified as a drop in quality and reliability as they pursued headlong growth at all costs.  Apparently, several polls and reviews in the US and elsewhere have placed other cars ahead of Toyota in several areas, one being where they were allegedly always king: reliability.

Me, I’m not so sure.  Without a doubt Toyotas are reliable enough, probably more so than most other cars and certainly no worse than any, but I don’t think that tells the whole story about where their reputation comes from.  I once owned a 1974 lightweight Land Rover, half of which I rebuilt myself using basic tools, a Haynes manual, and the back of the thing as a workshop as it lay parked on the street in Manchester.  Land Rover had, and for the older models still has, a reputation for being reliable.  This may come as somewhat of a surprise to anyone who has actually owned one, because the damned things leak oil from brand new (I’m talking about Series III and earlier here, I don’t know if the newer ones were plagued with the same issues) because of daft designs and the use of paper gaskets between roughly machined surfaces, and bits were corroding, coming loose, and falling off all over the place.  It took an entire tube of instant gasket to stop the oil leaking from beneath the distributor mount (the distributor runs off the oil pump).  The brake cylinders on one side had seized completely.  The synchromesh was shot through and the gear teeth so worn it kept leaping out of 1st and 2nd gear.  Everything was corroding from the chassis to the thermostat housing to the aluminium panels at the point where they were cleverly held in place with a steel bolt.  The door seals were non-existent, so you drove it in wellies and ignored the big pools of water on the floor (this was not a problem on the passenger side where the huge hole in the footwell served as a handy drain).  The windscreen wipers worked if you fiddled with the earthing wire a little bit.  Land Rover enthusiasts are well aware of the enormous shortcomings of the early Land Rover design, and they all add the fun of driving one.  In fact, stuff ceasing to work as you’re rattling along the road is the fun of driving an old Land Rover!

Where was I?  That’s right.  The reputation Land Rover had for reliability came not from their infrequency of breaking down but the fact that any problem you encounter can be fixed on the spot with a very basic toolkit and some gaffer tape.  All you need is a few ring spanners, a decent hammer, some WD-40, and a monster 12″ screwdriver and you can be on your way again no matter what happened.  Oh, and don’t forget a couple of adjustable spanners.  For some unknown reason, 49% of Land Rover threads are metric, 49% Imperial, and the remainder being some completely unknown type with a hexagonal head no socket will fit and you wonder who the hell owned it before you and botched the job in such a manner.  Or maybe it came like this from the factory?  It took me to a very small, old fashioned engineering supply shop near Salford where a lady caked in layers of grease rummaged through boxes of random fittings to find the pinch bolt on the main gear selection rod; the local Land Rover supply shop were themselves at an utter loss.  So reliability in the sense of a Land Rover is a case of reliability in completing your journey, not in not breaking down at all.

Now Toyotas are not as easy to fix as an old Land Rover should something go wrong, but they do have a similar advantage.  Consider that when I lived in Dubai and was as close as I’ll ever get to a wide-boy phase I bought an 8-year old Mercedes CLK 320.  It looked lovely, nice long bonnet, leather seats, 3.2l flat six engine which although not great off the mark could get you from 70-100mph in a few seconds with remarkable ease, and drove beautifully.  Unfortunately, it gave me as much of a headache as my Land Rover.  Firstly, stuff started going wrong which should not have gone wrong in a German car.  Small stuff.  The back windscreen sunshield motor failed.  The air conditioning pump seized.  One of the electric ventilation flaps jammed, meaning cold air couldn’t blow through the central vents.  Then one of the coolant pipes burst and left me somewhere in Furjeirah having to come back to Dubai in the cab of a breakdown truck, which was very uncool.  So I took it in for a service.

And there the fun began.  Every garage told me the same thing: they could only do half of the work, because they can’t work on Mercedes and don’t have the parts.  Better take it to the main dealer.  The first thing the main dealer did was remove my arm and leg for the privilege of talking to him.  Then he charged me a small fortune to look at the car and tell me what was wrong with it.  Everything, it seemed.  Engine mounts, bushes, clips, all these tiny items which added up to a list as long as an arm which would have been bad enough in itself, but there was more to come.  Half the items on the list “were not in stock and we need to order them from Germany”.  Yes, Mercedes main dealer in Dubai, which probably enjoyed greater revenue than any other Mercedes dealer anywhere, had to order stuff from Germany to fix things which a routine service has highlighted.  Jesus wept.  I did, especially when I got the bill.

Contrast this with the experience of a Toyota owner in Dubai.  He has a problem.  He goes to any garage he likes, and a Romanian, Indian, or Armenian will tell him he’ll have a look, call him back the next day to say he needs x, y, and z which are all on the shelf behind him and he can fit the lot that afternoon.  No main dealer.  No specialist tools.  No hidden maintenance procedures.  No flying parts halfway round the world.  If you have a Toyota and something goes wrong, wherever you are in the world if there is a garage then they will be able to fix a Toyota and the parts will either be in stock or very close by.  And it is this as much as anything else from which Toyota’s reputation for reliability derives: it might break down, but you can get it back on the road quickly and cheaply.  Unless and until Toyota’s German and other competitors realise this, Toyota’s crown is not going to slip very far.

Needless to say, I have driven nothing but Toyotas since I arrived in Sakhalin.  What I drive now is a Surf, basically a car on a Hilux chassis, and it is the most popular 4×4 on the island (a place where few get accused of driving vehicles with unnecessary off-road capabilities).  Any problem, and it’s into the nearest garage where whoever comes out of the gloom and smoke takes one look and knows immediately what he’s dealing with.  This is Toyota’s real strength.

This is interesting, and will almost certainly get more so:

China has agreed to lend Russian oil companies $25 billion in return for supplies from huge new East Siberian oilfields that will power its economy for the next two decades, a source close to the talks said today.
Russia’s state oil champion Rosneft and pipeline monopoly Transneft signed a long-delayed deal to borrow the money from China Development Bank during talks in China, the source told Reuters.

…

Beijing has abundant cash that Moscow needs to access in the credit crunch as its government is running major deficits and some of its companies are finding it difficult to repay loans and borrow project finance on commercial markets.

…

“Rosneft and Transneft can’t borrow easily, so China steps in … with a lot of funds to lend because of China’s huge wealth funds,” said Leo Drollas, deputy director and chief economist at the Centre for Global Energy Studies.

“They have trillions of dollars of reserves and they’re saying ‘we’ll lend you this amount to develop the oil fields and the pipeline infrastructure needed’ and it will be paid for by deliveries of oil,” Drollas added.

In short, China has placed $25bn worth of expectation onto the shoulders of the Russian government.  If the oil flows as promised, it will be an agreement of great benefit to both parties.  But will Russia be able to deliver?

Maybe, but it might be tricky.  For starters, what any sum of money is supposed to get you in Russia invariably ends up being not enough.  Accept a bid of $20m and you end up spending $33m.  Budget a project at $10bn and the final cost comes in at $22bn.  Everyone in Russia knows that money does not go half as far as you think it does.  So where does it go?  Mostly navigating the myriad, often contradictory, laws, regulations, approvals processes, and bureaucracy which are deep rooted throughout Russia; rules which are changed arbitrarily and often, sometimes retroactively, and to top it all off, inconsistently applied.  Obtain MChS approval for the design of a building, build it as per design, and the same authority will refuse to grant you a fire safety certificate upon construction completion because the authorising individual has a completely different interpretation of the requirements than the bloke who approved the design.  Bring in a third party, and he’ll tell you they were both wrong.  Companies either spend millions on complying with Russian regulatory requirements, or they spend millions to avoid having to.  A handful of individuals get rich, projects cost twice as much as they should, Russia is all the poorer.

Of course, there is the possibility that this being a Russian-run project of significant national importance the usual regulatory and legal requirements will be waived and the project ram-rodded through to completion regardless.  But even this is doubtful.  Consider the two posts I wrote recently on doing business in Russia, particularly the second one where I list the 54 different bureaucratic hoops you have to jump through to get a warehouse built in Moscow.  An outsider would be forgiven for thinking these vast rules and regulations all stem from a single, monolithic government body which has complete control over the entire process, but the truth is that it is far more complicated.  Various government agencies and approvals bodies operate in quasi-independence from central government, and this is especially true in the provinces far from Moscow.  Often run as personal fiefdoms the agencies build, cherish, and protect the power and authority - and hence the revenue stream – that they enjoy.  As a result, they are often unwilling or unable to implement reforms or changes dictated from Moscow, and sometimes the applicable laws in the provinces are months and even years behind what the actual law is supposed to be.  Tales abound in the expat communities of the dozens or regulatory and state bodies which businesses must deal with implementing laws which differ from those which are officially in place.  Either deliberately or through poor management and communication, Moscow has only limited control over the dozens of provincial offices whose cooperation is essential to getting a project completed.

So in practice, even on a job which is considered priority for the government, the construction company – whether Russian or foreign – is faced with enormous delays and overspends as they try to negotiate through the approvals process at every point and turn.  It is true that the government could, and almost certainly will, intervene in certain areas to speed things up (for example, it is unlikely that the environmental consultation on the new gas pipeline being built from Sakhalin to Vladivostok by Gazprom was as lengthy and detailed as that for the foreign-led projects), but they cannot do so in every instance.  And even then their intervention might not speed things up.  A building contractor on Sakhalin told me that a recent law forbids any change orders on government construction projects: if something changes which causes a price increase, the entire job – even half complete – must be rebid.  So if a construction company arrives on site and find their piling estimate was too low due the the geotechnical survey being incomplete at the time of tender, the job gets stopped as they re-tender the entire project.  No doubt this law was brought in to try to mimise corruption on government projects, but if it is applied we can expect to see either 200% contingencies in bid prices or even simple projects dragging on for decades.  The sheer complexity of the laws and bureaucracy makes executing works in Russia much harder than it should be, and it is doubtful whether this has been fully considered – assuming it even could be quantified – when calculating what the Chinese $25bn is supposed to be buying.

In any case, we won’t have to wait too long to find out:

Also planned is a spur pipeline between China and Russia, which is part of the loan-for-oil agreement under which China will provide $25 billion to Russia’s Rosneft and Transneft in exchange for 300,000 bpd of oil imports from Russia for 20 years.

Russian Prime Minister Vladimir Putin said in early April that Transneft will finish laying the 67-kilometre East Siberia-Pacific Ocean oil pipeline from Skovorodino to the Chinese border within a few weeks, with work on the line expected to be complete in 2010 in time for crude to start flowing the following year.

The pipeline was originally due for completion last year but has been delayed due to political complexities and internal housekeeping issues with Russian suppliers.

What’s that?  Political complexities and internal housekeeping issues with Russian subcontactors?  That’s the diplomatic description of what I’ve just been talking about.  The Russians might want to consider the possible consequences of oil not arriving in China when it is supposed to after taking a $25bn loan to make sure that it does.

Happy St. David’s Day to all Welshmen.  Sadly, I have been unable to find a daffodil in Dubai, nor a leek which could be attached to my shirt.

This is a bit sick. On a message board for Honda enthusiasts, a wife of one of the regular contributors starts a thread in February 2002 with the following post:

As most of you here may know i am lifsatrip7′s (Todd’s) wife. i havnt been on in a while we have been pretty busy. this past monday the 18th Todd died during the night, ill spare you all the details but we were asleep in bed and a cause of death isnt yet determined. They performed an autopsy tuesday and that was inconclusive and were waiting on the toxicology report to come back (4-8 weeks) So he’s not going to be around any more. i will be here to learn more about the honda then i already know… well im not sure what im going to do with it but as of right now i cant get of it. he couldnt so how could i??? well anyways.. i just wanted to let you all know
Cindy

Naturally, the other forum users – some of whom appeared to know the deceased personally – are shocked and offer her condolences, prayers, and best wishes. This carried on until Page 3 of the thread, when nearly 4 years later in January 2006 somebody puts up the following link on Post 75 :

http://msnbc.msn.com/id/10479896/

SAN DIEGO – Cynthia Sommer didn’t fit the role of a grieving Marine widow.

Shortly after her husband died suddenly, she hosted boisterous parties at her home on the base. Authorities say she showed Marine wives her newly enhanced breasts — paid for with her husband’s life insurance policy. And within two months, she had taken up with another man.

Military investigators say Sommer wanted a life that was out of her reach as a mother of four working at a Subway restaurant and married to a strict Marine — and she allegedly poisoned her husband with arsenic to get it.

Sommer, 32, is in a Palm Beach County, Fla. jail fighting extradition back to San Diego. She is charged with first-degree murder for financial gain, a special circumstance that could carry the death penalty. The San Diego County district attorney’s office has not yet decided whether to seek it, prosecutor Laura Gunn said.

…

Marine Sgt. Todd Sommer, 23, died in February 2002 in his home at Marine Corps Air Station Miramar in San Diego. His death initially was ruled a heart attack, but tests of his liver later found levels of arsenic 1,020 times above normal, court documents show. Arsenic is a colorless and usually tasteless poison that causes stomach distress followed by death.

Following a lengthy investigation by military and civilian authorities, the San Diego County Medical Examiner concluded in October 2005 that the cause of death was acute arsenic poisoning.

Only his wife had the motive or the close access to poison him, Navy Criminal Investigative Service agent Rob Terwilliger said in a court statement filed last month seeking a warrant for Cynthia Sommer’s arrest.

According to the statement, Todd Sommer began showing symptoms of arsenic poisoning on Feb. 8, 2002 — 10 days before he died. That day, his wife visited a plastic surgeon’s office and inquired about breast augmentation, authorities say.

It was a $5,400 surgery that her household income would not allow, according to Terwilliger’s statement. A credit check showed she had more than $23,000 in debt, Navy investigators found.

But Todd Sommer’s death left his widow a $250,000 lump-sum payment from his servicemember’s life insurance policy as well as a $6,000 death gratuity, according to Terwilliger. She also was entitled to receive $1,871 a month from the Department of Veterans Affairs.

“Cindy’s excuse for the lifestyle she started living after (her husband) died was that he was very strict, he didn’t like for her to go out partying, staying out with friends,” said former Marine Brent Applebee, who told military investigators the widow showed him her still-taped up breasts.

“Todd also didn’t want her to get her breasts enlarged, so I think that she was living out the fantasy life she really wanted.”

Two weeks before her husband’s death, Cynthia Sommer paid $16.95 for an Internet dating service, authorities say.

During an 2001 investigation of child neglect-abuse, she allegedly told a North Carolina caseworker, “I have four kids. It isn’t like I could leave them and go anywhere. No one wants to baby-sit four kids.”

Murdering wives posting news of the death on Honda forums, hours after the act. The internet never ceases to amaze.