No way you’d have known if you weren’t a college student in the last ten years 
Indeed. I recently replaced a 1986 Chevy Cavalier with a 1989 Honda Accord. Granted, the Accord was probably a bit “higher end” when both cars were new*, but the difference in quality is vast. Closing the door on the Cavalier made a sound similar to slamming the lid down on a galvanized steel garbage can. Closing the door on the Accord makes a solid, satisfying “thunk”. Though smaller than the Cavalier, the Accord feels much roomier inside. It’s more comfortable, and the handling is far superior.
- Huh. According to Wikipedia’s Cavalier page (bolding mine):
They missed.
I’d actually equate the Cavalier with the Civic rather than the Accord. The Cavalier was cheap, both in price and quality. So… I bought my second consecutive Civic when I was looking to replace my first Civic. The Accords were always a step above. They were Taurus class, and there were a few years where they were both contenders for America’s most popular car.
The Cavalier was a piece of junk. I worked in the body shop in the plant that produced them, and even the management didn’t give a crap about that car. It was always openly acknowledged that its only purposes were to be a loss leader for GM and balance out the CAFE versus premium products. Basically, no one gave a crap about it. It changed a little bit when they put the Alero there, because it was car they could be proud of.
Yep, the Cavalier came up short-the reason? GM has NO development money! It is (and always has been) a company run by accountants. When they decided to design a new car (the Cavalier), the engineers wanted a new body, new engine, new transmission. They soon found that the accountants wanted to make do with an old 4-banger engine (half of a V-8), transmission from the 1960’s, everything from the GM parts bin. what they wound up with was a car heavier and underpowered-not nearly as good as the HONDA CIVIC. How do you explain coming out with a 1970’s car in 1980? The sad thing-GM could esily use an existing european (OPEL) design. They don’t want to-they think Americans WANT a car with a floaty, marshmallow ride, and sloppy handling!
Careful, gonzomax. There are folks here that are experts in the economy (probably based on their observations while driving past a B-school or something) and the auto industry (based on taking those plant tours). They will come for you next and accuse you of whining or not having a big enough toolbox or something. 
I now return you to the previously scheduled ongoing thread hijacking…
So much for your plea to avoid attacks and accusations. :rolleyes:
For someone who claims to have a background in engineering, you have done nothing to quantify your opening post. That is very unlike an engineer. I have at least tried to quantify things so we can have a discussion, but you don’t seem inclined to do so.
As for being short on logic, I don’t think that my observations on Ford were too far off the mark. gonzomax has mentioned the multiplier effect, so let’s take a closer look at that. First, I have no doubt that there is an effect on the local economy, and he mentions restaurants and bars that have gone out of business. He fails to follow that up with any explanation, so I’ll try. gonzomax can add if he feels I miss something.
I think that auto plant closing do have a major impact on the local economy, but we are not talking about plant closings but rather wage reductions. The plant is still open and people still have jobs. Money is still being spent locally.
But the OP says nothing about the local economy, he claims that the automakers will lose their buying market if they pay the employees a reduced wage. I’ve already demonstrated that the 245,000 employees can account for only a tiny fraction of Ford’s sales, but let’s take a look at the multiplier effect. What would be a good multiplier? I think that a 1:1 ratio is extremely generous (that is, the spending that one Ford employee does locally allows one other non-Ford employee such as a restaurant worker to buy a car) but let’s use it. OK, now we have Ford losing 490,000 sales. Twice a tiny fraction is still a small fraction. Ford will still manage to sell over 6 million cars.
To follow the logic of the OP, the reduced employee wages will somehow have a bizarre multiplier effect such that Ford will be unable to sell those 6 million cars. I don’t see that.
Just for the record… I’m not speaking from plant tours. I’m speaking as someone that has worked in these plants since 1996 and still does, including hourly supervision, tooling decisions (which impacts employment decisions), manpower decisions, and more. Hell, if we really wanted efficiencies, we’d just pick up and move everything to Mexico and fire all the Americans. That has less to do with hourly wage than it does with work ethic.
I’ve had two posts getting eaten.
The multiplier effect does exist, but it exists independant of what anybody pays their workers; it’s just money one way or another and it doesn’t remember or care who gets it. However, anything paid to employees beyond their real value (and they may have a high value or low one) is basically value tossed into the garbage. That money could be used for directly productive purposes, so that both the company and economy get the use of it.
As it is, only the employee gets to use it - and that’s a HUGE waste. But furthermore, this is magnified throughout the economy. Every company which pays its employees more than they’re really worth in produced value is wasting potential resourcs. This reduces interest in investment. People may have money, but they’re getting less for it.
TINSTAAFL: There Is No Such Thing As a Free Lunch. Paying your employees more than they are actually worth can’t ever give you or the economy something. It actually REDUCES employment indirectly. If it had been invested, it would have produced more wealth. Investment creates wealth; labor is but one component of it.
I’m just curious , but why dont you just do that instead of holding people hostage to a threat to move production to a low wage zone thats politically dynamic. Sure it might be a political potato for the auto companys to toss around, but I am sure individuals have thought things out and have ansewers to why it was a good idea.
Declan
- Big backlash from the public;
- Massive initial investment costs, for companies which are already cash-strapped = bad
- They are doing this already, just not overnight. If you really look at where your cars are being built (or components sourced), you’ll find an awful lot of Mexican/Canadian content.
So all production should and will be moved to the lowest labor cost location. That means nothing will be done in the US until employees are willing to work for 58 cents an hour.Watch what that does to the local economy.
14 bucks an hour is still not a competitive wage in China,Mexico and other places ,people will work cheaply and the plants can pollute as they want. That is the level we have to drop to in order to be competitive.
Strangely upper management salaries and bonuses have skyrocketed.
I dont have to look that far , my company has a plant in mexico already, its one of the lines my boss likes to trot out occasionally for the masses.
Declan
I can’t speak for China – I’ve heard that it’s a cesspool over there, in all areas of industry. But it’s not true that you can pollute all you want in Mexico; they’re actually quite stringent. Every operation is ISO 14001 certified and audited to that standard by North American personnel. Their safety procedures are the same and sometime more stringent; they’re unionized; and they’re not as cheap as one would imagine especially if you equate Mexico with China.
As for competetivemess, clearly I was exaggerating. There are many, many other factors in locating a production plant. Logistics is a huge one, for starters. There are political costs, engineering costs, travel costs, taxes, and a lot of other concerns.
I’m not upper management but a working guy, but yet when I hear complaints about salaries and bonuses, I always imagine the UAW just being jealous. After all, executive compsenation is just a tiny little percentage of the overall operating budget. It seems like a huge figure to a poor guy like me, but so what? It’s a competetive world, and upper management is constantly swayed to move from one company to the other.
I think the key is why?
I mean, what do Bob Lutz/Iacocca/whoever actually do when they aren’t writing memoirs or flying their private fighter jets? They don’t design the cars. They don’t build the cars. They don’t sell the cars. All they do AFAIK is determine broad operating policy, and perhaps direct the odd merger/acquisition or two.
Since Detroit’s broad operating policies over the last thirty years have clearly been poorly thought out, and virtually every merger and acquisition made by the Big Three has been a mild, if not spectacular, failure, what makes them so valuable that they must be retained at all costs?
My sister retired in her early 40s from her job as comptroller of one of the largest auto parts manufacturers because the corporate culture for top executives and senior management was nose to the grindstone 24/7.