That doesn’t sound like much of a debunking. How much does your company pay to surviving spouses of dead retired workers, just as an example?
Most successful companies have moved to a defined contribution instead of a defined benefit plan YEARS ago, because they found out that such a model was totally unsustainable.
And using Olbermann’s numbers, $28 an hour is outrageous for unskilled labor. Many professionals don’t make that much. If they let market forces work, then 12-15 an hour would be the norm.
Look, I don’t begrudge a guy for being able to pull down $28 an hour. But who does that enrich? The working man? No way. When you or I buy a Ford or GM car, we subsidize that type of ridiculous pay.
These union contracts have been killing Detroit for years. How can they compete with the Asian market with this nonsense in place?
All good and fine. But I wonder about the wisdom of thinking that congress or the general public knows more about building cars in this country than the big three. I mean come on, they have had a lot of experience. Perhaps there is only room in the world economy for two companies that build the kind of car that can be built in America at a profit.
You’re kidding, right? The Big Three have lagged behind the Japanese in terms of R&D for a very long time, that alone should be an indication that the execs in Detroit haven’t been exactly on the ball. They’ve also vigorously opposed every piece of environmental and safety regulation that’s come down the pike, without ever bothering to offer any kind of alternative to those supposedly onerous regulations, which accomplished the same thing at a lower cost.
By contrast, the Japanese have generally looked at the coming regulations and worked to meet them before the deadlines established. Detroit laughed at Toyota and Honda for introducing hybrid vehicles, when anyone who could rub two brain cells together knew that fuel prices were only going to go up.
The big 3 are ahead of the Japanese and Europeans in most areas of new technology. GM currently has the best GDI 4 cylinder engine in the world (LNF Ecotec), the best GDI V6 (the LA7) and by far the best performance engines in the world (LS V8).
And Toyota Prius sales have fallen almost 50% this month. At rock bottom GM still sold 3x as many Silverados (at much higher margins - leaf springs and rear live axles are cheap to make) as Toyota USA sold Priuses… and Ford sold MORE F-Series than GM sold Silverados. So who exactly has their finger on the market’s pulse? Toyota isn’t stupid or oblivious about the American market, that’s precisely why they invested in a completely new US market Tundra full sized truck and massive new facilities in the US to build them - because that’s what Americans WANT.
guyblond, you’re absolutely right. All these threads can basically be summarized as “Well, my Honda Fit/WRX/AMC Gremlin/[other unpopular car] was the best car I ever drove, by god, so why don’t they just make those?”. Its’ telling that there’s basically been no discussion amongst the bailout hearings about model lineup or market demand, and it’s all been about labour and financial restructuring. No one who knows anything about the US car market would suggest that the Big 3 aren’t building the cars Americans want.
And they’re playing catchup in a number of other areas. Its only recently that the Big Three have managed to equal to the Japanese in terms of quality, and it was the Japanese who started putting things like cupholders in cars, long before the Americans did.
Which is a pretty meaningless statistic, seeing as how all automotive sales have fallen by similar numbers.
Forgetting, of course, that Toyota had such a huge demand for Priuses that they could charge a premium price for them, had waiting lists for the cars, and the used Priuses were selling for more than the new ones. All of this was happening while the Big Three were happily churning out big trucks and SUVs in record numbers and selling them.
The Japanese, however, did not throw the bulk of their weight behind their large truck designs. Yes, they developed larger vehicles, while simulatainously researching and building fuel efficient vehicles. When gas prices started to spike, the Japanese didn’t have to scramble to find models which got good mileage (or even work that hard at promoting them), because they already had them in the market.
The Japanese have also moved quickly to expand their lineup of fuel efficient cars, while folks like GM have struggled to make up their mind if they’re going to start bringing over to the States fuel efficient cars they make in other parts of the world.
Nope, not pickup trucks. GM’s Yukon/Escalade plant in Arlington, TX is now working overtime to meet demand.
How would it benefit Toyota to ship over more Priuses and drive down their margins? There aren’t enough VW R32s to meet demand in the US, either, and for a long time, used R32s were selling for as much as new ones, so the R32 must be the best car in the world and everyone wants one, right? Same thing for the Honda Fit. Or pretty much all Ferrari models.
Until you realize that those cars aren’t shipped to the US in numbers enough to meet demand, because their makers have no expectation of selling much more than a small number of them, so why bother shipping over more than they need to attain maximum profit per unit sold? THey make far more money selling far more units of those cars in markets outside the US anyway, so their marginal cost to ship over (demand -1) units to the US are small.
Out of however many millions of people, I’ll bet there are at least 3 people in Japan/Britain that want Cadillac Escalades, so if GM ships over 2 units for sale, ZOMG! Escalade demand in Japan far outstrips supply! Buyers on waiting lists! Dealers charge premium!
You’re falling (again) in to the fallacious trap of ignoring the supply side of supply and demand and ignoring the absolute number of sales in the market.
Well, that’s a good point if you’re discussing the business model of the Big Three and why they shouldn’t get bailouts, but the fact remains that the claim that “the average auto waorker makes $70 an hour” is a ridiculous lie. If we’re going to debate this issue let’s ensure we’re acquainted with the facts.
But $28 isn’t the average for unskilled labor, it’s the average for the entire wage roll workforce. Some are unskilled, but some are skilled. $28 an hour is quite attainable these days for skilled welders, machinists, and other specialized operators.
It’s worth noting that pay at Asian manufacturing plants is quite comparable. If you work at Nissan in Nashville, or Toyota in Woodstock, ON, you’re making very handsome bucks indeed. The difference between those companies and the Big 3 isn’t that they’re cheaping out their workforce.
…
Similarly, all this argument over who makes better cars is pointless. The cars made by the Big 3 are perfectly serviceable vehicles by any objective measure. Teir problems are in business management, not the stuff that rolls off the lot of Jim’s Tri-County GM. The list of failed businesses includes hundreds of thousands of businesses that sold good products. Many of them even paid economically reasonable wages.
I note that the date on the article you linked to is dated October 10th and it has this key sentence at the beginning of it:
(bolding mine)
So, are they or are they not working overtime? Based on your article we can’t tell, as it was written before much of the implosion, and the announcements of sales figures dropping. It should also be noted that while Toyota’s Tundra has started to inch upwards in sales (they’d idled the plant for two days last month because of low demand), there’s a bit of a reason for that.
Funny thing is, Toyota had its plant in Japan working massive amounts of overtime to build Priuses because the demand was so great. In fact, the quality of Toyota’s began to slip across the board when they were putting all their efforts into building the Prius.
Again, your argument breaks down in the case of the Prius, as Toyota was doing everything they could to keep up with demand. It should be noted, also, that Toyota began selling the Prius in Japan in 1997, shipping them to the US some years later. The Big Three didn’t even have anything like the Prius on the drawing boards in 1997. (Not that the Big Three were alone in this, however, Nissan’s hybrids are built using Toyota components.)
As the execs at GM (and the other Big Three will be more than happy to tell you) shipping cars built in the US is a difficult process because of the way Japanese import laws are written. If the Big Three wanted to compete successfully on Japanese soil, all they would have to do is build plants there, like the Japanese did for the US market. In doing so, they still could have kept production numbers low enough to create an artificial shortage.
No, I’m not. First of all, the reason the Big Three liked building things like SUVs, etc., is that the margins on those vehicles are so much higher than that of small cars, and yet the Japanese makers, who built primarily small vehicles, with smaller margins on them, managed to not only to be profitable doing so, but put a serious squeeze on the Big Three. GM, Ford, and Chrysler did not suddenly find themselves in bad shape, they have all been in financial troubles for quite some time. Ford has been extremely wobbly since before William Ford took over the company (and then handed it off to the current head a few years ago). Nobody should be surprized that the Big Three found themselves in a world of hurt when the financial sector collapsed, as they weren’t all that healthy to begin with and hadn’t been for quite some time!
Actually, until fairly recently, the freakin’ janitors at GM made as much as the guys working on the assembly line. That changed in the last round of contract negotiations that GM had. And while the Nissan employees in the plant in Smyrna, TN make wages comparable to what GM pays their workers, a good many of the employees working in the Smyrna plant are sub-contracted labor making significantly less than the Nissan employees. This is not simply unskilled jobs like janitorial work, but the folks doing things like monitoring the paint systems and other jobs. Nissan’s goal was to reduce their workforce (but not necessarily the number of people working in the plant) to just those doing things like quality inspections of the vehicles and physically putting parts on the vehicles, everything else, was being done by subcontracted labor.
In some ways, this makes sense, after all, why should Nissan run its own cafeterias in the plant? They make cars, not meals. In other areas, where you have people assembling components in the plant, but not putting them on the cars, it doesn’t make quite as much sense to me.
Are you suggesting that no one had any idea where the market/economy was going in October? I thought you and I HAD a thread just like this one in October?
Here’s a more in depth article on the rebound in the truck and SUV market.
None of that changes the fact that the Prius isn’t even the most popular vehicle Toyota sells, and it’s sales figures are nowhere near that of pickup trucks and SUVs even now. Given the labour and legacy cost disadvantages of the Big 3, do you think having a Prius would have helped them much?
Not true. As you can see by the sales figures, the B3 buit SUVs because people wanted and bought SUVS. The Japanese companies didn’t, so people didn’t buy them as much. That’s why they (still) are the BIG 3. The Japanese companies have been for years trying to break into the large SUV and truck market because it was the biggest and most profitable in North America. Now because the North American market is the hardest hit, the Big 3 are the hardest hit (on top of their other problems not related to building cars). Your continued insistence otherwise is simply your bias towards small vehicles - since YOU want small cars, everyone else must want them too and companies that don’t make small cars are all on the wrong track. I used this example before - PSA Peugeot Citroen is probably the car maker least impacted by the downturn at this point. Is it because the French are just better at making cars than everyone else, or is it because they have no market share in North America?
(bolding mine)
So there’s been an uptick in the market, thanks to car makers being willing to slash their margins on the vehicles. A far cry from what it was just a few years ago, when they could offer the vehicles with little to no incentives on them.
Would it have hurt them to have one? It certainly would help them now, as they go before Congress and beg for a much smaller percentage of money that the Government gave to the banks, with no questions asked.
Yet the Big Three couldn’t manage to build up large cash reserves to help them through the collapse (which really should have been foreseen). Nor did the Big Three bother to make a simple device, invented by Toyota in the 1960s, which improved mileage by 10% on any of their vehicles. Do you think that people would have turned their noses up at such a thing, if it had been offered on a big vehicle? Do you think someone would have said, “What? I can have the same vehicle, for almost the same price and it gives me 10% better mileage? Fuck that!”
Not really. Toyota briefly passed GM in vehicle sales, and neither Chrysler or Ford have been the second and third car companies in terms of vehicle sales for some time.
The Big Three were in trouble before the markets imploded. They were really only financially stable in the mid-90s.
The fact is the big 3 made a fortune selling vans and SUVs. They just did not invest it in the newer market which was coming. They either did not see it or chose not to. Complaining about them making big vehicles is silly. They sold them and made a ton.
If I read that stupid 70 dollar an hour figure again ,I will scream. It is not true. It is anti union propaganda.
Our form of capitalism has a flaw.We have no planning for the future. Long term planning does not exist. Every year we judge the success by the bottom line at that time. Thee is nothing to make them invest in the future. The stock holders want their cut and the execs want their bonuses. There is little pushing an investment in the future.
As opposed to the hundreds of billions lost, and possibly worldwide economic depression, because the Big Three went away? (Again, this was the entire point of the guy quoted in my post.) Furthermore, as I said, the 30 billion wouldn’t be a waste if it gave them breathing room to recover - or gave the larger economy breathing room to recover, so when they do collapse, the effects aren’t as spectacular.
(If I didn’t make this clear earlier, I’m not sure what to think of this argument - I’m trying to probe for the counters.)
http://www.msnbc.msn.com/id/20049862/ GM was making money not long ago. They cleaned up when they were selling SUVs. The combination of high gas prices and the lack of planning for small cars and hybrids hurt them. The financial mess ,which was not their fault, came at a very bad time. 1.2 million job losses in the last 3 months is certainly shrinking the customer base.The lack of lending is finishing them off.
"A $14 billion rescue package for the nation’s imperiled auto industry sped to approval in the U.S. House Wednesday night, but the emergency bailout was still in jeopardy from Republicans who were setting out roadblocks in the Senate. "
So the bailout looks like it is happening. The House has passed it but the Senate might not go along with it.
Is this the right bill? Does it have enough safegaurds? Will it pass?
Right bill or not, its what we’ve got. Personally, I’m much happier with the idea of the government just cutting the Big Three a check, than I am with them just cutting the banking industry a check. While the Big Three might have been stupid in some of the things that they’ve done in recent years, the banking industry’s actions were criminal.
No matter what the bill looks like when its passed, expect for both sides to to try and renegotiate the terms of it once Obama takes office.
First the US Governmnt desrves a major share of the blame. Why did people buy SUVs in the 1990’s? Because the government forced the big 3 to build small cars that nobody wanted. Gas was cheap, and people anted larger cars. The Michigan congressional delegation (headed by Sen. Carl Levin) fought and succeeded to have SUVs and trucks exempted from the mileage and safety standards that applied to cars. So, in this way, the development of economical cars was stunted. Then along comes $4.00/gallon gas-and the Big 3’s market collpased overnight.
So, in a perverse way, the government caused this disaster.
If reasonable vehicle standars had been enacted (and SUVs nor allowed to trump the laws) the whole thing could have been avoided.
