Now here's a contentious proposal: Let GM go Bankrupt

[cwtnospam]

Quote: Originally Posted by NovaScotian I can only say that we differ; apparently irredeemably, not because I deny management's part in this fiasco, but because I see UAW's too.

Explain it to me then. How can 10% of the cost of a vehicle make or brake the company when no one is claiming that sales are slumping because GM cars cost more than Toyota's? Frankly, I'd pay more for the Toyota, and I think most people would too. That's the problem.

[Jasen]

[citation needed] on the price of labor only being 10% the cost of the car.

2nd, comparing the retail value of two vehicles by differing manufacturers is a bit of a non-sequitor as you cannot know the costs involved in the production of the vehicle. R&D, materials, etc.

To deny that the UAW played no part in the downfall of the American auto companies is to deny reality. This not a hypothetical theory, it's a known factor, recognized by economists.
Labor cost is more than simple wages, it's also benefits paid as well as pensions.
The UAW has ensured that unskilled laborers for these companies are making not just $30+/hr wage, but with the added benefits employees cost the company $73/hr. Not to mention the 100,00+ pensions currently being paid.

So to simply say that these company's failure is nothing more than lack of consumer confidence is short-sighted at best.

[cwtnospam]

Quote: Originally Posted by Jasen 2nd, comparing the retail value of two vehicles by differing manufacturers is a bit of a non-sequitor as you cannot know the costs involved in the production of the vehicle. R&D, materials, etc.

Maybe so, but you have to do it every time you buy a car.

Quote: Originally Posted by Jasen This not a hypothetical theory, it's a known factor, recognized by economists.

By what economists, and what is their Party affiliation? Do these economists also want to dismantle Social Security?

Quote: Originally Posted by Jasen Labor cost is more than simple wages, it's also benefits paid as well as pensions. The UAW has ensured that unskilled laborers for these companies are making not just $30+/hr wage, but with the added benefits employees cost the company $73/hr. Not to mention the 100,00+ pensions currently being paid.

And how do these wages compare to those of upper management? Which group determines what vehicles get made, what the quantities will be, and what direction the company will take?

The Big 3 are in trouble because they've lost customers like my father, who never bought anything but "American" cars until about 8 years ago, when he got tired of me laughing at his multiple trips to repair shops. He's now on his second Camry (the first went to my mother when he bought a new one) and he wouldn't think of buying another GM. That has nothing to do with labor. It's based on his experiences, which were caused by GM management's (he had a Chevy pickup) decisions. He'll buy from GM/Ford/Chrysler when people he knows rave about their GM/Ford/Chrysler vehicles the way Toyota owners did when he was shelling out cash for repairs that should not have been needed. So will I, and not before.

[NovaScotian]

This New York Times article by David Leonhardt debunks the $73/hr figure and supports CWT's 10% labor cost. The big problem is retirement benefits, but they amount to very little of the deficit; the real problem is that Americans simply don't want their cars and trucks and after they've made the switch to a Pacific Rim or European product, they never go back to trying American.

[Woodsman]

I think some of you may enjoy this. CWT especially.

http://www.markfiore.com/clapper_0

[NovaScotian]

Startlingly true, isn't it. Woe is us.

[cwtnospam]

Quote: Originally Posted by NovaScotian ...and after they've made the switch to a Pacific Rim or European product, they never go back to trying American.

Which is entirely due to management decisions.

Here's my premise:

1) Labor can only influence the cost of the product, and only to a small degree.

2) If the cost of the product is an issue, then you can accurately complete the following sentence:
GM (or Ford or Chrysler) cars are generally perceived to be more expensive than comparable (and comparably equipped) cars made by ___________.

If you can't complete that sentence, and I don't believe that you can, then the problem is unrelated to labor. Instead, it's related to the value that customer associates with the cars, and that is related to how management has treated their customers. The Big 3 have treated their customers as cash cows to be milked at every opportunity, and they're stuck with the resulting reputation, even if they really have improved quality.

[NovaScotian]

Of course, at the end of the day, the issue here is not who's to blame, but what should be done about it. That good, well-paying, solid jobs become obsolete from time to time is not unusual and the trend is accelerating. Here's the abstract of a book called "Job Obsolescence in the Nineties" by Eric Wills:

Quote: The accelerating pace of technological and social change has resulted in a large number of jobs, skills and professions becoming obsolete, or dramatically reduced in numbers and importance. This pace of job obsolescence is likely to accelerate rapidly in the 1990s when the full effects of the second industrial revolution, based on the dramatic advances in electronics and computing, are implemented throughout industry and commerce. The resulting change will mean an unprecedented need for flexibility and retraining; but even then large sections of the potential working population are likely to remain marooned, and surplus to the requirements of the job market.

Further, companies themselves become obsolete and through no fault of their own, their workers lose their jobs. This is the case CWT is making, by and large, vis-a-vis GM and the American auto industry. The current financial crisis is just the proverbial straw that broke the camel's back given a 20-year slide in GMs performance in the marketplace and their totally inadequate response to it.

But the bigger question for the long term is whether the automotive industry as it is is likely to survive for long anyway. Years ago, Washington DC built a subway system at a cost that would have provided a new Cadillac to every rider every year for years. Vancouver, British Colombia, is considering a multi-billion dollar elevated train, but analysis shows that the most effective way to deal with their traffic problems would be to reinstitute their old streetcar system; a system that runs on hydro power. The cost to the commuter would be speed; trams and light rail systems are not very fast, but they're energetically very efficient; much more so than busses.

We are becoming increasingly urbanized, however, and it's clear that we cannot continue to use automobiles to get to work. Cities like London and Singapore are actually charging tolls to drive downtown and you have to be a rich man to park a car in Manhattan. I was raised in New York City (Jackson Heights, Queens, to be exact) and we never owned a car. I suspect that since I left in 1955, not many New Yorkers buy cars now. My father was the director of the soap chemistry research labs at Colgate Palmolive in Jersey City and took the subway to and from work every day for the 20 years he lived there; a one-hour commute. I think that over the next few years increasing numbers will do exactly that.

Here in Halifax, for example, there's a new system of busses called the "Link". These large articulated busses run from suburban terminals surrounded by large parking lots and go straight downtown stopping only once or twice at other large terminals. They've rapidly become so popular that the parking areas have had to be expanded several times. The cost of the ride is substantially mitigated by the savings in bridge tolls and parking fees downtown.

Sure, we'll all own cars for a while yet, but in my mind it's an industry approaching obsolescence, and GM is just the first casualty.

[edalzell]

http://news.yahoo.com/s/nm/20081215/...ankofamerica_1

[aehurst]

Quote: Originally Posted by NovaScotian This New York Times article by David Leonhardt debunks the $73/hr figure and supports CWT's 10% labor cost. The big problem is retirement benefits, but they amount to very little of the deficit; the real problem is that Americans simply don't want their cars and trucks and after they've made the switch to a Pacific Rim or European product, they never go back to trying American.

The $73 an hour does include retiree costs, but that is the correct figure for what the big 3 pay in labor costs. Even excluding the retiree costs, the hour wage plus fringe is $55 an hour.... that's $110k a year, and Detroit is NOT a high cost of living area. That's for by and large unskilled labor.

The big 3 can buy their raw materials/parts at the same price as everybody else and they are competitive in this arena. They are competitive in the number of hours it takes to build a car. Only personnel costs are out of whack.... even if it is only 10 percent of the total cost.

Big 3 labor costs have been negotiated downward, but the major savings do not kick in until 2010.... too late to save them in a market where they cannot find credit.

Labor cost is only one area where the big three are inefficient... they have way too many lines competing with each other, too many dealers and quality control still has a ways to go (in my opinion).

GM and Ford will survive this crisis. Chrysler is not likely to. May take a bankruptcy to reorganize, or maybe govt can do it. Either way, they will survive.

My six year old Camry has been trouble free. But, it does have design problems I am not at all happy with and I will be buying GM next time around assuming I have that choice.

[aehurst]

Here's a reference for US vehicle sales. Please note that the big 3 produce 10 of the top 20 selling vehicles, including number 1 and number 2. In my state, the top selling model is a pickup truck... not a fuel efficient small car.

http://online.wsj.com/mdc/public/pag...autosales.html

[cwtnospam]

Quote: Originally Posted by NovaScotian Further, companies themselves become obsolete and through no fault of their own, their workers lose their jobs. This is the case CWT is making, by and large, vis-a-vis GM and the American auto industry. The current financial crisis is just the proverbial straw that broke the camel's back given a 20-year slide in GMs performance in the marketplace and their totally inadequate response to it.

Yes, I see this as a microcosm of the entire economy, and I believe that the extreme right wing of the Republican Party does too. If they can force wages down in the auto industry, they can do it across the board. It's a sneaky way of raising prices, and therefore corporate profits, without Joe Six Pack catching on to the fact that he's being screwed yet again. We don't need more Trickle Down Economics. It's what has brought us to where we are!

[Jasen]

The funny thing is, Joe Sixpack is usually a Republican.
Especially in these mid-East states. They'll keep voting party-line until they die.
Ford has a factory in my town, making huge-ass trucks of some type. The place is filled with good old country boys, Republican for life. The parking lot this year looked like a McCain/Palin tailgate party.

[cwtnospam]

Quote: Originally Posted by Jasen The funny thing is, Joe Sixpack is usually a Republican.

Normally, I'd be all for letting them shoot themselves, but this affects us all.

[ArcticStones]

.
I heard somewhere that one of the Big Three rewards 4000 managers with free cars and free gas. That is a huge number.

[ArcticStones]

.
One more thing: Let’s stay away from the party politics.
You’re more than welcome to discuss that at hundreds of other online forums.

[trident68]

Quote: Originally Posted by cwtnospam Explain it to me then. How can 10% of the cost of a vehicle make or brake the company when no one is claiming that sales are slumping because GM cars cost more than Toyota's? Frankly, I'd pay more for the Toyota, and I think most people would too. That's the problem.

Oh? And what's the source of your figure of 10%? Oh, the Union provided that number?

I think that now that they have some bailout money it's high time to reduce total costs. We all know that a common way to reduce costs is to outsource.

Maybe it's time for the automakers to increase their investments in Mexico, India, or China?

[Jasen]

Quote: Originally Posted by trident68 Maybe it's time for the automakers to increase their investments in Mexico, India, or China?

Personally, I don't think that is necessary.
If Honda, Toyota, and Nissan can open new plants in the US and be profitable at it, so should domestic companies be able to do the same. One major difference is the lack of unions in these plants.

Ford/Chevy/GM are all within the top 4 market share in this country, so we can stop arguing that nobody buys their products. Nissan is #2. Toyota and Honda are both lower than the big 3 domestic brands in terms of sales.
http://online.wsj.com/mdc/public/pag...autosales.html

[cwtnospam]

Quote: Originally Posted by trident68 Oh? And what's the source of your figure of 10%? Oh, the Union provided that number?

No! I'm only going to trust the CEOs, because we all know they never lie.

Quote: Originally Posted by trident68 I think that now that they have some bailout money it's high time to reduce total costs. We all know that a common way to reduce costs is to outsource.

Outsourcing works by externalizing costs. Eventually, those costs end up coming back to taxpayers with a huge amount of interest in the form of Superfund sites, global warming, enormous pollution from a new dirty coal plant per week in China (and other toxic dumping) causing health problems around the world, a strained health care system trying to deal with tens of millions of uninsured, etc.

Outsourcing only looks cheaper if you don't look too closely.

[aehurst]

Quote: Originally Posted by Jasen Ford/Chevy/GM are all within the top 4 market share in this country, so we can stop arguing that nobody buys their products. Nissan is #2. Toyota and Honda are both lower than the big 3 domestic brands in terms of sales. http://online.wsj.com/mdc/public/pag...autosales.html

Thanks for a dose of reality. Also I would point out that the Chevy Malibu and Ford Focus are the only vehicles in the top 20 to show an increase in sales over 2007.

Big 3 can build cars people want to own. And their trucks are a slam dunk in the US market.