Senate and UAW just gave up a few minutes ago ..., tomorrow is gonna hurt ... Options

[sgarnett]

The Senate, UAW, et al, just gave up (ie failed) on reaching a compromise a few minutes ago.

I don't know how GM will come out after bankruptcy (they just hired the bankruptcy lawyer), but the stock market futures are looking ugly tonight. It actually held up well through some dismal recent employment numbers, but I suspect tomorrow is gonna be ugly. Rebuilding my retirement is going to mean austerity and no new cars for a very long time, and I suspect that will be true for many others. That can't be good for any automaker.

I'll admit I wasn't convinced that bridge loans to March could solve the problems for GM, so I don't claim to know what the right answer was. Nevertheless, this is going to be a big kick in the teeth for the economy.

This post has been edited by sgarnett: Dec 12 2008, 04:07 AM

[mitchntx]

ouch ...

goodbye recession ... hello depression.

This could last for years.

[T.O.Dillinder]

Did you hear that?..........
That is the economy going down the toilet.
My brother and his wife are going to lose everything.
My brother works for Lear Seating, and my sister-in-law was laid off from the GM Plant in Janesville 4 months ago.
They were depending on their Sub Pay to keep them afloat.
Time to start changing out the bills for ounces of gold and silver.
Obama better get rid of the free trade agreements and fast. Reinstate the High tariff, Buy American Reganomics.
It worked through RR second term, Bush Sr.'s term, and the first term of Slick Willy.
Then Willy had the great idea of free trade (NAFTA, and laying the ground work for China).
What was traded was jobs. No Jobs, No Money, No buy new car. When will the Politicians and Corporate Fat Cats get a clue.
I am glad I am in the medical sector now.
Sorry, I will get off my soap box now.

[sgarnett]

It just amazes me that "they" just don't seem to get it. I don't see how they can even consider adjourning tomorrow. Personally, I think they should all be locked in with plenty of coffee and with all the restrooms locked until some kind of agreement is reached.

OK, I'm not really amazed. I was just hoping they could somehow grasp the tremendous gravity of the situation and "man up".

This post has been edited by sgarnett: Dec 12 2008, 04:30 AM

[TSHACK]

It just amazes me that "they" just don't seem to get it. I don't see how they can even consider adjourning tomorrow. Personally, I think they should all be locked in with plenty of coffee and with all the restrooms locked until some kind of agreement is reached.

OK, I'm not really amazed. I was just hoping they could somehow grasp the tremendous gravity of the situation and "man up".

X's 2

[sgarnett]

OK, now the treasury is going to backstop backstop GM until congress reconvenes. I still think the coffee and locked restroom idea could work, especially if they have to hold out until ... January.

[StanIROCZ]

If your going to take the time to gripe about this please take the time to send a letter to the white house to tell Mr. Bush how important it is that the Big 3 get this bail out.

Here is the email address: comments@whitehouse.gov

[C3SS]

I agree it is important but would still like to see more concessions from the UAW. In the admittedly little reading I've done on this, that seems to be the hang-up.

[BigEnos]

If your going to take the time to gripe about this please take the time to send a letter to the white house to tell Mr. Bush how important it is that the Big 3 get this bail out.

Here is the email address: comments@whitehouse.gov

Personally I'd like to see it called what it is, which is not a "bailout", but a loan. To me, a bailout is free money with oversight strings. This is money with strings attached that they actually have to pay back. All the Wall St. firms are getting "bailouts" which afaik they don't have to repay but the gov't gets to keep their eye on them for a while.

What really needs to happen is that the companies need to have the ability to "right-size" themselves. They all have too many plants, employees, and factories and I blame the UAW. I know it'll hurt a lot of people, but not as many as will be hurt when these companies fail outright.

[trackbird]

I agree it is important but would still like to see more concessions from the UAW. In the admittedly little reading I've done on this, that seems to be the hang-up.

I saw them say that they wanted the UAW to take a pay cut to put them in line with the non union import plants in the country. Many of which are located in areas with lower costs of living. Also, even if they are not, many families can't afford to take a 5-25% (I didn't see the exact number) pay cut. Of course going bankrupt and putting everyone out of work is an issue, but it doesn't do much good to keep your job and still lose the house and such due to not making enough money to continue paying your bills.

Don't take this to mean that I'm defending people overspending. But if you have a house and a couple kids (and income that's quite predictable since it's in the contract), your budget is probably pretty well stretched on the current salary. If you knew you were getting a pay cut, you might have kept a smaller car payment (or other bill) instead of buying whatever you may be driving currently. But if you're living (barely) within your means, a large paycut is almost as bad as losing your job. And it's not like you can just sell the house and buy something smaller right now, or sell/trade the car. The market sucks all the way around and you're probably going to be stuck with your current car/house/bills for a while.

And I've heard some mention of a few government officials who are wanting to "bust up" the unions. So, I guess it's a big sticking point.

Of course I'm just thinking out loud. Others may not agree.

[C3SS]

But if you have a house and a couple kids (and income that's quite predictable since it's in the contract), your budget is probably pretty well stretched on the current salary. If you knew you were getting a pay cut, you might have kept a smaller car payment (or other bill) instead of buying whatever you may be driving currently. But if you're living (barely) within your means, a large paycut is almost as bad as losing your job. And it's not like you can just sell the house and buy something smaller right now, or sell/trade the car.

At this point it seems the choices are change the contract (what do they think bankruptcy is going to accomplish?) or lose it all, so I'd think that the former would be preferable. The status quo is what got them into this situation in the first place, and ignoring the problem will not fix it, especially when you are saddling your company with labor costs 30% higher than your competitors. Per the AP:

Hourly wages for United Auto Workers laborers at General Motors Corp. factories actually are almost equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour.

The difference is in benefits, with the unionized factories having far higher costs.

GM says its total hourly labor costs are now $69 including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are around $48. The Japanese automaker has far fewer retirees and its pension and health care benefits are not as rich as those paid to UAW workers.

The UAW has not been able to organize workers at a Toyota plant in this country; it does represent workers at one joint GM-Toyota plant in Fremont, Calif.

http://www.google.com/hostednews/ap/articl...aw_VYgD950S0A84

[rmackintosh]

ouch ...

goodbye recession ... hello depression.

This WILL last for years.

Fixed that for ya! (IMG:http://www.frrax.com/rrforum/style_emoticons/default/nutkick.gif)

[trackbird]

But if you have a house and a couple kids (and income that's quite predictable since it's in the contract), your budget is probably pretty well stretched on the current salary. If you knew you were getting a pay cut, you might have kept a smaller car payment (or other bill) instead of buying whatever you may be driving currently. But if you're living (barely) within your means, a large paycut is almost as bad as losing your job. And it's not like you can just sell the house and buy something smaller right now, or sell/trade the car.

At this point it seems the choices are change the contract (what do they think bankruptcy is going to accomplish?) or lose it all, so I'd think that the former would be preferable. The status quo is what got them into this situation in the first place, and ignoring the problem will not fix it, especially when you are saddling your company with labor costs 30% higher than your competitors. Per the AP:

Hourly wages for United Auto Workers laborers at General Motors Corp. factories actually are almost equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour.

The difference is in benefits, with the unionized factories having far higher costs.

GM says its total hourly labor costs are now $69 including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are around $48. The Japanese automaker has far fewer retirees and its pension and health care benefits are not as rich as those paid to UAW workers.

The UAW has not been able to organize workers at a Toyota plant in this country; it does represent workers at one joint GM-Toyota plant in Fremont, Calif.

http://www.google.com/hostednews/ap/articl...aw_VYgD950S0A84

I started to delete that post, but you beat me.

I'm seeing some cases of UAW guys taking home $150k. Ok, that's a bit extreme. But take someone in an "average" $30 an hour position and cut them to $22 or so, and they are going to lose the house in many cases. I wasn't looking at it from the perspective of 80 hour a week/$150k a year guys. Just an average 40 hour job and raising a family on it.

I really think the UAW assumes that GM will "pull it off" and they aren't going to go down until the very end. Once the ship really sinks, they'll probably agree to some changes for the last few weeks. But I don't think they are going to just roll over. It's ingrained in you that "the company is always lying", so I think that's the same issue here.

It's just a game of poker, though a very expensive one.

ouch ...

goodbye recession ... hello depression.

This WILL last for years.

Fixed that for ya! (IMG:http://www.frrax.com/rrforum/style_emoticons/default/nutkick.gif)

Guess I need to go reduce the price on the Camaro...

[FBody383]

If your going to take the time to gripe about this please take the time to send a letter to the white house to tell Mr. Bush how important it is that the Big 3 get this bail out.

Here is the email address: comments@whitehouse.gov

I agree that you should contact your Congressmen and the President regarding your feelings on the issue.

I am unapologetically in the camp of bankruptcy as a workout of the existing issues.

Would you loan money to a company that appears to be mismanaged, has significant competition with arguably better engineering, product lines, cost structure, etc.?

What saved Chrysler when they got their loan was the K car and the minivan. I choose to believe that there is the second coming of Iacocca somewhere in the automotive/business world. I'm certain that person does not currently work for the U.S. government.


I feel for the retirees who put in a career and left the company with a mutual economic bargain.

[pknowles]

I'm surprised the GM investors aren't fed up and file Chapter 7. Between heavy government regulations and extortion like behavior by the UAW, I can't believe they didn't liquidate and run years ago.

[ESPCamaro]

A labor union would have saved my job. I had the 3rd highest seniority (sp) and got cut to save costs.
I have family in the Teamsters union (geesh).
I understand what/why the labor unions were created.

But with sensible workers rights regulations and a decent economy, I just don't see any use for the unions. The ones that are strong are hurting the companies in which they are in place. The weak ones only take the workers money and do nothing for them.....

Part of this money should be aimed at buying out union contracts and/or eliminating them.....


I'd take a non union job at a GM plant for less than what they make and with fewer benefits. Offer me a 401k keep the pension and call me a happy M/F. And you better beleive I wouldn't be the only one........


Another thing I hate to bring up since I've been labeled racist, biggot etc (if you know me you know that is idiotic but whatever).......In industrial jobs around me there are still tons of illegal immigrants. And tons of U.S citizen workers out of a job. Time to actually do something about this problem now too.

[cccbock]

If your going to take the time to gripe about this please take the time to send a letter to the white house to tell Mr. Bush how important it is that the Big 3 get this bail out.

Here is the email address: comments@whitehouse.gov

I agree that you should contact your Congressmen and the President regarding your feelings on the issue.

I am unapologetically in the camp of bankruptcy as a workout of the existing issues.

Would you loan money to a company that appears to be mismanaged, has significant competition with arguably better engineering, product lines, cost structure, etc.?

I feel for the retirees who put in a career and left the company with a mutual economic bargain.

This seems to be an excellent exchange with no sniping or flaming...which is great.

I pretty much ditto the above. I have worked for all types of companies (well run and not), and government as well. My grandfather ran a non-union tool and die shop in South Bend in the 60's and the Union came in and ran him out of business within 5 years. The workers didnt even get a chance to work for less pay, they just just lost their job completely.

We have to remember also that the car companies are trying to deal with totally unprecedented economic problems in addition to their other better known problems. I own a real estate appraisal company, and I don't care how you manage it.....if your revenue goes to 20% of what it was before (practically overnight), and you have employees to pay...and no credit....there is gonna be a real big problem real soon....even if the executives work for nothing.

To survive, the Amercian auto industry needs to be restructured period. Just like the airlines are having to do. The airlines have had to use bankruptcy, and im afraid the auto companies will as well. Anything the government does is a only stop gap.

That and 4 bucks will get you a cup of coffee. Cream extra.

Bock

[nape]

I'm surprised the GM investors aren't fed up and file Chapter 7. Between heavy government regulations and extortion like behavior by the UAW, I can't believe they didn't liquidate and run years ago.

Remember this within the next 30 years when Toyota finally has a lot of workers who are old enough to start collecting a pension. Are you going to be telling them to do the same thing because... the vicious employees negotiated too much for retirement benefits? They just admitted that their labor costs about the same, the majority of the difference is the amount of people collecting.

A labor union would have saved my job. I had the 3rd highest seniority (sp) and got cut to save costs.
I have family in the Teamsters union (geesh).
I understand what/why the labor unions were created.

But with sensible workers rights regulations and a decent economy, I just don't see any use for the unions. The ones that are strong are hurting the companies in which they are in place. The weak ones only take the workers money and do nothing for them.....

Part of this money should be aimed at buying out union contracts and/or eliminating them.....

I'd take a non union job at a GM plant for less than what they make and with fewer benefits. Offer me a 401k keep the pension and call me a happy M/F. And you better beleive I wouldn't be the only one........

Another thing I hate to bring up since I've been labeled racist, biggot etc (if you know me you know that is idiotic but whatever).......In industrial jobs around me there are still tons of illegal immigrants. And tons of U.S citizen workers out of a job. Time to actually do something about this problem now too.

The use for unions is strength in numbers and this time it's working in reverse. Too many people drawing pensions is increasing the cost per vehicle too much, but that could happen to any manufacturer with an aging work force.

In tough times, it's interesting to see what people will do to undercut each other. Who cares if you'd take a job for less then what they make with fewer benefits? I'm sure a lot of people would, but you must've thought you had a better deal going before the economy went into the dumper or you'd already be working there.

We're seeing that in the trades as well. People who think they should be white collar but decided to try a trade because the job market sucks. I wish they'd keep their white collar, they come out, don't want to work hard, don't want to get dirty, don't want to go home sore. Be careful what you wish for.

Trackbird: You're exactly right about the money and that's why it pisses me off when people bring it up. So what if a UAW represented employee makes $150k/year? He had to work a shitload of hours to do it.

I'm an IBEW Electrician and a lot of people complain about how much we cost, that we're lazy, make too much money. Yeah, I know guys hitting the $150k/year mark this year, but they've been on the road 8-10 months this year working 6-7 days a week (58-96hrs/wk).

As far as non-union not necessarily being better, we saw a good example of it on the job I'm working at right now. We didn't get the bid to install 4 transformers, a non-union shop did. It takes us 5 guys for 3 days to dress out 1 transformer. The rat shop took 8 guys 10 days to dress out each transformer. But, they can make it happen because they pay their guys 1/4 to 1/2 of what we make. You figure out which one is right or better.

[T.O.Dillinder]

My brother is making $ 17.50 per hour ($ 36,400 gross per year)at Lear Seating
His wife was making $ 22.76 per hour ($ 47,340.80 gross per year) working on the assembly line at GM on 2nd shift.
Compare that to your yearly wage.
The 150K hourly workers are in the Skilled Trades (Plant and Machinery Maintanence)with a wage of $35 p/hr., that are working Saturdays and Sundays and are making that wage double and triple that on those weekend days.
The Assembly workers at the Chrysler plant in Belvedere, IL are making over $ 26.00 per hour now.
Financial Institution and Corporate Heads need to quit taking the 7 to 9 figure Bonuses. How can anyone justify that kind of bonus when their company is losing money.
In 1963 my father started at the Janesville plant making $ 3.63 per hour. after his proby period he bought a 1963 Corvette.
I do not recall the sticker price. I think they were around $ 6,500.00 back then.
Anyways, my point is look at what my bro makes and the cost of a new Corvette.
The cost of living has risen at a higher percentage rate than people's salaries, it doesn't matter what your profession is.
If we could figure what the CEO of GM was making in 1963 compared to today, we would all be shocked at how the gap between the salary of a Top Person of a Corporation and the salary of "low guy" Joe has become greater by what some would consider extreme.
If I remember correctly from one of my business management classes from long ago, the CEO made approximately 300 times more than the lowest paid worker in the same company.
Today, using the estimate $ 130 million dollar salary for a CEO (and this is low, I have seen upwards of $ 300,000,000 with all options considered), and my sister-in-law's wage. The CEO makes 2,746.04 times more than my brother's wife.
So don't start hating on Union workers. You can hate on the Union Organizations Heads all you want.
Times have changed since my Grandfather was an original "Sit Downer" at the Janesville GM Plant.
The Unions pushed for what all of us share now days. Paid Vacations, 40 Hour work week, and safety improvements, and for hourly personnel, job security. But like any big organization there is politics and greed ot the top that pollutes the original cause and mode of operations of that organization.
If someone is not working, how are they going to buy your product to keep you employed?
If you price something out of the average person's range, how are you going to sell your product to keep you employed?
Sorry for the soap box, but to lay blame on the blue collar workers of companies is just plain stupid.
Teddy Roosevelt bailed out banks in the 1920's, and what happened?
The exact same thing that is happening now. Funds being use improperly by the Corporate Leaders.
What was the outcome?
The Great Depression.

[ESPCamaro]

My brother is making $ 17.50 per hour ($ 36,400 gross per year)at Lear Seating
His wife was making $ 22.76 per hour ($ 47,340.80 gross per year) working on the assembly line at GM on 2nd shift.
Compare that to your yearly wage.
The 150K hourly workers are in the Skilled Trades (Plant and Machinery Maintanence)with a wage of $35 p/hr., that are working Saturdays and Sundays and are making that wage double and triple that on those weekend days.
The Assembly workers at the Chrysler plant in Belvedere, IL are making over $ 26.00 per hour now.
Financial Institution and Corporate Heads need to quit taking the 7 to 9 figure Bonuses. How can anyone justify that kind of bonus when their company is losing money.
In 1963 my father started at the Janesville plant making $ 3.63 per hour. after his proby period he bought a 1963 Corvette.
I do not recall the sticker price. I think they were around $ 6,500.00 back then.
Anyways, my point is look at what my bro makes and the cost of a new Corvette.
The cost of living has risen at a higher percentage rate than people's salaries, it doesn't matter what your profession is.
If we could figure what the CEO of GM was making in 1963 compared to today, we would all be shocked at how the gap between the salary of a Top Person of a Corporation and the salary of "low guy" Joe has become greater by what some would consider extreme.
If I remember correctly from one of my business management classes from long ago, the CEO made approximately 300 times more than the lowest paid worker in the same company.
Today, using the estimate $ 130 million dollar salary for a CEO (and this is low, I have seen upwards of $ 300,000,000 with all options considered), and my sister-in-law's wage. The CEO makes 2,746.04 times more than my brother's wife.
So don't start hating on Union workers. You can hate on the Union Organizations Heads all you want.
Times have changed since my Grandfather was an original "Sit Downer" at the Janesville GM Plant.
The Unions pushed for what all of us share now days. Paid Vacations, 40 Hour work week, and safety improvements, and for hourly personnel, job security. But like any big organization there is politics and greed ot the top that pollutes the original cause and mode of operations of that organization.
If someone is not working, how are they going to buy your product to keep you employed?
If you price something out of the average person's range, how are you going to sell your product to keep you employed?
Sorry for the soap box, but to lay blame on the blue collar workers of companies is just plain stupid.
Teddy Roosevelt bailed out banks in the 1920's, and what happened?
The exact same thing that is happening now. Funds being use improperly by the Corporate Leaders.
What was the outcome?
The Great Depression.

I wasn't laying blame on the blue collar worker........GM has had a long history of paying out big bonuses to white collar position holders, and/or refusing to cut white collars....As I understand it.

I'm simply pointing out that if it costs company X 1 and 3/4 to make something as company Y, company X is at a disadvantage........


I do find it interesting that saving a million jobs comes with such reservation for law makers, yet they just rushed right into giving money away to AIG etc.


Again I'm not entirely against unions. They would have protected my job. Pay was similar or better than what you quoted, but guess what. I'm out of a job. Union workers aren't (yet). And I put more than just time in, but time giving-----yeah I'll just not get into it.

This post has been edited by ESPCamaro: Dec 13 2008, 04:50 AM

[T.O.Dillinder]

I wasn't laying blame on the blue collar worker........GM has had a long history of paying out big bonuses to white collar position holders, and/or refusing to cut white collars....As I understand it.

I'm simply pointing out that if it costs company X 1 and 3/4 to make something as company Y, company X is at a disadvantage........


I do find it interesting that saving a million jobs comes with such reservation for law makers, yet they just rushed right into giving money away to AIG etc.


Again I'm not entirely against unions. They would have protected my job. Pay was similar or better than what you quoted, but guess what. I'm out of a job. Union workers aren't (yet). And I put more than just time in, but time giving-----yeah I'll just not get into it.

Do not take it personal, because I was not taking any shots at you, or anyone else on here, just the politicians. I am just upset at the "bone-headed" things they ALL are doing.
I am also upset that there are people who do not take responsibility for their desicions (AIG, GM, Ford, etc, etc.), and are asking the government to save their behinds.
I smell communism on the horizon. Communism did not work either, ask Russia.
Free Trade of GOODS would work if the other country's citizens would buy our products. But they do not.
It is late and it is this economic situation that has me upset. With my sibling and his family about to lose everything they have worked to get.
I have a secure job, doesn't pay well enough for me to go wheel to wheel racing at all, hence starting the parts business in hopes to subliment my income.
My health has improved a lot, but I have been stuck at the 280 lbs. I am at.
Personally I am all right, just won't be able to do the thing I have wanted to do since I grabbed a wrench at 3 years old.
I hope I can find a Camaro or Trans-Am come Mid March so I can play a little bit on track days.
Anyways thanks for letting me vent some.

[PeteL]

Free Trade of GOODS would work if the other country's citizens would buy our products. But they do not.

But they do buy our goods to the tune of 1.148 trillion $ in 2007. We are number three in terms of value of exports behind Germany ($1.3 trillion) and China($1.2 trillion). Suprisingly, we are ahead of Japan ($0.7 trillion). That's why protectionist arguments make no sense, it's cutting off your nose to spite your face. You ban their goods and they ban yours and everybody loses. There are plenty of economists who believe that Hawley-Smoot Tariff was an important co-contributer to the cause of the depression.

[NJSPEEDER]

This is part of the problem with electing people without making sure they are qualified to do .....welll.....anything actually.

Anyone with common sense and a calculator can see what is about to happen all because they decided to be a bunch of hard asses. Where was all of this stand up and do it yourself rhetoric when they were writing blank checks to the finance companies? I guess those white collars are more important than the 50 times as many blue collars that are at risk now.

[Rob Hood]

Here's a (lengthy) article on GM and their bankruptcy status - http://www.bloomberg.com/apps/news?pid=206...id=ai5KpbywxqiQ

[pknowles]

I'm surprised the GM investors aren't fed up and file Chapter 7. Between heavy government regulations and extortion like behavior by the UAW, I can't believe they didn't liquidate and run years ago.

Remember this within the next 30 years when Toyota finally has a lot of workers who are old enough to start collecting a pension. Are you going to be telling them to do the same thing because... the vicious employees negotiated too much for retirement benefits? They just admitted that their labor costs about the same, the majority of the difference is the amount of people collecting.

Pensions are good. They help add stability to your work force, keeping your experienced people in the company to help train the newcomers. However, the pensions should be secured with some sort of bonds (in full or part), not secured by future sales or profits. This is the problem GM is facing.

My true beef with the UAW is the strike last year, that was the definition of extortion in my mind.

This post has been edited by pknowles: Dec 14 2008, 03:22 AM

[StanIROCZ]

Free Trade of GOODS would work if the other country's citizens would buy our products. But they do not.

But they do buy our goods to the tune of 1.148 trillion $ in 2007. We are number three in terms of value of exports behind Germany ($1.3 trillion) and China($1.2 trillion). Suprisingly, we are ahead of Japan ($0.7 trillion).

I'm not challenging but more asking because I don't understand. If that is true why do we have a trade deficit and why has the dollar become so weak?

[BigEnos]

Free Trade of GOODS would work if the other country's citizens would buy our products. But they do not.

But they do buy our goods to the tune of 1.148 trillion $ in 2007. We are number three in terms of value of exports behind Germany ($1.3 trillion) and China($1.2 trillion). Suprisingly, we are ahead of Japan ($0.7 trillion).

I'm not challenging but more asking because I don't understand. If that is true why do we have a trade deficit and why has the dollar become so weak?

I can't say why the dollar is weak, but even though we export 1.148 trillion$, we import 1.968 trillion$. That's a trade deficit.

For a bunch more info check out

CIA World Factbook

[PeteL]

Free Trade of GOODS would work if the other country's citizens would buy our products. But they do not.

But they do buy our goods to the tune of 1.148 trillion $ in 2007. We are number three in terms of value of exports behind Germany ($1.3 trillion) and China($1.2 trillion). Suprisingly, we are ahead of Japan ($0.7 trillion).

I'm not challenging but more asking because I don't understand. If that is true why do we have a trade deficit and why has the dollar become so weak?

The way to fix a trade deficit is to become more productive at making the things that you now import. Productivity is simply the value of the goods produced relative to what it cost to make them. High productivity is what makes a nation wealthy.

In the absence of trade barriers, a nation exports what it is most productive at making and it imports what it sucks at making. If you enact trade barriers. Then you will move the nation's production from what it's best at making to what it doesn't make as efficiently. Consequently the nation as a whole losses productivity and is worse off than before.

The unions and managment of the big 3 have to decide to become more productive... period. So the union has to drop the ridiculous and unproductive work rules and the managers have to stop sucking the lifeblood of the company away in the form of outrageous bonuses, perks and stock options.

A bailout will simply encourage they same unproductive behaviour that has been going on since the last bailout. Remember we have been down this road before...and now instead of just one company with it's hand out...there are three.

Why the dollar is weak, in my opinion has to do with another deficit...but I've given up hope of our government every becoming fiscally responsible.

[mitchntx]

many families can't afford to take a 5-25% (I didn't see the exact number) pay cut.

heavy government regulations and extortion like behavior by the UAW

For some reason people/families today live on the ragged edge. The "need" for a Suburban or Expedition to occasionally take a 5th or 6th kid to soccer practice has some how become a necessitiy. Why can't all 6 scrunch together for the 5 minute commute?

That is merely a single example of hundreds we can all come up with that absolutely proves that as a whole US citizens have become self-absorbed and fiscally irresponsible. We, as a whole, have become glassy-eyed into thinking money derived from a home equity line of credit can be placed in their e-trade account and investing via articles read on Google news is a way to afford seldom used 3rd row seating.

This issue is way deeper than the fault of any union. They just ahppen to be a convenient scape-goat.

My brother is making $ 17.50 per hour ($ 36,400 gross per year)at Lear Seating
His wife was making $ 22.76 per hour ($ 47,340.80 gross per year) working on the assembly line at GM on 2nd shift.
Compare that to your yearly wage.
The 150K hourly workers are in the Skilled Trades (Plant and Machinery Maintanence)with a wage of $35 p/hr., that are working Saturdays and Sundays and are making that wage double and triple that on those weekend days.
The Assembly workers at the Chrysler plant in Belvedere, IL are making over $ 26.00 per hour now.
Financial Institution and Corporate Heads need to quit taking the 7 to 9 figure Bonuses. How can anyone justify that kind of bonus when their company is losing money.
In 1963 my father started at the Janesville plant making $ 3.63 per hour. after his proby period he bought a 1963 Corvette.
I do not recall the sticker price. I think they were around $ 6,500.00 back then.
Anyways, my point is look at what my bro makes and the cost of a new Corvette.
The cost of living has risen at a higher percentage rate than people's salaries, it doesn't matter what your profession is.
If we could figure what the CEO of GM was making in 1963 compared to today, we would all be shocked at how the gap between the salary of a Top Person of a Corporation and the salary of "low guy" Joe has become greater by what some would consider extreme.
If I remember correctly from one of my business management classes from long ago, the CEO made approximately 300 times more than the lowest paid worker in the same company.
Today, using the estimate $ 130 million dollar salary for a CEO (and this is low, I have seen upwards of $ 300,000,000 with all options considered), and my sister-in-law's wage. The CEO makes 2,746.04 times more than my brother's wife.
So don't start hating on Union workers. You can hate on the Union Organizations Heads all you want.
Times have changed since my Grandfather was an original "Sit Downer" at the Janesville GM Plant.
The Unions pushed for what all of us share now days. Paid Vacations, 40 Hour work week, and safety improvements, and for hourly personnel, job security. But like any big organization there is politics and greed ot the top that pollutes the original cause and mode of operations of that organization.
If someone is not working, how are they going to buy your product to keep you employed?
If you price something out of the average person's range, how are you going to sell your product to keep you employed?
Sorry for the soap box, but to lay blame on the blue collar workers of companies is just plain stupid.
Teddy Roosevelt bailed out banks in the 1920's, and what happened?
The exact same thing that is happening now. Funds being use improperly by the Corporate Leaders.
What was the outcome?
The Great Depression.

The History Channel ran a terrific documentary of FDR and then a really interesting comparison to the crash in 29 and subsequent depression to where we are today. It was just uncanny the similarities between '29 and today.

Hoover was president and Mellon was the Treasury Secretary. After the crash, Hoover decided to stand pat and "to let the market correct itself" and Mellon was adamant that banking deregulation was the way for a capitalist society to flourish. FDR was elected in 1932 on a "New Deal" campaign where the nations infrastructure would be bolstered to ready the country to move forward.

Now, replace Reagan, Clinton and Bush for Hoover, Greenspan for Mellon and Obama and "Change" for FDR. Spooky, eh?

FDR's new deal got people back to work, but the banking industry, market and economy didn't rebound till 1943 when US industry was in over-drive to support the european and asian war efforts.

Execs in today's world are really no different than the soccer family described above. While the monies discussed are quite different, the principles are identical to the blue collar workers. There is plenty of blame to be spread around.

[jeffburch]

I would like to see a tariff similar to what was on big (701cc up) motorcycles in 1984 on imports (crap).
Look at Harley Davidson now.

Put Americans to work building American products.

God Bless our Unions

jb
IBEW 69

[pknowles]

The History Channel ran a terrific documentary of FDR and then a really interesting comparison to the crash in 29 and subsequent depression to where we are today. It was just uncanny the similarities between '29 and today.

Hoover was president and Mellon was the Treasury Secretary. After the crash, Hoover decided to stand pat and "to let the market correct itself" and Mellon was adamant that banking deregulation was the way for a capitalist society to flourish. FDR was elected in 1932 on a "New Deal" campaign where the nations infrastructure would be bolstered to ready the country to move forward.

Now, replace Reagan, Clinton and Bush for Hoover, Greenspan for Mellon and Obama and "Change" for FDR. Spooky, eh?

FDR's new deal got people back to work, but the banking industry, market and economy didn't rebound till 1943 when US industry was in over-drive to support the european and asian war efforts.

Execs in today's world are really no different than the soccer family described above. While the monies discussed are quite different, the principles are identical to the blue collar workers. There is plenty of blame to be spread around.

An excellent book on the topic is "The Forgotten Man" by Amity Shales. This book was released before our stock market crash and looks at how Government policy in the great depression may have actually lengthened the depression. The similarities in the players are scary and the policy doesn't seem that different from today, ironically enough.

I've also been reading up on the Weimar republic, which was basically Germany before Hitler's party came to power. These are the people that had out of control inflation and you see pictures of in textbooks bringing wheel barrels full on money to by bread or burning the money to keep warm because it was worth almost nothing. It seems like some of the worst dictatorships in history come just after a financial crisis. Before I started researching the matter I had no idea that Hitler came to power so fast (less then 3 years). It's crazy what people do in a crisis to "save the republic". I'm not saying that anyone we have is anything like Hitler, but losing our republic is a possibility that we need to be aware of and happens slowly with seemingly good intentions. Crazy scary stuff. I personally don't think we are near that point, but I think it's good to understand how countries get to that point.

[mitchntx]

I would like to see a tariff similar to what was on big (701cc up) motorcycles in 1984 on imports (crap).
Look at Harley Davidson now.

Put Americans to work building American products.

God Bless our Unions

jb
IBEW 69

JB ... I honestly don't think any increase in taxation is the way out. Taxing a company's products just means that over head cost is passed along to the consumer. Taxing big business in effect, really doesn't affect big business.

JMHO ...

The tariff on bikes in the 80s was a little different than now. There were no foreign bike assembly plants. The vast majority of cars sold in the US are actually assembled here by US workers. And if discussing profits, publicly traded companies means that everyone, US citizen or not, can get a piece of that pie. But, bottom line, if Toyota wants to continue to employe 50,000 US citizens at it's San Antonio assembly plant, then that is 50,000 people bringing home a pay check.

I respect your opinion and the others in this group about unions. Unions have brought about great change in the way we work. However, the potential for abuse is quite extraordinary. So, my opinion on unionized labor is mixed ... in theory, I think it's a great thing ... in application, it sometimes gets too political and out of control.

[jeffburch]

Re: Texas Toyotas, Yeah, but they're assembled with something like 85% imported parts.
What about the sub plants that make those parts and sub assembies?
Also, the money on the sale goes offshore.

jb

[mitchntx]

Interesting reading ...

Heavy Load
For Toyota, a New Small Truck
Carries Hopes for Topping GM

Targeted at Emerging Markets,
Hilux Takes Risk on Quality:
It Bypasses Japanese Plants
Lessons of a Financial Crisis
By NORIHIKO SHIROUZU and JATHON SAPSFORD
Staff Reporters of THE WALL STREET JOURNAL
May 12, 2005; Page A1

BUENOS AIRES -- Martinic Drasko wants 50 new pickup trucks to lease to oil companies that operate in Argentina's hinterlands. But he doesn't want just any truck.

Mr. Drasko says he has tried Ford Ranger and Chevy S10 pickups and a Brazilian-built Nissan truck, but no vehicle has proved more reliable than Toyota Motor Corp.'s Hilux model. "If you break down in remote oil fields, and it's winter, you're cooked," he says.

Now, Toyota is banking on a new version of this sturdy workhorse and a couple of related models it will sell mostly in the developing world as a key part of its strategy to overtake General Motors Corp. as the world's No. 1 car maker. The retooled pickup is Toyota's 21st-century answer to the Ford Model T, a vehicle for the masses that is versatile, inexpensive and highly reliable.

But Toyota is also taking a big gamble on its reputation for quality with its new emerging-market strategy: It's dumping its high-cost plants in Japan as a source of critical components.

For years, Toyota has followed a widely successful formula. It assembled cars in and near local markets, providing jobs and making the products less foreign. But the company produced those cars with engines, transmissions and other key components brought in from the company's world-beating Japanese factories.


That emerging-market business model fell apart during the currency crisis that struck Southeast Asia in the late 1990s. Suddenly, Japanese-made components were prohibitively expensive for buyers using devalued Asian currencies.

So Toyota devised a new approach. It is building the new Hilux and related models in developing countries using parts made almost entirely in factories strategically located to take advantage of regional free-trade zones and cheap labor.

With the new strategy, the company hopes to boost its sales numbers while damping the risks that foreign-currency conversions will eat up all of its profits. But the big question is whether Toyota can keep quality to its lofty standards even as it moves to build more of its cars almost bumper to bumper outside Japan.

Toyota executives say they know achieving a high level of quality is a must if the IMV project is to succeed. Decades of experience Toyota's manufacturing division has in producing vehicles outside Japan "have given us confidence to say we can proceed with the project, even though it almost completely bypasses Japan," says Yoshi Inaba, the Toyota senior managing director in charge of operations in North and South America, Oceania, Asia and the Middle East.

The new Hilux truck, the first of a wave of vehicles built on a single, low-cost vehicle platform known inside Toyota as "IMV," shorthand for "innovative international multipurpose vehicle," hit the marketplace in Thailand last August.

If the strategy succeeds as planned, the Hilux and its related vehicles -- a sport-utility vehicle and a minivan -- will be a crucial part of Toyota's ambitious push to grab a 15% slice of the global auto market by 2010. It had a 12% share at the end of 2004, according to CSM Worldwide, a research firm in Farmington Hills, Mich. Toyota expects the new family of emerging-market vehicles to sell an additional 500,000 vehicles over the old Hilux line, which has consistently sold about 250,000 vehicles a year. The sales jump would make up about a third of the 1.6 million additional vehicles the company needs to sell annually if it is to overtake GM for the top spot. Toyota has no plans to sell the Hilux pickup and its related vehicles in the U.S.

This week, Toyota parked three IMV models outside the hotel ballroom where the company disclosed its latest annual sales and profits. Inside, Toyota President Fujio Cho said the new line was the main reason Toyota's sales in developing markets from Asia to Africa jumped by 362,000 cars, more than the combined increase in sales for developed markets of Japan, Europe and North America.

Toyota's overall sales reached 7.4 million cars, a record. Yet the growth came at a cost. Earnings for the year ended March 31 edged up 0.8% to a record $11.09 billion. But in the final quarter, profits slumped 17% from a year earlier to $2.76 billion in part because of heavy investment in plant and development, including that for the new vehicles.

Big Western and Japanese auto makers have long sold cars and trucks in less affluent, developing countries. But few auto makers have tried a project as ambitious as Toyota's IMV strategy. Toyota wouldn't say how much it spent to develop the new platform and the three basic models based on it, but the company said it sank at least $1.4 billion so far into updating or building plants in Argentina, India, Indonesia, Thailand and South Africa, among other countries, for the project.

The IMV architecture, a basic vehicle building block known in the industry as a chassis, is designed to support a family of rugged vehicles. The vehicles, including the Innova minivan and the Fortuner SUV in addition to the Hilux, will be marketed in 140 emerging-market countries.

By using low-wage factories to make major components, Toyota can offer the new trucks at prices well below the norm in markets like the U.S. The base price for a Hilux pickup is $9,900 in Thailand, for example. In the U.S., a Toyota Tacoma compact pickup -- essentially the same size as a Hilux -- starts at $13,415.

Rivals are skeptical of what GM spokesman Patrick Morrissey calls a "one size fits all" approach to emerging markets. "You can't sell the same car in different markets," says Nissan Motor Co. Chief Executive Carlos Ghosn. "You always have to tune it."

GM uses its global brands and alliance partners to come up with a different portfolio of products for different emerging markets. Ford Motor Co., on the other hand, tries to tap shared technology and vehicle architectures to approach the emerging world. In Asia, for instance, Ford is rolling out a version of the Ford Focus that has been tweaked to Asian tastes but shares basic technology and architecture with the namesake car originally developed for Europe.

Toyota says its IMV-based vehicles are fine-tuned for subtle differences in local markets. Officials also stress that the new models aren't Toyota's only emerging-market offerings. It also sells an affordable entry-level car tailored to various major emerging markets as well as its big-selling global sedans, the Corolla and the Camry.

Behind the emerging-market strategy is a significant shift in the way Toyota operates around the world. Toyota's top brass often touts the "internationalization" of the company, but the car maker has long relied heavily on building engines and other crucial components in Japan. Workers at the company's traditional factories there have long experience with Toyota's brand of highly-efficient "lean" production. One reason the company was reluctant to move such operations off shore was concern about quality.

But in 1997, when the Asian economic crisis triggered a recession in many of Toyota's key developing markets, the company was forced to reassess its strategy. At Toyota manufacturing operations in Thailand and Indonesia, the devastating slide of the local currencies against the yen pushed up the cost of importing Japanese-made components by 80% or more. Those prices made the company's cars just about unsellable in some markets.

Toyota executives also realized that the company's internal system of pricing and discounting made it impossible for them to determine accurately whether the company was making or losing money on each car produced in the Asian region.

Toyota bosses decided the company's developing-market strategy needed a fundamental overhaul, starting with the Hilux trucks.

Toyota's traditional approach to cost-cutting is kaizen, continuous effort on the shop floor to systematize work processes and make them more efficient. But kaizen often yields only incremental savings over time. The approach wasn't adequate to deliver the deep cuts the Asian financial crisis called for, says Kaoru Hosokawa, the executive chief engineer of the team that developed the IMV vehicle architecture and the three models based on it. Mr. Hosokawa says he set out to slash the cost to manufacture each vehicle, including parts procurement and logistics costs, by as much as 30% to make the project viable.

Mr. Hosokawa and other top strategists devised a new plan that completely bypasses Japan as a source of quality but high-cost parts. Toyota located new factories to take advantage of some of the liberal free-trade agreements in different regions, from South America, to Africa, to Southeast Asia.

Gasoline engines for the IMV vehicles, for example, are being made in Indonesia and shipped to assembly plants in Thailand, South Africa and Argentina, among other countries. Diesel engines are being made at a plant in Thailand. Manual transmissions are being shipped around the world from plants in India and the Philippines.

Toyota has set up a war room for IMV production at its office in Bangkok. On the wall is a long line of coded numbers, each representing a component, from wipers to heat sensors to nuts and bolts. Red lines fan out from each component to its subcomponents, which in turn have more red lines going out to further subcomponents. In some cases, the components are traced back to 12 levels of suppliers.

It was drudgery to map out those supply chains. But once they did, Toyota executives discovered all kinds of areas where subcomponents were going back and forth between suppliers, needlessly raising costs. "We found a lot of waste to cut before we even got started," says Akira Okabe, a Toyota managing officer in charge of Asian operations.

In the end, Mr. Hosokawa, the chief engineer, says Toyota was able to reduce the cost to manufacture the vehicles based on the IMV platform by 20% to 25%, compared with old Hilux trucks they replaced. The savings allowed the Japanese auto maker to price those vehicles affordably in the developing world and still make a profit.

Toyota's new strategy has some potential weaknesses. For example, a port strike in India, one of the two sources of manual transmissions, could paralyze Hilux production around the world. Supply lines could also be disrupted by a natural disaster -- another tsunami or earthquake -- or political unrest. Another round of currency upheaval in the region, or changes in tax policies on parts moved across borders could undermine Toyota's strategy.

As insurance, Toyota has created "backup capacity" in Japan and Thailand for each major component and ordered each factory producing the Hilux and its family of vehicles to stock roughly a two-week supply of engines, transmissions and other key components to prepare for an unforeseen disruption in parts production and cross-border shipments. That is a departure from Toyota's traditional ideal, which is to run with very little inventory stored in warehouses.

Through the project, Toyota is also learning that selling vehicles to customers in less developed economies isn't what it used to be. Years ago, auto makers could get away with selling old technology vehicles to relatively isolated Third World customers.

That no longer works, says Mr. Inaba, the Toyota senior managing director. Thanks to the Internet, car makers can't keep consumers in the dark as to what kind of cars they sell in different markets around the world.

At a dealership in Buenos Aires, some customers showed up well before Toyota said anything about its plans for a launch of the redesigned Hilux, waving pictures of the new Toyota model that had already been unveiled in Thailand. They demanded to know when they could get their hands on the new truck, says Mariano Fernandez, vice president of the dealership who manages its day-to-day operations.

Now, Toyota is trying to offer as much up-to-date technology as possible with the new vehicles. The new Hilux, for instance, offers more powerful engines -- including two types of four-cylinder, 16-valve direct-injection turbo diesel engines -- as well as front- and four-wheel-drive versions and either one or two rows of seats. Some versions of the truck also offer antilock brakes and front airbags, although low-end models still come without those features in order to keep them more affordable. "No car maker can get away with the old trick and deprive emerging markets of the latest technology," Toyota's Mr. Inaba says.

So far, sales of the new Hilux and its sister vehicles are brisk. In Thailand, a market Toyota bets will become its biggest for IMV-based vehicles, customers bought a total of 112,300 new Hiluxes in the first eight months after the pickup's launch, compared with the 76,200 sold during the same period a year earlier.

In Argentina, where the economy is showing signs of recovery after a devastating economic crisis in 2002, Mr. Fernandez, the Buenos Aires dealer, believes the new Hilux truck will allow him to expand his sales by 40% this year to 1,400 vehicles. He says that would put his business solidly back in precrisis profitability.

Mr. Fernandez expresses frustration that Toyota isn't making more trucks to meet demand. Toyota's "really conservative," he barked at a Toyota sales representative, Gustavo Salinas, in his showroom one recent day. All Toyota needs to sell more is to open up the taps at the factory: "You just have to produce more," he said.

Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com1 and Jathon Sapsford at jathon.sapsford@wsj.com2

URL for this article:
http://online.wsj.com/article/0,,SB1...330907,00.html

Can't argue with you Jeff other than within that article it does elude to an import tax which prompted manufacturers like Toyota to begin assembling their products, which are normally sold in the US market.

Your questions, though, prompted even more questions.

Remaining on the vehicle theme ...The realist in me tends to wonder what a vehicle would cost if it were completely built inside the US borders AND it did so at a price which didn't require US government intervention in order to remain solvent.

I see this as a viscious cycle that continues in a do loop till something gives.

Workers demand wage increases to maintain the life to which they've become accustomed.
Manufacturers pay the wage and benefit increase to maintain production and pass along the wage increase as the "cost of doing business".
Consumers/workers purchase said products, but it takes a bigger chunk out of their budget. So a wage increase is necessary.

So who is supposed give in? A bazillion workers conceding a dollar each or a handfull of companies yielding a bazillion dollars?

I don't know the answer and don't pretend to be smart enough to figure out all the differnet angles. But I try and be informed and learn as much as I can.

[BigEnos]

I see this as a viscious cycle that continues in a do loop till something gives.

Workers demand wage increases to maintain the life to which they've become accustomed.
Manufacturers pay the wage and benefit increase to maintain production and pass along the wage increase as the "cost of doing business".
Consumers/workers purchase said products, but it takes a bigger chunk out of their budget. So a wage increase is necessary.

So who is supposed give in? A bazillion workers conceding a dollar each or a handfull of companies yielding a bazillion dollars?

I don't know the answer and don't pretend to be smart enough to figure out all the differnet angles. But I try and be informed and learn as much as I can.

You forgot the part about ambition, wanting to give your kids a better life, the seemingly relentless march to buy what currently constitutes a "good life", etc. It's difficult to boil down, and I don't know the answer either. Unlike most people I went to college with, I found economics fascinating. I wish I'd taken more classes in it.

[mitchntx]

You forgot the part about ambition, wanting to give your kids a better life, the seemingly relentless march to buy what currently constitutes a "good life", etc. It's difficult to boil down, and I don't know the answer either. Unlike most people I went to college with, I found economics fascinating. I wish I'd taken more classes in it.

Again ... JMHO ...

Every parent wants more for their children than they had as a kid, a better life, a better education, better amenities ... Nothing at all wrong with that ambition.

But one's personal ambition vs abilities is based upon their personal means, right?

Just because I graduated a JuCo and live in a 1500 sq/ft house with 2 cars doesn't mean I should expect my employer to pay me enough to send 2 kids to Harvard, put them up in a 1750 sq/ft house each and both add an RV to their driveway does it?

I know that's a rather silly extrapolation, but the point I feel as though my ambition is mine. It's not incumbent upon some one else or something else to make that possible. It's up to me. If I can't, does that make me a failure?

[FBody383]

You forgot the part about ambition, wanting to give your kids a better life, the seemingly relentless march to buy what currently constitutes a "good life", etc. It's difficult to boil down, and I don't know the answer either.

Sure you do, individual responsibility - the American Dream. Manifest destiny in the sense of seeking to improve upon one's condition, though not at the expense of others. The "good life" is accepting that there is enough. That there are some less fortunate than yourself and that character and integrity matter.

Unlike most people I went to college with, I found economics fascinating. I wish I'd taken more classes in it.

I still believe that anybody that wants a college degree in this country can get one. It may not be at the school of their choice and may take longer than you want, but it is achievable. And we are certainly free to pick up a class at the local JuCo every now and then whether it's Macro Economics or Intro to MIG Welding.

[BigEnos]

You forgot the part about ambition, wanting to give your kids a better life, the seemingly relentless march to buy what currently constitutes a "good life", etc. It's difficult to boil down, and I don't know the answer either. Unlike most people I went to college with, I found economics fascinating. I wish I'd taken more classes in it.

Again ... JMHO ...

Every parent wants more for their children than they had as a kid, a better life, a better education, better amenities ... Nothing at all wrong with that ambition.

But one's personal ambition vs abilities is based upon their personal means, right?

Just because I graduated a JuCo and live in a 1500 sq/ft house with 2 cars doesn't mean I should expect my employer to pay me enough to send 2 kids to Harvard, put them up in a 1750 sq/ft house each and both add an RV to their driveway does it?

I know that's a rather silly extrapolation, but the point I feel as though my ambition is mine. It's not incumbent upon some one else or something else to make that possible. It's up to me. If I can't, does that make me a failure?

What I meant was, all those things are more factors that apply wage increase pressure. That's the only point I was trying to make. Certainly was not a judgement.

To me, more people than ever feel like a life of luxury is attainable. The best cars, the best "stuff", and the best of everything for your kids. I am guilty of it.

The pressure to spend in our society is strong and can be difficult to resist. Much of one's status is viewed by the stuff you have. The car you drive, the phone you carry, and even the vehicle you tow to events with. (IMG:http://www.frrax.com/rrforum/style_emoticons/default/ph34r.gif)

[mitchntx]

What I meant was, all those things are more factors that apply wage increase pressure. That's the only point I was trying to make. Certainly was not a judgement.

To me, more people than ever feel like a life of luxury is attainable. The best cars, the best "stuff", and the best of everything for your kids. I am guilty of it.

The pressure to spend in our society is strong and can be difficult to resist. Much of one's status is viewed by the stuff you have. The car you drive, the phone you carry, and even the vehicle you tow to events with. (IMG:http://www.frrax.com/rrforum/style_emoticons/default/ph34r.gif)

Well said!

[pknowles]

What I meant was, all those things are more factors that apply wage increase pressure. That's the only point I was trying to make. Certainly was not a judgement.

To me, more people than ever feel like a life of luxury is attainable. The best cars, the best "stuff", and the best of everything for your kids. I am guilty of it.

The pressure to spend in our society is strong and can be difficult to resist. Much of one's status is viewed by the stuff you have. The car you drive, the phone you carry, and even the vehicle you tow to events with. (IMG:http://www.frrax.com/rrforum/style_emoticons/default/ph34r.gif)

For all the bad things about the economy, one good thing is a depression will teach us to think like our grandparents. My grandparents that lived through the Great Depression resewed buttons on shirts instead of just buying new, didn't through things away that still had use; they were frugal but not cheap and didn't play the keeping up with the Jones' game at all. If we gain even a little bit of that thinking we will be better off.

[cccbock]

What I meant was, all those things are more factors that apply wage increase pressure. That's the only point I was trying to make. Certainly was not a judgement.

To me, more people than ever feel like a life of luxury is attainable. The best cars, the best "stuff", and the best of everything for your kids. I am guilty of it.

The pressure to spend in our society is strong and can be difficult to resist. Much of one's status is viewed by the stuff you have. The car you drive, the phone you carry, and even the vehicle you tow to events with. (IMG:http://www.frrax.com/rrforum/style_emoticons/default/ph34r.gif)

Well said!

Since this seems to be veering slightly off topic....I had to just chuckle at this one.

I wonder what status judgements I engender from the Viper & Vette crowd when I pull up to an event with a 13 year old Fcar on an open trailer being towed by a Honda (of all things) talking on my 4 year old cell phone?

Wonder what they think when I beat most of them?

bock

[mitchntx]

Wonder what they think when I beat most of them?

bock

"Damn redneck" ... (IMG:http://www.frrax.com/rrforum/style_emoticons/default/blink.gif)

Phil ... you and I think a lot alike.

Don't get me wrong ... I like my "stuff", but there is a lot of it I could actually survive without.

[00 Trans Ram]

Hahaha - I get the same reaction. Pull up in the 1984 Chevy C20, with a Trans Am on an all-purpose utility trailer. Then go beat the Vipers and Vettes with 18-wheeler transports. Kinda fun.

As for the issue, I'm not an expert on any of this. In fact, I'm not even learned. If we talk about healthcare specifically, then I can speak with knowledge. But, I have no experience with unions, large manufacturing companies or government assistance of this scale. Therefore, I will reply only in general and to a select few points made above.

First, I don't understand the idea of pensions. I mean, I get what they are - I just don't get why anyone would want one! You are trusting your future finances to someone other than yourself? And, what's more, you're trusting it to a company which you probably gripe about dozens of times per day? Why would the average employee want a pension, which they can't control, versus a 401(k) or other retirement which they can control?

Second of all, no one is going to benefit by this. The workers making $30/hour will not benefit, the execs won't, and the labor bosses won't. everyone will hurt. A point was brought up about if the $30/hr worker were cut to $24/hour, how he would lose his house. That is probably true. But, is that the worse case scenario? If so, it's not that bad. After all, he's still making almost $50k per year. Yes, he may lose the house he is in now. But, he can buy a smaller one. He may have to keep that 2005 Tahoe a few years longer than he originally thought. But, he'll have a house and a car. Again, it's not what we all want, but it's certainly better than standing in a breadline.

As for the unions... I just don't see their place today. When they were formed, they served a very much needed purpose. Companies ran roughshod over their employees. People like the Rockefellers, Vanderbilts, etc. owned huge industries and if you wanted to work, you worked for them at whatever wages and under whatever conditions they told you to. But, the world has changed. America has labor laws now. Companies have to spend an average of 2-3x an employee's salary just to train a new person. That means there is natural incentive to make your employees happy. Heck, the company that I work for was just voted the 2nd Best Place to Work in this region - how many times did Rockefeller win that award back when he ruled the industrial world?

The unions have not defeated Big Business - they have replaced them. If a company refuses to give into a union demand, then the union will go on strike and shut down all production. How is that any different than way-back-when, when a company would fire its workforce because they refused to work 25 hours a day?

For once, I can proudly say that the South has gotten it right. We are attracting large industrial and manufacturing plants at an unprecedented rate, and have very little union presence. When Thyssen-Krupp looked to build one of the largest steel plants in the nation, they looked at LA and AL. Heck, Louisiana (who very recently held the distinction of have zero Fortune 500 companies in-state) makes an announcement almost quarterly about some huge plant of Fortune 500 company relocating here.

Sorry, I seem to have gotten off on a tangent. I don't lay this blame only on unions, and almost none of it on union workers (though they may have the toughest time reacting to the changes coming). GM et al are probably mostly to blame. At some point, they should have told the unions to go screw themselves. You want to strike at our Detroit facility? Fine, we're moving to Arizona. Everyone who wants to come down there feel free.

But, I also think that a lot of this is being made into too big of a deal. The economy is hurting, but this is no recession. During the Great Depression, unemployment was 25%. The official unemployment rate for November 2008 was 6.7%. This is the exact same rate as the European Union, and only .6% above that of China (who, supposedly is doing great)!

People see the stock market sliding. But, does 90% of the country even know what that means? I have yet to find a single person who, in normal conversation, can tell me exactly what the numbers (ie: 8663.61) of the Dow Jones Industrial Average mean! (FYI, it's the activity measured on just 30 companies' stock.) But, when they hear that it's gone down by 500 points, they all run to withdraw their money from banks!!

This economic downturn is a product of a moderate recession, that has been multiplied by consumer ignorance, media hype and investor incompetence (after all, they should know better than to get spooked by some of these numbers).

[trackbird]

First, I don't understand the idea of pensions. I mean, I get what they are - I just don't get why anyone would want one! You are trusting your future finances to someone other than yourself? And, what's more, you're trusting it to a company which you probably gripe about dozens of times per day? Why would the average employee want a pension, which they can't control, versus a 401(k) or other retirement which they can control?

It's not "instead of" in most cases, it's "both". I get a pension at my current job (if I stay that long) and we have a 401k program with company match. When I retire, I can get paid "monthly" or in a "lump sum" to invest and live off of, as well as whatever I stick in my 401k.

And that's why someone would want one... (IMG:http://www.frrax.com/rrforum/style_emoticons/default/2thumbs.gif)

[StanIROCZ]

People see the stock market sliding. But, does 90% of the country even know what that means?

If you have a 401k and you've checked your account balances at least once in the past year, you know what that means.

[TSHACK]

People see the stock market sliding. But, does 90% of the country even know what that means?

If you have a 401k and you've checked your account balances at least once in the past year, you know what that means.

I have over a grand drop this year

[T.O.Dillinder]

Why would the average employee want a pension, which they can't control, versus a 401(k) or other retirement which they can control?

Pensions are a benefit given to an employee for length of service.
Length of service and the amount of a Pension is determined by the Company, unless it is a Unionized shop. In which case, the Union and the Company bargin primarily the amount of the pension.

20 years in the Military, 30 years for a Manufacturing employee are a couple of examples for length of service amounts.

Do you really have control of a 401K?
Correct me if I am wrong, but it is my understanding that a 401(K) is a type of Mutual Fund with those monies being used in the investments in the Stock Market.

A Salaried employee may have a Pension, and the value of the pension stated in his/her contract.

I am just going to say it is the fault of the Federal Reserve, Corporate Magistrates, and Politicians. In other words "THE MAN". (IMG:http://www.frrax.com/rrforum/style_emoticons/default/nutkick.gif)

[BigEnos]

People see the stock market sliding. But, does 90% of the country even know what that means?

If you have a 401k and you've checked your account balances at least once in the past year, you know what that means.

I have over a grand drop this year

Like a grand meaning $1,000.00?

[TSHACK]

People see the stock market sliding. But, does 90% of the country even know what that means?

If you have a 401k and you've checked your account balances at least once in the past year, you know what that means.

I have over a grand drop this year

Like a grand meaning $1,000.00?

yup (IMG:http://www.frrax.com/rrforum/style_emoticons/default/nutkick.gif) but it's come back up some (IMG:http://www.frrax.com/rrforum/style_emoticons/default/drink.gif)

[BigEnos]

People see the stock market sliding. But, does 90% of the country even know what that means?

If you have a 401k and you've checked your account balances at least once in the past year, you know what that means.

I have over a grand drop this year

Like a grand meaning $1,000.00?

yup (IMG:http://www.frrax.com/rrforum/style_emoticons/default/nutkick.gif) but it's come back up some (IMG:http://www.frrax.com/rrforum/style_emoticons/default/drink.gif)

I guess it's all relative to the starting balance. (IMG:http://www.frrax.com/rrforum/style_emoticons/default/drink.gif)

[mitchntx]

The drop in my 401K has several zeros and a comma. (IMG:http://www.frrax.com/rrforum/style_emoticons/default/sad.gif)

But my pension is based upon my years of service, age at the time of retirement and ending salary and not the market ... thank God!

[pknowles]

Why would the average employee want a pension, which they can't control, versus a 401(k) or other retirement which they can control?

Do you really have control of a 401K?
Correct me if I am wrong, but it is my understanding that a 401(K) is a type of Mutual Fund with those monies being used in the investments in the Stock Market.

The amount of control you have over your 401K depends on who you have it with. Most 401K's give you packages or general areas to invest in, but the individual stocks are determined by the handler. Some if not most 401K's give you the option to buy bonds instead of investing in the market. On average over years of time, the market out performs bonds by almost 2X, but bonds don't go down in amount (this is different than value because value is based on the strength of the dollar). There have been people speaking out wanting their 401K to be more like an e-trade account, where they can choose exactly what they invest in. I'm not sure if this exists yet, but I can see this being an option in the future for people that really follow the market. This allows the 401K handler to rake in the trading fees because you are locked into using them. Since 401K handlers are investment firms anyway this seems like a natural progression.

You get a pension and a 401K. I interviewed with ExxonMobil last year and they had the best pension and 401K matching program I've ever seen. They told me straight up that their focus was to retain experienced workers because their industry is so specialized, they can't buy experience in the oil industry where one small mistake costs millions of dollars.

[mitchntx]

Let me add ...

I've seen several on other boards that want total control of their 401Ks, as Phil said. And along with that, they say that if you aren't market savy, too bad, so sad.

I find that kind of mentality very short-sighted and arrogant. If a percentage of folks gamble away their savings playing the market (and it is, in reality, legalized gambling) then that percentage of folks will become wards of the government in some form or fashion.

[00 Trans Ram]

FYI, my 401k has gone up over the past few months. But, that's only because I moved things around a year ago. Put a lot into money markets.It's in no one's best interest to have people lose their savings, even if it's their own fault.That said, now I see why GM et al are going under. They pay pensions, 401k, healthcare, andhigher wages? Sounds like I should have fed at that trough before the food ran out! But, that's unsustainable.The only time a company should do all those things is if their competition is doing it - if it's the only way to entice employees. But, the competition is NOT doing it.

[trackbird]

The only time a company should do all those things is if their competition is doing it - if it's the only way to entice employees. But, the competition is NOT doing it.

The competition was doing it, it was called Ford and Chrysler. At least the competition was doing it at the time it started being done. And, good luck getting anyone to accept "going backwards". Meaning, you generally expect to get a raise every year (or at least stay even with the cost of living). Nobody is going to accept "we're not doing that anymore". Once something becomes "the way it's always been done", it's the way everyone will expect it to be done. Nobody expects to take a job that pays you less every year to where in 30 years you can't maintain the standard of living you had when you started (as a new employee with no experience). So, once you go down that road, you are going to keep driving. There isn't a good place to turn around, so nobody did.

The foreign automakers moved here and went to some of the less affluent states (without pulling the numbers) where people were just happy to have work. So, they took jobs for less money than the Detroit guys. But there was no existing precident. You are hiring and you pay how much? Well, ok, I need work so I'll take it. That's how the foreign automakers got away with cheaper labor. If they had opened a plant in Detroit, they'd probably have had a hard time getting enough people to fill their labor needs (You want me to work for what???), but I could be wrong.

[C3SS]

And, good luck getting anyone to accept "going backwards". Meaning, you generally expect to get a raise every year (or at least stay even with the cost of living). Nobody is going to accept "we're not doing that anymore". Once something becomes "the way it's always been done", it's the way everyone will expect it to be done. Nobody expects to take a job that pays you less every year to where in 30 years you can't maintain the standard of living you had when you started (as a new employee with no experience). So, once you go down that road, you are going to keep driving. There isn't a good place to turn around, so nobody did.

Kevin - I know you're not advocating the quoted attitudes, just expressing the hurdles the Big 3 face. None of the below is aimed at you (or anyone) personally!

That said...

The pay at airlines went "backwards" back in 2001-3 at every level - flight crew, maintenance, and management. Some voluntarily, some through bankruptcy. So did software consultants from 1999-2002. Sometimes the market changes and jobs don't pay what they used to, and we're fortunate enough that we live in a country with a free market that allows us to change our individual courses if we so desire. As someone who works to earn money it is MY responsibility to be worth more to an organization (maybe not even the same one) year after year, not theirs to pay me more just because I've managed to hang around on payroll for another 365 days. It seems the US automakers are paying well over market value for their labor (when compared to competitors) and that needs to be fixed.

If they had opened a plant in Detroit, they'd probably have had a hard time getting enough people to fill their labor needs (You want me to work for what???), but I could be wrong

The only difference is the lesser paid workers will still have jobs. Ironically, in the long run they'll be paid more.

This post has been edited by C3SS: Dec 17 2008, 04:53 PM

[StanIROCZ]

And, good luck getting anyone to accept "going backwards". Meaning, you generally expect to get a raise every year (or at least stay even with the cost of living). Nobody is going to accept "we're not doing that anymore". Once something becomes "the way it's always been done", it's the way everyone will expect it to be done. Nobody expects to take a job that pays you less every year to where in 30 years you can't maintain the standard of living you had when you started (as a new employee with no experience). So, once you go down that road, you are going to keep driving. There isn't a good place to turn around, so nobody did.

Kevin - I know you're not advocating the quoted attitudes, just expressing the hurdles the Big 3 face. None of the below is aimed at you (or anyone) personally!

That said...

The pay at airlines went "backwards" back in 2001-3 at every level - flight crew, maintenance, and management. Some voluntarily, some through bankruptcy. So did software consultants from 1999-2002. Sometimes the market changes and jobs don't pay what they used to, and we're fortunate enough that we live in a country with a free market that allows us to change our individual courses if we so desire. As someone who works to earn money it is MY responsibility to be worth more to an organization (maybe not even the same one) year after year, not theirs to pay me more just because I've managed to hang around on payroll for another 365 days. It seems the US automakers are paying well over market value for their labor (when compared to competitors) and that needs to be fixed.

If they had opened a plant in Detroit, they'd probably have had a hard time getting enough people to fill their labor needs (You want me to work for what???), but I could be wrong

The only difference is the lesser paid workers will still have jobs. Ironically, in the long run they'll be paid more.

I 100% agree with what you said Cody.

To state this in another way, you are worth as much as someone is willing to pay for you. Just like your house, a used car, a share of a particular stock, baseball cards etc. I'm an engineer and if someone comes up with a machine that can do my job faster/better/cheaper than I can more than likely I will have to take a pay cut, get in the business of making that machine, or find a new profession.

What scares me is all the engineering and design that is being outsourced to India. I better pay off my debt fast.

[trackbird]

From my local news:

http://www.10tv.com/live/content/business/...da.html?sid=102

Honda Cuts Top Salaries, Slashes Profit Forecast
Wednesday, December 17, 2008 3:04 AM



TOKYO — Japanese automaker Honda slashed its profit forecast for the fiscal year Wednesday and announced that managers will take a 10 percent pay cut amid a global downturn in the auto industry.
President Takeo Fukui blamed the revisions on declining demand set off by the U.S. financial crisis and the nose-diving dollar, which has recently fallen to 13-year lows against the yen.

Japan's second-biggest automaker now expects 185 billion yen ($2.06 billion) in group net profit for the fiscal year ending March 31, 2009. That's less than a third of the 600 billion yen it earned last fiscal year.

Tokyo-based Honda has already twice revised its forecast, the latest in October when it said it expected 485 billion yen in profit.

"Every day, the hardships we face are getting worse and worse. And there are no signs of recovery," Fukui said at a news conference that was hastily moved up two days from the initial schedule.

Fukui said the automaker will focus on green technology, especially hybrids and small cars, to ride out the difficult times and prepare for recovery in the long run.

Until recent months, Honda had avoided the woes of its cash-strapped U.S. rivals, General Motors Corp., Ford Motor Co. and Chrysler LLC, which are asking for a government bailout.

Like other Japanese manufacturers, Honda makes models such as the Civic and Accord, which have a reputation for fuel-efficiency. Such products had been relatively popular amid surging gas prices.

But the recent drop in auto sales is proving too much for even Honda. In November, when U.S. auto sales plunged 37 percent to their worst level in more than 26 years, and Honda's vehicle sales sank 32 percent from the same month a year ago.

[00 Trans Ram]

Looks like everyone is getting hit. I hear that the Euro car makers are asking for many of the same thing that the American ones are (bailout, loans, etc.). Now Honda is being hit.

I think the car companies (not just American ones, either) are going to have to make some changes. Stop paying pensions. Cut the fat on administration. Make a flatter corporate structure to enhance efficiencies. Cross-train employees so that they can perform more than one job function. Automate. Pull salaries back in line.

Then comes the hard parts - make a car that people want to buy and price it cheaper than the next guy. This isn't the 50's. I don't think Americans (or any other nationality) is going to pay more for a "X" brand car just because of where it's made.

Besides, who knows where cars are made? My Trans Am was assembled in Canada, with a gazillion Mexican parts. But, it's an American car. My G8GT is made in Australia, with who-knows-where parts. But it's an American car. Whereas my neighbor's Toyota is made in America, with who-knows-where parts, but it's foreign?

Back in 2000, you were in for a world of hurt if you were in the tech industry. Today, you're going to be in a world of hurt if you're in the automotive industry. It's not nice, but I think that's where we're going.

Don't worry - I'm not immune, either. I'm in healthcare. Not that people are going to stop getting healthcare, but I think the landscape and the direction healthcare is going is going to make it a very NOT FUN place to work in a few years.

For my part, I'm doing what I can to help - I bought a new Saturn in 2006, and a new G8 and Honda Pilot in 2008. I think my new-car-buying days are over for a while, but I tried!

[94bird]

Considering I work at GM doing engine calibration I suppose my opinion on this whole mess could be considered biased. Given I go to work every day and we all talk about the possible scenarios we could be facing in coming weeks, I'm a little burned out on discussing the issue.

However, the biggest point I see that just flabbergasts me is how GM is not initiating any kind of positive PR campaign. The misconceptions so many people have about the domestic car industry and how it's stuck in the past, and all we make are trucks/SUVs, etc. are just mind boggling to me. The information is out there, but most of the public has to be fed this info. They won't go out and find it themselves. None of the Detroit 3 are doing much positive PR to the public right now. I'm sure they're doing it in Washington, but that method obviously isn't working.

I also want to point one thing about this argument that a Toyota that is made here is just as American as a GM car that is made in the US. That is simply not true, not even close. Where the car is made, is only a very small part of the picture. Of course, I'm an engineer, so my opinion may be biased here too, but Japanese cars are almost exclusively designed in Japan. There are engineering centers here in the US, yes, but they are just minions to Japan. Toyota has an engineering center in Ann Arbor, a suburb of Detroit, but the powertrain engineers are basically a liason to US based suppliers. They do not engineer the parts. Most of the engineering done in Ann Arbor is for vehicle crash safety, dynamics, and some vehicle calibration, centered on having emissions testing support for EPA testing. So, when you talk about Toyota cars being just as American because they are made here, remember, the jobs that Toyota has here in the US are decidedly low in tech and on the totem pole vs. what the domestic auto companies have here. As foreign auto companies gain ground here, those higher tech jobs are being lost. Do we really want to replace engineering jobs with manufacturing jobs? Is that a net gain for our country?

[mitchntx]

I also want to point one thing about this argument that a Toyota that is made here is just as American as a GM car that is made in the US. That is simply not true, not even close. Where the car is made, is only a very small part of the picture. Of course, I'm an engineer, so my opinion may be biased here too, but Japanese cars are almost exclusively designed in Japan. There are engineering centers here in the US, yes, but they are just minions to Japan. Toyota has an engineering center in Ann Arbor, a suburb of Detroit, but the powertrain engineers are basically a liason to US based suppliers. They do not engineer the parts. Most of the engineering done in Ann Arbor is for vehicle crash safety, dynamics, and some vehicle calibration, centered on having emissions testing support for EPA testing. So, when you talk about Toyota cars being just as American because they are made here, remember, the jobs that Toyota has here in the US are decidedly low in tech and on the totem pole vs. what the domestic auto companies have here. As foreign auto companies gain ground here, those higher tech jobs are being lost. Do we really want to replace engineering jobs with manufacturing jobs? Is that a net gain for our country?

I'm the one that brought it up and I went back and looked to make sure I didn't say that the American assembled Toyata was just as American as your GM. I didn't say that and would never assume that.

I did say ...

The vast majority of cars sold in the US are actually assembled here by US workers. And if discussing profits, publicly traded companies means that everyone, US citizen or not, can get a piece of that pie. But, bottom line, if Toyota wants to continue to employe 50,000 US citizens at it's San Antonio assembly plant, then that is 50,000 people bringing home a pay check.

Yes, the high tech jobs are going elsewhere and have been for years in multiple industries and disciplines. There can be only 2 reasons for it. Better talent or lower costs.

Toyotas are assembled here because of lower costs.

It's a tough nut to swallow, but I believe the myth that we Americans are over-paid when compared to a global work force is becoming a reality. And these econmic times are the fall out from that.

[94bird]

Mitch, I was referring to this:

Besides, who knows where cars are made? My Trans Am was assembled in Canada, with a gazillion Mexican parts. But, it's an American car. My G8GT is made in Australia, with who-knows-where parts. But it's an American car. Whereas my neighbor's Toyota is made in America, with who-knows-where parts, but it's foreign?

It's not just that comment though. I see or hear this almost every day, and just wanted to put my opinion out there.

Regarding high tech jobs going overseas, yes, that's true, but manufacturing jobs usually lead the way. It's the low tech jobs that generally go first and are less valued because of the pay scale and resulting standard of living. Think, textile manufacturing. Once we start losing most of our higher paying jobs, we're in a lot more trouble.

[mitchntx]

OIC ... I can see both sides ... ALL cars are now homoginized to a large degree.

I think we can all agree, though, that we all began down this slippery slope decades ago, are feeling the bubble burst today and are realizing there is no short term fix.

[00 Trans Ram]

94bird - You're right, it sounds like I was saying that. Not what I meant, though. I meant that it's getting tougher to distinguish. But, you're right in that a Japanese car still has most of its profits going overseas.Also, I think you are SPOT ON with talking about the Big 3 not doing enough PR. I have a responsibility to learn if I want to express an opinion. But, if they want me to agree with them, then they should make that info easy to find. Otherwise, I'm likely to find info that runs counter to their position and base my position on that.That said, if anyone knows of a way to save the companies, lessen union power, but preserve what workers now have, then I'm all for it! Perhaps say that current workers keep what they have been promised, but all new employees will have whatever it takes to make this work (lower wages, no pension, etc.)???

[trackbird]

CASHOLA!!!!!

http://www.cnn.com/2008/POLITICS/12/19/aut...lout/index.html

(Bolding by me)

Feds to lend $13.4 billion to automakersStory Highlights
Automakers must show financial viability by end of March

Loans will be recalled if automakers do not meet viability standard

Loans come from $700 billion Troubled Asset Relief Program




WASHINGTON (CNN) -- The federal government will provide $13.4 billion in loans to Detroit automakers, the White House said Friday.


President Bush said Friday morning automakers must show they can be profitable businesses by March 31.

"Allowing the U.S. auto industry to collapse is not a responsible course of action," President Bush said Friday morning.

"The terms and conditions of the financing provided by the Treasury Department will facilitate restructuring of our domestic auto industry, prevent disorderly bankruptcies during a time of economic difficulty, and protect the taxpayer by ensuring that only financially viable firms receive financing," according to a statement released by the White House.

An additional $4 billion may be available in February, the Bush administration said.

The loans are designed to stabilize U.S. automakers through March 2009, at which time the automakers must show they are financially viable.

"If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury," the statement says.

Financing will be drawn from the $700 billion Troubled Asset Relief Program, it says.

The president said Friday the plan will give the automakers a chance to show they can be viable outside a "disorderly bankruptcy" which he said would drive American into a deeper depression with effects "far beyond the auto industry."

The government will put other conditions on the loans, Bush said Friday, including making pay competitive with foreign automakers with large U.S. operations such as Toyota and Honda. Employees of foreign automakers generally make less than those in U.S.-owned plants.

The plan also puts limits on executive compensation and perks such as corporate jets, requires the automakers to adhere to fuel efficiency and emission standards and open books to government scrutiny.

Chrysler Chairman and CEO Bob Nardelli thanked the administration for the loan.

"A letter of intent was signed which outlines the specific requirements that must be achieved," Nardelli said in a statement. "These requirements will require consideration from all constituents, requiring commitment first in principal, leading to implementation this coming year. Chrysler is committed to meeting these requirements."

[00 Trans Ram]

interesing.I don't know - but is it realistic to expect a 180 turnaround in less than 4 months?

[trackbird]

interesing.I don't know - but is it realistic to expect a 180 turnaround in less than 4 months?

Not in my opinion, but the bankers are walking around with "lots" of govt. money and little oversight and the Big 3 are going to get beat to death over "some" money.

The investment bankers ran up the price of oil/fuel which killed demand for trucks and SUV's (which are quite profitable). Then the banking industry locked up the credit market by giving bad home loans to everyone on the planet and seeing record defaults. This has made it nearly impossible to purchase a new car, thus severely hurting the domestic auto manufacturers. However, the manufacturers are getting "oversight" and have to perform while the banking industry seems to be mostly unregulated with regard to what they do with the funds they have received.

I still say the banking meltdown caused the domestic auto manufacturers to wind up where they are currently. And everyone is picking on the wrong group...

[CrashTestDummy]

I still say the banking meltdown caused the domestic auto manufacturers to wind up where they are currently. And everyone is picking on the wrong group...

Yeah, but the coyotes look after their own kind....

[marka]

Howdy,

The investment bankers ran up the price of oil/fuel which killed demand for trucks and SUV's (which are quite profitable). Then the banking industry locked up the credit market by giving bad home loans to everyone on the planet and seeing record defaults. This has made it nearly impossible to purchase a new car, thus severely hurting the domestic auto manufacturers. However, the manufacturers are getting "oversight" and have to perform while the banking industry seems to be mostly unregulated with regard to what they do with the funds they have received.

I still say the banking meltdown caused the domestic auto manufacturers to wind up where they are currently. And everyone is picking on the wrong group...

This picture says it pretty well:

http://www.flickr.com/photos/stoller/2907411559/

Mark

[marka]

Howdy,

Having said that... I'd rather have seen GM/Chyrsler go though a "managed" chapter 11 with the government stepping in as a creditor as needed, plus incentives for folks to buy a domestic car, plus some program / "money vault" to ensure service for ten years.

I think expecting everyone involved to sit down and agree that they should hurt themselves for GM to succeed is completely insane. Gettelfinger in particular doesn't strike me as someone that will bend at all.

GM has other problems and its 100% true that its not all just about the UAW... But the UAW isn't helping. If the workers aren't being stepped on, the UAW is just making things cost more, unless all the union employees that work only on union business and the union lobbyists are doing it for free (and they sure as hell aren't). Chapter 11 would let them ditch that anchor, hopefully along with another few.

Couple that with some new direction (which they're already starting to do, but need to do more of... No minivan? Really?) and I think GM can be as good as any other car company.

But I think Chapter 11 is the only way they'll politically be able to shed the deadweight.

Mark

[94bird]

I think the simple answer is many things have conspired to put the Detroit 3 into dire straits. The final straw was the credit crisis when GM's cash was very low because they were giving huge sums of money to Delphi, buying out workers to bring in lower paying workers, etc. It may not be common knowledge, but most UAW workers who had good seniority, and who took buyouts in the past 2-3 years got close to $100K each to take "early retirement". Multiply that by 25,000 workers or more per year, and you can see that billions of cash has been going each year to lessen their labor costs in the long run. I don't think the credit crisis is hitting the Detroit 3 any harder than the transplants, but the big difference is how little cash GM and Chrysler have on hand to deal with 6-12 months of very low sales. Ford is very lucky since it got a good LOC in '06 IIRC, for about 28 billion dollars. They couldn't get that deal this year and were lucky they hadn't tapped into it too much until now.

But, I'll be the first to say too many times GM's thinking has been too short sighted. The company is many times too quick to think about whether a project will pay off in the short term and not about whether it will strengthen their portfolio if the market changes. It does amaze me, since everyone knows if you don't have a broad enough portfolio, and the market wants a car you don't have, you're likely 3-4 years away from having it in the market. You just can't afford short term thinking in conditions like that.

[94bird]

But I think Chapter 11 is the only way they'll politically be able to shed the deadweight.

Whether or not it's formally called Chapter 11 or not, GM and Chrysler are functionally in bankruptcy right now, with DIP financing from the government. A real Chapter 11, where you go to court to get your plan approved before you can come back out of it, is what Delphi has been in for about 4 years now. They still don't have an approved plan to exit Chapter 11. GM's been bankrolling Delphi's buyout packages for UAW workers, etc. for the duration of Delphi's bankruptcy, and it's seemed like a money pit. There are just so many stakeholders and road blocks to getting everyone to agree to a final company structure and debt settlement it becomes nearly impossible.

Multiply that by at least ten fold, and you're somewhere in the ballpark of how difficult it would be for an OE automaker Chapter 11 to work. Compound this by the fact that if Delphi is in bankruptcy, OEs will still order parts from them. albeit with purchasing terms designed to protect the OE if the supplier moves to Chapter 7. If an OE goes into bankruptcy, customers won't buy from them. End of story.

The current path has a shot at working, but there has to be a big stick in the negotiations that scares everyone enough to think that negotiating is better than just fighting for a spot in a Chapter 7 liquidation. I haven't seen that big stick yet.

[marka]

Howdy,

If an OE goes into bankruptcy, customers won't buy from them. End of story.

Bull. If anything has been proven, its that the American consumer buys the cheaper product, all else equal and often all else NOT equal. One of the saddest thing about this whole mess is that the OEMs have managed to convince folks of this particular fallacy.

With tax credits for purchasing a new domestic vehicle, help with credit for a domestic purchase, and some handwaving about "we guarantee service/parts" by the government, people would buy the cars, perhaps more so than in the past.

The current path has a shot at working, but there has to be a big stick in the negotiations that scares everyone enough to think that negotiating is better than just fighting for a spot in a Chapter 7 liquidation. I haven't seen that big stick yet.

There's no stick anymore. The government has proven to them that they'll bail them out and there's no reason to expect folks (Gettelfinger in particular) to think it won't keep happening. Couple that with the reorg process being more political than it would have been under chapter 11 (since by definition it'll be a new process) and I think there's less chance it'll work.

Certainly there's a shot it'll work, and I'd hope some of the people in charge have learned some lessons, but I think the chances are fairly remote. These fuckers have been getting away with (hell, rewarded!) dumbass decisions for so long they don't know how to make smart ones. And no, that's not specific to GM and its various stakeholders.

As an example, Madoff ought to be executed, but I bet he ends up with a better life than any normal person could hope to expect.

Mark

This post has been edited by marka: Dec 21 2008, 06:07 PM

[00 Trans Ram]

Bring a little levity to the situation:


(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree1.jpg)

(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree2.jpg)

(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree3.jpg)

THE RIGHT WAY
(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree4.jpg)

THE WRONG WAY
(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree5.jpg)

[killer_bluebird]

I'm surprise no one has said anything about the though that GM, Ford and Chrysler have also put their products in peril by diluting their brands. (if I missed a post mentioning this feel free to ignore my ramblings) I mean does GM needs to sell cars under the GMC, Cadillac, Chevrolet, Pontiac, Hummer, Buick, Saturn and SAAB Brands, especially when a lot of the cars are the same they just have different styling or options. I do understand that there is a sense of history attached to the names but I think they should consolidate brands. Why do I have to choose between a Saturn Outlook, Chevrolet Equinox, Buick Enclave, GMC Acadia, and Cadillac SRX. It is not enough that a Brand has to compete with the other car companies offerings but do they really need to compete with other brands withing their own company? I mean if you offered only the Solstice and not the Sky you would be reducing costs by reducing having to tool, manufacture and stock parts for each of the 2 brands (personally I like the sky better but you get the idea). I mean when you look at Honda they have 2 brands Honda (economy, sporty and Mid-Scale) and Acura for (Upscale Luxury and sporty luxury) then you have Toyota/Lexus similarly. GM could be Saturn (economy), Chevrolet (Mid-scale and performance) and Cadillac (Luxury and Sporty Luxury). Ford maybe would look like Ford Brand (Economy, Mid-scale and performance), Lincoln (Upscale Luxury), Jaguar (Upscale Performance). I don't know but I think doing this makes a lot of sense as they can market their products better, increase quality (less money dedicated on variations for the different brands and spent increasing quality, fit and finish), and better use of manufacturing facilities by reducing the complexity of building different brands of vehicles based on the same underlying platform. That coupled with new labor agreements can move this companies into profitability in my opinion.


Edit by trackbird: Acura is Honda's upscale line (not Mazdas).

This post has been edited by trackbird: Dec 23 2008, 01:03 PM

[pknowles]

I'm surprise no one has said anything about the though that GM, Ford and Chrysler have also put their products in peril by diluting their brands. (if I missed a post mentioning this feel free to ignore my ramblings) I mean does GM needs to sell cars under the GMC, Cadillac, Chevrolet, Pontiac, Hummer, Buick, Saturn and SAAB Brands, especially when a lot of the cars are the same they just have different styling or options. I do understand that there is a sense of history attached to the names but I think they should consolidate brands. Why do I have to choose between a Saturn Outlook, Chevrolet Equinox, Buick Enclave, GMC Acadia, and Cadillac SRX. It is not enough that a Brand has to compete with the other car companies offerings but do they really need to compete with other brands withing their own company? I mean if you offered only the Solstice and not the Sky you would be reducing costs by reducing having to tool, manufacture and stock parts for each of the 2 brands (personally I like the sky better but you get the idea). I mean when you look at Mazda they have 2 brands Mazda (economy, sporty and Mid-Scale) and Acura for (Upscale Luxury and sporty luxury) then you have Toyota/Lexus similarly. GM could be Saturn (economy), Chevrolet (Mid-scale and performance) and Cadillac (Luxury and Sporty Luxury). Ford maybe would look like Ford Brand (Economy, Mid-scale and performance), Lincoln (Upscale Luxury), Jaguar (Upscale Performance). I don't know but I think doing this makes a lot of sense as they can market their products better, increase quality (less money dedicated on variations for the different brands and spent increasing quality, fit and finish), and better use of manufacturing facilities by reducing the complexity of building different brands of vehicles based on the same underlying platform. That coupled with new labor agreements can move this companies into profitability in my opinion.

GM and Ford do have a lot of brands. However, most Americans that are not into cars don't understand that a Lexus ES300 is basically a Camry with leather. My wife didn't understand until we saw a Camry and an ES300 parked next too each other at the mall. She looked at the interiors and said "It's a Camry with leather and color accents".

[BigEnos]

I'm surprise no one has said anything about the though that GM, Ford and Chrysler have also put their products in peril by diluting their brands. (if I missed a post mentioning this feel free to ignore my ramblings) I mean does GM needs to sell cars under the GMC, Cadillac, Chevrolet, Pontiac, Hummer, Buick, Saturn and SAAB Brands, especially when a lot of the cars are the same they just have different styling or options. I do understand that there is a sense of history attached to the names but I think they should consolidate brands. Why do I have to choose between a Saturn Outlook, Chevrolet Equinox, Buick Enclave, GMC Acadia, and Cadillac SRX. It is not enough that a Brand has to compete with the other car companies offerings but do they really need to compete with other brands withing their own company? I mean if you offered only the Solstice and not the Sky you would be reducing costs by reducing having to tool, manufacture and stock parts for each of the 2 brands (personally I like the sky better but you get the idea). I mean when you look at Honda they have 2 brands Honda (economy, sporty and Mid-Scale) and Acura for (Upscale Luxury and sporty luxury) then you have Toyota/Lexus similarly. GM could be Saturn (economy), Chevrolet (Mid-scale and performance) and Cadillac (Luxury and Sporty Luxury). Ford maybe would look like Ford Brand (Economy, Mid-scale and performance), Lincoln (Upscale Luxury), Jaguar (Upscale Performance). I don't know but I think doing this makes a lot of sense as they can market their products better, increase quality (less money dedicated on variations for the different brands and spent increasing quality, fit and finish), and better use of manufacturing facilities by reducing the complexity of building different brands of vehicles based on the same underlying platform. That coupled with new labor agreements can move this companies into profitability in my opinion.


Edit by trackbird: Acura is Honda's upscale line (not Mazdas).

At one time, GM had like 40-50% of the US market and they used all of those brands to cover the demographic. Obviously that's not a reality now that they are in the low 20% range of the US market. GM needs to cut models, dealers, and plants to be profitable. The unions make it tough to cut production capacity, and every division wants its piece of the pie, and who wants to close down a dealership?

One of the main problems with GM having so many different models and divisions is marketing. It's difficult to properly launch 4 different models when, like you said, they are essentially the same vehicle. Most people don't even know what a current Saturn looks like, which is a shame because I think they are some of the best looking cars GM is making now.

[94bird]

Regarding GM cutting brands, they've already said they want to sell Hummer and Saab, and are studying whether they want to sell or shut down Saturn. Pontiac will become a niche brand. That will leave them with Chevy, Buick, GMC, Pontiac and Cadillac. They've also announced they will reduce their dealerships by about 2000 (approx. 33%). This goes a long way, but GM has said for a long time now, their main brands to focus on are Chevy and Cadillac. That begs the question why they're not proposing to cut more brands. For what I've read, the main reason is, Buick, GMC, Pontiac are traditionally under one dealership. This gives a dealership a reasonably full line of products to sell, no matter what the market trends are. If GMC was disbanded, for example, this dealership would have no trucks or SUVs to sell. GM wants to keep Buick, as this is a very strong selling brand in China and older people here also gravitate toward's a Buick design features. Buick has also topped the quality charts with JD Power for a few years now.

So, a BGP dealership would have some family cars and a crossover with Buick. They would potentially have cars like a G8 and Solstice with Pontiac. They would also have SUVs and trucks through GMC. That's a viable dealership, albeit missing a fuel sipping car, like an Aveo, Cruze or Astra. That could easily be rectified through the Pontiac brand.

Chevy is already a full line dealership and Cadillac is doing quite well, so not much change is needed there.

I understand the logic stated above, but I think it's short sighted thinking again. It will be hard to just drop down to Chevy and Cadillac, but I think it needs to be done. Saturn has failed as a brand, but some of their products like the Astra should be folded into Chevy I think. GMC just is not needed. Chevy trucks and SUVs basically duplicate their whole product line. Buick is the only brand with a good following in the BGP group that would be hard to get rid of, but I would still do it.

[94bird]

Howdy,

If an OE goes into bankruptcy, customers won't buy from them. End of story.

Bull. If anything has been proven, its that the American consumer buys the cheaper product, all else equal and often all else NOT equal. One of the saddest thing about this whole mess is that the OEMs have managed to convince folks of this particular fallacy.

With tax credits for purchasing a new domestic vehicle, help with credit for a domestic purchase, and some handwaving about "we guarantee service/parts" by the government, people would buy the cars, perhaps more so than in the past.

Mark

Ah, but Mark, when I said bankruptcy, I meant a true Chapter 11. This would have no safety net by the government. As soon as you add the safety nets you mentioned it's not Chapter 11 anymore. As it is, the OEs are already functionally in a government backed Chapter 11. There is really very little distinction. The Treasury gives the DIP financing because the private sector never would in today's financial environment and the Presidential appointed overseer is the bankruptcy judge. A huge reorganization is still going to happen, just like in Chapter 11. It just means that a bankruptcy court won't be involved.

Show me a survey of the American people that says anywhere near a majority of them would buy from an OE in Chapter 11. The surveys I've seen, and I'm not including any done by the automotive industry, say otherwise.

[00 Trans Ram]

A little info on the Buick, GMC, Pontiac dealership position.

When I bought my G8 earlier this year, I thought that Pontiac was a HORRIBLE match for a Buick-GMC dealership. Pontiac is trying to sell cars to a younger generation. But, every dealership I went to was filled with the all the ambience of a mortuary. They'd have a couple of $20k Buicks on the floor, plus a couple of GMC trucks. Then, some lone G8 would be off to the side.

No wonder I don't see more G8s on the road. This, despite the fact that my friends (owners of an Audi RS4, Audi S4, BMW 550i, BMW 328i, and BMW 750i) all said that they thought the G8 looked just as good as any of their cars, admitted that it outperformed all but the RS4, and cost less than every one of them.

GM not only has financial problems, they have image problems. Even when they innovate something new (like the Volt), people assume that they are following someone else's lead.

[T.O.Dillinder]

Bring a little levity to the situation:


(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree1.jpg)

(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree2.jpg)

(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree3.jpg)

THE RIGHT WAY
(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree4.jpg)

THE WRONG WAY
(IMG:http://i119.photobucket.com/albums/o145/mpatterson1410/Bigthree5.jpg)

Did you know that when GM had the last round of plant closings, if the TOP THREE EXECS would donate their salary for one year, they could have kept all those plants going for another three.
Quit bashing Union Labor with Full Assembly line Pay at $ 30.00 ($ 62,000 per year salary) Per hour, and target the real Greed Problem. The Presidents and CEO's of Large Corporations, Banks, and even the National Executive Committee of the UAW.
Who the Hell needs a 8 to 10 figure salary a year with such an outragous "Golden Parachute"?
It seems some of you may have never worked at the ground level before.
Try it sometime and see if you can raise a family of five on $ 11.50 an hour.
Even my late cousin Gerald Knight (Fuel System Engineer for Cadillac that retired in the 80's) said that the "Newbs" probably never changed a spark plug in their life the way they were designing the vehicles.

[94bird]

Todd, I realize this can become a very emotional issue, especially when you have relatives who are factory workers, UAW, or the like. However, plant closings haven't been solely to lessen their labor costs. Plants closings have been frequent the past few years because the OEs need to shrink their capacity.

Also, I think you'll find the CEOs of the Big 3 don't have golden parachutes in their contracts. Other industries do, but I have heard nothing of this in the auto industry. Richard Wagoner testified as such in the grillings by Congress earlier this month. Granted, he did make $16 million last year. That may seem like an exhorbitant sum, but compare that with the CEOs of companies like Goldman Sachs and AIG and it's a paltry sum.

There are still issues with UAW contracts which hurt the competitiveness of the Big 3, but the gap became much less last year with the new UAW contract. Things like the jobs bank and VEBA funding are an issue, but they are being dealt with now, under Bush's terms for the bridge loan.

What are still left are:

1. Legacy costs for having approx. 1 million retirees with their pensions and healthcare. That's a much tougher issue to solve, since none of the transplants have such a "handicap".
2. Overall debt - last I heard GM owes about 66 billion dollars. My understanding is they have to reduce that by 2/3 by getting debtholders to accept equity and other bargaining chips for their debt.
3. Reducing dealerships by 33%. When GM stopped the Oldsmobile brand, IIRC, it took them about 3 years from when they made the first announcement to when they made their last Oldsmobile. This was largely because dealerships are independent franchises, with state laws protecting their franchises. Each dealership can demand a buyout from GM before they can be forced out of business. To close a plant, new negotiations with the UAW have to happen. By the time GM shut Oldsmobile down it had cost them almost $2 billion, almost 5 years ago. That would likely cost more now, if it weren't being done under the threat of bankruptcy. The theory is debtholders are likely to take pennies on the dollar to settle a debt rather than being left out in the cold if Chapter 7 is the result. We'll see if that works in this instance.

[marka]

Howdy,

Did you know that when GM had the last round of plant closings, if the TOP THREE EXECS would donate their salary for one year, they could have kept all those plants going for another three.
Quit bashing Union Labor with Full Assembly line Pay at $ 30.00 ($ 62,000 per year salary) Per hour, and target the real Greed Problem. The Presidents and CEO's of Large Corporations, Banks, and even the National Executive Committee of the UAW.
Who the Hell needs a 8 to 10 figure salary a year with such an outragous "Golden Parachute"?
It seems some of you may have never worked at the ground level before.
Try it sometime and see if you can raise a family of five on $ 11.50 an hour.
Even my late cousin Gerald Knight (Fuel System Engineer for Cadillac that retired in the 80's) said that the "Newbs" probably never changed a spark plug in their life the way they were designing the vehicles.

Did you ever hear the saying "Two wrongs, don't make a right"?

This is a great example of that, except that there's a lot more than "two" wrongs.

To me, as an outsider, it seems that everyone in the mess that is GM is currently engaged in pointing a finger at the other parts of the mess.

To me, as an outsider, GM shouldn't have the UAW involved at all since its nothing but overhead, and executive compensation shouldn't be at the stupid level.

Mark

[marka]

Howdy,

Also... How does an overabundance of dealerships cost GM money?

Mark

[94bird]

Howdy,

Also... How does an overabundance of dealerships cost GM money?

Mark

Good question. I don't know how it directly costs GM money. It certainly makes it harder for dealerships to make money, when they have so many competitors. I can also understand an argument that having too many dealerships dilutes the brand's image. Which looks better to a customer, having a thriving dealership with a lot of customers and frequent turnover of new cars, or having 3x that many dealerships that appear much more stagnant?

Last I heard Toyota has only about 2500 dealerships across the country and GM has about 6500. They both sell similar numbers of vehicles in the US each year. GM's factories and labor force are downsizing, but their dealership presence hasn't kept the pace.

[marka]

Howdy,

Quit bashing Union Labor with Full Assembly line Pay at $ 30.00 ($ 62,000 per year salary) Per hour

My wife is a college physics professor with tenture, PHD, etc. etc.

She makes ~$55k/year.

I'd been working as a hardware/software engineer for ~ 4 to 5 years, with a BS in 'computer engineering' (basically a cross between the digital side of EE and the core classes of CS) before I passed the $60k/year mark.

I'd also be extremely surprised if the UAW worker contribution toward health care was anything like as costly as what she and I pay.

Don't go there.

Mark

This post has been edited by marka: Dec 27 2008, 04:43 PM

[marka]

Howdy,

Howdy,

Also... How does an overabundance of dealerships cost GM money?

Mark

Good question. I don't know how it directly costs GM money. It certainly makes it harder for dealerships to make money, when they have so many competitors. I can also understand an argument that having too many dealerships dilutes the brand's image. Which looks better to a customer, having a thriving dealership with a lot of customers and frequent turnover of new cars, or having 3x that many dealerships that appear much more stagnant?

Last I heard Toyota has only about 2500 dealerships across the country and GM has about 6500. They both sell similar numbers of vehicles in the US each year. GM's factories and labor force are downsizing, but their dealership presence hasn't kept the pace.

Yeah, I totally get how it would hurt individual dealerships, but it seems like the competition would drive dealership prices lower, which would tend to sell more cars in total compared to other brands, and all at no cost to GM directly?

People say this is an inefficency of GM, but I have yet to hear how its a GM problem, vs. a dealer problem. If anything, it seems like it would help GM a little, unless they're financially supporting their dealerships in some manner.

Mark

[BigEnos]

Howdy,

Howdy,

Also... How does an overabundance of dealerships cost GM money?

Mark

Good question. I don't know how it directly costs GM money. It certainly makes it harder for dealerships to make money, when they have so many competitors. I can also understand an argument that having too many dealerships dilutes the brand's image. Which looks better to a customer, having a thriving dealership with a lot of customers and frequent turnover of new cars, or having 3x that many dealerships that appear much more stagnant?

Last I heard Toyota has only about 2500 dealerships across the country and GM has about 6500. They both sell similar numbers of vehicles in the US each year. GM's factories and labor force are downsizing, but their dealership presence hasn't kept the pace.

Yeah, I totally get how it would hurt individual dealerships, but it seems like the competition would drive dealership prices lower, which would tend to sell more cars in total compared to other brands, and all at no cost to GM directly?

People say this is an inefficency of GM, but I have yet to hear how its a GM problem, vs. a dealer problem. If anything, it seems like it would help GM a little, unless they're financially supporting their dealerships in some manner.

Mark

More dealerships does drive the cost per unit down, which in turn drives the profit down for both entities. When you have 4 Chevy dealers in a 10 mile radius (which in some areas around here we do) you can certainly go from place to place and hammer them on price. Also, each franchisee is entitled to some support from the mother ship which means that you either just spend a ton and fully support them all, or you dilute your funds and settle for less effective marketing, branding, etc. Then you have delivery costs, a lot more dealer rep's for sales, service, marketing, etc.

Ford just bought out a local dealer in my area which was extremely saturated. Oddly enough it was a profitable store, but it was also on a small pad and couldn't really expand.

[marka]

Howdy,

More dealerships does drive the cost per unit down, which in turn drives the profit down for both entities. When you have 4 Chevy dealers in a 10 mile radius (which in some areas around here we do) you can certainly go from place to place and hammer them on price. Also, each franchisee is entitled to some support from the mother ship which means that you either just spend a ton and fully support them all, or you dilute your funds and settle for less effective marketing, branding, etc. Then you have delivery costs, a lot more dealer rep's for sales, service, marketing, etc.

I don't see why extra dealerships means the _factory_ would lower the price on a vehicle.

It makes sense that the dealer would need to sell the vehicle closer to the factory price, but the factory is in competition with toyota/ford/whatever, not another chevy dealer.

What support does each dealer get from the factory? The only thing I know of is per vehicle sale incentives, and that's going to be based on volume sold in total, not volume per dealer.

Mark

[robz71lm7]

http://findarticles.com/p/articles/mi_qn41...s_/ai_n19342425

I'll say one thing we only have a couple Toyota dealers in the area, both of which are astounding in size. GM dealers? Too many to count and most are pretty small. It will also cost GM a pretty penny, depending upon state franchising laws, to close some of the smaller dealers.

Also see the 3rd paragraph of this:

http://online.wsj.com/article/SB122688631448632421.html

It's like mom and pop competing against Wal-mart.

[marka]

Howdy,

Both of those articles blur the line between what's bad for the dealer and what's bad for the automaker...

I'd still like to see something that talks about costs to GM per dealer that would be cut if the dealer network was reduced. I don't buy that sales would increase with less dealers... I think if anything they'd shrink. Using Mini as an example (which is at the far end of the other extreme, with a very limited dealer network), I will not buy a Mini because I will not deal with Mini of Pittsburgh and there are no other dealer options other than going all the way to Cleveland.

I think reducing the dealer network makes sense in terms of overall "that seems silly" stuff, I just don't understand how reducing the dealer network will help GM itself and every article I've read has focused on things like dealer oversaturation, rather than how that oversaturation affects GM vs. the dealer franchises themselves.

Mark

[trackbird]

Howdy,

If an OE goes into bankruptcy, customers won't buy from them. End of story.

Bull. If anything has been proven, its that the American consumer buys the cheaper product, all else equal and often all else NOT equal. One of the saddest thing about this whole mess is that the OEMs have managed to convince folks of this particular fallacy.

Two-thirds of those polled said they would be less likely to buy a car from an auto company in bankruptcy.

From here:

http://www.cnn.com/2008/POLITICS/12/22/pol...lout/index.html

WASHINGTON (CNN) -- A new national poll Monday finds a majority of Americans approve of recent loans to big U.S. automakers, but less than 3 in 10 would support additional assistance.

Flags fly outside of the General Motors Corporation in Detroit, Michigan.

Sixty-three percent of those questioned in a CNN/Opinion Research Corp. survey support the White House loaning more than $13 billion to American automakers Chrysler and General Motors, while 37 percent opposed the move.

In exchange for the loans, the deal calls for the auto companies to show by the end of March plans for viable new business models.

The poll numbers out Monday are drastically different from a similar poll from early December.

Sixty-one percent of those questioned in a CNN/Opinion Research Corp. survey out December 3 were against the federal government providing billions of dollars to the automakers, with 36 percent favoring such a bailout.

Monday's poll shows 53 percent of Americans don't think government assistance for the automakers will help the U.S. economy.

But just 28 percent said they would approve providing the automakers with more money, while 70 percent said they would prefer to let them go bankrupt.

"The opposition to any additional assistance may be a reluctance to spend more money that they think the government may never see again," Holland added. "Only 28 percent say the auto companies involved in the current program will be able to pay all or most of the $13 billion back; one in five say they will not be able to pay any of it back to the government.

"This perceived lack of ability to pay taxpayers back may be one reason why the poll indicates auto executives are not very popular with Americans. Eighty-two percent of those questioned have a negative view of auto executives."

Union leaders don't fare well either: Sixty-one percent of those polled have a negative view of them.

Two-thirds of those polled said they would be less likely to buy a car from an auto company in bankruptcy.

The CNN/Opinion Research poll was conducted Friday through Sunday, with 1,013 adult Americans questioned by telephone. The survey's sampling error is plus or minus 3 percentage points.

[marka]

Howdy,

I'd need to see the exact poll (and who paid for it, given the automakers wailing about it in the congressional hearings) before I put any credence into the result. Even taking it at face value "less likely" doesn't mean a heck of a lot. I'd be less likely too, all else equal.

The point is to make sure all else _isn't_ equal.

I wonder how many of those polled would be less likely to buy a domestic car vs. an import? Or who'd be less likely to buy a GM vs. a Ford?

And again, despite what anyone might want to believe, the success of walmart, Harbor Freight, and others proves that we as consumers will buy the lower priced option, even if it doesn't work as well, the customer service is worse, etc.

Mark

[robz71lm7]

It's a CNN poll paid for by CNN:

"The CNN/Opinion Research poll was conducted Friday through Sunday, with 1,013 adult Americans questioned by telephone."

Of course the sampling size is non-scientific IIRC and who knows how the questions were phrased.

I think the example of Mini, as you admitted is too far in the other direction. Mini is very stretched it sounds like, whereas in my hometown you could eliminate 1/2 the Chevy dealers and still have more than twice as many Chevy dealers as Toyota dealers.

The costs to buy out the dealers varies state to state and as of this time I haven't seen any numbers on what that might cost. However, with no capital up front it's not something they could've pursued.

[robz71lm7]

Howdy,

Quit bashing Union Labor with Full Assembly line Pay at $ 30.00 ($ 62,000 per year salary) Per hour

My wife is a college physics professor with tenture, PHD, etc. etc.

She makes ~$55k/year.

I'd been working as a hardware/software engineer for ~ 4 to 5 years, with a BS in 'computer engineering' (basically a cross between the digital side of EE and the core classes of CS) before I passed the $60k/year mark.

I'd also be extremely surprised if the UAW worker contribution toward health care was anything like as costly as what she and I pay.

Don't go there.

Mark

I strongly agree with what Mark has said here. The problem is many of these UAW workers are unskilled and wouldn't have a chance of making that much on the open market. Where I work we employ union mechanics, I/E techs, and operators who make about the same pay. I think it's fair because our union employees are actually worth that much. They could find a job on the open market with comparable compensation. FWIW, with a bachelors and masters in mechanical engineering I make about half of what union employees at our plant make-and I have authority over them.

My point is the UAW really is a unique situation here and is costing GM more than it should for labor.

[94bird]

My point is the UAW really is a unique situation here and is costing GM more than it should for labor.

I think everyone agrees with that, which is why the contract signed with the UAW last year allows the OEs to bring in new workers at about $14/hr, instead of the current $30/hr average. Problem is buying out a large percentage of the workers who are working at a higher wage, is costing $50K-$100K per worker. That's a boatload of money that the OEs thought they could afford, and now realize they couldn't. It's also getting very hard to find more takers, as many of the workers who took buyouts are still unemployed, or are working at minimum wage a year or more later. A "retired" auto worker can burn through that kind of cash very quickly if he's working at near minimum wage with very limited or no benefits. That reality is now common knowledge with current workers. Many of them are staying put and taking their chances that the Detroit 3 will make it out of this mess, and they'll be better off than taking a buyout. Of course, with these new terms for company viability, may come the end of buyouts as we have known them for the past few years. We'll see how many strings are attached to layoffs of workers after March 2009.

OTOH, as a salaried engineer at GM, if they want to lay me off, they don't have to give me anything. As a courtesy they might give me one month's pay for every year I've worked there. Many of you may have heard that Chrysler's plants are shut down until Jan. 19. The UAW workers will get paid about 95% of their normal wages through collecting unemployment and getting Jobs Bank money from the UAW, or so I've heard on the news. The salaried workers like engineers and other plant employees will have to burn through vacation time or just not get paid. The disparity isn't lost on me, believe me.

[StanIROCZ]

The salaried workers like engineers and other plant employees will have to burn through vacation time or just not get paid. The disparity isn't lost on me, believe me.

I work for a tier 1. GM and Chrysler's releases to us are down to ZERO for the month of January. In response, we had to shut down completely, that means even the Engineering office that is located 800 miles away shuts down. I'll be at home collecting unemployment, and hopefully use my time off to put a cage in my car. I'm not totally bummed out about it since it is only one month and I'll be ok, assuming I go back to work and stay employed etc etc, but I don't get 95% of my salary while I sit at home are you freaking crazy?

Quit bashing Union Labor with Full Assembly line Pay at $ 30.00 ($ 62,000 per year salary) Per hour, and target the real Greed Problem.

A very good percentage of those people made over 100k for many years after they work a little overtime at 1.5x, 2x, and 3x. I’ve even heard of a couple people making over 200k/year.

I don’t care too much about how much they get paid / hour. It is higher than it should be, but my biggest gripe is how big of a pain in the ass it is to work with the UAW and Skilled trades. Its one thing for them to get paid a lot and be hungry for work and high degree of respect and professionalism and quality, but they don’t. Many of them are spoiled brats.

I worked in a UAW plant for a couple years and this is just a sample of some things that I remember coming from them:
“I’m not doing it, that’s not my job”
“I’m calling my committee man”
“Can’t you see that I was busy sleeping… reading the newspaper…etc, don’t bother me” (wasn’t actually said, but definitely implied)
“why should I bust my ass and finish this job? I need to milk this so I have to come in on Sat and Sunday and get paid 2x or 3x or whatever” (wasn’t actually said, but definitely implied)

You are getting paid a crap ton of money, QUIT YOUR BITCHING AND DO YOUR FREAKING JOB!! This isn’t true for everyone, but it is for a decent percentage. Many of the people aren’t concerned about making good product or making/saving the company money. Only concerned about extracting as much money as possible, do as little work as possible, and be a pain in the ass the whole time. And because of the foot hold that the Union has these bad apples can get fired but will come back to work after a short time.

How can union company be competitive with this mindset?

A friend of mine and my father-in-law are both in skilled trades, and they aren't bad apples. But they are getting hurt by this.

The Presidents and CEO's of Large Corporations, Banks, and even the National Executive Committee of the UAW.
Who the Hell needs a 8 to 10 figure salary a year

I agree with this too. John Wagner, your company is in the hole, you don’t deserve your 8 figure salary and you certainly don’t need that much to live.

There isn’t just one problem, there are many.

Hopefully I don't ruffle too many feathers here.

[00 Trans Ram]

I'm rapidly getting out of my element here, given that no one I know is employed by a union, and (living the Deep South) am very unfamiliar with the intricacies of the situation.

However, let me focus on one thing I've seen a few times. I've read that some of the workers make upwards of $100k by working overtime. This means that GM has to pay them at least time-and-a-half, and perhaps more (if it's a holiday or whatnot). That sounds AMAZINGLY inefficient.

I realize that the factory may need workers at some times and not others. But, paying 150% salary is not the answer. They should do what the healthcare industry does - hire part-time, on-call workers. We have PRNs that are nurses. They are not full time, so they get no benefits. They come to work when we are busy and need extra staff. Then, they go home when it's not busy. They are usually inexperienced and therefore get less $$ per hour.

[StanIROCZ]

hire part-time, on-call workers. We have PRNs that are nurses.

Wouldn't that be great. If an engineer or any non-Union individual even touches a wrench, a grievance can be filed. It is different in every plant, but I've seen / heard of it happening.

[rpoz-29]

By federal law, hours over forty in a work week are compensated at 1.5 times regular pay.