Coming This January From The Big Three
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monitoradiation
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Dudemon, I agree with most of what you said; there's something I heard about the 70 dollar an hour wage though, and that is that this figure accounts for pensions, healthcare, etc., all divided by the number of work hours; which means that there was a lot of extra expenditures that were counted as wages.
Though, that's really just a small point. The big 3's gotta change. I heard GM's net worth is lower than what they're asking for; the government could just buy them out and tell the factories to start producing things we need rather than gigantic trucks that less and less people are buying strictly for driving through urban streets in sparkling clean conditions.
Though, that's really just a small point. The big 3's gotta change. I heard GM's net worth is lower than what they're asking for; the government could just buy them out and tell the factories to start producing things we need rather than gigantic trucks that less and less people are buying strictly for driving through urban streets in sparkling clean conditions.
The Gardener
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That's not really fair.
First off, the Big 3 aren't asking for a bailout because there is something wrong with their cars... the problem is that the US consumer is not in the mood to buy ANYTHING right now.
Joe Sixpack is seeing his mortgage go underwater, his home equity line of credit was shut off by the banks, his credit card limits are being trimmed down as he pays his balances off, he has seen friends and relatives lose their jobs, his year end bonus was nixed, and his annual raise was modest. In this kind of a situation, Joe Sixpack is putting off buying a car, and is instead either getting his current car fixed up to drive more miles, or he is choosing to buy a cheaper used car at a lower cost.
ADD to this the fact that banks are tightening lending standards. If you don't have a credit score above 700, lots of banks are simply NOT lending money for car loans. And this tightening is getting worse.
Given this situation, demand for new cars has fallen off a cliff! It's got nothing to do with a US versus Japanese thing, both US AND Japanese companies are experiencing the same horrid sales fundamentals.
People ask, "well, if THAT is the case, then why aren't the Japanese car makers asking for government handouts?" which is one of the most ignorant and uninformed questions one can ask. Then people rant on about the UAW union workers and how they are "so expensive" and have such "generous benefits" that make them uncompetitive against their Japanese counterparts.
Utter bul lshit. Why? Because Japan has nationalized healthcare, and has a relatively generous pension system that is also funded by their government. The reason why the UAW worker rates are more expensive is because they need to roll their health care and pension obligations into it. In Japan, they DON'T, because the government is paying for it! And that being said, the Japanese automakers are receiving HUGE government subsidies EACH AND EVERY YEAR in the form of their government picking up the tab for their health care and pension expenses every year!
And lastly, the Japanese automakers' internal market is protected. In the US, the Big 3 automakers not only compete against each other, but they also face import competition from overseas makers. NOT the case in Asia... these nations have made it a regulatory NIGHTMARE for foreign carmakers to to business in their own internal markets. And given the fact that auto sales in Asia have been brisk the last decade, the Asian carmakers have had this entire market semi-protected for them to do business in, wheras the US carmakers have been significantly handicapped in their attempt to market there.
In summation... despite what I say above, I am AGAINST the bailout of the carmakers, because I think that bankruptcy would be a cleansing process for them, and would give them a chance to start fresh and re-negotiate contracts with their suppliers. I'm also against the bailout because subsidizing the US auto industry is NOT addressing the problem. The problem is not their product quality nor their workers, the problem is that the US consumer is, simply stated, broke... incomes stagnating, credit drying up, 401k's melting away... they are just not in a mood to buy a new car this year.
And, all this talk about "well if they only made fuel efficient and green cars, then everything would be peachy" is false as well. The US government continues to force CAFE standards on the US automaker industry, and these standards only serve to make American cars MORE EXPENSIVE because the technology required to implement the high mileage rates is expensive. FORCING the US automakers to provide these models, and continuing to FORCE the US automakers to attain economically impossible CAFE fuel efficiency standards won't help the carmakers... it will put them out of business even faster.
First off, the Big 3 aren't asking for a bailout because there is something wrong with their cars... the problem is that the US consumer is not in the mood to buy ANYTHING right now.
Joe Sixpack is seeing his mortgage go underwater, his home equity line of credit was shut off by the banks, his credit card limits are being trimmed down as he pays his balances off, he has seen friends and relatives lose their jobs, his year end bonus was nixed, and his annual raise was modest. In this kind of a situation, Joe Sixpack is putting off buying a car, and is instead either getting his current car fixed up to drive more miles, or he is choosing to buy a cheaper used car at a lower cost.
ADD to this the fact that banks are tightening lending standards. If you don't have a credit score above 700, lots of banks are simply NOT lending money for car loans. And this tightening is getting worse.
Given this situation, demand for new cars has fallen off a cliff! It's got nothing to do with a US versus Japanese thing, both US AND Japanese companies are experiencing the same horrid sales fundamentals.
People ask, "well, if THAT is the case, then why aren't the Japanese car makers asking for government handouts?" which is one of the most ignorant and uninformed questions one can ask. Then people rant on about the UAW union workers and how they are "so expensive" and have such "generous benefits" that make them uncompetitive against their Japanese counterparts.
Utter bul lshit. Why? Because Japan has nationalized healthcare, and has a relatively generous pension system that is also funded by their government. The reason why the UAW worker rates are more expensive is because they need to roll their health care and pension obligations into it. In Japan, they DON'T, because the government is paying for it! And that being said, the Japanese automakers are receiving HUGE government subsidies EACH AND EVERY YEAR in the form of their government picking up the tab for their health care and pension expenses every year!
And lastly, the Japanese automakers' internal market is protected. In the US, the Big 3 automakers not only compete against each other, but they also face import competition from overseas makers. NOT the case in Asia... these nations have made it a regulatory NIGHTMARE for foreign carmakers to to business in their own internal markets. And given the fact that auto sales in Asia have been brisk the last decade, the Asian carmakers have had this entire market semi-protected for them to do business in, wheras the US carmakers have been significantly handicapped in their attempt to market there.
In summation... despite what I say above, I am AGAINST the bailout of the carmakers, because I think that bankruptcy would be a cleansing process for them, and would give them a chance to start fresh and re-negotiate contracts with their suppliers. I'm also against the bailout because subsidizing the US auto industry is NOT addressing the problem. The problem is not their product quality nor their workers, the problem is that the US consumer is, simply stated, broke... incomes stagnating, credit drying up, 401k's melting away... they are just not in a mood to buy a new car this year.
And, all this talk about "well if they only made fuel efficient and green cars, then everything would be peachy" is false as well. The US government continues to force CAFE standards on the US automaker industry, and these standards only serve to make American cars MORE EXPENSIVE because the technology required to implement the high mileage rates is expensive. FORCING the US automakers to provide these models, and continuing to FORCE the US automakers to attain economically impossible CAFE fuel efficiency standards won't help the carmakers... it will put them out of business even faster.
optimus prime
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The Gardener said:
Not true, Ford has been losing money for some time now.
In Europe Ford is an average ok brand. Toyota is looked upon as reliable, stylish, well designed and reliable again. Honda is the same.
I had a Ford and I wouldn't touch one again. This is isn't a dig at US cars. UK cars (if there are any left) are/were crap. They break down every 5 mins.
Also where is Fords efficient cars? Honda and Toyota have a few on the market already with more to come. January is the launch of a new Toyota hybrid car. Ford is lagging big time, especially in Europe.
The Gardener
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Hey, no argument from me that a lot of the American standard models have uninspired styling, and are just an "okay" brand. I agree... I own and drive an Infiniti, and love Japanese cars.
But that's not my point. There is PLENTY large a market for an "average ok brand" in the US. Not everyone in the US is looking for a more refined Japanese make... many Joe Sixpacks with families are content with a bland looking car given that it has a lower pricetag that fits their budget. Also, US automakers make plenty of efficient cars, the Ford Escort had a legendary sales record in the US as an example. Heck, the most popular selling auto in the US is the Ford F-150 pickup truck, so, the arguments that Americans don't buy American make cars is just not true.
The point I am trying to make is that the US makers' product is not the problem. The PROBLEM is that Joe Sixpack's home has lost 20% of its value, his home equity line of credit is gone, his credit card limits are under scrutiny and are being reduced, his coworkers are losing their jobs, his 401k (tax deferred pension savings plan) is down the tubes, and as a result Joe Sixpack is just NOT as willing as he used to be to buy a new car, as opposed to keeping the car he has a few extra years. THAT is what is killing the US auto industry right now... and a bailout or subsidization of the auto industry won't change this, and frankly speaking, it won't help. They'll be back for another in a few months.
The thing that drives me crazy is this talk about the bailout being a bad idea because "the Japanese car makers aren't needing a bailout". That's false... the Japanese car makers receive HUGE subsidies each and every year as a result of the Japanese government paying for the health care and pensions of Japanese workers, whereas the US worker does not get this advantage, so the cost needs to be factored into the American labor rates and makes their rates higher.... additionally, all of the Asian car makers benefit from their governments protecting their home car markets from external imports... its difficult and costly for the US makers to export cars to Asia, whereas in the US market, the Asian makes compete on a level playing field with the domestic makers.
I guess, in a nutshell, my point is that I think the bailout is a bad idea. But, the rationale being given here in the US to be against the bailout is totally faulty and misses the true cause of the problem. The problem is not on the supply side, the problem is that there is no demand here in the US, and for those who DO actually have a demand, the credit restrictions are making it harder to buy a car. Thus, sales are plummeting, and the car companies are in trouble.
But that's not my point. There is PLENTY large a market for an "average ok brand" in the US. Not everyone in the US is looking for a more refined Japanese make... many Joe Sixpacks with families are content with a bland looking car given that it has a lower pricetag that fits their budget. Also, US automakers make plenty of efficient cars, the Ford Escort had a legendary sales record in the US as an example. Heck, the most popular selling auto in the US is the Ford F-150 pickup truck, so, the arguments that Americans don't buy American make cars is just not true.
The point I am trying to make is that the US makers' product is not the problem. The PROBLEM is that Joe Sixpack's home has lost 20% of its value, his home equity line of credit is gone, his credit card limits are under scrutiny and are being reduced, his coworkers are losing their jobs, his 401k (tax deferred pension savings plan) is down the tubes, and as a result Joe Sixpack is just NOT as willing as he used to be to buy a new car, as opposed to keeping the car he has a few extra years. THAT is what is killing the US auto industry right now... and a bailout or subsidization of the auto industry won't change this, and frankly speaking, it won't help. They'll be back for another in a few months.
The thing that drives me crazy is this talk about the bailout being a bad idea because "the Japanese car makers aren't needing a bailout". That's false... the Japanese car makers receive HUGE subsidies each and every year as a result of the Japanese government paying for the health care and pensions of Japanese workers, whereas the US worker does not get this advantage, so the cost needs to be factored into the American labor rates and makes their rates higher.... additionally, all of the Asian car makers benefit from their governments protecting their home car markets from external imports... its difficult and costly for the US makers to export cars to Asia, whereas in the US market, the Asian makes compete on a level playing field with the domestic makers.
I guess, in a nutshell, my point is that I think the bailout is a bad idea. But, the rationale being given here in the US to be against the bailout is totally faulty and misses the true cause of the problem. The problem is not on the supply side, the problem is that there is no demand here in the US, and for those who DO actually have a demand, the credit restrictions are making it harder to buy a car. Thus, sales are plummeting, and the car companies are in trouble.
Old Baldy
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Hey, I love my Buick and Oldsmobile!!
Right now I have an 8 year old Oldsmobile and just bought a new Buick for retirement. The Oldsmobile has never had any repair work done. Only maintenance work has ever been done in all these years.
The new Buick replaced a 14 year old Buick that was never in the shop for repairs. Only maintenance work was performed on that vehicle in all that time.
Most of the maintenance work was the simple type that I did myself. (I don't do brakes any longer though. I got tired of doing that now that I'm an old guy.)
Gardener is correct, labor has priced themselves out of the market to a large extent. However, all I can say is my Buicks and Oldsmobile have lasted longer than I expected. (I donated the old Buick to Purple Heart and it still ran like a top. I just wanted a new car for a "retirement" gift to myself.)
Plus, as you guys said, American autos were "planned obsolesence" for many years decades ago. That hurt them alot IMHO. They've gotten alot better due to foreign competition but the damage was already done.
Fairly recently, two of my friends had their Honda transmissions blow out, needing total replacement.
Labor and management did alot of it to themselves but I still don't want our manufacturing base to collapse.
Heck, one of the shortest books in existence is the book of "Japanese Automobile Inventions"!!
My worry is will Honda and Toyota be there if we ever need large amounts of military vehicles, armaments, etc., produced in the future? Heck, even dumba** Pelosi agrees with that concern.
Right now I have an 8 year old Oldsmobile and just bought a new Buick for retirement. The Oldsmobile has never had any repair work done. Only maintenance work has ever been done in all these years.
The new Buick replaced a 14 year old Buick that was never in the shop for repairs. Only maintenance work was performed on that vehicle in all that time.
Most of the maintenance work was the simple type that I did myself. (I don't do brakes any longer though. I got tired of doing that now that I'm an old guy.)
Gardener is correct, labor has priced themselves out of the market to a large extent. However, all I can say is my Buicks and Oldsmobile have lasted longer than I expected. (I donated the old Buick to Purple Heart and it still ran like a top. I just wanted a new car for a "retirement" gift to myself.)
Plus, as you guys said, American autos were "planned obsolesence" for many years decades ago. That hurt them alot IMHO. They've gotten alot better due to foreign competition but the damage was already done.
Fairly recently, two of my friends had their Honda transmissions blow out, needing total replacement.
Labor and management did alot of it to themselves but I still don't want our manufacturing base to collapse.
Heck, one of the shortest books in existence is the book of "Japanese Automobile Inventions"!!
My worry is will Honda and Toyota be there if we ever need large amounts of military vehicles, armaments, etc., produced in the future? Heck, even dumba** Pelosi agrees with that concern.
monitoradiation
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Old Baldy said:
I hope somewhere in your mind you've qualified that statement with "if everything else (including peace talks, diplomacy, economic sanctions, covert ops, etc) fails"... Because I don't see building weapons stockpiles as the way to the future, unless you envision the future as a gigantic mushroom cloud.
If not, then hopefully you were speaking in jest.
The Gardener
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Are you implying that having some serious concerns about the US's heavy manufacturing base being offshored is something that should be taken "in jest"?monitoradiation said:
This is a serious issue that deserves some serious thinking. And the supposition that offshoring our defense industry's talent is in some way not worthy of concern is emblematic of the mindset of someone very naive.
Look, nobody "envisions mushroom clouds". But that doesn't mean that it would not be prudent to maintain a high technology manufacturing capability here on domestic soil.
monitoradiation
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The Gardener said:
The mushroom cloud thing was a tongue-in-cheek way of saying that blowing each other up is probably not the best way of a cooperative future. Sorry if the internet is a poor medium for sarcasm. That being said, the whole point about production capacity is moot when the US already has enough to blow the world up til kingdom come and hasn't stopped its production and trading. Maintaining old weapon stockpiles is also costly; they're just sitting there unused. We don't want more weapons that we might never use and certainly not more than we'll need.
Nobody's suggesting that we should "[offshore] defense industry talents". Where do you suppose the current weaponry development and manufacturing of the US comes from right now, as the potential "high technology manufacturing capability" as you've mentioned is currently manufacturing domestic vehicles not intended for military use? The US spends a trillion dollars on military spending per year, is the largest arms supplier in the world, and you, for some reason, seem to think that the US will lose their arms superiority if the big 3 lost their factories. Guess what, if a war breaks out, the US will stop exporting weapons, keep it for themselves, and bomb the crap out of everyone.
Where are these "talented" people? Working for the Big 3 in their manufacturing plants? Are you joking me? The US develops/trade weapons under Boeing, GE, etc., not the Big 3. The only qualm you have about it is that if the US suddenly goes to war and needs a large injection of weaponry, you seem to think that it must come from converting car factories into armament manufacturing plants as was done in previous world wars. Uh, yah, guess what, in a state of national crisis, I'll bet you anything if there are any factories still making anything in the US, they will be nationalized and converted for armaments; and that is if the supply of weaponry were to run low.
Prudence doesn't come from maintaining factories that build things that don't sell simply as an insurance policy for when wars break out. That's like saying I'm going to keep a dog in case I need its feces as fertilizer for when I want to grow organic vegetables. The point isn't that we should close down all car manufacturing plants currently owned by the Big 3, the point is that they should be making things that we need. If Toyota plants were to replace the Big 3, I'm actually sure that when the need arises, you can bet that the US government to seize it if it needs to use it for weaponry production.
If you want me to belabour the point, should there also be mandatory conscription at age 18 like many countries do for the eventuality of war? There is something to be said about an idea, while it would be nice, but impractical to implement because there are other avenues to explore that are arguably better.
Edit #3?: Oh, and I should mention, is that if the Big 3 were somehow involved in providing the military with anything, you can bet that if and when the Big 3 goes down, the government would be right there to grab it and run it themselves.
The Gardener
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That wasn't the tangent I was trying to take in my argument.
My point about maintaining a domestic manufacturing base as a matter of national security was not one of trying to claim that the Big 3 make weapons. It was more a point that national security could be threatened if this country continues to offshore industries because it is cheap.
Let me give you an analogous argument to try to clarify.
Lets consider the US agricultural industry. Our agriculture is systemically inefficient, and for the most part relies on a combination of sub-mimimum wage migrant labor, subsidies, and protectionist trade policies to remain viable. Without these protections, a very significant portion of our agriculture would be out-priced by imported foodstuffs from abroad. It might make economic sense to allow this to happen, but, when you rely on foreign nations to produce the food you eat, does this not present a national security concern?
Don't get me wrong, I am not a protectionist and am merely presenting this argument as food for thought, but being a strict "free trading, no government subsidies" nation only benefits you in an absolute way if all of the other nations in the world are playing by the same set of rules.
And in the case of foreign automakers, they definitely are NOT. They receive subsidies from their home nations, and their home domestic auto markets are protected by their trade policies.
So... while I personally agree that there should be no automaker bailout, I think that the rhetoric being spouted about it is completely wrong and is not really addressing the true problems.
My point about maintaining a domestic manufacturing base as a matter of national security was not one of trying to claim that the Big 3 make weapons. It was more a point that national security could be threatened if this country continues to offshore industries because it is cheap.
Let me give you an analogous argument to try to clarify.
Lets consider the US agricultural industry. Our agriculture is systemically inefficient, and for the most part relies on a combination of sub-mimimum wage migrant labor, subsidies, and protectionist trade policies to remain viable. Without these protections, a very significant portion of our agriculture would be out-priced by imported foodstuffs from abroad. It might make economic sense to allow this to happen, but, when you rely on foreign nations to produce the food you eat, does this not present a national security concern?
Don't get me wrong, I am not a protectionist and am merely presenting this argument as food for thought, but being a strict "free trading, no government subsidies" nation only benefits you in an absolute way if all of the other nations in the world are playing by the same set of rules.
And in the case of foreign automakers, they definitely are NOT. They receive subsidies from their home nations, and their home domestic auto markets are protected by their trade policies.
So... while I personally agree that there should be no automaker bailout, I think that the rhetoric being spouted about it is completely wrong and is not really addressing the true problems.
monitoradiation
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So in short, you're not protectionist. You're anti-globalization. Perfect. Please stop wearing T-shirts.
I kid, I kid. However, what you've stated just now wasn't the point of contention whatsoever.
I have no problems with people thinking that the domestic manufacturers should keep their factories here; for protectionist reasons, for national security reasons, etc. My point in mentioning weapons development was in response to Old_Baldy who'd mentioned that should the US need armaments, the Toyotas and Hondas of the vehicular world might not oblige. I saw that not as protectionist, but of a cold-war-stockpile-deterrence mentality, which is inappropriate in response to the current bailout situation.
That being said, I don't disagree with you on agriculture. I just don't see it as relevant to the discussion. I was talking about the prospects of Big 3 factories being mandated to produce armaments in times of war. With or without the Big 3's factories, the US will still retain its arms superiority strictly in terms of armaments, as it is currently the world's largest trader and manufacturer of arms technology. I'm speaking in terms of that context. Talking about agriculture and national security in that context is irrelevant, even though I agree with that tangent; what could be said is that the US threatens the national security of other countries as it can refuse to export arms, if you want to look at it in terms of its ties to agriculture.
I kid, I kid. However, what you've stated just now wasn't the point of contention whatsoever.
I have no problems with people thinking that the domestic manufacturers should keep their factories here; for protectionist reasons, for national security reasons, etc. My point in mentioning weapons development was in response to Old_Baldy who'd mentioned that should the US need armaments, the Toyotas and Hondas of the vehicular world might not oblige. I saw that not as protectionist, but of a cold-war-stockpile-deterrence mentality, which is inappropriate in response to the current bailout situation.
That being said, I don't disagree with you on agriculture. I just don't see it as relevant to the discussion. I was talking about the prospects of Big 3 factories being mandated to produce armaments in times of war. With or without the Big 3's factories, the US will still retain its arms superiority strictly in terms of armaments, as it is currently the world's largest trader and manufacturer of arms technology. I'm speaking in terms of that context. Talking about agriculture and national security in that context is irrelevant, even though I agree with that tangent; what could be said is that the US threatens the national security of other countries as it can refuse to export arms, if you want to look at it in terms of its ties to agriculture.
Old Baldy
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Without going into too long of a post, let me just say we should agree to disagree on this one monitorradiation.
I feel it is of vital importance to our national security to keep a strong manufacturing base here in the USA. Without the Big Three, we would not have won WWII IMHO. We wouldn't have stood a chance IMHO.
I simply do not want to diminish our ability to manufacture armaments in times of emergency. Which could happen (e.g., WWII).
I feel it is of vital importance to our national security to keep a strong manufacturing base here in the USA. Without the Big Three, we would not have won WWII IMHO. We wouldn't have stood a chance IMHO.
I simply do not want to diminish our ability to manufacture armaments in times of emergency. Which could happen (e.g., WWII).
monitoradiation
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Alright old. No problems there with me.
Old Baldy
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Just read that the bailout failed. The UAW refused to make wage concessions and the talks fell apart. A preliminary vote went down to defeat. Looks like bankruptcy for GM and Chrysler.
The UAW shot themselves in the foot once again. They felt they have given up enough and wouldn't give up more pay/benefits.
Kind of like the union's refusal to renegotiate Winchester Arms contract a few years ago. That venerable firearms company went out of business but, within a few years, reorganized and is making firearms without the high union wages that hurt the company's ability to compete.
I guess the same will happen with GM and Chrysler. (Although Bush and Obama want Congress to do something with the $700 billion available for loans.)
These are tough, tough times people! (It appears the UAW is a thing of the past?)
The UAW shot themselves in the foot once again. They felt they have given up enough and wouldn't give up more pay/benefits.
Kind of like the union's refusal to renegotiate Winchester Arms contract a few years ago. That venerable firearms company went out of business but, within a few years, reorganized and is making firearms without the high union wages that hurt the company's ability to compete.
I guess the same will happen with GM and Chrysler. (Although Bush and Obama want Congress to do something with the $700 billion available for loans.)
These are tough, tough times people! (It appears the UAW is a thing of the past?)