Source.
President Bush – this is your “air traffic controllers” moment. Do not waver.
Someday, a nation will thank you for it.
92 Replies to “Let. Them. Go.”
I have a question for you Kate, what do you and your husband do for a living and what was your gross income in 2007 – 2008?
That graph shows who’s really responsible for the downfall of the beloved automotive industry on this continent. I wish I could make that kind of money putting a nut and a bolt together. Unfortunately, there is no reason to believe Bush will choose the wise path. He bailed out a rotten system once and he will only prolong the slow, choking death of the Big Three.
Kate
Two words..union spoilt. Productivity decreases with each collective agreement and the legacy of men who busted their balls is diminished by their spoilt offspring. The functionaries within the “movement” pad their nests and the whole concept of quality is rejected in lieu of fake solidarity.
Disgraceful.
Syncro
Though I happily voted for Harper, I do have some fears that the Cdn gov’t will be bailing out the Big 3 autoworkers in Ontario & Quebec too.
It would be fascinating to show poll respondents the graph and then ask them whether they think the autoworkers should be bailed out with our tax dollars.
It all started 40 years ago.
Union; Give us big money and pensions (from R&D kitty if ya have to) or we strike.
Management; Ok, we will just bolt on a new tailfin for next years model.
Meanwhile, Honda and Toyota perfected their crankshafts and made every button and lever work to perfection and encouraged the workforce to innovate, with reward.
In my day – first 11 vehicles were Fords and GMs. The last 3, Honda and Toyota. The kids ? All Honda and Toyota.
Not gloating. I really do think it is sad Sad SAD
Bailing out the NA auto makers now will only delay the inevitable at the expence of taxpayers.
Either the Unions go or the Manufacturers go.
(Syncro, I think the term roont is more apt than spoilt) š
Related:
Look at slide #4 (on page 2] http://www.boomertirement.org/documents/Moshe-Milevsky-Boomertirement-Presentation-Slides.pdf
Big 3 US automakers have an unsustainable business model. Defined Benefit Pensions, retirees living longer.
Chart of Retirees per 100 workers: Toyota, 2; Honda, 5; Nissan, 11; Ford, 125; Chrysler, 153; GM, 310. ref: NYT May 19, 2006 (C5). The hidden liability of DB Pensions will eventually sink the ship; it’s inevitable. Let.Them.Go. A little more of interest in the other slides.
In my day – first 11 vehicles were Fords and GMs. The last 3, Honda and Toyota. The kids ? All Honda and Toyota.
Not gloating. I really do think it is sad Sad SAD
Posted by: ron in kelowna at November 11, 2008 1:43 AM
Back in my early driving days, I had an extremely unhappy experience with a Ford vehicle. It was easily the most unreliable vehicle I have every driven.
After that, I moved onto a Suzuki model vehicle. I ended up not really liking the vehicle, but reliability was not one of the problems — mainly poor fuel economy bothered me.
My last three vehicles, all Honda. I won’t even look at another model. Bought my first Honda back in 1997, and it was easily the best vehicle I’d ever driven, from fuel economy to reliability, top marks.
I have a feeling I’m but one person telling such a story. All due to a poorly engineered and designed Ford product, I have avoided North American vehicles since. Like Ron, not gloating here … just stating my own personal experience. I would personally prefer to see the “Big 3” auto companies in strong financial shape.
My 1987 Chrysler LeBaron had a great engine and drive train but the damn alternator kept crapping out and the plastic fittings around the window frames never fit. The dealer’s attitude: it’s your problem, you bought it! My 1997 Saturn SL1 was good but the crankshaft bent at 136,000 km. The dealer’s attitude? The warranty has expired.
Shopping for my current vehicle, the local Ford dealer was too busy holding a party for Mustang buyers to deal with us. After that brush off we only considered Honda and Toyota. We bought a 2005 loaded Honda van. Best decision I ever made. Now I am shopping for a second commuter car and GM, Ford and Chrysler do not receive a moment’s consideration.
Let. Them. Go. They are authors of their own misfortune.
Saskboy, let’s do a little math, shall we? Let’s take Kate’s quoted figure as gospel (remember this figure is what the manufacturer says they pay), $73.20. Let’s multiply that by the industry’s quoted number of hours to build a vehicle, in fact, let’s round it up to 24 hours. The product of those numbers is less than $1800. It’s been quite a while since you could buy a Big 3 vehicle for 18 grand, so the labour cost is less than 10% of the price of a vehicle. If I worked for free, the price would still be over 90% of what it is now, even if they did reduce it by the labour cost. So, if I did work for free, who would you blame then?
Saskhab, let’s do the math. Taking Kate’s figure of $73.20 (a figure given by the manufacturer, let’s remember) and multiply by the 24 hours it takes to build a car. The result is less than $1800. It has been quite a while since you could buy a Big 3 vehicle for 18 grand, so the labour cost per vehicle is less than 10%. If I worked for free, and they actually reduced the price by the labour cost, the vehicle would still cost over 90% of what it does now. Who would you blame then?
finnbar,
Does it only take 24 man hours to assemble a car? What about all of the parts that go into it? It would be good to know just how many man hours are required to build an automobile.
While its easy to trash the NA car biz, reality is, since WWI, it has been the single most important economic engine building the NA economy. Be careful what you wish for. The high wages of the industry have provided the cash flow for much of the consumer portion of all western economies, and the seed capital for many post war recoveries, Japan being a prime example. Oil wasn’t a big player until relatively recently. The collapse of the North American auto industry could be the tipping point into a full scale depression.
“I have a question for you Kate, what do you and your husband do for a living and what was your gross income in 2007 – 2008?”
A post that prompted the right Lefty question. What world might the auto union workers live in after their bubble bursts you mean? When they have to earn their own living?
There was a time when unions were important. That time has long past. Now unions are one of the most destructive things the North American economy has ever known.
And given their political sister – socialism – unions are one of the most destructive things our political system has ever known.
Cleanse the system. Let them die.
Some of the comments seem to imply that Americans and Canadians would not be making automobiles if GM, Ford, and Chrysler went under. Is it not true that most of the well managed anuto manufacturers have plants in North America?
I spent my life listening to these potbellied, unskilled bozos bragging about how much money they made – not mention laughing about how little work they did.
This bailout will simply prolong the agony. People paid little attention, but the big 2.5 automakers were going broke long before the so-called meltdown. The timing works for them, now they can call for a handout without exposing their inherent weakness. A few years from now they’ll be back for more.
It seems autoworkers are the protected class, we are all supposed to make sacrifices for these people. Ontario has lots of unspoiled wilderness left, I say it’s time to build a nature preserve and museum for this endangered species; they can demonstrate their lost art of bolting little parts to big parts.
Union wages are why the big three are opening new facilities outside of US and Canada, not why they’re doing so poorly in terms of sales. They couldn’t effectively compete with Toyota and Honda in the car market based on design and quality, so they put all of their efforts into the pickup and suv market. Now those markets are drying up, and suddenly they’re hurting.
There was an excellent book called the Death of Detroit written some 5 years ago. The author pointed out that Toyota and others were headed by engineers and their focus was on the customer and the quality of the car whereas Detroit was headed by accountants focused on how much profit they could make from each vehicle hence the larger the more profit. As all unions do UAW and CAW demanded always more for less. They are no different here in Canada where they are demanding the same taxpayer help. The non-union car companies are still doing well here.
Toyota and the others moved to the bible belt away from the Detroit area and built flexible lines with highly trained and well paid non-union workers.
When I was in Kansas city airport in July I was astounded at the thousands of new Ford SUVs sitting on paved lots never to be sold. Look around you and count the percentage of the Big 3 to the other car manufacturers like Honda. People are buying value and have been for a long time.
Let the market decide and if these companies fail they fail. Remember all the companies that provide the parts supply the other non-union companies too and these successful car companies will expand into the larger market.
The truly sad thing is that whereas the union and non-union employees of the Big 3 will suffer our huge public employee unions grow larger each day as private union and non-union companies shrink and are affecting our whole society. A primary school teacher now makes $94,000 in Ontario plus rich benefits.
I live in Windsor,ON. the automotive capital of Canada ruled by CAW thuggery, dare speak up against them you will suffer reprisals.
Ingrate CAW thugs and money grubbing executives will be all looking for a golden parachute at the expense of the taxpayers.
Ken Lewenza will scream bloody murder and bite the hand that saves his CAW.
So I say NO minister Flaherty to any bailout.The sooner the automotive industry dies the faster the CAW will disappear.
To all you CAW members – who needs your business when you come in looking for CAW discounts. Get a job.
odd how it is only the unionized auto companies that have all the problems. Bad management, greedy unions, crappy products.
Ya . . just prime for a bailout.
Wonder if they’ll bail out Honda & Toyota ?
. . as for me – never owned a “big 3” car. Started with a 72 Datsun 510 that died at 300k miles – then Hondas since. Recently “upgraded” to an Acura TL.
I am a very happy car driver.
I am perfectly happy to pay high taxes so that people whose only skills are political can make more money than me. Why shouldn’t I be? We are in Obamopia, after all.
I wish they broke out the costs better. They indicate total compensation…so how much of that is direct labour and how much of that is pension and health care liabilities or payments.
GM has moved to address some of this but GM was effectively a Health Care and Retirment Management company based on the programs that they agreed to in contract negotiations.
The answer may need to be Chapter 11 so that the companies are restructured. You need to be careful how it is done so it isnt done for the favour of managemnt, single investors or the unions alone. The old saw is only the government can decide whose ox gets gored when there isnt enough food to feed the village.
These long temrm costs are the problem, they cost money and most importantly they take management time. Honestly, is there any reason mgt should spend one minute discussing the huge bureaucracy that manages health benefits at GM and not spend time discussing new cars, better cars and all the details that flow from it?
The overcapacity in the industry has been known for 25 years. It just isnt possible to float keep it all going now, or engage in slow orderly shutdowns, because they delayed the decision.
Canadianas and Americans will continue to produce cars, its at what wage and who for. Spend too much time discussing it and you’ll lose the whole industry.
There will be major pension and health care reform that comes out of this. In the US, I wouldnt be surprised to see this as the excuse to bring in universal health care, they’ll do it to save the car companies because then GM can shred the contracts and hand off significant costs to a government plan. Estimates are that helath and bennie costs for retirees are on the order of $5,000 per car!! Thats the costs that kills.
I agree that contrcats need to be respected…but when a contract is no longer tenable, despite best efforts then it needs to be recast. The companies will take a bankruptcy bath, trough Chpter 11 and emerge less encumbered, but shreholders and retirees and current workers are about to take it in the neck.
This has been a long time coming, the ONLY thing the government can do is mitigate some of the pain, it can t stop it or delay it any longer.
How this relates to the crisis, in the past, as in good times, the companies could raise capital, which would then be raided by unions and execs. This credit criss means there is no money available, and the companies are in an incredibly weakened stake.
For Toronto’s sake, thank goodness the banks are in decent shape, in pain but not distress. There are two industries that fuel the GTA, Financial services and Automotive. If both went at the same time there would be tumbleweed rolling down king and Bay.
Ugly ugly times. Governments role at this time is to grease the wheels of transition and protect only what is startegic. Flaherty struck the right tone, help only those plants or situations which are in normal course sustainable operations…the rest we will have to deal with otherwise.
I will say again a big F N mess. And in due course metaphorical heads should be put on metaphorical spikes, a little early for that yet but the time will come. And the blame is in some surprising areas…..getting ahead of that curve politically will be important.
On one of the other threads somebody mentioned the reason the Big Three started the whole SUV thing: taxes.
CAFE standards dictate that cars be a certain size and get a certain mileage…but not “trucks”. Nobody wants those cars. They want the truck because its bigger and it can get out of its own way. So Detroit builds trucks. Duh.
V8 rear wheel drive, that’s what people want.
Nobody makes that anymore. So the Japanese and Korean cars have a huge advantage, because they are tooled up and trained up to make front-drive four bangers. Any possibility that British or Italian cars might compete got killed by their respective governments in the 1960’s.
Fast forward a while, we have ever tightening CAFE standards, ever more obscene union demands, ever more intrusive regulation of workplace and etc. etc. et bloody cetera.
So cars cost $30-$50k. So you have to get a LOAN, because nobody these days can -safe up- $30k in the lifetime of the average car. That being five years. So, pretty soon your frickin’ dog can qualify for a car loan.
Suddenly, you can’t get a loan. Because SOMEBODY, the same geniuses who were responsible for the CAFE standards and the regulations and the unions and the health care costs and the lawsuit insurance blah blah blah, decided they were going to do for house loans what had already been done for car loans. Now your dog can get a house loan to go with his car loan.
Lasted what, nine years?
Who was responsible for all that? Who did that? The US government, that’s who. Sometimes the Dems, sometimes the Repugnicans, but always socialists trying to central plan their way to The Workers Paradise.
So yeah, I think maybe they should bail them out seeing as how they put them under in the first place. And when the bailout fails, as it will, the socialists can raise taxes and nationalize the companies. Which will go broke. Again.
At some point in this process it will become obvious to the general public that Big Government isn’t working. Then we will have smaller government. Eventually.
Mazda guy myself. I guess Ford owns a piece of the action but so far they haven’t screwed it up.
The Big 3 are a money pit. No amount of money thrown their way can save them. Bankruptcy will be painful but is necessary.
I’m a dedicated half-ton guy. I drive a GMC or a Chevy. Pretty much the same thing. That could be a problem right there. Why would GM have both? They are the same truck. Doesn’t make much sense to me.
The way things are going I may have to consider a Toyota Tundra. The “trade-in value” of my GMC is probably going down fast.
But, I agree – no bailout. Let them go.
When I was a kid the most popular and affordable cars out west came from England. Austin, Morris, etc Very poor management,a greed y Union along with foolish Government killed the British owned industry. They nationalized Austin, Morris into British Leyland and that didn’t help.
Today, no British owned car company exists.
Strangly (or not) cars are produced in great Britian by many other car mfg’s.
The bottom line is that the big three and thier Unions have been beaten in the market plaace by thier compettitors.
When the public decides that they want cars made by a new batch of car makers instead of the big 3
no government should interfear with that choice.
For the workers at Ford, CHrysler and GM here in Canada..,. they should thank thier home grown “RED BARON” Buzz, for joining with poor management in destroying a great Industry.
Our Governments should accept that the consumer has chosen to avoid buying from the BIG3
Save our Tax dollars for something worthwhile.
p.s. yes I own a Dodge 1 ton and my wife drives a Vibe.. (choices)
Sadly, there will be a bailout any way you look at it.
It would be good to let them go into chapter 11 before helping so that they can be re-organized.
But any way you slice it, the ERISA laws will kick in if they go under. Thanks to the Dems union pandering decades ago, the union shops were allowed to promise unsustainable retirement benefits which they didn’t have to fully fund. The US taxpayer is going to get to do that. All defined-benefit pensions (which only union and government hacks get any more,) are insured in the US.
That means that bailout before or bailout after, bailout there will be. Hopefully, it’s after chapter 11. They need to shed the unions and force the bond holders to take a haircut. The equity holders will get zero (which, some analysts are already calling.)
Warwick,
Thank you for mentioning the pension piece, defined benefit.
While the Canadian government is reconsidering pension rules, they should outlaw defined benefit plans, only to take them off the table for union demands. Save companies and unions form themselves. Leave it at defined contribution and then there are no lingering liabilities down the road for comapnies to poach or unions to negotiate higher bennies on.
Its for each sides own good. Outlaw these creatures now and force conversion of existing ones, provide assistance to do so. They are corrosive promises, either false hopes for workers or an unecessary drain on companies.
While there have been bailouts in the past that have worked (Lee Iaccoca Chrysler), the reality is that most bailouts just wind up encouraging the recipients to continue exactly the same as what they have been doing.
In the false hope the good old days will return and then we’ll pay it all back.
Hands down winner so far in this thread is Dave with the Toyota engineers designing good, quality cars versus Detroit accountants designing Detroit dollar signs, ooops, I mean cars. That is as true as it gets.
And to think of all the years that Buzz Hargove pleaded poverty!
Autoworkers making almost $75/hr. Hah, they wish. The average wage is about $25/hr for autoworkers at the Big 3 in Canada. Benefits are at most about $15/hr. Outside of the Big 3, average wages are only a few dollars less per hour mainly due to their slightly younger workforce (experienced workers earn more) but that gap continues to shrink.
Ontario teachers make $94,000?!? Dave, check your numbers: a teacher in the top pay category of the current contract, with the maximum years of experience, makes $10,000 less than that — and teachers who are in lower pay categories or are “working their way up the grid” make considerably smaller sums. Remember, too, that many of these people have a couple of university degrees, and the potential to make considerably more in the private sector if they so chose.
McClelland,
You’re an economic illiterate/leftard – which is the same thing.
The labour costs include days off (sick as well as vacation,) health, pension, wages, benefits, and includes the cost of retired employees as well as working employees.
They include those not working as they still have to pay for them. In fact, GM’s retired workers cost them more than the people currently building what they refer to as their product.
The figure is the COST of labour and is an accurate figure.
BTW, I am wondering when Lawrence Solomon is going to weigh in on this subject?
He is the Toronto-based writer that wrote many, many columns that ridiculed the federal govt for spending tax dollars on western agriculture.
He said it was a complete waste of money to ‘subsidize’ agriculture in the Palliser Triangle and most of Western Canada.
Has anybody seen anything Lawrence’s position on the auto industry bailout?
Robert,
This is why I wish the source broke out what is in the calc. It is likely the unsustainable pensions and health bennies. SO each car isnt carrying just the “burden” of mgt overhead, direct labour and other inputs but the past legacy of all ex employees.
As somone pointed out here or otherwise, GM has moved to change this with the union but the effects wont really be felt till till either 2010 or 2012.
You could make the car everybody wants and it would still be a problem until the new structure kicks in.
In normal times GM, in partiucular, would have muddled through till that time, raising either some debt or additional equity to tide it over till their new cost structure started to yield benefits.
One option on the table, if it was about a single company, was providing the funding to accelerate that chnage to yield the new costs structure. Then you could walk away saying its all down to business finally and not some legacy that the government played direct and indirect roles in creating. And that is the question all sides have to face.
This isnt just GM mgt fault, not just the workers. If the last 50 years had been a true negotiation, without the government thumb on the scale in a number of areas, requirements to builf certain types of cars, tax incentives to build others, favours to unions in certifications etc then a more rational result might have been the result. But there is lots of time to deal with that later.
There is continued overcapacity on the car industry, massive new investments are required in the normal course of business and there are new things coming down the pipe that will require additional new investment. Investment is hard to come by right now, these arent normal times, so government has to be prudent about what it does, who it helps and who it chooses to let slide beneath the waves, because some have to but not all.
This is when I really wish we had a majority government. But Harper looks to be playing it smart and trying to ensure that as many groups as possible are in the boat with him making the decision. A proper process makes the inevitable cuts easier to implement.
Big F N mess.
Robert,
This is why I wish the source broke out what is in the calc. It is likely the unsustainable pensions and health bennies. SO each car isnt carrying just the “burden” of mgt overhead, direct labour and other inputs but the past legacy of all ex employees.
As somone pointed out here or otherwise, GM has moved to change this with the union but the effects wont really be felt till till either 2010 or 2012.
You could make the car everybody wants and it would still be a problem until the new structure kicks in.
In normal times GM, in partiucular, would have muddled through till that time, raising either some debt or additional equity to tide it over till their new cost structure started to yield benefits.
One option on the table, if it was about a single company, was providing the funding to accelerate that chnage to yield the new costs structure. Then you could walk away saying its all down to business finally and not some legacy that the government played direct and indirect roles in creating. And that is the question all sides have to face.
This isnt just GM mgt fault, not just the workers. If the last 50 years had been a true negotiation, without the government thumb on the scale in a number of areas, requirements to builf certain types of cars, tax incentives to build others, favours to unions in certifications etc then a more rational result might have been the result. But there is lots of time to deal with that later.
There is continued overcapacity on the car industry, massive new investments are required in the normal course of business and there are new things coming down the pipe that will require additional new investment. Investment is hard to come by right now, these arent normal times, so government has to be prudent about what it does, who it helps and who it chooses to let slide beneath the waves, because some have to but not all.
This is when I really wish we had a majority government. But Harper looks to be playing it smart and trying to ensure that as many groups as possible are in the boat with him making the decision. A proper process makes the inevitable cuts easier to implement.
Big F N mess.
Chesswiz is correct. My wife is a primary school teacher and she’s one year off the top of the scale and doesn’t make close to 94k.
Nah, it’s just the beginning. What’s next are governemnt employee pension shortfalls, they are all DB type and the legacy costs are beyond what a resonable person would pay for, contract or no contract. The taxpayer is on the hook for them, paid for by us BEFORE we get to pay for our own.
The actual people in government who will decide the results of this looming fiasco, have a conflict of interest – they are also recipients of government DB pensions.
Mucho apologies over double post
Logically, GM will arrange a working line of credit, (either prive hands holding bailout money), or direct bailout funds, file for protection, void all contracts, leases, default on the pension plans, (forced in place by GOVERNMENT, not unions), shut down and sell off obsolete plants and THEN gobble up the remains of Chrysler and strip it down as well. This will save the military divisions, and ensure continued production. Are you aware that Allison Division, (Automatic transmissions), is operated under military command with full military security?
As another mentioned, the CAFE standards mandated everyone drive Ugos, and the demand was there for trucks and SUV’s. Unfortunately, manufacturers can’t change production as fast as fickle consumers can change their minds. Back in the dark ages, (the seventies) I worked for Hertz Truck division, Ford told us that Hertz was 35% of their market,and US governments were 45%.
When I worked for Chrysler in the late ()’s, 60% of all Chrysler vehicles were purchased by US governments. It was rumoured that the failure of Chrysler in the Carter years was due to the US government cutting back on military spending on vehicles.
IanV
Elementary school teachers in Ontario earn an average $80,392 in salary and benefits, according to the ministry of education. Secondary school teachers earn slightly more, an average of $83,543.
With the wage increases on offer, the average elementary school teacher’s salary will rise to $90,481 in four years.
I’m a pretty young guy and I bought a 2006 Ford Fusion over a similar Honda Accord/Toyota Camry because it was $7,500 less and had 0% financing rather than the 7.25% financing that Honda and Toyota were offering at the time; the Honda and Toyota were nicer cars, but there was a $10,000 premium for owning them. If it wasn’t for unpaid liabilities to retired union workers the total price difference would have been much more dramatic.
The American automobile manufacturers can compete in the marketw, but certain liabilities need to be eliminated and they have to survive long enough to move into a new market segment … Back in the day people bought Japaneese cars because they were dramatically cheaper than American cars, if the big three survive we may see the reversal of this trend.
pete,
That figure includes benefits. The figure from Dave above claimed 94k NOW ++ benefits.
The problem with teachers isn’t their pay but their lack of accountability. The unions only protect the teachers who should have been fired long ago. My wife complains about the bad teachers all the time. She’s a good Scot with a proper work ethic. She doesn’t look kindly to the lack of effort and professionalism shown by some of her peers.
Given the average age of teachers, the unions have also sold out younger teachers. Boomer’s greed again. May they die young.
Un-fortunately Kate, I firmly Believe Bush is gona bail the Big-3 out.
We Conservatives had it made when Bush came on board, but how quickly it all came apart. Bush and Roves Amnesty Plan pretty much killed the GOP and now if they appoint Steele to head the RNC it will finish us off. There is no accountability or transparency left in our Gov’t.
Get what you can, stash what you can, take out what you can, and cash it in if you can and hang on, it’s gona be a rough 4 year ride.
ps.. the Pontiac Vibe is a Toyota Matrix, and isn’t the Ford Fusion a Mazda something or other ?
Bottom line on bailouts, USA, Obama. Canada, electoral numbers, we still need a majority of Ontario votes for a conservative majority. As far as Iām concerned bailouts are a given, hardly worth discussion.
Kate you are right.
Unfortunately the auto industry has in essence become a form of welfare.
Quality isn’t that great, never has been. Ergonomics of most US auto designs is terrible. No such thing as a refined, well-engineered small engine from any of the US auto companies. Big is better has always been their engineering and business motto.
And workers are way overpaid.
It’s a rotten situation all around.
The gov’t would be better off taking their money and using it to seed some NEW auto companies that are able to bring fresh ideas to design, and that don’t have union shops.
The big US auto companies are dinosaurs that need to be left to become extinct. The US will be better off in the long term.
The notion that companies are used as a form of welfare is very European.
RockyT, you know, I can’t really agree with you on the design thing. I have a Dodge 1/2 ton truck which I love, a Honda Pilot which bores me but is a really fine vehicle in all other respects, and a Chrysler Intrepid which is like 13 years old and still working just fine. Boring, but fine.
My all time favorite cars I’ve ever owned were a 1976 Pontiac Lemans and a 1978 Oldsmobile Delta 88. I bought them both for under $1000, and drove the hell out of them. The all time worst POS I ever had was a 1978 Honda Accord. Where the Yankee iron kept on chugging, the Honda lost a wheel bearing on the 401, lost a pair of front brake pucks on the Gardiner Expressway (exciting!), and burned oil like a smudge pot. Impossible to work on, everything teeny weeny.
My Pilot works 100%, my sister’s Element toasted its brakes once and blew the front and rear diffs and transmission already at three years old. All depends, doesn’t it?
All things considered, I like the older American cars and newer trucks because I can FIX the damn things. The rice and the front drive American cars a hell to work on. Bad design forced into service by asinine government interference and weak kneed managers.
Trent, the 24 man-hour figure is what the company tells us it takes. This is when they are telling us that we must reduce that time to be more competitive. Obviously, a reduced time would mean the labour cost is an even smaller part of the vehicle’s cost. As for sub-components, they are beyond the control of the Big Three’s employees, aren’t they? So if the companies choose to outsource and are taken to the cleaners by other manufacturers, how is that the fault of those overpaid slobs who only screw nuts onto bolts? How is outsourcing considered to be a labour cost?
Finnbar,
How about doing a bit of analysis instead of just conjecture. Let’s compare GM to Toyota shall we? EBITDA margins at Toyota are 15% (approx). They are 2,5% at GM. That’s a 12.5% difference! If you assume GM could somehow make the same margins at Toyota, it would (assuming it managed its working capital properly) be able to invest an extra 23B per year in capex to improve its products. So obviously, the inferiority of GM’s product line has to do with the fact that it makes less money on the cars it sells.
So let’s delve into this further. What are GM’s costs? A huge portion is raw materials (steel, aluminum, plastic). It is doubtful Toyota could gain such an advantage on that front. The other big cost are fixed costs related to running plants. That is mostly energy and operational costs. Again, improbable that Toyota could gain such an advantage from this. The last major component is labour. Look it up, estimates of Toyota’s advantage in terms of labour costs range between $1500 and $3000 per car. So if your average car costs $18 000, it is perfectly logical to conclude that the Toyota advantage comes from it’s labour efficiency. How is this not the union’s fault???
Please do your homework and think before spouting your economically and financially illiterate opinions.
Ted Turner appeared Tuesday on CNN, the network he founded….
CNN: [Obama] seems to be talking about a lot more government involvement in the business community going forward, more government money for an auto industry bailout, another economic stimulus package. As a person who pulled [himself] up in the business community from his bootstraps, is that the way to do it, with more government involvement?
Turner: Well, I don’t think so. It was a struggle financing CNN, but I did it without ever asking the government for a nickel. In fact, I gave the government $32 million when they were a little short and couldn’t pay the dues to the U.N. http://www.cnn.com/2008/SHOWBIZ/books/11/11/turner.qanda/
If Chevy went back to making a basic pickup truck?
I’d buy another in a heartbeat.
Never any major issues and held up when I got hit by a drunk driver in a Dodge Ram.
I hate the “luxury liners” anyone cranks out anymore.
The Titanics of Deeeetroit they are.
I have a question for you Kate, what do you and your husband do for a living and what was your gross income in 2007 – 2008?
That graph shows who’s really responsible for the downfall of the beloved automotive industry on this continent. I wish I could make that kind of money putting a nut and a bolt together. Unfortunately, there is no reason to believe Bush will choose the wise path. He bailed out a rotten system once and he will only prolong the slow, choking death of the Big Three.
Kate
Two words..union spoilt. Productivity decreases with each collective agreement and the legacy of men who busted their balls is diminished by their spoilt offspring. The functionaries within the “movement” pad their nests and the whole concept of quality is rejected in lieu of fake solidarity.
Disgraceful.
Syncro
Though I happily voted for Harper, I do have some fears that the Cdn gov’t will be bailing out the Big 3 autoworkers in Ontario & Quebec too.
It would be fascinating to show poll respondents the graph and then ask them whether they think the autoworkers should be bailed out with our tax dollars.
It all started 40 years ago.
Union; Give us big money and pensions (from R&D kitty if ya have to) or we strike.
Management; Ok, we will just bolt on a new tailfin for next years model.
Meanwhile, Honda and Toyota perfected their crankshafts and made every button and lever work to perfection and encouraged the workforce to innovate, with reward.
In my day – first 11 vehicles were Fords and GMs. The last 3, Honda and Toyota. The kids ? All Honda and Toyota.
Not gloating. I really do think it is sad Sad SAD
Bailing out the NA auto makers now will only delay the inevitable at the expence of taxpayers.
Either the Unions go or the Manufacturers go.
(Syncro, I think the term roont is more apt than spoilt) š
Related:
Look at slide #4 (on page 2]
http://www.boomertirement.org/documents/Moshe-Milevsky-Boomertirement-Presentation-Slides.pdf
Big 3 US automakers have an unsustainable business model. Defined Benefit Pensions, retirees living longer.
Chart of Retirees per 100 workers: Toyota, 2; Honda, 5; Nissan, 11; Ford, 125; Chrysler, 153; GM, 310. ref: NYT May 19, 2006 (C5). The hidden liability of DB Pensions will eventually sink the ship; it’s inevitable. Let.Them.Go. A little more of interest in the other slides.
In my day – first 11 vehicles were Fords and GMs. The last 3, Honda and Toyota. The kids ? All Honda and Toyota.
Not gloating. I really do think it is sad Sad SAD
Posted by: ron in kelowna at November 11, 2008 1:43 AM
Back in my early driving days, I had an extremely unhappy experience with a Ford vehicle. It was easily the most unreliable vehicle I have every driven.
After that, I moved onto a Suzuki model vehicle. I ended up not really liking the vehicle, but reliability was not one of the problems — mainly poor fuel economy bothered me.
My last three vehicles, all Honda. I won’t even look at another model. Bought my first Honda back in 1997, and it was easily the best vehicle I’d ever driven, from fuel economy to reliability, top marks.
I have a feeling I’m but one person telling such a story. All due to a poorly engineered and designed Ford product, I have avoided North American vehicles since. Like Ron, not gloating here … just stating my own personal experience. I would personally prefer to see the “Big 3” auto companies in strong financial shape.
My 1987 Chrysler LeBaron had a great engine and drive train but the damn alternator kept crapping out and the plastic fittings around the window frames never fit. The dealer’s attitude: it’s your problem, you bought it! My 1997 Saturn SL1 was good but the crankshaft bent at 136,000 km. The dealer’s attitude? The warranty has expired.
Shopping for my current vehicle, the local Ford dealer was too busy holding a party for Mustang buyers to deal with us. After that brush off we only considered Honda and Toyota. We bought a 2005 loaded Honda van. Best decision I ever made. Now I am shopping for a second commuter car and GM, Ford and Chrysler do not receive a moment’s consideration.
Let. Them. Go. They are authors of their own misfortune.
Saskboy, let’s do a little math, shall we? Let’s take Kate’s quoted figure as gospel (remember this figure is what the manufacturer says they pay), $73.20. Let’s multiply that by the industry’s quoted number of hours to build a vehicle, in fact, let’s round it up to 24 hours. The product of those numbers is less than $1800. It’s been quite a while since you could buy a Big 3 vehicle for 18 grand, so the labour cost is less than 10% of the price of a vehicle. If I worked for free, the price would still be over 90% of what it is now, even if they did reduce it by the labour cost. So, if I did work for free, who would you blame then?
Saskhab, let’s do the math. Taking Kate’s figure of $73.20 (a figure given by the manufacturer, let’s remember) and multiply by the 24 hours it takes to build a car. The result is less than $1800. It has been quite a while since you could buy a Big 3 vehicle for 18 grand, so the labour cost per vehicle is less than 10%. If I worked for free, and they actually reduced the price by the labour cost, the vehicle would still cost over 90% of what it does now. Who would you blame then?
finnbar,
Does it only take 24 man hours to assemble a car? What about all of the parts that go into it? It would be good to know just how many man hours are required to build an automobile.
While its easy to trash the NA car biz, reality is, since WWI, it has been the single most important economic engine building the NA economy. Be careful what you wish for. The high wages of the industry have provided the cash flow for much of the consumer portion of all western economies, and the seed capital for many post war recoveries, Japan being a prime example. Oil wasn’t a big player until relatively recently. The collapse of the North American auto industry could be the tipping point into a full scale depression.
“I have a question for you Kate, what do you and your husband do for a living and what was your gross income in 2007 – 2008?”
A post that prompted the right Lefty question. What world might the auto union workers live in after their bubble bursts you mean? When they have to earn their own living?
There was a time when unions were important. That time has long past. Now unions are one of the most destructive things the North American economy has ever known.
And given their political sister – socialism – unions are one of the most destructive things our political system has ever known.
Cleanse the system. Let them die.
Some of the comments seem to imply that Americans and Canadians would not be making automobiles if GM, Ford, and Chrysler went under. Is it not true that most of the well managed anuto manufacturers have plants in North America?
I spent my life listening to these potbellied, unskilled bozos bragging about how much money they made – not mention laughing about how little work they did.
This bailout will simply prolong the agony. People paid little attention, but the big 2.5 automakers were going broke long before the so-called meltdown. The timing works for them, now they can call for a handout without exposing their inherent weakness. A few years from now they’ll be back for more.
It seems autoworkers are the protected class, we are all supposed to make sacrifices for these people. Ontario has lots of unspoiled wilderness left, I say it’s time to build a nature preserve and museum for this endangered species; they can demonstrate their lost art of bolting little parts to big parts.
Union wages are why the big three are opening new facilities outside of US and Canada, not why they’re doing so poorly in terms of sales. They couldn’t effectively compete with Toyota and Honda in the car market based on design and quality, so they put all of their efforts into the pickup and suv market. Now those markets are drying up, and suddenly they’re hurting.
There was an excellent book called the Death of Detroit written some 5 years ago. The author pointed out that Toyota and others were headed by engineers and their focus was on the customer and the quality of the car whereas Detroit was headed by accountants focused on how much profit they could make from each vehicle hence the larger the more profit. As all unions do UAW and CAW demanded always more for less. They are no different here in Canada where they are demanding the same taxpayer help. The non-union car companies are still doing well here.
Toyota and the others moved to the bible belt away from the Detroit area and built flexible lines with highly trained and well paid non-union workers.
When I was in Kansas city airport in July I was astounded at the thousands of new Ford SUVs sitting on paved lots never to be sold. Look around you and count the percentage of the Big 3 to the other car manufacturers like Honda. People are buying value and have been for a long time.
Let the market decide and if these companies fail they fail. Remember all the companies that provide the parts supply the other non-union companies too and these successful car companies will expand into the larger market.
The truly sad thing is that whereas the union and non-union employees of the Big 3 will suffer our huge public employee unions grow larger each day as private union and non-union companies shrink and are affecting our whole society. A primary school teacher now makes $94,000 in Ontario plus rich benefits.
I live in Windsor,ON. the automotive capital of Canada ruled by CAW thuggery, dare speak up against them you will suffer reprisals.
Ingrate CAW thugs and money grubbing executives will be all looking for a golden parachute at the expense of the taxpayers.
Ken Lewenza will scream bloody murder and bite the hand that saves his CAW.
So I say NO minister Flaherty to any bailout.The sooner the automotive industry dies the faster the CAW will disappear.
To all you CAW members – who needs your business when you come in looking for CAW discounts. Get a job.
odd how it is only the unionized auto companies that have all the problems. Bad management, greedy unions, crappy products.
Ya . . just prime for a bailout.
Wonder if they’ll bail out Honda & Toyota ?
. . as for me – never owned a “big 3” car. Started with a 72 Datsun 510 that died at 300k miles – then Hondas since. Recently “upgraded” to an Acura TL.
I am a very happy car driver.
I am perfectly happy to pay high taxes so that people whose only skills are political can make more money than me. Why shouldn’t I be? We are in Obamopia, after all.
I wish they broke out the costs better. They indicate total compensation…so how much of that is direct labour and how much of that is pension and health care liabilities or payments.
GM has moved to address some of this but GM was effectively a Health Care and Retirment Management company based on the programs that they agreed to in contract negotiations.
The answer may need to be Chapter 11 so that the companies are restructured. You need to be careful how it is done so it isnt done for the favour of managemnt, single investors or the unions alone. The old saw is only the government can decide whose ox gets gored when there isnt enough food to feed the village.
These long temrm costs are the problem, they cost money and most importantly they take management time. Honestly, is there any reason mgt should spend one minute discussing the huge bureaucracy that manages health benefits at GM and not spend time discussing new cars, better cars and all the details that flow from it?
The overcapacity in the industry has been known for 25 years. It just isnt possible to float keep it all going now, or engage in slow orderly shutdowns, because they delayed the decision.
Canadianas and Americans will continue to produce cars, its at what wage and who for. Spend too much time discussing it and you’ll lose the whole industry.
There will be major pension and health care reform that comes out of this. In the US, I wouldnt be surprised to see this as the excuse to bring in universal health care, they’ll do it to save the car companies because then GM can shred the contracts and hand off significant costs to a government plan. Estimates are that helath and bennie costs for retirees are on the order of $5,000 per car!! Thats the costs that kills.
I agree that contrcats need to be respected…but when a contract is no longer tenable, despite best efforts then it needs to be recast. The companies will take a bankruptcy bath, trough Chpter 11 and emerge less encumbered, but shreholders and retirees and current workers are about to take it in the neck.
This has been a long time coming, the ONLY thing the government can do is mitigate some of the pain, it can t stop it or delay it any longer.
How this relates to the crisis, in the past, as in good times, the companies could raise capital, which would then be raided by unions and execs. This credit criss means there is no money available, and the companies are in an incredibly weakened stake.
For Toronto’s sake, thank goodness the banks are in decent shape, in pain but not distress. There are two industries that fuel the GTA, Financial services and Automotive. If both went at the same time there would be tumbleweed rolling down king and Bay.
Ugly ugly times. Governments role at this time is to grease the wheels of transition and protect only what is startegic. Flaherty struck the right tone, help only those plants or situations which are in normal course sustainable operations…the rest we will have to deal with otherwise.
I will say again a big F N mess. And in due course metaphorical heads should be put on metaphorical spikes, a little early for that yet but the time will come. And the blame is in some surprising areas…..getting ahead of that curve politically will be important.
On one of the other threads somebody mentioned the reason the Big Three started the whole SUV thing: taxes.
CAFE standards dictate that cars be a certain size and get a certain mileage…but not “trucks”. Nobody wants those cars. They want the truck because its bigger and it can get out of its own way. So Detroit builds trucks. Duh.
V8 rear wheel drive, that’s what people want.
Nobody makes that anymore. So the Japanese and Korean cars have a huge advantage, because they are tooled up and trained up to make front-drive four bangers. Any possibility that British or Italian cars might compete got killed by their respective governments in the 1960’s.
Fast forward a while, we have ever tightening CAFE standards, ever more obscene union demands, ever more intrusive regulation of workplace and etc. etc. et bloody cetera.
So cars cost $30-$50k. So you have to get a LOAN, because nobody these days can -safe up- $30k in the lifetime of the average car. That being five years. So, pretty soon your frickin’ dog can qualify for a car loan.
Suddenly, you can’t get a loan. Because SOMEBODY, the same geniuses who were responsible for the CAFE standards and the regulations and the unions and the health care costs and the lawsuit insurance blah blah blah, decided they were going to do for house loans what had already been done for car loans. Now your dog can get a house loan to go with his car loan.
Lasted what, nine years?
Who was responsible for all that? Who did that? The US government, that’s who. Sometimes the Dems, sometimes the Repugnicans, but always socialists trying to central plan their way to The Workers Paradise.
So yeah, I think maybe they should bail them out seeing as how they put them under in the first place. And when the bailout fails, as it will, the socialists can raise taxes and nationalize the companies. Which will go broke. Again.
At some point in this process it will become obvious to the general public that Big Government isn’t working. Then we will have smaller government. Eventually.
Mazda guy myself. I guess Ford owns a piece of the action but so far they haven’t screwed it up.
The Big 3 are a money pit. No amount of money thrown their way can save them. Bankruptcy will be painful but is necessary.
I’m a dedicated half-ton guy. I drive a GMC or a Chevy. Pretty much the same thing. That could be a problem right there. Why would GM have both? They are the same truck. Doesn’t make much sense to me.
The way things are going I may have to consider a Toyota Tundra. The “trade-in value” of my GMC is probably going down fast.
But, I agree – no bailout. Let them go.
When I was a kid the most popular and affordable cars out west came from England. Austin, Morris, etc Very poor management,a greed y Union along with foolish Government killed the British owned industry. They nationalized Austin, Morris into British Leyland and that didn’t help.
Today, no British owned car company exists.
Strangly (or not) cars are produced in great Britian by many other car mfg’s.
The bottom line is that the big three and thier Unions have been beaten in the market plaace by thier compettitors.
When the public decides that they want cars made by a new batch of car makers instead of the big 3
no government should interfear with that choice.
For the workers at Ford, CHrysler and GM here in Canada..,. they should thank thier home grown “RED BARON” Buzz, for joining with poor management in destroying a great Industry.
Our Governments should accept that the consumer has chosen to avoid buying from the BIG3
Save our Tax dollars for something worthwhile.
p.s. yes I own a Dodge 1 ton and my wife drives a Vibe.. (choices)
Sadly, there will be a bailout any way you look at it.
It would be good to let them go into chapter 11 before helping so that they can be re-organized.
But any way you slice it, the ERISA laws will kick in if they go under. Thanks to the Dems union pandering decades ago, the union shops were allowed to promise unsustainable retirement benefits which they didn’t have to fully fund. The US taxpayer is going to get to do that. All defined-benefit pensions (which only union and government hacks get any more,) are insured in the US.
That means that bailout before or bailout after, bailout there will be. Hopefully, it’s after chapter 11. They need to shed the unions and force the bond holders to take a haircut. The equity holders will get zero (which, some analysts are already calling.)
Warwick,
Thank you for mentioning the pension piece, defined benefit.
While the Canadian government is reconsidering pension rules, they should outlaw defined benefit plans, only to take them off the table for union demands. Save companies and unions form themselves. Leave it at defined contribution and then there are no lingering liabilities down the road for comapnies to poach or unions to negotiate higher bennies on.
Its for each sides own good. Outlaw these creatures now and force conversion of existing ones, provide assistance to do so. They are corrosive promises, either false hopes for workers or an unecessary drain on companies.
While there have been bailouts in the past that have worked (Lee Iaccoca Chrysler), the reality is that most bailouts just wind up encouraging the recipients to continue exactly the same as what they have been doing.
In the false hope the good old days will return and then we’ll pay it all back.
Hands down winner so far in this thread is Dave with the Toyota engineers designing good, quality cars versus Detroit accountants designing Detroit dollar signs, ooops, I mean cars. That is as true as it gets.
And to think of all the years that Buzz Hargove pleaded poverty!
Autoworkers making almost $75/hr. Hah, they wish. The average wage is about $25/hr for autoworkers at the Big 3 in Canada. Benefits are at most about $15/hr. Outside of the Big 3, average wages are only a few dollars less per hour mainly due to their slightly younger workforce (experienced workers earn more) but that gap continues to shrink.
Ontario teachers make $94,000?!? Dave, check your numbers: a teacher in the top pay category of the current contract, with the maximum years of experience, makes $10,000 less than that — and teachers who are in lower pay categories or are “working their way up the grid” make considerably smaller sums. Remember, too, that many of these people have a couple of university degrees, and the potential to make considerably more in the private sector if they so chose.
McClelland,
You’re an economic illiterate/leftard – which is the same thing.
The labour costs include days off (sick as well as vacation,) health, pension, wages, benefits, and includes the cost of retired employees as well as working employees.
They include those not working as they still have to pay for them. In fact, GM’s retired workers cost them more than the people currently building what they refer to as their product.
The figure is the COST of labour and is an accurate figure.
BTW, I am wondering when Lawrence Solomon is going to weigh in on this subject?
He is the Toronto-based writer that wrote many, many columns that ridiculed the federal govt for spending tax dollars on western agriculture.
He said it was a complete waste of money to ‘subsidize’ agriculture in the Palliser Triangle and most of Western Canada.
Has anybody seen anything Lawrence’s position on the auto industry bailout?
Robert,
This is why I wish the source broke out what is in the calc. It is likely the unsustainable pensions and health bennies. SO each car isnt carrying just the “burden” of mgt overhead, direct labour and other inputs but the past legacy of all ex employees.
As somone pointed out here or otherwise, GM has moved to change this with the union but the effects wont really be felt till till either 2010 or 2012.
You could make the car everybody wants and it would still be a problem until the new structure kicks in.
In normal times GM, in partiucular, would have muddled through till that time, raising either some debt or additional equity to tide it over till their new cost structure started to yield benefits.
One option on the table, if it was about a single company, was providing the funding to accelerate that chnage to yield the new costs structure. Then you could walk away saying its all down to business finally and not some legacy that the government played direct and indirect roles in creating. And that is the question all sides have to face.
This isnt just GM mgt fault, not just the workers. If the last 50 years had been a true negotiation, without the government thumb on the scale in a number of areas, requirements to builf certain types of cars, tax incentives to build others, favours to unions in certifications etc then a more rational result might have been the result. But there is lots of time to deal with that later.
There is continued overcapacity on the car industry, massive new investments are required in the normal course of business and there are new things coming down the pipe that will require additional new investment. Investment is hard to come by right now, these arent normal times, so government has to be prudent about what it does, who it helps and who it chooses to let slide beneath the waves, because some have to but not all.
This is when I really wish we had a majority government. But Harper looks to be playing it smart and trying to ensure that as many groups as possible are in the boat with him making the decision. A proper process makes the inevitable cuts easier to implement.
Big F N mess.
Robert,
This is why I wish the source broke out what is in the calc. It is likely the unsustainable pensions and health bennies. SO each car isnt carrying just the “burden” of mgt overhead, direct labour and other inputs but the past legacy of all ex employees.
As somone pointed out here or otherwise, GM has moved to change this with the union but the effects wont really be felt till till either 2010 or 2012.
You could make the car everybody wants and it would still be a problem until the new structure kicks in.
In normal times GM, in partiucular, would have muddled through till that time, raising either some debt or additional equity to tide it over till their new cost structure started to yield benefits.
One option on the table, if it was about a single company, was providing the funding to accelerate that chnage to yield the new costs structure. Then you could walk away saying its all down to business finally and not some legacy that the government played direct and indirect roles in creating. And that is the question all sides have to face.
This isnt just GM mgt fault, not just the workers. If the last 50 years had been a true negotiation, without the government thumb on the scale in a number of areas, requirements to builf certain types of cars, tax incentives to build others, favours to unions in certifications etc then a more rational result might have been the result. But there is lots of time to deal with that later.
There is continued overcapacity on the car industry, massive new investments are required in the normal course of business and there are new things coming down the pipe that will require additional new investment. Investment is hard to come by right now, these arent normal times, so government has to be prudent about what it does, who it helps and who it chooses to let slide beneath the waves, because some have to but not all.
This is when I really wish we had a majority government. But Harper looks to be playing it smart and trying to ensure that as many groups as possible are in the boat with him making the decision. A proper process makes the inevitable cuts easier to implement.
Big F N mess.
Chesswiz is correct. My wife is a primary school teacher and she’s one year off the top of the scale and doesn’t make close to 94k.
Nah, it’s just the beginning. What’s next are governemnt employee pension shortfalls, they are all DB type and the legacy costs are beyond what a resonable person would pay for, contract or no contract. The taxpayer is on the hook for them, paid for by us BEFORE we get to pay for our own.
The actual people in government who will decide the results of this looming fiasco, have a conflict of interest – they are also recipients of government DB pensions.
Mucho apologies over double post
Logically, GM will arrange a working line of credit, (either prive hands holding bailout money), or direct bailout funds, file for protection, void all contracts, leases, default on the pension plans, (forced in place by GOVERNMENT, not unions), shut down and sell off obsolete plants and THEN gobble up the remains of Chrysler and strip it down as well. This will save the military divisions, and ensure continued production. Are you aware that Allison Division, (Automatic transmissions), is operated under military command with full military security?
As another mentioned, the CAFE standards mandated everyone drive Ugos, and the demand was there for trucks and SUV’s. Unfortunately, manufacturers can’t change production as fast as fickle consumers can change their minds. Back in the dark ages, (the seventies) I worked for Hertz Truck division, Ford told us that Hertz was 35% of their market,and US governments were 45%.
When I worked for Chrysler in the late ()’s, 60% of all Chrysler vehicles were purchased by US governments. It was rumoured that the failure of Chrysler in the Carter years was due to the US government cutting back on military spending on vehicles.
IanV
Elementary school teachers in Ontario earn an average $80,392 in salary and benefits, according to the ministry of education. Secondary school teachers earn slightly more, an average of $83,543.
With the wage increases on offer, the average elementary school teacher’s salary will rise to $90,481 in four years.
I’m a pretty young guy and I bought a 2006 Ford Fusion over a similar Honda Accord/Toyota Camry because it was $7,500 less and had 0% financing rather than the 7.25% financing that Honda and Toyota were offering at the time; the Honda and Toyota were nicer cars, but there was a $10,000 premium for owning them. If it wasn’t for unpaid liabilities to retired union workers the total price difference would have been much more dramatic.
The American automobile manufacturers can compete in the marketw, but certain liabilities need to be eliminated and they have to survive long enough to move into a new market segment … Back in the day people bought Japaneese cars because they were dramatically cheaper than American cars, if the big three survive we may see the reversal of this trend.
pete,
That figure includes benefits. The figure from Dave above claimed 94k NOW ++ benefits.
The problem with teachers isn’t their pay but their lack of accountability. The unions only protect the teachers who should have been fired long ago. My wife complains about the bad teachers all the time. She’s a good Scot with a proper work ethic. She doesn’t look kindly to the lack of effort and professionalism shown by some of her peers.
Given the average age of teachers, the unions have also sold out younger teachers. Boomer’s greed again. May they die young.
Un-fortunately Kate, I firmly Believe Bush is gona bail the Big-3 out.
We Conservatives had it made when Bush came on board, but how quickly it all came apart. Bush and Roves Amnesty Plan pretty much killed the GOP and now if they appoint Steele to head the RNC it will finish us off. There is no accountability or transparency left in our Gov’t.
Get what you can, stash what you can, take out what you can, and cash it in if you can and hang on, it’s gona be a rough 4 year ride.
ps.. the Pontiac Vibe is a Toyota Matrix, and isn’t the Ford Fusion a Mazda something or other ?
Bottom line on bailouts, USA, Obama. Canada, electoral numbers, we still need a majority of Ontario votes for a conservative majority. As far as Iām concerned bailouts are a given, hardly worth discussion.
Kate you are right.
Unfortunately the auto industry has in essence become a form of welfare.
Quality isn’t that great, never has been. Ergonomics of most US auto designs is terrible. No such thing as a refined, well-engineered small engine from any of the US auto companies. Big is better has always been their engineering and business motto.
And workers are way overpaid.
It’s a rotten situation all around.
The gov’t would be better off taking their money and using it to seed some NEW auto companies that are able to bring fresh ideas to design, and that don’t have union shops.
The big US auto companies are dinosaurs that need to be left to become extinct. The US will be better off in the long term.
The notion that companies are used as a form of welfare is very European.
RockyT, you know, I can’t really agree with you on the design thing. I have a Dodge 1/2 ton truck which I love, a Honda Pilot which bores me but is a really fine vehicle in all other respects, and a Chrysler Intrepid which is like 13 years old and still working just fine. Boring, but fine.
My all time favorite cars I’ve ever owned were a 1976 Pontiac Lemans and a 1978 Oldsmobile Delta 88. I bought them both for under $1000, and drove the hell out of them. The all time worst POS I ever had was a 1978 Honda Accord. Where the Yankee iron kept on chugging, the Honda lost a wheel bearing on the 401, lost a pair of front brake pucks on the Gardiner Expressway (exciting!), and burned oil like a smudge pot. Impossible to work on, everything teeny weeny.
My Pilot works 100%, my sister’s Element toasted its brakes once and blew the front and rear diffs and transmission already at three years old. All depends, doesn’t it?
All things considered, I like the older American cars and newer trucks because I can FIX the damn things. The rice and the front drive American cars a hell to work on. Bad design forced into service by asinine government interference and weak kneed managers.
Trent, the 24 man-hour figure is what the company tells us it takes. This is when they are telling us that we must reduce that time to be more competitive. Obviously, a reduced time would mean the labour cost is an even smaller part of the vehicle’s cost. As for sub-components, they are beyond the control of the Big Three’s employees, aren’t they? So if the companies choose to outsource and are taken to the cleaners by other manufacturers, how is that the fault of those overpaid slobs who only screw nuts onto bolts? How is outsourcing considered to be a labour cost?
Finnbar,
How about doing a bit of analysis instead of just conjecture. Let’s compare GM to Toyota shall we? EBITDA margins at Toyota are 15% (approx). They are 2,5% at GM. That’s a 12.5% difference! If you assume GM could somehow make the same margins at Toyota, it would (assuming it managed its working capital properly) be able to invest an extra 23B per year in capex to improve its products. So obviously, the inferiority of GM’s product line has to do with the fact that it makes less money on the cars it sells.
So let’s delve into this further. What are GM’s costs? A huge portion is raw materials (steel, aluminum, plastic). It is doubtful Toyota could gain such an advantage on that front. The other big cost are fixed costs related to running plants. That is mostly energy and operational costs. Again, improbable that Toyota could gain such an advantage from this. The last major component is labour. Look it up, estimates of Toyota’s advantage in terms of labour costs range between $1500 and $3000 per car. So if your average car costs $18 000, it is perfectly logical to conclude that the Toyota advantage comes from it’s labour efficiency. How is this not the union’s fault???
Please do your homework and think before spouting your economically and financially illiterate opinions.
Ted Turner appeared Tuesday on CNN, the network he founded….
CNN: [Obama] seems to be talking about a lot more government involvement in the business community going forward, more government money for an auto industry bailout, another economic stimulus package. As a person who pulled [himself] up in the business community from his bootstraps, is that the way to do it, with more government involvement?
Turner: Well, I don’t think so. It was a struggle financing CNN, but I did it without ever asking the government for a nickel. In fact, I gave the government $32 million when they were a little short and couldn’t pay the dues to the U.N.
http://www.cnn.com/2008/SHOWBIZ/books/11/11/turner.qanda/
If Chevy went back to making a basic pickup truck?
I’d buy another in a heartbeat.
Never any major issues and held up when I got hit by a drunk driver in a Dodge Ram.
I hate the “luxury liners” anyone cranks out anymore.
The Titanics of Deeeetroit they are.