@Robert Gentel,
What's is this "we" crap? Have you got a mouse in your pocket? I am not obliged to restrict my observations to the points of view which you wish to pursue to the exclusion of ideas which occur to me.
The dealerships sure as hell won't be around long if the auto manufacturers go out of business. You choose to focus on labor costs as it relates to the profit margins of the manufacturers. One could as easily point out that executive salaries and perquisites are "not small when it comes to profit margins." One could as easily say that the wage and benefits packages of steelworkers, or of parts manufacturers employee wage and benefit packages matter. One could as easily say that the salaries and perquisites of the executives of steel manufacturers or parts manufacturers are not small when it comes to profit margins. It is a choice to focus on employee wages and benefits packages among a host of cost factors when discussing any value-added business.
Once again, the dealerships won't be in business long if the manufacturers go under. Many dealerships are owned in part or wholly by the auto manufacturers, and their relationship with dealerships of which they own no part is still crucial to moving the inventory they have created based on their projections about how many cars to manufacture based on estimates of how many cars they can sell, either through dealerships they own in part or wholly, as well as dealerships of which they do not own no part.
Quote:Can you come up with a way they (Detroit, not the dealerships mind you) can make a profit per vehicle at their current labor costs?
Sure, they need to produce a product which the consumer will either find as attractive as or prefer to the product produced by Japanese, Korean and German manufacturers.
As for the rest of your comments, once again, you might just as well focus on the cost of steel or parts due to labor wage and benefits packages. You might just as well focus on the cost of management in terms of their salaries, benefit packages and perquisites. To hammer the point home, they are in this mess because of their own arrogance, which seems to have prevented them from taking the steps necessary to compete effectively with Japan, Korea and Germany in a more timely manner. You can call the union costs overcompensation, and i don't necessarily disagree, which is why i reviewed the history behind the large wage and benefit packages which became the norm in the auto industry (and which, given the historic relationship between the auto industry and the steel industry, also accounts for the expensive wage and benefit packages which long obtained in the steel industry). That does not change, however, the basic
fact that the Detroit manufacturers (in all their locations, of course, in the United States and Canada) don't compete well with the products the Japanese, the Koreans and the Germans offer here. If you choose to focus on labor costs, while ignoring the costs of steel and parts, and the cost of bloated management, that's fine by me, but don't expect that you are somehow entitled to insist that nothing else if as important, or that labor costs are solely responsible for their failure to make a profit. I have already pointed out that Saturn was produced in Tennessee after GM made a deal with the UAW. My Jeep is a four-cylinder model available in the United States, Mexico and the rest of Latin America, but not in Canada, and not for export outside Latin America--and it is a metric model, and was wholly assembled in Mexico, before being brought back to the United States for sale. If that model were not profitable, one could hardly blame UAW costs for that. (By the way, it was profitable, but is no longer available in the United States, because with gas prices under $1 a gallon in the late 90s, and the SUV craze, Chrysler apparently decided they didn't need to offer it any longer to Americans, who were eagerly snapping Explorers and other such monstrosities. Just park a 2000 model year Explorer next to a 1990 model year Explorer and you can immediately see the result of the SUV craze when translated through the corporate culture of Detroit--the former is a behemoth compared to the latter, and the Explorer is generally credited with launching the SUV craze.)
There has been some discussion in these fora of the compensation received by executives of financial institutions which are to bailed out by the government, and the same point can be made about the auto manufacturers. When UAW workers at Chrysler took a pay cut, and Lee Iacocca earned more than $11,000,000 in pay, benefits, stock options and perquisites in the 1980s, that money would have paid the salaries of a good deal more than 200 assembly line workers, or more than a hundred of them if you combine wages and benefits packages. I am not convinced that Iacocca and only Iacocca could have turned the company around--Chrysler got loan guarantees from the Congress, and both the Dodge Omni and the Plymouth Horizon were unlooked for hits in the market, both of which models had been designed and put into production
before Iococca showed up. I question whether the entire executive culture of American businesses is justified, based as it is on an assumption of unique talent on the part of the "old boys" of the old boy network which acts constantly to preserve its privilege and pay. I rather suspect that young business school grads could do as well and for less money, and i rather suspect that huge cuts in the numbers of management positions would not adversely affect the efficiency of manufacturing operations, given the high efficiency of American and Canadian factory workers.
Detroit has done a lot to become more competetive, but they've got an uphill battle to overcome decades of customer disenchantment with their products and services. It will be a long haul, and making organized labor the villain of the piece will do nothing to restore the confidence of the consumer in the auto manufacturers, and will do nothing to make their offerings more attractive to the consumers.
