12
   

So typical-Obama auto team drives imports

 
 
roger
 
  1  
Reply Tue 24 Feb, 2009 01:30 pm
@kuvasz,
kuvasz wrote:

The typical American autoworker now produces a value added worth of $206 per worker per hour, far more than what they earn in wages and benefits.



You can support this contention?
Robert Gentel
 
  1  
Reply Tue 24 Feb, 2009 01:32 pm
@roger,
roger wrote:

kuvasz wrote:

The typical American autoworker now produces a value added worth of $206 per worker per hour, far more than what they earn in wages and benefits.



You can support this contention?


It's a claim from the UAW union site. I don't believe it includes the full range on non-hourly compensation.
0 Replies
 
Robert Gentel
 
  1  
Reply Tue 24 Feb, 2009 01:45 pm
@kuvasz,
kuvasz wrote:
Son, you don't know what you are talking about. The typical American autoworker now produces a value added worth of $206 per worker per hour, far more than what they earn in wages and benefits.


Bullshit. You are citing a figure from the auto union that does not include total compensation and that is not substantiated in the real world.

If you want to claim this as fact then prove it. You can't substantiate this number you regurgitate.

Quote:
Factor in the "alleged" $70/hour wage canard from right wingers like you and the company still get about three times the value for the worker's effort and sweat for the work he/she does.


Firstly, I am not a "right winger", no matter how fast and stupidly your knee jerks.

Secondly, show substantiation of this value you claim. I have read the Auto Workers Union claims as well. I don't find them to be credible but would love to see the numbers if I'm wrong.

Do you just buy their claim or do you have any special understanding of how this nebulous "value" is calculated, while their company can't sell at a profit or stay alive without bailouts.

Where is all this "value" you claim going?


Quote:
The average UAW assembly line worker makes $28.78 an hour. The $70 is not what they make on an hourly basis, but what GM says is its total hourly labor cost. Included in the higher figure are several costs most employers have to pay: Contributions for Social Security and Medicare; workers’ compensation and unemployment payments; holiday and vacation pay; pension contributions for active workers; health care; overtime; shift premiums; and education and training. Most importantly, this higher figure also includes pension and health care costs for retirees, so called “legacy costs.”


I understand this, however the legacy costs are part of their compensation packages, and are part of the inordinate compensation they receive. Just because it's not part of the hourly wage doesn't mean it's not a factor in the company's losses.

Quote:
I bet few individual's can say they are anywhere near as productive as the average UAW worker.


Sure they can, they can just pull numbers out of the air like the auto union did.

Quote:
Within that context, your remark is complete bull ****.


As long as "that context" is the auto worker's claim of how much value they provide. Care to substantiate that claim and explain where all this value is going? Why are we giving them billions if they are sitting on a gold mine of value here?

Quote:
Toyota’s CEO and its other top 31 top executives combined earned $19.9 million for Toyota’s fiscal year ending March 2007. Meanwhile, GM’s CEO Rick Wagoner made $10.2 million during that same time period (Pizzigati, 2008). And the total compensation for the just the top five executives at Ford for 2007 was $60 million.


So? I'm fine with cutting their compensation as well, but it just isn't a big factor in their losses. The executive pay may be inordinate but it doesn't translate into the cost per vehicle that the union workers add to the cars.

That too is another argument you lift directly from the auto worker union site. I've read it as well, and I don't see how the overcompensation of the executives justifies the overcompensation of the union workers.

Quote:
To further illustrate the double standards of anti-union critics, consider the example of the financial industry bailout.


The "double standards of anti-union critics" has nothing to do with whether the auto union is overcompensated and whether or not this is the primary reason Detroit sells at a loss per vehicle.

Quote:
Congressional critics of the auto manufactures’ bridge loan didn’t even whisper a word about labor costs on Wall Street when they passed the financial industry bailout, even though employee compensation for the seven largest financial firms account for 60 percent of their cost of doing business while labor costs at the Big Three amount to less than 10 percent of a vehicle’s cost.


I would have liked to see much more oversight and regulation with the financial bailout, but I don't think that the compensation of their employees would make a difference in their plight.

When you say their compensation is 60% of their "cost" you neglect that they aren't selling a product at a loss, they are incurring huge losses on bad investments that no amount of compensation reduction can solve.

In short, you could have cut the finance industry's compensation down to a dollar per man per year and you won't have solved their problems. However I contend that if the auto workers accept compensation in line with their competitors they can get out of the red largely through this alone.

Quote:
Considering these facts, either you are too lazy to care about the simple facts or are engaging in selective class warfare towards industrial workers to whom you look down upon as inferior beings, or as Orwell would call them "Prols." In either case, it sucks and you ought to be ashamed of yourself.


What "facts" are you claiming I am ignoring. I am familiar with all the claims you made, but I don't think for a minute that you've established them as "fact".

Are you under the mistaken notion that you are peddling facts here? If so, back them up.

Quote:
I have two dogs in this fight since my father is a proud 49 year member of the UAW and I was in the same union before I went to college.


Well it certainly hasn't done anything for your objectivity.
Setanta
 
  1  
Reply Tue 24 Feb, 2009 02:36 pm
The United Auto Workers negotiated the wage and benefits packages they have after what was virtually a war to organize in the 1930s. Following hard on the heels of that was the Second World War when the auto makers were virtually nationalized to produce vehicles for the war, including tanks and aircraft on license. With the end of the war, and with Detroit finally allowed to come out with a new model year, the auto makers assumed (and not without justification) that they could sell everyone a new car every two years. That was pretty much par for the course in the 1950s and -60s. Having won their labor organizing war, and in the glut of the 50s and 60s, the UAW were able to negotiate deals from which are subsequent contracts derive. The auto makers didn't try too hard to beat down their demands until the late 1970s when the Japanese began to offer serious competition. Congress initially tried to stave off the Japanese invasion by limiting the number of vehicles they could import. The Japanese, who had been, basically competing with VW and the sub-compacts Detroit came out with (pieces of **** for the most part--unsafe at any speed as Nader had it)--but now, with the number of vehicles they could import limited, they simply switched to high end cars to compete with the Detroit Holy of Holies, the family car. They actually began to make more money than they had importing hundreds of thousands of the low end models. They were further aided by the consequences of the Arab oil embargo after the 1973 Israeli war--it might have ended years earlier, but the energy industry in the U.S. had become addicted to record-setting profit levels, and the Japanese cars, using better engineering and something as "no-brainer" as fuel injection, were all the more attractive because of their fuel efficiency. The Germans were ready, willing and able to jump in and play that game, and VW competed, and competed successfully with a will.

Detroit struggled to keep up, but not very seriously. It has only been in the last alarming couple of decades that they have become convinced that their very existence is at stake, and that they need to really make a sincere effort to build the cars Americans and Canadians are going to want to buy. It has largely been an effort of too little, too late. Toyota is the largest selling automobile in the world, and Honda the most popular car in North America. Both companies set up manufacturing in North America to obviate any future attempts by the Congress to interfere with their sales. GM made a deal with the UAW and set up in Tennessee to make the Saturn, but again, it has proven to be too little, too late. GM is dumping Saturn in order to qualify for more government aid.

The "Big Three" have taken a pasting due to their own arrogant attitude toward the kind of vehicles they would offer the public, and their hubris in thinking they owned the North American automobile market. The high wages and benefits packages of the UAW simply reflect that attitude as it obtained in labor negotiations in the 50s, 60s and 70s. With employee wages as high as they are, and top-heavy executives with bloated salaries and benefit packages (especially "golden parachute" retirement deals), those wages and benefits for both labor and management represent a small portion of the cost of the vehicle which is offered to you. Cut labor costs in half and the dealership makes another $30 or $40 per vehicle. As it stands right now, and has for decades, the dealership only makes a few hundred dollars per vehicle sold, and counts on getting your business for the service package, which is where they really make money. They continue to rape the customer on vehicle leasing. Detroit has been selling about 15,000,000 to 18,000,000 vehicles per year recently. In order to benefit from economies of scale, they lay out their manufacturing operational plans years in advance, and were going with the 18,000,000 figure for the 2009 model year. They've gotten screwed by the financial downturn, certainly, but if they offered a product at least as good as the Japanese, Koreans and Germans, never mind something better, they'd have been in a lot better shape than they are now, and much better equipped to weather the storm.

Blaming labor is a popular stance to take, but ultimately, the blame lies squarely with the arrogance and the hubris of Detroit corporate management attitudes.
hamburger
 
  1  
Reply Tue 24 Feb, 2009 03:07 pm
@Robert Gentel,
robert wrote :

Quote:
...the legacy costs are part of their compensation packages, and are part of the inordinate compensation they receive.


perhaps you wanted to say : "G.M. has to make enough money so that the pensions and other contractual pension obligations can be paid . "

when i still received a monthly paycheque , the company didn't say : "well , we are paying you $ xxx and to that you have to add $ yyy for the pension costs of the retirees - so you are receiving quite an inordinate amount of compensation . "

the company explained to me what kind of pension i might expect and how much money the company would contribute (to which i could contribute an equal amount) .

now that i receive my pension , the company doesn't say to its present employees : "you are being paid a salary of $ zzz and to that you have to add the pension that we are paying hbg - so you are being paid quite an inordinate amount of compensation ."

companies - at least in canada - are free to set their wage/salary levels and decide what additional benefits they want to offer .
-----------------------------------------------------------------------------------------------
Quote:
Just because it's not part of the hourly wage doesn't mean it's not a factor in the company's losses.


that is correct , of course .
i'm sure that G.M.'s had all the experts necessary to determine both the current wage costs and future pension obligations they would be able to afford and still make a good profit . if they did not hire competent management to do so , it's hardly the labourers' fault , is it ?

the big three seemed more interested in volume than profit .

Quote:
THE G.M. STORY - substitute the name of any other company .
...............................................................................................................
there is an old management joke about it :
production manager : "it costs us $1,000 to make each piece" ,
cost accountant : "to make a $100 profit per unit , we need to sell it for $1,100 a piece " ,
sales manager : "we can sell each unit for $900 within a month - no problem " ,
cost accountant : "hold it - that means we are losing $200 a unit " ,
sales manager : "yea , but look at the volume !!! " .
END OF G.M. STORY !



when G.M. offered me .9 % financing over 60 months when i bought my olds-intrigue in 1999 , i'm sure they must have known that those financing rates were unrealistic - or was it my fault to accept those rates and help G.M. in its downfall ?
hbg

Robert Gentel
 
  1  
Reply Tue 24 Feb, 2009 03:40 pm
@hamburger,
hamburger wrote:
perhaps you wanted to say : "G.M. has to make enough money so that the pensions and other contractual pension obligations can be paid . "

when i still received a monthly paycheque , the company didn't say : "well , we are paying you $ xxx and to that you have to add $ yyy for the pension costs of the retirees - so you are receiving quite an inordinate amount of compensation . "


I get what you are saying here, and it's a valid point but it's not exactly what I wanted to say. I believe that these legacy costs they have can't be paid while keeping them competitive.

In other words, even if they do receive the money to pay these costs these companies will be bankruptcies waiting to happen with the legacy costs.

And while it's true that current laborers are not at fault for the legacy costs of laborers before them neither are the taxpayers who make less on average than these guys do.

I don't want to pay taxpayer money to companies if it's not going to make the companies healthy, and as long as these companies have these costs they won't be able to sell at a profit.

Quote:
now that i receive my pension , the company doesn't say to its present employees : "you are being paid a salary of $ zzz and to that you have to add the pension that we are paying hbg - so you are being paid quite an inordinate amount of compensation ."


But I bet it doesn't say that the taxpayers who make less money should be paying for it either.

Quote:
companies - at least in canada - are free to set their wage/salary levels and decide what additional benefits they want to offer .


They are here as well, and if they do so stupidly they go bankrupt.

And if they want to avoid the bankruptcy by receiving public money then the public has a right to assurances that they will practice fiscal responsibility with the money.

I personally don't see how these companies can turn a profit with their current labor deals.

Quote:
that is correct , of course .
i'm sure that G.M.'s had all the experts necessary to determine both the current wage costs and future pension obligations they would be able to afford and still make a good profit . if they did not hire competent management to do so , it's hardly the labourers' fault , is it ?


I never said it was the labourer's fault. But it's certainly not the taxpayer's fault either. Regardless of whose fault it is, this compensation level is not tenable for these companies, and if it continues we'll be pouring money down a drain.

Quote:
the big three seemed more interested in volume than profit .


Well volume is one way to solve the profit problem. With more volume they'd be more profitable per vehicle.

Quote:
THE G.M. STORY - substitute the name of any other company .
...............................................................................................................
there is an old management joke about it :
production manager : "it costs us $1,000 to make each piece" ,
cost accountant : "to make a $100 profit per unit , we need to sell it for $1,100 a piece " ,
sales manager : "we can sell each unit for $900 within a month - no problem " ,
cost accountant : "hold it - that means we are losing $200 a unit " ,
sales manager : "yea , but look at the volume !!! " .
END OF G.M. STORY !


This is not what they did at all though. Their cars aren't competitive even at the lower prices than their competitors.

The solution isn't raising the price to cover the additional labor costs, they would sell even less than they do now at that price. The bottom line is that their vehicles come with additional labor costs above their competitors and that this is about the amount they lose per vehicle even with their pricing below their competitors.

Raising the price of their vehicles won't make these companies healthy and even if they were able to produce vehicles that rival their competitors in quality they still have this additional labor cost that puts them in the red.

At present, I don't believe they can produce cars at market value with their labor costs. If you disagree run the numbers and tell me how they can do it. I'd love for there to be an easier solution but I have not seen it.

Quote:
when G.M. offered me .9 % financing over 60 months when i bought my olds-intrigue in 1999 , i'm sure they must have known that those financing rates were unrealistic - or was it my fault to accept those rates and help G.M. in its downfall ?
hbg


Could you please explain to me how this is relevant at all to what I was discussing? Are you trying to say that offers like this is why they are in this mess? I really don't see any connection to what we are talking about.
Robert Gentel
 
  1  
Reply Tue 24 Feb, 2009 03:49 pm
@Setanta,
Setanta wrote:
The high wages and benefits packages of the UAW simply reflect that attitude as it obtained in labor negotiations in the 50s, 60s and 70s. With employee wages as high as they are, and top-heavy executives with bloated salaries and benefit packages (especially "golden parachute" retirement deals), those wages and benefits for both labor and management represent a small portion of the cost of the vehicle which is offered to you. Cut labor costs in half and the dealership makes another $30 or $40 per vehicle.


We aren't talking about bailing out dealerships though. The companies that produce the cars are the ones with these labor costs and these losses per vehicle. And the losses per vehicle are orders of magnitude more than "$30 or $40 per vehicle".

The labor cost to make a car is small, in relation to the rest of the costs. But it's not small when it comes to profit margin. The profit margin on these vehicles is very comparable to what these companies pay in labor costs above their competitors.


Quote:
As it stands right now, and has for decades, the dealership only makes a few hundred dollars per vehicle sold, and counts on getting your business for the service package, which is where they really make money.


We aren't talking about bailing out "dealerships".

Quote:
Blaming labor is a popular stance to take, but ultimately, the blame lies squarely with the arrogance and the hubris of Detroit corporate management attitudes.


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?

I have no qualm with organized labor, and with unions in principle. But that doesn't mean I agree with every position every union takes. So if there is really a way to keep their overcompensation and turn a profit I'd think that'd be great. I care about those jobs much more than I do about the auto brands so I'm legitimately interested in seeing the numbers if you think that's possible.

I've tried running the numbers myself, I don't see any way these companies can be profitable with these compensation levels but would love to see real data (not ideology) that shows this to be incorrect, because my personal ideology would love for it to be incorrect.
Cycloptichorn
 
  1  
Reply Tue 24 Feb, 2009 04:07 pm
@Robert Gentel,
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 - raise the price of the cars. Lower the number of different models and options offered.

But, they should do both that AND work with the union to renegotiate their labor costs.

Cycloptichorn
Robert Gentel
 
  1  
Reply Tue 24 Feb, 2009 04:16 pm
@Cycloptichorn,
Cycloptichorn wrote:
Sure - raise the price of the cars.


But their cars are already not selling when priced under their competitors. I really don't think that they can sell the same cars at a higher price.

They have inferior cars to their competitors, and their cars are priced accordingly. Profit margins on cars are thin, I don't think this would work. Remember, Honda's record year in 2006 saw a profit margin of under $2000 per vehicle. Being able to make $1,000 per car is doing good in this industry.

So if their labor costs are close to that much more than their competitors I don't see how they can compete even if they product better cars. Unless they can reduce the operating costs elsewhere in ways that their competitors haven't been able to (and their competitors are pretty damn good at it) where is that going to come from?

Quote:
Lower the number of different models and options offered.


This is a no-brainer. But I also think, but am not sure, they are running into union problems here as well, and can't lay off as many people as they need to in order to slim down.

Quote:
But, they should do both that AND work with the union to renegotiate their labor costs.


Other than the raise the prices thing I agree. GM should be Chevy and Cadillac and scrap/sell the other brands. But no matter what they do, I don't see how they can compete in an industry where $1,000 profit per vehicle is doing good (that's about what Honda did in 2005) when having labor costs above their competitors of about that much.
hamburger
 
  1  
Reply Tue 24 Feb, 2009 04:21 pm
@Robert Gentel,
robert wrote ;


Quote:
hbg wrote :
when G.M. offered me .9 % financing over 60 months when i bought my olds-intrigue in 1999 , i'm sure they must have known that those financing rates were unrealistic - or was it my fault to accept those rates and help G.M. in its downfall ?
hbg


robert asked :
Quote:
Could you please explain to me how this is relevant at all to what I was discussing? Are you trying to say that offers like this is why they are in this mess?


it seems to me that G.M. must have foreseen the problems - there were enough warnings imo .
i would think that if a business is expecting financial problems , "throwing money away" (below par financing) is deprieving the business of money needed for development of competitive products .

imo the big three were really in a race for " most cars produced " rather than quality products to be sold at a profit .

on of the problems with the G.M. pension fund seems to be that it was not held in a separate "trust account" administered by a pension trustee - who would be responsible for the performane and stability of the trust fund .
my suspicion is - though i don't have enough knowledge about it - that the pension fund was/is co-mingled with the company accounts .
trust funds should really never be allowed to be in the hands of the employer since it's the financial property of the employees and not the employer .
but that is history ... ...

a long p.s . :
having worked for many years in the life insurance industry , there were often enough cries from sales management : "we need a lower price for the product - the competition is killing us ! " .
the actuaries would take their pencil stubs , make some calculations and present the president with the answer . usually the answer was : " a lower price will result in a loss" - and that was usually the end of the story .
the company i worked for was never the largest life insurance company in canada but made the family (controlling shareholder) enough money to their satisfaction .
there were also some life insurance companies that were not as prudent .
result almost always : takeover by some competitor .
since the reserves were protected there never was a loss to a policyholder or a bailout by the government (at least so far) .
of course , that's a different chapter ....
hbg


Robert Gentel
 
  1  
Reply Tue 24 Feb, 2009 04:29 pm
@hamburger,
hamburger wrote:
i would think that if a business is expecting financial problems , "throwing money away" (below par financing) is deprieving the business of money needed for development of competitive products .


I can't be sure, but I strongly suspect that they needed to do that in order to avoid even larger losses. If their vehicles aren't seen as competitive in quality I think they need to compete in price. I think this is one of the ways they compete in price.

Quote:
having worked for many years in the life insurance industry , there were often enough cries from sales management : "we need a lower price for the product - the competition is killing us ! " .
the actuaries would take their pencil stubs , make some calculations and present the president with the answer . usually the answer was : " a lower price will result in a loss" - and that was usually the end of the story .


But that's only one side of the coin. If there are clear, identifiable ways to lower cost without selling at a loss why not do so?

For example, Detroit knows that their competitors can produce a better product at a lower labor cost. They aren't faced with only the decision of higher prices or a loss, reducing labor costs is a very viable option.

Do you really think just raising their prices and selling fewer cars would make these companies healthy without any reduction in labor costs?
Cycloptichorn
 
  1  
Reply Tue 24 Feb, 2009 04:53 pm
@Robert Gentel,
I didn't say they WOULD sell cars by raising the prices, but they could make a profit at their labor costs if they did so, which was the question.

I suppose they could identify those factors which lead to their cars being 'lower quality' than their foreign counterparts, and focus on improving those factors. I doubt that this is entirely because of costs; it's likely that at least some of it is due to the way the businesses are ran, or the methods of production.

Cycloptichorn
Robert Gentel
 
  1  
Reply Tue 24 Feb, 2009 05:48 pm
@Cycloptichorn,
Cycloptichorn wrote:
I didn't say they WOULD sell cars by raising the prices, but they could make a profit at their labor costs if they did so, which was the question.


If they don't sell enough cars then the cost per car becomes more expensive, so it's not beyond the realm of possibility for them to raise prices and still lose the same per car.

But put that aside, and just look at the big picture. You know that raising prices isn't going to save them, so it's not really a viable option for them.

Quote:
I suppose they could identify those factors which lead to their cars being 'lower quality' than their foreign counterparts, and focus on improving those factors.


Yeah but for all the talk about how they need to innovate in their product line I don't see how it changes the basic math.

Right now, they produce inferior cars at a greater labor cost. So what happens if they improve the quality of their product? Even if they do, they'd have to find a way to make up for their additional labor costs. Otherwise they still have an operating disadvantage roughly equal to the difference between a profitable company and a company that is not profitable.

Quote:
I doubt that this is entirely because of costs; it's likely that at least some of it is due to the way the businesses are ran, or the methods of production.


The quality? I'd agree, but I don't see them making up the labor cost elsewhere even without trying to out-quality their competitors. If they are trying to I'd imagine that non-labor costs would actually go up.
0 Replies
 
hamburger
 
  1  
Reply Tue 24 Feb, 2009 06:44 pm
@Robert Gentel,
robert wrote :

Quote:
For example, Detroit knows that their competitors can produce a better product at a lower labor cost. They aren't faced with only the decision of higher prices or a loss, reducing labor costs is a very viable option.


(strictly my OPINIONS and what i would call "selective" reading - the truth seems to be that nobody knows for sure how to resolve the dilemma) .

1)business analysts of the automotive sector had warned for many years that "low price and low financing" would not avoid a problem for the big three (perhaps nobody expected it to get this enormous - but warning bells had been going off for some years - not just months) .

2) the main thing the 3 seemed to be interested in was "volume" . essentially they were trying to "flood the market" to drive out the competition - it didn't work , but they seemed to be unwilling or unable to admit to themselves that it was the wrong strategy .

3) the 3 were certainly able to throw a product at a lower price on the market than the foreign manufacturers for some years .
surely , they must have realized that that was NOT the solution for the long term .

4) the impression i have is that the 3 did not have a long-term strategy - or simply a very poor one .

5) reduction in labour/production costs seems to have occured to them a little too late .
did they really need that many different platforms to satisfy their customers ?
looking at the engine choices for GM alone is mind-boggling - and it didn't seem to achieve anything except drive up their production costs .

6) now it's a sorry mess , and the american workers and the total american economy is going to suffer from the problems accumulated over many years for many years to come , i'm afraid .
(and there are plenty of problems in the american economy already !) .

8) i believe it will be very difficult for the 3 . many customers are holding back from purchasing a car - any car - because they don't know if there will be a company left that'll stand behind their product for even another year .

8) wouldn't even want to guess what a possible solution might be at this stage .

9) might a retrenchment by foreign car manufacturers save the american car manufacturers ?

10)wait and see .
hbg

and another p.s. :
read somewhere that an important advantage of asian manufacturers is the ability to change assembly lines much more quickly than the 3 .
they have usually been able to bring a new product to market much more quickly and with fewer changes of the assembly lines than U.S. manufacturers .

i recall that it was w e deming ( http://en.wikipedia.org/wiki/W._Edwards_Deming ) who taught the japanese modern quality construction after WW II and who is being credited with turning japan's industry into quality manufacturers . at that time his knowledge was not being welcomed in america .
kind of ironic that an american had to go to japan to make them competitive with the americans .

Quote:
The philosophy of W. Edwards Deming has been summarized as follows:

"Dr. W. Edwards Deming taught that by adopting appropriate principles of management, organizations can increase quality and simultaneously reduce costs (by reducing waste, rework, staff attrition and litigation while increasing customer loyalty). The key is to practice continual improvement and think of manufacturing as a system, not as bits and pieces
Diest TKO
 
  1  
Reply Wed 25 Feb, 2009 02:17 am
Lest we not forget how much the stimulus bill went into government vehicles. I'm pretty confident those will be all American cars, if it's so important to you LV.

T
K
O
0 Replies
 
DrewDad
 
  1  
Reply Wed 25 Feb, 2009 08:05 am
@hamburger,
hamburger wrote:
surely , they must have realized that that was NOT the solution for the long term .

I see this as being key. The driving force for all decisions at a publicly-traded company is the stock price, not long-term health.
Setanta
 
  1  
Reply Wed 25 Feb, 2009 08:51 am
@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.
Setanta
 
  1  
Reply Wed 25 Feb, 2009 08:52 am
@Cycloptichorn,
And take an ax to management and management pay and benefits packages.
Setanta
 
  1  
Reply Wed 25 Feb, 2009 08:54 am
@DrewDad,
Quote:
I see this as being key. The driving force for all decisions at a publicly-traded company is the stock price, not long-term health.


This bears repeating. And, of course, i would add that an important factor is the old boy culture of assuring cushy berths and golden parachutes for management.
0 Replies
 
Cycloptichorn
 
  1  
Reply Wed 25 Feb, 2009 09:14 am
@Setanta,
Setanta wrote:

And take an ax to management and management pay and benefits packages.


I hate this attitude which says, 'well, Ford is losing Billions per year, so cutting executive pay won't make a difference.' Bullshit. It does make a difference. It gives the guys at the top an incentive to actually improve the situation. As it exists right now, you can get hired into a top position at these companies, not do a damn thing to make them any leaner or meaner, and still walk away with millions of dollars. It's a perverse situation.

I also don't understand why the Unions are the devil and the management is presented as victims. It seems to me that management has done a pretty shitty job of negotiating with the unions these last 50 years or so, if they've let things get out of control to this point.

Cycloptichorn
 

Related Topics

 
Copyright © 2022 MadLab, LLC :: Terms of Service :: Privacy Policy :: Page generated in 0.03 seconds on 01/24/2022 at 09:06:09