Where is the US economy headed?

Labor is part of the problem, a big part. Lousy cars are not the problem, I have driven domestic cars all my life, never had a problem to speak of, they are not lousy cars. Some had more problems in the 70's when emissions technology was being instituted, just my personal observation. I have relatives with Toyotas, Hondas, and all manner of other cars, such as a Prius, etc. I have ridden in all these cars and have driven some, some are nice, yes, but nothing that special, not particularly superior to American cars. Some of the earlier foreign cars had lousy suspension or steering apparatus, ball joints, etc. for rough road driving, that was my experience anyway. They were built for paved streets.

Same thing with trucks, a guy went with a Toyota and thought it would be the cats meow, but I think he wishes for his GMC back now. Its a matter of personal preference, but foreign cars are not distinctly better or worse than domestic cars I do not believe.

Health care, I agree something needs to be done, first we need to divorce health care insurance from employers, this makes no sense whatsoever. We do need drastic health care reform, but not the kind you want.

okie, Your personal experience with "domestic" cars belies the facts out in the field. Your myopia is your worst enemy.

Detroit did make lousy cars. Consumer Reports use to rate domestic and foreign cars together, and former were always on the bottom relative to repair records, etc. It was so bad, that the magazine began to rate them separately. What knowledgeable person in their right mind would then buy a domestic car. When someone buys a car, they are going for the best one out there in the type and price range suitable for him or her.

Detroit agreed to labor contracts because they had a lock on the US market. They blew this due to their lousy cars, not because of labor costs.

All I can tell you is I have always driven all of my cars and trucks to 150,000 miles give or take, and have never had much trouble, the repairs consist of tires, batteries, alignments, an occasional water pump, whatever. Never a transmission failure, only one engine failure, which was due to over stressing an engine while towing, and the engine had over 160,000 miles.

Frankly, I don't read consumer reports, I talk to all of the people I know, which have lots of different kinds of vehicles. One of the best sources of information are people that use their vehicles for work, and they can attest to any problems with drive trains, etc. Consumer reports may be fine, but I have never had any serious problems buying vehicles in the manner that I have always done it. One very good way way to do it is to buy from a trusted and experienced used car dealer that you personally know, they will know cars, and they will have bought hundreds of them through auctions, etc., and they will only buy the best, most trouble free cars, and that is how I have purchased alot of cars. I wait until the initial 3 or 4 years of rapid depreciation is over, then buy them with 30 to 60,000 miles, then drive them until they have around 150,000 miles or so. I have heard many people like yourself that Detroit built lousy cars, I don't believe it. In my opinion, cars have gotten better since the first cars I drove in the 50's. If you take proper care of a car, they can go hundreds of thousands of miles. Right now, I know a guy with a Prius, and so far, great, but the clock is ticking until a new battery pack is needed, and frankly when I ride in it, it is not much of a car, its a roller skate. My car gives a much better ride and it gives decent mileage, over 30 on the highway.

okie, It's obvious your personal experience is not common, and yet you insist your knowledge on matters qualifies you as an expert - even when evidence is provided that you are full of yourself *(BS).

Thats fine, ci, I realize Toyotas and Hondas, etc. have been more trendy to buy, I actually think it is a generational thing. But to convince everyone that the reason Detroit failed is due to entirely quality, no, not true. Its the unions negotiating for ridiculous packages of pay and benefits that cannot be sustained. After all, until recently, GM still sold more cars than any other company in the world, so going broke was not due to not selling enough cars.

okie wrote :



labor ... is a big part .
lousy casr are not the problem ...

since you say that the american cars are not lousy , what's your beef with labour ?
foreign cars are usually more expensive than domestic cars when looking at size and horsepower .
so it seems that american cars are price competitive , aren't they ?
so why is labour the problem if the cars they are building are price competitive and not lousy ?

why are americans buying foreign cars ?
are they mad at the autoworkers ?
are they unhappy with the products of the big 3 ?

perhaps you can help me understand where exactly the problem with labor is .
hbg

Okie, really, you sound like a child. You provide anecdotal evidence regarding your own and others' experiences, which is childish and worthless. CR, on the other hand, polls tens of thousands of people, and has a sterling record for accuracy.

The problem with labor is that it is unsustainable to pay a guy nearly $80 an hour to tighten a bolt or to watch a bolt be tightened. Not when the people buying the cars may only earn a fourth of that or less.

Does that help, hamburger?

If it isn't too much trouble, please google search "average hourly wage us auto industry including benefits." The very 1st link has a nifty chart (albeit for 2006) that someone smarter than me could post here, perhaps.

It's not wages and benefits that hurt Detroit; according to JDPowers, the five premium cars listed shows four as foreign and one as domestic; Cadillac. People will put out the bucks when they know they are buying "quality."

Real John Boy- Here is your chart--

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Average Hourly Compensation 2006 (US Wages and Benefits)
for Big Three compared to Toyota, Honda, the national average, and select state averages


Avg. per Hour
(US 2006): A. B. C. D. E. F. G. H.
GM 1 Ford 2 Chrysler 3 Toyota 4 Honda 4 US Natl. Avg. 5 Michigan
Avg. 6
(2007) Ohio
Avg. 6
1. Wage $39.68 $28.88 $29.15 $24 $24 $19.12 $20.30 $18.38
2. Value of Benefits $33.58 $41.63 $46.71 $24 $24 $8.19 ? ?
3. Compensation (Wages and Benefits) $73.26 $70.51 $75.86 $48 $48 $27.31 ? ?


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Note that the totals for GM, Ford and Chrysler

$73.26, $70.51 and $75.86 and far far above the $48.00 of Honda, the US National Average and the Michigan Average.

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Cicerone Imposter doesn't want to know this since he will never blame the Mafia Unions for causing the problem!!!

Here is the problem, Hamburger-
Almost every source you can find will indicate that the high costs laid on the auto makers by the greedy Unions was a MAJOR factor in their failure.

Note:

l. It is a fact that the big three costs are an ASTONISHING $77.00 an hour per worker. This has been documented over and over.

2. The Big Three have spent a great deal on R & D.

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Research and Development Expenditures by Size of Company



U.S. industrial R&D expenditures are heavily concentrated in a relatively small number of firms. In 1993, the 4 largest R&D performing companies (in terms of nonfederal funds) accounted for 17 percent of the total amount spent; the 20 largest, 33 percent; and the 200 largest, 71 percent. (See appendix table 4-12.)

Over a 10-year period, 1984-94, some major membership changes occurred in the annual list of 100 leading R&D-performing companies according to Standard & Poor's Compustat Services, Inc.8 (See appendix table 4-14.) The four largest R&D-performing companies, however, were the same in both years (although their order changed). That may be one of the few constants revealed by comparing the lists from 1984 and 1994. There were some major changes in rankings among the remaining 96 entries. For instance,




The "Big Three" automakers are all now in the top 10.


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3, Japanese car makers are in the USA. They do have health costs. The Universal health care in Japan is irrelevant to their costs.

There are, at this time, AT LEAST ELEVEN AUTO COMPANIES IN THE USA WHICH ARE PRODUCING JAPANESE AUTOS. All of those companies provide Health Care Insurance for their employees.

Once you guys get an idea into your head, it sticks like glue. Sand and glue are not good combinations for furthering your knowledge about anything.

UAW Ready to Negotiate Labor Contracts
United Auto Workers (UAW) union bargaining officials arrived in Detroit last week "to begin discussing wage and benefit concessions they must make so General Motors Corp. and Chrysler LLC can keep their federal loans" the Associated Press reports, adding that UAW president Ron Gettelfinger said the "union will ensure that 'what we do is done in the best interest of our members as well as our retirees.'"

Under the terms of the $17.4 billion rescue package granted last month, General Motors and Chrysler have until Feb. 17 to amend current labor contracts to bring labor costs in line with those of foreign auto companies with plants in the U.S.

According to GM, hourly wages for UAW workers at its factories are about equal to those paid by Toyota Motor Corp. at its older U.S. factories, with the average UAW laborer making $29.78 per hour while Toyota says it pays about $30 per hour. Including benefits and health care, GM says its total labor cost is approximately $69 per hour. Toyota's total cost is $53 per hour.

"GM's total cost will drop to $62 per hour in 2010 when a UAW-administered trust fund starts paying retiree health care costs instead of the company, but that still leaves a $9 difference, mainly due to the 'legacy' costs of century-old GM paying its retiree pensions," the New York Times says.

UAW officials would not say if or when formal talks with GM and Chrysler would begin, however both sides have met in recent weeks.

Not many industries include future benefit costs in determining current actual cost per hour. If they really earned $77/hour now, their currrent benefit cost would represent $130,000. There isn't any company in existence today that pays its current employees $77/hour. Future health and pension costs are calculated separately. Under normal standards of calculation for employee benefits, they usually range in the 45% level to wages. I'm not aware of any business that spends 2.3Xs the wages for the average worker of any company.

It is very common strategy for employers to spread rumors that their employees are overpaid. This pays off big-time when the time comes to negotiate compensation. Of course, the right wing is always ready to jump on this bandwagon of trashing labor.

We should remember that management was responsible for the growth of unions by their serious mistreatment of workers. For example, there was a time when employees were not allowed to take lavatory breaks, and were encouraged to go in their trousers or on the factory floor. Later, a commode was provided in the middle of the work area, where there were no walls for privacy. The mistreatment was often much worse than this.

to okie and genoves :

let's forget the hourly pay for a moment (which is NOT $80 as okie said) .

the question is :
why are americans buying more and more foreign - but particularly japanese cars - when the foreign cars usually sell at a premium to "big 3 cars " ?
if the "big 3 cars" are superior cars and usually less expensive than foreign cars of equivalent size and horsepower , why are the big 3 having so much trouble selling their cars ?

i think i can point to a couple of problems :
1) american cars are NOT superior to most equivalent foreign cars ,
2) the big 3 three thought flooding the market with cars would sell more cars - but it only drove the price down .
sometimes you even had to order and wait for a foreign car !

the pay to the worker plays only a minor role in the downfall of the big 3 .
hbg

btw i did drive an olds intrgue (twin-cam shortstar) from 1999 to 2008 - i was reasonably satiesfied but could find no comparable GM model to that car any more .

hamburger, I do not deny that quality is an issue, cars are very competitive, but Detroit does not build "lousy" cars as Advocate claims. They are not necessarily better than foreign cars, nor are they worse, although model to model, there are differences, some better, some worse. You would have to compare models. Remember, GM still outsold Toyota until recently, so it is not a case of sales tanking completely, it is a matter of losing money even while selling lots of vehicles.

If you go back to the 50's, face it, there was no competition, domestic car companies got used to being king, then although imports increased in the 60's and since, market share continued to decline over a long period of time, but the unions and business model simply did not adjust along with it. The result was that a great economy and selling cars with innovative credit was necessary to keep the auto companies profitable, even as more unsustainable concessions were being made to unions. I also believe new cars were oversold to people that really should not afford them, with credit too easily obtained. So here we are, when the economy goes down, the auto companies are just not prepared to weather it. I do not believe it is a matter of quality, I believe cars are pretty good quality, but so are all the other competing cars, they are also great quality, so domestic companies are no longer king. It just may be that the market cannot currently bear this many large auto manufacturers, that one or two may bite the dust, and nothing would be unusual in free enterprise for this to happen.

But I still go back to the unions, I believe cars simply cost too much for what they are, that wage scales are in fact one huge factor, and if automobiles could be made to sell for a few thousand less, with the same profit margin, this would not be happening. Of course there are other factors, but to deny that unions are not part of the cause is essentially the claim made by blind partisans that are in the tank for unions.

One final point in regard to quality. I do not think it is a matter of domestic cars not being of sufficient quality, I think instead that the quality of foreign designed cars have instead increased so much that they now compete and have taken a significant share of the market. But again, if production costs were less for domestic cars, the products could be sold for a lower price, and would be able to retain a higher market share.

Why, okie, do you think, unions aren't that big deal with foreign car makers?

I mean, when I compare the "power" of unions and what they actually do in the USA and, let's say, France, Germany, the UK, Italy - you're really doing good in keeping them low!

A major problem for the Big Three is, I wager, the bad experiences people have had with their products. The stories are legion.

I believed in buying American until I experienced problems with poor quality. I had a Pontiac that would diesel for minutes after turning off the ignition. I once had a Ford that was poorly made, with several hardware problems. Why would I wish to again subject myself to this.

I currently have a Japanese car that has provided excellent service and satisfaction. The high quality is very evident.