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Will Ford and GM survive?

 
 
Thomas
 
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Reply Sat 22 Oct, 2005 01:29 pm
au1929 wrote:
Why the American auto industry can't compete.

America's horribly mismanaged and inefficient health care system. Analysts estimate health care costs add from $1,000 to $1,500 to the price of every automobile produced in the United States. Manufacturers in no other advanced economy face these costs, since health care is funded by their national governments. America's dysfunctional health care system even dissuades investment here. Honda recently decided to build a new North American plant. It chose to build it in Canada. One of its stated reasons: our neighbor to the north's universal health care system.

Hmmm. But other industries in America have to deal with the same healthcare system as the automibile industry, do they not? Other industries in Canada have universal healthcare too, but Americans are competing just fine against them. How come? Moreover, the American healthcare system is just as broken for Hyundai and Mercedes in Alabama as it is for Ford and GM in Detroit. How come German and Japanese companies are doing just fine in America, and only the foreigners do well? Your explanation seems to raise more questions than it answers.
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au1929
 
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Reply Sat 22 Oct, 2005 02:28 pm
Thomas
Other industries do not have 2 retirees for each man employed. Other industries do not have the same type of what has been called [welfare] union contracts as Ford and GM have. Those that have or had are in the same boat as GM and Ford. Or have gone bankrupt as the auto parts Mfg. and many airlines.

As to the foreign auto companies manufacturing in the states. They are not unionized and do not carry the financial burden that GM and Ford do. The wages are comprable, however the fringes are not in the same universe. Further, they do not have hundreds of thousands retirees.
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au1929
 
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Reply Sat 22 Oct, 2005 02:40 pm
Thomas
Ford and GM cannot survive if they do not get an accommodation from the unions. Apparently the unions agree or they would not have made the concessions.
Their only recourse would be to declare bankruptcy which would in essence clear much of the burden. An action which neither the unions nor their creditors want.
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Thomas
 
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Reply Wed 26 Oct, 2005 06:11 am
The Washington Post reports that an Overhauled Chrysler Boosts Profit for Quarter. It also offers some insights on why Chrysler is profitable while Ford and GM are not.

Quote:
Chrysler has already gone through a wrenching overhaul. In the past five years, Chrysler cut its workforce by more than 30 percent, from 126,000 employees to 86,000. The automaker closed seven factories, including a vehicle assembly plant in Canada, and sold 10 other manufacturing facilities. Both GM and Ford are reviewing their operations for plant closings and job cuts. Chrysler took steps to streamline its auto-parts buying process, an action Ford is undertaking now.

Chrysler has more easily weathered this year's downturn in large sport-utility vehicles than GM and Ford, which have many more plants devoted to building the vehicles.

My guess is that Ford and GM will go through a similar overhaul as Chrysler did, make similar adjustments to their product portfolio, and survive both.
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