Monday, November 17, 2008

Something to Think About...

On letting the auto industry fail (approx four minutes):



Yeah... you could call it propaganda, given the source. But... there's truth herein, regardless of where the video was produced.

Committed to the Inter-tubes by on

15 comments:

  1. Lori Renee Fye17 November, 2008 13:00

    I would MUCH rather bail out the auto industry than I would Wall St. However, bailing out the Big 3 won't do any good until the auto industry produces autos that we want to buy. For starters, they must be more fuel efficient. 24 mpg (!! ... big whoop) SUVs ain't cuttin' it anymore, and let's not even discuss the ridiculous prices of U.S. autos, or the crappy warranties offered.

    As I've mentioned before, I grew up in NE Ohio, and believe me it's still a "sin" to buy something other than an American-made, American-labeled auto (don't even buy a Tennessee-made Honda, they don't like that either). My brother (who lives in Ohio) is really annoyed that I bought a 2008 Hyundai Elantra, but I couldn't pass up a 10 year, 100,000 mile warranty for a $17,000 car that has (more than) everything I want and need, and that (in my personal experience) gets 35 mpg on an automatic transmission.

    Until and unless U.S. automakers start offering truly competitive vehicles, they won't see their sales improve. You can lead a horse to water ...

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  2. Buck17 November, 2008 13:23

    Well, I'm not one to talk in the "Buy American" space, given my current ride was manufactured by a subsidiary of the J.A. Pan Company. But... in my defense... exactly half of the cars I've owned in my lifetime were Big Three products, and mostly from GM, at that. And I STILL miss that Big-Ass, Vette-motored, Darth Vader-ish '96 Impala of mine (O! How I MISS it!). Hardly a politically-correct conveyance in ths day and age, but one I wish I still had, gas prices be damned. The Vette, too.

    Say what you like about American manufacturers not producing cars Americans want/need, but I'm of the opinion the Big Three are still producing CARS... not "transportation modules." I hope THAT never changes.

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  3. Mike17 November, 2008 15:50

    While I'd rather not bail out anyone, I've never understood the affinity Americans have for the blue collar workers at the big 3. To me, they, more than anyone (including the financial sector) bear the most responsibility for the mess they have found themselves in. If their unions weren't so greedy and lazy their companies wouldn't be in as bad of a situation today. If you are going to demand that you deserve 90% of your pay in order to sit on your ass and do nothing while you are laid off, you deserve whatever fate happens to your company as a result of your greed.

    As for the video itself, it lies in the first few seconds by saying that the "American auto industry" is facing collapse. The 50% of the American auto manufacturing industry that is owned by "American" companies is facing collapse. The other 50% is doing just fine.

    The first 50% are run by abysmal businessmen who have failed to stand up to their parasitic unions that have slowly sucked the companies dry. The second 50%, well, aren't and haven't.

    Most of what the video states as evidence for why the domestic industry can't fail are the reasons why they are failing in the first place (paying out the ass to the unions, entirely too many (and too small) dealers, too long and varied of a supply chain, etc.).

    Finally, the national security argument is a crock. Just what percentage of combat equipment is produced by the big 3? While there are few certainties in national security, I think we can safely say that the chances of the U.S. being involved in a WWII total war type situation where all manufacturing capacity is retooled to produce military equipment is effectively zero. This shoots down the other half of the national security argument, that while they might not produce any equipment now the production capacity is needed for surge capability. Regardless, a nebulous national security argument is nowhere near enough to justify throwing billions of dollars in good money after bad.

    As laid out in this article, the steel industry might provide a good model for what path to pursue. Failure, Chapter 11, and consolidation, probably largely by foreign owned companies who actually know how to run a car company, something that the management at the big 3 obviously have no clue how to do.

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  4. Barry17 November, 2008 16:18

    BMW, Honda, Mercedes-Benz, Nissan, Toyota, and Subaru (among others... these are just the ones I know about personally) are successfully building cars in America, sourcing from American suppliers, employing American assembly-line workers and managers, and profitably selling them to American consumers.

    Their factories are located in a broad swath of the Southern US, with some plants in the West and Midwest.

    These companies are producing very different products for different types of consumers, but they all have one thing in common:

    *None of them utilize union labor.*

    The Big Three are, and have been for some time, union benefits providers cleverly disguised as car companies.

    GM, Ford and Chrysler can be propped up a while longer (a la "Weekend at Bernie's") but there's likely no saving them in the long term without completely restructuring and largely eliminating the obligations they have to their current workers and retirees.

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  5. Lori Renee Fye17 November, 2008 16:33

    From the article linked to by Mike, this:

    In 2001, 12 firms accounted for 75% of U.S. hot-rolled steel production. In 2007, three firms accounted for more than 80% of hot-rolled steel production. The consolidation has afforded the steel industry an alternative to requesting bailouts in the face of declining demand.

    I'm sorry, but this sort of consolidation bothers me. What's next? One company, run by the U.S. gov't? I may have some very Socialist tendencies, but I can't go as far as that.

    It would be like having my shopping choices limited to Wal-Mart. Were that the case, I'd rather just not shop at all.

    I get very tired of everything being blamed on the unions. Yes, the unions need a complete revamp. However, most of the true problems start with bad management decisions, and then, like always, the sh!i rolls downhill.

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  6. Mike17 November, 2008 17:11

    "I'm sorry, but this sort of consolidation bothers me. What's next? One company, run by the U.S. gov't? I may have some very Socialist tendencies, but I can't go as far as that."

    None of those companies are run or controlled in any way by the U.S. government (besides the myriad regulations and other bureaucratic bullshit that every company in this country has to deal with). If the automakers are bailed out, the U.S. government will have a much larger stake in them than if they are allowed to fail and subsequently consolidate.

    In some regions (generally smaller towns) Wal-Mart may be the only retailer. That's not because of some nefarious plot or government intervention, but just the invisible hand of Adam Smith in action. If there was a business that could compete with Wal-Mart in that environment, there would be. There are obviously companies that can compete with the big 3 (i.e., the other 50% of the domestic auto industry) so the only free market thing to do is let that other 50% reap the benefits of their good management decisions while the big 3 suffer the consequences of their poor decisions.

    Most of the true management problems are directly related to unions. You could argue that the management should have told the unions to go pound sand when they asked to be given ridiculously exorbitant compensation packages. However, the unions are still the ones that asked, and given the amount of cloud they wield, they knew they would get what they asked for. Now they can reap the whirlwind.

    The exorbitance of their compensation is especially true given their status as blue collar workers...there's something wrong when a guy that can be replaced by a robot is getting a sweeter compensation/benefits package than an upper manager with an engineering degree at a mid-level steel fabricating firm like my dad. Not saying there's something wrong from a "fairness" or some other egalitarian bullshit point of view, but there's something wrong from a business bottom line point of view. There's no way to operate a business like that and NOT run it into the ground.

    Like Barry said, they are benefits providers disguised as car companies. Just look at the facts they themselves provided in the video...239,000 employees, but an additional 775,000 retirees/surviving spouses and a staggering 2 MILLION for health care. (Which includes providing free viagra, by the way, to the tune of $17 million.) There's no way on God's green earth that you can run a company operating under that benefits model. None. Who's to blame? The line starts with those who asked for the benefits, the unions.

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  7. Buck17 November, 2008 17:55

    Wow... I go out for a couple of hours and come back to find a riot goin' on!

    You beat me to it with your last, Mike. I also believe the lion's share of the blame for the downfall of the Big Three can be laid at the feet of the UAW. They deserve ALL the bashing they get, and then some.

    I worked for GM for a time, albeit indirectly when EDS was a subsidiary of GM. As such I have first-hand experience with the UAW and their insane/inane (I repeat myself) work rules, which caused EDS' work in the GM plants to be a major pain in the ass... due to delays when UAW workers weren't "available" when needed, our inability to hire non-union labor for ANY aspect of ANY work we did in a GM plant, work stoppages due to pecuniary grievances filed by UAW workers against EDS (often to slow-roll a project they didn't like)... the list goes on.

    I also knew many UAW line workers that were living what I would call a lavish lifestyle, with the big house, a vacation cottage on the lake, boat, two or three cars, yadda, yadda. I don't begrudge anyone those things... but as Mike said, it's ludicrous when an unskilled guy on the line makes $50K a year (and up to $75 - $100K with overtime, to the tune of about 10 - 15 hours per week)... and that was 20 years ago, in the late-80s. I shit thee not. Those guys were well and truly over-compensated then, they're over compensated now.

    Ditto on what Mike said about Wally-World, too. You may get tired of union bashing, Lori, but I tire of knee-jerk liberal Wal-Mart bashing just as easily, if not more so.

    Just sayin'.

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  8. Buck17 November, 2008 17:58

    I got to typing fast and furiously (in more ways than one, LOL) and forgot to acknowledge your points, Barry... which are all damned good ones. "cleverly disguised as car companies" indeed!

    Thanks.

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  9. Mike17 November, 2008 18:09

    "I also knew many UAW line workers that were living what I would call a lavish lifestyle, with the big house, a vacation cottage on the lake, boat, two or three cars, yadda, yadda."

    That reminds me of a post on another blog (can't remember which one) lamenting the loss of the blue collar middle class worker, who could have all of those things while sending the kids to a decent college while working on an assembly line. I did a double take at that, because to me the words "middle class" and "assembly line" do NOT go together. Now, that's not to say that a college degree is the be all end all of existence, because as the post over at Doc's illustrated, a plumber can live a better lifestyle than a doctor. But the plumber has what the assembly line worker doesn't: a scarce (and therefore, valuable) skill.

    I can remember my dad bitching about the union at that steel fabricating firm he used to work for, but those problems were miniscule (and quite resolvable) compared to the issues between UAW and the management at the big 3. I mean, $17 million...for Viagra. That just about sums it up right there.

    OT, forgot to thank you for the heads up about those Acids. Unfortunately I wasn't able to take advantage of it, as last week was the week from hell for me, but I should be able to make up for it with their 10% off for your birthday deal that I'm taking advantage of.

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  10. Buck17 November, 2008 18:23

    OT, forgot to thank you for the heads up about those Acids.

    That's OK... I knew you were busy just by checking your blog. It gets that way sometimes! My order arrives tomorrow and the weather has been cooperative of late (low 70s). Which means Happy Hour will be fine tomorrow!

    I did a double take at that, because to me the words "middle class" and "assembly line" do NOT go together.

    Well, the terms sure went together in Detroit. The UAW guys had it made and they damned well knew it. The reckoning has arrived, tho...

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  11. Bag Blog18 November, 2008 11:59

    Last night Charlie Gibson did a report on the auto industry. One of the facts he pointed out made me stop in my tracts. American made auto industry pays their workers $71.00 per hour in salary and benefits thanks to unions while Toyota pays $48.00. I would buy American, but my Toyota is awesome for the price as is Jesse's Scion and Toby's Nissan. And for once I have to agree with Lori - 24 mpg is a joke.

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  12. Lori Renee Fye18 November, 2008 12:05

    Mike wrote: None of those companies are run or controlled in any way by the U.S. government (besides the myriad regulations and other bureaucratic bullshit that every company in this country has to deal with).

    I didn't mean to imply that any auto companies are currently run by the U.S. gov't. I asked, "What's next? One company, run by the U.S. gov't?" That's based on my issues with consolidation, which seems to discourage competition and innovation because it's difficult for a company without massive "consolidated" resources to compete.

    Buck wrote: I tire of knee-jerk liberal Wal-Mart bashing just as easily, if not more so.

    Point taken. I have a personal (family-related) issue with Wal-Mart, and again, there's the consolidation thing ... plus I have to admit that I also have issues with how much useless CRAP there is in big box (as well as other) stores. Otoh, I guess the lower classes of Chinese have to have something to manufacture, eh? Afterall, that crap supports the landfill industry ... it all goes round and round and round, in the circle game ... : )

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  13. Catmoves18 November, 2008 13:19

    You're quite right, Lori, in your remark "What's next? One company, run by the U.S. gov't?"
    And it will be a company controlled through our law-proof Federal banking system. Check out our founding fathers and see their take on a federal system.
    I agree the auto unions are greedy. I do not agree they are lazy. There's some hard working humans on those lines. Or at least there used to be.
    Grew up in Milwaukee, when Nash Motors had a plant there. When Dad would drive us by the plant, the entire parking lots was filled with employee owned Nash cars. Dad said it was because they sold them below cost to their employees. Anybody getting that deal nowadays?
    We knew the unionized auto workers were making good money then, but no one resented it 'cause you could always get a job there.
    From what I hear of living in Detroit now, you'd want to be single and a loner.
    Oh, I didn't grow up to work in a car plant. Went to college and made a career for myself. Missed all the "easy money" and had to work for a crust. Dang it.

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  14. Barry18 November, 2008 14:37

    This is one of the better, more balanced treatments of the Big 3 bailout issue that I've seen - it's an article/FAQ from CNNMoney.com.

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  15. Buck18 November, 2008 16:19

    Lou sez: American made auto industry pays their workers $71.00 per hour in salary and benefits thanks to unions while Toyota pays $48.00.

    That's pretty much the whole point, right there. $48.00 is a danged respectable wage, even if one considers that 25% of that is probably benefits, using the standard "rule of thumb." Damn the UAW. And I mean that in the fullest sense of the expression.

    Lori sez: Point taken. I have a personal (family-related) issue with Wal-Mart, and again, there's the consolidation thing ... plus I have to admit that I also have issues with how much useless CRAP there is in big box (as well as other) stores.

    Thanks for acknowledging that, Lori. I can't help ya with the personal issue... but we all have 'em, I suppose. Remember all those late nite bitch sessions we had about the Air Force? Yet I look back on those days VERY fondly now.

    As for all the crap in Big Box stores... I have the same sorts of thoughts occasionally. I try to keep 'em in check, mainly coz there's no accounting for taste. It just IS... good or bad.

    Cat sez: I do not agree they are lazy. There's some hard working humans on those lines. Or at least there used to be.

    Agreed, Cat. Those folks earn their money, in one sense... that being they work hard. But they don't BEGIN to deserve $71.00/hour... if one believes Charlie Gibson (and I do).

    Barry: Thanks for that link. It is a good synopsis of what the issues/problems are in this mess. The point is especially well-taken about consumers and companies that go into Chapter 11. Would they (the few, the proud... that still buy GM/Ford/Chrysler products) still buy ? I think not.

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Just be polite... that's all I ask.

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