SRR: The demise of the auto industry....

Discussion in 'Fly Fishing Forum' started by IveofIone, Nov 21, 2008.

  1. IveofIone

    IveofIone Active Member

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    I have watched the proceedings in Washington with horror this week as horribly misinformed government officials grilled Detroit big wigs with dialog that was too lame for even a B-movie. We elected guys this stupid? Of course Detroit automakers have misbehaved horribly, we can hardly argue that. But to throw away an entire industry critical to the national defense because of bad management is hardly the answer. We don't send our errant children off to third world countries just because they screw up. We try to get them pointed in the right direction and see them through to adulthood without further trauma.

    We need to save the industry and the peripheral industries that go with it. Failure to do so will result in the loss of millions more jobs in many sectors that we don't even equate to car production. Those job losses will translate into at least a doubling of the current mortgage default rate and probably more. Without question it will extend the current recession and once unemployment rises above 10% the 'D' word will become ever more prevalent.

    It is amazing to me that the government coughed up over 700 billion to a banking industry whose product turned out to be speculation. The auto industry-asking for a mere 25 billion-and actually having a product that millions of Americans need and use on a daily basis-are being treated as though they are asking for the keys to Fort Knox.

    Tom Friedman, the celebrated journalist, has actively campaigned for the demise of the American auto industry. But Tom wasn't around in 1941. On Dec 7 we were attacked and the world changed at that moment. By Feb 1st of 1942 all auto production in this country was halted-a mere 2 months later. Tanks, bombers, jeeps, assault vehicles, weapons and ammo soon began rolling out of the auto makers doors at a rate that just overwhelmed all of the production capacity of the Axis powers. Once production was halted all of the remaining vehicles were impounded as it became illegal to sell a car to civilians. All rubber content on said vehicles became government property to assist in the war effort. Most of you are too young to remember those days including Friedman. Without the effort of those companies he would probably be writing in Kanji nowadays and we would be reading it as well.

    And before you paraphrase Friedman and say just let the Japanese build our cars think of this. In my 70 years this country has had armed conflicts with Japan, Germany, Italy, Korea, Viet Nam, Afghanistan, Iraq, fought in Panama and Bosnia and spent much of our national treasure posturing with Russia during a decades long cold war. A nation with a record of more than 1 conflict a decade can ill afford to give away the crown jewel of it's manufacturing capacity. Honda, Nissan and Toyota are not going to build smart bombs or planes and trucks and war material for us. Once we lose that capacity it is gone much like the giveaway of manufacturing and technology to China over the past decade.

    Annual auto sales during good times run in the vicinity of 16-18 million units a year with US manufacturers responsible for about 45% of that. Should our companies fail import makers will be about 8 million units short of demand once the economy improves. A better formula for price gouging cannot be imagined.

    I haven't heard a word about leveling the playing field so our manufacturers can compete. Japan Incorporated only allows a maximum of 7% foreign car penetration in their market, that number has been relatively stable for years. Beyond that they tariff the crap out of our products making them essentially unaffordable. But in this country we have rushed to give import makers free land, huge infrastructure assistance and deferred tax status just to get them to show up. Despite the wages paid to workers the profit still leaves the country.

    I have no idea what the answer is to all of this but I'm sure some of you have strong opinions. My gut feeling is that Chrysler is toast no matter what. With Bob Nardelli at the helm the rocks can't be far ahead. GM has needed to cut divisions and dealerships for years but just hasn't had the balls to undertake the job. They need to trim Saab, GMC division, Buick and Pontiac, sell Hummer and discontinue model proliferation while concentrating on a few good and recognizable products.

    Mulally is doing a good job at Ford but may have gotten there too late. They have excellent world class products in Europe but until Mulally arrived were too stubborn and stupid to bring them here. Instead they continued to engineer and sell the same car with three different engineering groups on three different continents. Little wonder they burned through cash like we would go through 6X tippet. It would help if they had announced after the last Nascar race that they are all withdrawing from competition and not pouring more millions down that rathole. Let 42 Toyotas start every race and call it the Camry Cup. They are all COTs anyway.

    I'm hoping but not encouraged that the auto companies will survive and somehow head off all of the grief and human suffering that their loss would incur. I think they are paying attention now that they have had the s#@t scared out of them.

    Ive
     
  2. Be Jofus G

    Be Jofus G Banned or Parked

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    Ive, the auto industry is going to get it's bailout money regardless. It will not come in the form of an official bailout. The politicians still have to much stink on them from the AIG fiasco. Mark it, the money will come in the form of a government check with "For Alternative Fuel Research" written in the memo field to get it past all of the pissed off taxpayers\voters. The politicans pay back their interests in the auto industry, the auto makers get their cash and the stupid taxpayers get a warm fuzzy feeing about saving the environment even if it is bullsheit and won't bring us a lick closer to alternative fueled vehicles. :beathead:
     
  3. SpeySpaz

    SpeySpaz still an authority on nothing

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    IveoFione-
    I'll give that rant an 8.6+ in my book. Great form, logic, and restrained passion. :D

    My 0.223...
    The bastards brought it on themselves. I've been waiting ever since the fuel prices began their sharp upturn a few years back, to see which one of the big three will come out with a dependable, affordable, fuel efficient car to reflect the new reality. But year after year they kept cranking out SUVs, screwing their unions, and flying around in corporate jets.:mad:

    If they get one penny it better have serious strings attached.
     
  4. Fishful Thinking

    Fishful Thinking Member

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    All good points, Ive, but we cannot forget how, EVERY TIME the government has made an effort to get the US car manufacturers to improve milage, improve safety, etc., the manufacturers balked, claiming these changes would increase their costs too much. They even complained about the cost of adding mandated seatbelts! Meanwhile, the Japanese, and now the Koreans have provided cars with modern safety features, good milage, acceptable handling, etc., and left Detroit in the dust. Certainly those in charge should have known that the economy goes in cycles, and that they should have applied some of the huge profits from selling SUVs into designing cars with better mileage?

    Rich
     
  5. Go Fish

    Go Fish Language, its a virus

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    The US auto industry has done very little to save itself. The whammy
    of $4.00 + a gallon for gas then boom, the economy goes tits up. If they
    were allowed to fail it would be a bigger mess than anything I can imagine.
    I agree that Chrysler is toast (again). Do we bail/loan them out? Like all
    negotiations everything happens at the end and we are not there yet. I
    haven't purchased an American brand car since 1983 but the cars I have
    purchased have been made in the USA. As for leveling the playing field you
    step on the slippery slope of union versus non. The UAW cars cost more
    due to health care and retirement. Don't get me started on health costs
    which are more expensive here than anywhere else in the world.
     
  6. Kent Lufkin

    Kent Lufkin Remember when you could remember everything?

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    Good thoughts all Ive. However, I must disagree.

    Here's why. The basic problem with Detroit is not only that they just don't get it - they continually don't get it. A recent article in the Wall Street Journal on the same question noted that between the three of them, the Big 3 introduced 41 new car models in the last year and have already discontinued 12 of them. I'd be willing to bet that most Americans couldn't name 6 let alone all.

    If they can't seem to produce dependable, reliable cars that Americans want to buy, then they deserve to fail.

    Given their current burn rate, the proposed $25B 'bridge loan' will last about 8-10 weeks. Then what? Another loan? But this time with the execs arriving in DC after flying Southwest?

    My solution: let Detroit declare bankruptcy and reorganize under chapter 11. That'll force them to confront the new realities as well as to get out from under their onerous UAW contracts while emerging much more like that 'other' American car industry, those Toyota, Honda, BMW and Mazda plants that operate profitably building cars people want to buy and pay their employees just as well but don't have anywhere near the entrenched overhead as Detroit.

    As for the rumored 2.4M in lost jobs? Don't believe it for a minute. That's just Detroit's PR machine running the fear card up the flagpole (to mix metaphors!) The Big 3 aren't gonna go away, they're just gonna have to change. And we all know how scary change is, even if it's for the better

    K
     
  7. Be Jofus G

    Be Jofus G Banned or Parked

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    Due to recent events (Dingell), I'll have to revise my "Mark it" statement They'll probably only end up getting 1/2 of what they are asking for under the guise of alternative fuel.
     
  8. Dick Warnke

    Dick Warnke was Pram-Man

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    No offence Ive, but I gotta go along with Kent I thing pounded the old proverbial nail on the head!!! iagree
     
  9. riseform

    riseform Active Member

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    Amen
     
  10. GATOR9

    GATOR9 Hey you guys

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    It is worth absolutly nothing but I too have to agree with Kent. They can join the growing list of people having to declare bankruptcy that I read in my local paper evey month, then again maybe every one should ask for a bailout. Could it be we are just going to high tech ourselves out of existance?
     
  11. EasyE

    EasyE Member

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    Here is a related story a buddy emailed me the other day:

    A Modern Parable

    A Japanese company ( Toyota ) and an American company (Ford) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race.
    On the big day, the Japanese won by a mile.
    The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.
    Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.
    Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion.
    They advised, of course, that too many people were steering the boat, while not enough people were rowing.
    Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents, and 1 assistant superintendent steering manager.
    They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings, dinners, and free pens for the rower. There was discussion of getting new paddles, canoes, and other equipment, extra vacation days for practices and bonuses.
    The next year the Japanese won by two miles.
    Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year's racing team was out-sourced to India .
    The End.
    Here's something else to think about:
    Ford has spent the last thirty years moving all its factories out of the US , claiming they can't make money paying American wages.
    TOYOTA has spent the last thirty years building more than a dozen plants inside the US. The last quarter's results:
    TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses.
    Ford folks are still scratching their heads
     
  12. ak_powder_monkey

    ak_powder_monkey Proud to Be Alaskan

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    the world is run by idiots.. Just remember that
     
  13. Wet Wade

    Wet Wade New Member

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    Ding, ding, ding. UAW needs to go away along with the 150K saleries for putting nuts and bolts on a car.
     
  14. Mark Walker

    Mark Walker Active Member

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    The world is inhabited by idiots and run by the rich.

    When something goes wrong in the West, we immediately look for someone to blame before finding a solution to the problem....in the East, they immediately fix the problem THEN look for someone to blame.

    Just my opinion.
     
  15. Ryan Francis

    Ryan Francis HUMILITY IS NOT THINKING LESS OF ME, BUT THINKING

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    Amen, I am a service manager at a Ford dealer, very scary times, I am fortunate to work at a store that is better shape than most, my shop stays very busy, however the front end is not selling a whole lot trucks. Ford is in better shape than GM and Chrysler, I can tell you that there are not a whole lot of salaried people left working for Ford now, I would bet that they have cut 50% of the "white hats"(zone reps, field reps, etc) in my region. I love big blue, started working at Ford dealer when I was in high school, I have seen a lot of ups and downs, but this is by far the lowest point I have ever seen. I agree with Fishdontcare, its time to find a solution, the Big Three may need to take some serious lessons from the foreign automakers. As a dealer we had to cut the fat, no money gets spent that is not deeply thought about, no more window cleaners, landscapers, etc. Right now I hope to ride out the storm, Ford has some exciting new products coming, I just hope it is not too late
     
  16. Evan Burck

    Evan Burck Fudge Dragon

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    just seeing how the bailout money has been handled so far, and the blatant stance on secrecy in which Kashkari and Paulson are taking with where much of it is going, i'm starting to feel my gut feeling about the bailout is true. they're bailing out their banking buddies while inflating the money that's in our (the working class) savings.

    what's the point in handing that much money over to banks that are tanking, so that in theory, they can loan it out to people and get them in debt, somehow "stimulating" our economy. though i don't agree with any kind of bailout at all, why don't they give that money straight to the homeowners to bail them out of their mortgage they can't pay because they lost their job. that money would then go back to the bank, where they can loan it back out. they should also be bailing out our ma and pops shops that are suffering right now.

    i personally feel the auto industry needs to be bailed out before the banks though. i feel that they have been doing a very, very poor job at making vehicles for the last few decades and need to pay for it, but bailing out that industry would have a better effect on the economy (at least in the short term) than bailing out banks. but in the grand scheme of things, their cars can't compete on just about any level with imports in any category, especially reliability and cosmetics, and I believe in letting a free market work.

    i guess all i'm trying to say is that i really don't think the intention of this bailout (as far as paulson, bernancke and kashkari are concerned) is meant to help the working class out in any way.
     
  17. jessejames

    jessejames Flyslinger

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    Some body needs to confront the myth that auto workers make 75.oo per hour. IT IS NOT TRUE!!!
    Because of old pension and medical insurance issues for retirees GM has to figure its labor force costs them around 75.00 per hour. The new funding of the old retirement and medical plans is nearly done and a trust is set up to pay them. The average amount going to wages and benefits will reduce to $50. per hour in late 2009 or early 2010. Toyota motor currently figures 47. per hour for it average. New hires at the big three are making under 15. per hour the same as Toyota and Honda. The union has made huge concessions in the last ten years.
    GM is making progress the labor force in the last decade has gone from 180,000 to 93,000 plants have closed all over. The union had to agree to these closures.
    There is a lot of blame to go around but we need to work with facts not the myths that surround this debacle. Auto workers do not make $150.000 per year it is just simply not true.
    The costs of a worker to an employer is not what he is taking home on his check. I am a PM at a union construction company a Carpenter here make $25.01 per hour and they will average about 1700-1800 hours per year. No vacation pay, no sick pay, no personal days so they make about $45,000. per year BUT when I figure the labor on a project I have to add 67% to that number to cover insurance, pension. state and federal taxes. This worker now has a "wage" of 42.00 per hour. This does not figure in any overhead and profit. So when I tell a client that my workman is going to cost him $$55. to 60. per hour he says wow I did not know that carpenters MADE 60.00 PER HOUR!!![/B]:beathead::beathead:When you are trying to spin this auto crisis the union worker will often come out the bad guy.
    The union has cetainly been too strong and has contributed to this problem in the past but those days are over for all unions. Busting the union will not help the economy or this nation.
    I think they need to get the CEO's of the big three and the head of the UAW in the room with the new Treasury Secretary and the President Elect and not let them out until a new business plan is approved. If all three come out great if there is only two left and a merger is in the works that works for me too.
    I am all for bad businesses being acccountable but I don't think that allowing any of these three manufacturers to go bankrupt is an option.
    Just my 4 cents worth (that the union wage:rofl:)
    Blessings
    jesse clark
     
  18. Kent Lufkin

    Kent Lufkin Remember when you could remember everything?

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    Good input Jesse. I don't know squat about the UAWs contract but have recently read that the document is over 1-1/2" thick and covers just about how much time a worker needs to take a leak.

    Labor costs aside though, the other issue that's hamstringing the Big 3 is pensions and health care costs for retirees. I'm sure you've also heard that adds $2,000 to the cost of every single vehicle they produce.

    I have no idea what concessions will ultimately be made, but I have a growing suspicion that they'll be made in front of a bankruptcy judge instead of the new Treasury Secretary.

    K
     
  19. jessejames

    jessejames Flyslinger

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    Kent:
    The old retiree's pension and medical is killing all three auto makers. The concession in the 2007 contract had all of the manufacturers contribute to a fund that will make all of these payments. The retiree's are having to pay for some care and having some benefits reduced but it had to happen. This fund will be fully funded by 2010. This is a huge deal, for GM especially, it will lower their costs by approx $2000. per car like you said.
    It is hard to say "lets give them another chance" or "give them time" but I really think they have made big strides in the last 5 years to lower costs.
    Companies the size of these three just don't change quickly.
    For the sake of all the wage earners that depend on these manufacturers I hope it works out.
    Blessings
    jesse
     
  20. Ed Call

    Ed Call Mumbling Moderator Staff Member

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    History shows us that unions were great for improving hours, work conditions and wages. Then they got greedy and focused mostly on repeating improved wages. Then they got greedy and focused mostly on repeating improved wages. Then they got greedy and focused mostly on repeating improved wages.

    Now they are having trouble competing because they pay too much overhead for staff who make more money than most of us would imagine. I hate to see them struggle as I believe they are part of the core of our country, but they need to reform. I truly feel bad for the men and women who try to earn a living selling these vehicles built by overvalued factory workers with under quality products.

    I think that drastic change must result for any forward progress to be made.
     

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