December 02, 2008
Question of the Day
When domestic auto companies and dealerships are blatantly infusing their advertising with patriotic appeals for a mercy purchase to benefit one's fellow Americans, does that indicate perhaps, just maybe, there are bigger fish to fry in turning these companies around than merely the need to rally around the flag?
Posted by Eric Earling at December 02, 2008
08:37 AM | Email This
1. DUH!!! :)
2. Hmmmmmmmm, let's see. I have a Toyota Landcruiser with 200.000 miles on it.
Sorry but it runs great, so I don't need another car/SUV/truck yet. (-:
Soooo...we're actually considering a car purchase right now. Not because we're patriotic or feel the need to "help our our fellow Americans," but because we think we can strike a screaming deal.
So we're totally crass and selfish.
Well, I've owned my '06 GTO for a couple years now, and it gets almost 30mpg on the highway, does 0-60 in 4.8, the quarter mile in the low 13s or high 12s, has the same motor as the standard Corvette, and still has no rattles or other problems (aside from having to replace my tires once already - the rear ones were strangely worn!)
Driving it is a pleasure, the only downside is that in Seattle I have to do the ol' first to neutral to first to neutral thing for an hour and a half every morning if I choose to drive it to work.
GM and Ford have made some great vehicles. They didn't sell well, for whatever reason.
If they want to fix it, the answer is simple. End the UAW.
5. I just wish I could buy a truck and Suburban right now, but it is not on the agenda. And a high mileage car, too. What a great buying opportunity.
> If they want to fix it, the answer is simple. End the UAW.
How will they do that without declaring bankruptcy? All 3 companies have declared that "Bankruptcy is not an option" it's going to be up to the UAW to give up a lot of stuff that doesn't work in today's labor markets.
The dealers are vulnerable to downsizing. The Big Three have dealer networks with about three times the number of outlets as the top selling foreign manufactures. With contracting sales, there is no way for all of the dealers to survive.
If the Big Three reorganize through bankruptcy, the surplus dealers can be eliminated. If the relief comes from Congress, state laws that protect dealers from arbitrary termination make the downsizing process painful and costly.
It appears to be impossible for Congress to preside over successful reorganizations. They know nothing. Quoting an old Marine Corps friend, Congressional over sight is a cluster f---.
Survivability is dependent upon shedding or renegotiating collective bargaining agreements so that the auto makers end up with wage and benefit programs that are competitive with foreign manufacturers.
Cato, I honestly don't know, but it has to happen.
The UAW has spent decades trying to get blood from a turnip, and there's just not much more blood to be had.
Paddy@7 writes, "It appears to be impossible for Congress to preside over successful reorganizations."
Chrysler in the 1980s? US Steel?
I'm very skeptical of a bailout (and I opposed the financial sector bailout), but don't they sometimes work?
This is a re-post of a comment of mine on another thread... pay CLOSE attention obfusCATOr:
The UNIONS have gutted, quartered and served up that golden goose and no amount of CPR, heart paddles or magic injection is going to bring it back to life to lay more fancy expensive eggs.
Bury that sucker and hope for some kind of reincarnation.
DO THE MATH!
The UAW has just under 600,000 members. Using the $29 MORE they get than non-union automakers:
$29 x 40 hrs/week x 52 weeks/year = $60,320 PER UNION WORKER PER YEAR x 600,000 = $36,192,000,000!
Even taking just one third of those 600,000 union employees that's STILL 12,064,000,000!
Furthermore, as per UnionFacts.com the UAW PAID OUT $119,744,856 for "Representational Activities" and another $9,621,882 for "Political Activities & Lobbying".
More from UnionFacts.com:
Job Banks: Paid Not to Work
Thousands of UAW members are being paid between $70,000 to $85,000 per year not to work. (By some accounts, the expense is even larger, costing the "Big Three" up to $130,000 for each job banker). For 4,200 of these union members, their 8 hour "work day" consists of "filling out crossword puzzles, watching World War II movies and even taking naps." These job bankers "have drawn nearly full pay and all benefits, often for years, no matter the companies' health." As shown by the $4.5 billion the "Big Three" earmarked to fund job banks, this practice is costing the companies billions of dollars at a time that they are losing billions.
Health Insurance: UAW's unsustainable spending
Negotiating for overly generous health benefits for union members has aided and abetted the decline of the auto industry. The "Big Three" collectively spent almost $10 billion on health insurance in 2002 and the UAW has heedlessly continued to waste money.
Some numbers for perspective:
$1,500 of the cost of each car pays for health insurance. For each car, more money is spent for health insurance than on steel for its construction. Toyota has far lower health care costs in comparison to the UAW. While healthcare costs contributed to a combined loss of $15 billion for the "Big Three," Toyota posted a profit of $14 billion.
We no longer live in the era of Norma Rae when a union was necessary to protect workers from an evil Boss Hog. Equality laws, labor laws and OSHA all serve to legally protect the workers. The unions are an obsolete, expensive and destructive force. It makes no sense to further demand MORE when it will result not in MORE for a job but in NO JOB at all.
UAW's Multimillion Dollar Resort
Union dues have subsidized the construction of an extraordinarily expensive resort and golf club retreat. The Black Lake Resort and Golf club is luxurious, to say the least. This lakeside resort has 241 guest rooms, 2 full-sized basketball courts, an Olympic size swimming pool, a full gym and exercise room with a sauna, and a golf course designed by Rees Jones, a pricey and well-known golf course architect.
While UAW union members are permitted to visit the resort their dues have paid for, they cannot do so at any significant discount--they only receive $18 off the regular price.
It's time for a reverse of the Norma Rae effect: it's time workers demand to be allowed to work without union thug interference.
It's Worse Than You Think
The first case to consider is General Motors, which was created in 1908. GM's company profile states that the company has 266,000 employees in 35 countries, and in 2007 sold 9.37 million cars and trucks. Looking at the highlights from the 2007 Annual Report, I see that GM took in over 178 billion dollars in revenue (or around nineteen thousand dollars per car or truck sold) from sales and just under 3 billion dollars from finance and insurance services. Despite this, the company's adjusted net income is a reported loss of 23 million dollars for 2007. But that's not the part that worries me. The loss before a reported "change in accounting principle" for 2007 was 38.7 billion dollars, meaning these geniuses spent an average of over twenty-three thousand per car or truck manufactured, so that they lost four thousand dollars on each and every car or truck they made that year.
Yeah... maybe they could build a bigger truck for us to haul more of our money to them.... or maybe we could just buy one from Mercedes Benz.
Disclaimer: We dumped our not so Big 3 stock years ago and have owned Daimler stock since then... and I drive one that's 9 yrs old.
The UAW will NOT allow the dem's to let the big 3 go chapter 11.
Come on. They own the dems.
This is all show and tell when it comes to the dems making noise about the big 3 getting gov money.
Gezzz, talk aboout lame!
Not in the market right now.
I drive an '03 F-150 Super Crew FX-4 Lariat and the wife drives a '07 Grand Cherokee. She had a '02 Volkswagon GTI that had only 32,000 miles on it and we traded it for the Jeep before our daughter was born.
I suppose we will get a new F-150 that has everything the one we have now has, in about five or six years.
I had an '88 Ranger Extracab 4x4 that I had put 496,000 miles on before we got our new truck. To say that we are satisfied with what we are driving would be an understatement.
Take care of 'em and they will last a good long time. I will buy a new Ford truck when I need one, but I will be damned if I am going to work to support the UAW by buying a new truck every other year.
Here is more on Congressional oversight, project micromanagement that is. The new Congressional Visitor Center in the Capitol Building, all 580,000 square feet of it, opened yesterday. The budgeted cost was $265 million. The completion was three years late and the cost was $621 million. See:
Remember, Congress presided over the rise and fall of Fannie Mae and Freddie Mac. That was their practice in preparation for a government take over of the Big Three.
14. Someone told me that the auto companies are just union pension funds that just happen to make cars.
15. Heh AM/V, I got you beat---my '93 Honda Accord has 285K on it and I'm hoping to get to 350k. True, I did have the engine rehabbed about 3 years ago, and it was worth every penny. I love that car. In 2-3 years I'll replace it with another used Accord.
16. The UNIONS have gutted, quartered and served up that golden goose
I see, the banking industry doesn't have any unions (except the janitorial staff) and guess what, they're up s**t creek without a paddle getting free money with a lot of hands-off oversight. How did they get there? Was it due to improper activities of their janitorial staff? Or was it because the CEO's bought into the idea that stocks go up and not down? Or maybe they realized that they could make a ton of money selling loans to people without even so much as running a credit check?
Big 3 have to present a plan before Congress and beg for money, Citigroup's stock price drops below $10/share and get's a big wad of money courtesy of the Govt. no questions asked.
We dumped our not so Big 3 stock years ago and have owned Daimler stock since then... and I drive one that's 9 yrs old.
Since we're on disclaimer's:
I've never owned an American car, the closest I've come is my current car, a Mazda 3 (Ford has a 13% stake).
Why did I never buy a car from one of the Big 3? Because every time I was in the market the models they had were continuously ranked low by Consumer Reports. That combined with the American cars I've rented (rental companies are the Big 3's biggest buyer) always seem to have issues and break down have led me to have a lack of faith in US Automakers products. My two prior Japanese vehicles have each lasted 250k+ miles with minimal breakdowns.
PS. I'd never buy a Volkswagen either because everyone I've known who bought one experiences problems with their electrical systems around 35k miles.
The banking industry is necessary for US commerce around the world. The Union Industry of Autos isn't... as clearly proven by the success and growth of non-union automakers. We can live and function quite well without Fords, we can't live nor function in a global economy without a healthy banking system, nor would the possibility of saving Ford (or the possibility if reorganization after its bankruptcy) without the banking industry.
18. Yeah... maybe they could build a bigger truck for us to haul more of our money to them.... or maybe we could just buy one from Mercedes Benz.
Guess what, Germany has socialized health care. That's one less perk that Daimler has to give their workers and one less expense that Daimler has to pass onto their customer base. Maybe we should give all the union workers socialized medicine so the Big 3 can invest more in retooling/catching up and less on worker benefits. This might give them a nice edge in the world market without upsetting the WTO.
How about it Ragnut?
obfusCATOr, how does Germany PAY for its socialized healthcare?
And no, they don't have a healthcare fairy that waves her wand over the country or its treasure.
20. The Union Industry of Autos isn't... as clearly proven by the success and growth of non-union automakers.
Such as whom...Our foreign competitors in their quasi-socialist countries? Not going to bring that trade deficit down without exports, people all over the world drive small American cars. Too bad American parents prefer SUV's to haul their kids back & forth to soccer/ice hockey practice.
21. how does Germany PAY for its socialized healthcare?
High taxes...you suggesting we need more taxes Ragnut? Maybe we could pay for it with all that untapped Alaskan and coastal oil.
Who pays those high taxes obfusCATOr?
Can you follow the line from Daimler to citizen to "free" healthcare?
Or is it that pixie that pays the taxes?
23. Too bad American parents prefer SUV's to haul their kids back & forth to soccer/ice hockey practice.
Yeah, it's really such a shame they would prefer to protect their children in all ways possible rather than put them in death trap of a "green" glorified golf cart.
How selfish of them.
YOU drive the death trap... er glorified golf cart.
Guess those high taxes and free healthcare pay off (despite the horrible German dietary habits) both competitively and health wise.
German Life Expectancy:
total population: 79.1 years
male: 76.11 years
female: 82.26 years (2008 est.)
US Life Expectancy:
total population: 78.14 years
male: 75.29 years
female: 81.13 years (2008 est.)
"Whaaaa!" They have LESS than a whopping ONE YEAR on us!
Hurry! SOCIALIZE THAT MEDICINE... we might miss out on .96 of a year!
Except my great grandmother lived to be 99, my maternal grandmother lived to 83, my paternal grandmother lived to 86...
26. Yeah, it's really such a shame they would prefer to protect their children in all ways possible rather than put them in death trap of a "green" glorified golf cart.
It's a real shame that children need to be protected in massive inefficient SUV's from all the drunk driving idiots who get off with hand slaps (like the current President). Harsher penalties and less hand slaps and the road would be a much safer place.
The Mazda 3 came in slightly lower than the Subaru Forester in crash tests, get a clue already. Nice try though...quality pics. You implying that your oldie but goodie Benz would survive a head on crash with a tractor trailer while you are both traveling opposite directions at 35mph? Basic physics laws would say no.
And, gee, Pacto... what's keeping you from moving to your bizarre version of Utopia? I only spent 6 years there... and it didn't impress me. So what's keeping you?
Feel free to move... and take the rest of the nutter fringe with you.
28. Hurry! SOCIALIZE THAT MEDICINE... we might miss out on .96 of a year!
That .96 of year can be spent being a productive consumer. =)
Just think bankruptcies would go down, people would live longer, they'd be healthier, and our products would be cheaper. As a nation we'd also be closer to the Golden Rule. =P
Besides, you could drop dead today should your Benz hit a 18-wheeler head on out on Hwy 2. You never know.
29. I only spent 6 years there... and it didn't impress me.
Good for you.
Feel free to move... and take the rest of the nutter fringe with you.
How is insulting me relevant to the conversation at hand? Oh yeah, I forgot the right wing isn't tolerant of perspectives other than their own selfish small-minded beliefs.
Have you ever been to Germany? Know any Germans that live there?
I have and I do. They live in Achim. It took them 5 years to be ALLOWED to have their home built. They have to inform their government of their movements and keep their ID current. When she was diagnosed with cancer the government sent her to a "spa" to "take the waters".
On the other hand they got great beer sold only to the locals, there was no commerce on Sundays and we rode bikes to the biergarten in town.
And as far as my Benz... I've had one totaled when I was at a dead stop and rear ended by a ditz on a cell phone driving Chevy truck who pushed into a Ford truck with a tow ball and a steel gate... AND with not a scratch on me or my passenger. Keep your Yugo.
31. Euro countries all seem to ave longer life expectancy than us. But, the statistical data is not comparable. We count all deaths after a live birth as a death even if the baby lived only minutes or a few hours. The Euros don't. That is basis for the difference. The survival rate of infants is much higher here than elsewhere.
The drumbeating inevitability of the auto-bailout juggernaut is enough to get a person depressed even if he doesn't have Seasonal Affective Disorder by now.
But I have to take issue with something.
Conservatives should stand up for the right of people to drive, bicycle or walk without getting crashed into.
A crash is a non-market transaction. The resulting destruction is a market externality that harms real people and can create great sadness. It's nothing to be gleeful about for political reasons.
And it can happen to anyone. Buy a Hummer if you want to, you are still a pedestrian when you're walking to get into it.
And we should all be pushing the DoTs to be more aggressive about promoting safety than they currently are.
I'm not going so far as to suggest a 45 mph speed limit, but that would increase the efficiency of highways because that's the speed of maximum throughput of automobiles on congested highways.
Speeding is as dangerous as drunk driving, and yet the attitudes toward it is completely different, and the DoTs are complicit with unreasonably high speed limits and few programs to deal with speeding, aggressive lane-changing, tail-gating, and driving while on the phone.
(My source on speeding is Traffic Safety by Leonard Evans: the added risk of driving 10 mph over the speed limit is statistically equivalent to the added risk of driving legally drunk).
New Left Conservative #1
I'm in the market, three simple criteria: cute, small, and 30 mpg minimum.
Detroit only has one care in the running, Focus. Currently so insulted by the commercials, will probably buy non-American. Example is the Caddy, where they quote a study that says female car buyers want...cup holders. Lord save us, what's wrong with those idiots? Any company you or I owned (and operated so poorly) would not only be allowed to fail, we'd probably get slapped with a lawsuit on our way down the toilet.
Our kids drive Mazda & Honda, both very durable products.
34. 32 - Please cite your sources that state that speeding is just as dangerous as drunk driving, and preferably not from some washington state patrol site that tries to convince the sheeple that their speed traps are there for safety and not revenue.
This is immensely depressing to read. Seems like so many people commenting on it don't really pay much attention to cars. dl is a good example. The Ford Focus is an ancient design. The current model is just a freshened version of the old one. It's really not worth considering. What would be worth considering is the Mazda 3 or the Volvo C30. The funny thing about those cars? They're actually Fords. They are the same platform as the new Focus (the one Ford doesn't sell in the US because they say they couldn't manufacture it cheap enough.)
New Left Conservative: The problem with reducing speed limits is that it would hurt efficiently badly. While it is true that lower speeds require less horsepower to maintain and drag increases with the square of speed, most modern cars, in order to be able to accelerate in a manner which would be considered "safe" are optimized to put out higher power outputs than what are required for a 60 MPH cruise efficiently. The upshot of that is that they can be geared to run at higher speeds at lower RPM. You're way better off at 70 at 1400 RPM than 45 at 2000.
Besides, pedestrians and bicyclists aren't allowed on freeways so your safety argument doesn't really hold water.
Also, note that the statistic is that driving 10 MPH over the speed limit is as dangerous as driving drunk. I seriously don't believe that because apart from rush hour parking lots I've never seen traffic NOT move at 10 MPH over the speed limit. But, if we assume, for a second, that that is true then the solution is simply to raise the speed limits until they are high enough that nobody bothers to exceed them.
This is immensely depressing. Right now GM is in the odd position of manufacturing more cars that are worth buying (at least within a realistic price bracket) than any other manufacturer. They get basically no credit for it, though. They don't need a bailout, they need to go bankrupt so they can get their cost structure in line with reality by ditching the unions and cutting their dealer network down to a quarter of what it is, and dumping a few redundant brands. It is beginning to look unlikely they will be able to go bankrupt, though.