Detroit is Hemorrhaging 35 comments
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Just turn on the news or visit the CNN-Money homepage, and you’ll hear/read all the latest bad news on the economy, which yesterday seemed to highlight the particularly bad situation in the Detroit auto industry. The headline story yesterday was the employment report, which showed that 240,000 jobs were lost in October, bringing the year’s total job losses to nearly 1.2 million. And the year isn’t over, of course; we’ve surely got two more months of bad news to go.
The employment news looks particularly bleak for the auto industry, and that’s even before projecting the employment implications of the (more) bad news about operating losses, pay cuts, and layoffs coming from Ford (F) and GM (GM) yesterday. Looking at the details in the October employment report, I note these trends:
- 263,000 private-sector jobs were lost last month, and 1.3 million private-sector jobs have been lost since a year ago (October 2007).
- 90,000 manufacturing jobs were lost last month (and 96,000 manufacturing production jobs), and 517,000 manufacturing jobs (and 449,000 manufacturing production jobs) have been lost since a year ago.
- In the automobile production industry (motor vehicles and parts), “just” 9,100 jobs were lost last month, accounting for “just” 10 percent of the total manufacturing jobs lost. But since a year ago, 131,500 auto manufacturing jobs have been lost, which is 25 percent of the total manufacturing jobs lost. (To put this in perspective, the auto industry accounted for about 7 percent of all manufacturing jobs a year ago, now down to closer to 6 percent.)
- Those auto industry job losses don’t count what has happened to the retail sector. Last month alone 21,400 auto retail jobs were lost (more than half of the decline in total retail jobs), and compared with a year ago, 91,300 jobs have been lost (nearly a third of the decline in total retail jobs).
- While the overall unemployment rate shot up (from 6.1 percent in September and just 4.8 percent a year ago) to 6.5 percent in October, the breakdown of the unemployment data shows particularly bad trends for production workers and hints at more than a temporary, cyclical downturn in auto manufacturing…
- For example, out of the 5.1 million unemployed workers who lost their jobs or completed temporary jobs, 3.2 million (63%) were reported as permanent job losers. And that is as many people suffering from permanent job loss now as was the total number of unemployed “job losers” a year ago.
- The unemployment rate among production occupations (as a whole, not just auto industry) has increased from 5.6 percent a year ago to 8.9 percent now.
- There are now 2.3 million people who have been unemployed for 27 weeks or more–22.3 percent of the total unemployed–compared with a year ago when 1.3 million of the unemployed (or 17.9 percent) had been unemployed for that long.
- The broader measures of “labor underutilization” (which account for discouraged workers who have stopped looking, and under-employed part-time workers) are all up this month and are dramatically larger than a year ago. The broadest measure was 8.4 percent a year ago and is now at 11.8 percent.
So yesterday’s news is bleak, particularly for the auto industry and employment in the auto industry. And yesterday talks continued on Capitol Hill about more federal assistance to the automakers.
I’ve said before that I’m not sure how much the government can or should do to help the auto industry, especially if the industry will be purged and downsized regardless, and especially if the additional money is more a bailout of executives for their bad decisions rather than assistance to the workers who are the ones really suffering from those bad decisions. In terms of “stimulus” it seems the best the government can do in the immediate and shorter run is to help those who will lose their jobs keep living (”consuming” sounds more frivolous than I mean), and perhaps help at least some of those workers start to train for new jobs (outside the auto industry) in new places (outside Detroit).
In terms of the health of the Detroit economy over the longer term, the government needs to pursue those policies that will encourage the industry to “transform” to the production of more energy-efficient vehicles and technologies–as President-elect Obama has proposed. That “transformation” will take time, however, and I think it involves much more time, effort, and money, than the term “retooling” suggests. In the meantime lots of blood will spill, and at least for a while, Detroit will need to shrink.
Sorry, Governor Granholm, but fighting against the economic tide to try to keep all the auto jobs and people in Detroit is probably not the best thing we could do for your people right now. I think we need to help them move on.
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This article has 35 comments:
www.gm.com/experience/.../
However, without a government lifeline, it will never be realized.
So now where do they go? How about building a truly reliable product for the first time? How about paying more attention to function than frills? How about looking more than 3 years ahead? Toyota and Honda are the world auto leaders because they started answering those questions in the 1970s. I fear it may be too late for Detroit to get the message. Giving that industry handouts is throwing good money after bad.
The real issue with GM and Ford is often blamed on mismanagement but with a twist in my own words...." GM and Ford is mismanaging UAW out of existence". As a shareholder, I think that it is an unnecessary exercise , but I agree that UAW is too overcompensated. Unless Japan and Europe stop subsidizing their own carmakers, this is the only way for GM and Ford to force UAW to back down.. If Japan and Europe stopped subsidizing carmakers, then UAW compensation is justified , but the other question is whether UAW will still want more compensation neverthelessly. GM and Ford shareholders are constantly pushed out! Everyone is concerned about jobs and competition but always leaving shareholders out of the picture as if we can do without shareholders. This is stupid! Simple as that!
It just angers me when people say that Detroit doesn't make products people want to buy. Being number two and number three in sales doesn't mean nobody wants your products. I would buy a GM product over a Toyota or a Honda any day. Many of GM's products are amongst the most efficient in their segments. I don't understand why we are so unpatriotic as a nation when it comes to buying things made in our country or at least engineered and developed by companies based here. The press is also to blame as they highlight negatives about Detroit way more than they do about the Japanese. They even criticize the Volt without fully understanding how it works or who the target market is.
UH2L
www.thingsivenoticed.c...
Here it is.....
Yeah...right, Gumby.....why don't you just stick to acting in dumb stop-motion cartoons.
Shareholders smell dog crap in the US automakers, but it's very old, dried out, bleached white dog crap. Look at a 50 year time-line of profitability and market share, and you tell me if these these companies deserve life support from the government. This will be the SECOND TIME that Chrysler has had it chestnuts pulled from the fire by the Feds (Remember the 70's and Lee Iacocca?)....if the Feds decide to do anything....(Probably so, since there are Bush/Obama cronies in Cerebus that owns that piece of crap company).
Go ahead...root for a bailout. Throw even more money into rat hole. And then watch as these companies come right back to Uncle Sam begging for more dough....when it's so worthless from inflation and interest rates are so high that nobody can afford a car....even a piece of crap from GM or Ford or Chrysler.
Aaahhh....America..... where Capitalism rules......until Capitalists screw it up so badly they beg for Socialism to save it.
If American car co's were spending more time coming up w/ better products, they wouldn't be in this position.
Not to mention, I owned a 1995 Chevy Tahoe 4X4. It came off the assembly line in MEXICO. Now I own a Toyota that came off the line in Indiana. America DOES produce great autos, it's just that Toyota is making them.
On Nov 08 06:00 PM XeroJ. wrote:
> GM & Ford must move to the Southern States where workers are
> friendly and no unions. Otherwise, NO CHANCE of Survival, Simple.
Ouch!
On Nov 08 05:55 PM sickofthehype wrote:
> When you build a POS for so many years in a row, and are REactive
> not PROactive, bad things happen.
>
> If American car co's were spending more time coming up w/ better
> products, they wouldn't be in this position.
>
> Not to mention, I owned a 1995 Chevy Tahoe 4X4. It came off the assembly
> line in MEXICO. Now I own a Toyota that came off the line in Indiana.
> America DOES produce great autos, it's just that Toyota is making
> them.
Once again... a short-sighted, band-aid approach to solutions from our friendly, neighborhood Congress.
But then again...can't lay the blame entirely on them....after all.....they represent us.....do they not?
where others see crisis granholm sees opportunity
waynei
So that means there are, right now, a whole lot less consumers who would be buying cars, (some of those America models), a whole lot of factory workers not making those cars, and a lot of people not alive to work in order to pay taxes in order to fund education, infrastructure, Social Security, Medicare, Medicade, etc. etc.
Oh...by the way....the highest percentage by far of aborted babies are black. Which means that if those babies had been carried to term, there would have been enough to vote for Gore, or Kerry or the first black President long before Obama.
Another economic irony.....all those Baby Boomers who aborted their children.....those children would now be alive to pay for their retirement. But now all we can hope for is amnesty for illegal immigrants. Which, by the way, there are 25 million in this country and if the word got out that amnesty was on the way, it has been estimated that at least two more family members at a minimum would try to run across the border in order to make the amnesty deadline. Which would swell their numbers up to .....hmmmm.....close to 50 million......around the number of children aborted since 1973.
Karma....it is a bitch.
On Nov 08 06:29 PM waynei wrote:
> Gov Granholm should propose that Michigan become the Abortion and
> Euthanasia Capital of the World! Now that we have a pro abortion
> president, house and senate with Granholm a hugh proponent of abortion/euthanasia-
> Michigan can lead the way and create thousands of jobs. Great location
> to draw teenage girls from Canada. Harvest those stem cells and market
> them to cure wrinkels and baldness.
> where others see crisis granholm sees opportunity
> waynei
I would also point out that the Bush administration was probably the most hostile administration towards Detroit EVER. Bush would not even meet with the CEO's of the Big 3 promptly (the meetings kept getting delayed.) I believe it was part of a political version of the military's "Scorched Earth/leave no survivors" approach to political opponents since Detroit is Blue State Union/Democratic country. The free trade deals have been devastating to ordinary workers who depend on Detroit for a living.
Was told that the UAW has over 100 billion dollars in the bank account.
That should be enought for the UAW to support whatever benefits needed.
Just let GM or Ford go bankrupt and somebody will buy the business and start anew. That way no taxpayers money will be wasted. There are too many cancers in GM & Ford right now, just hopeless.
I agree, let them fail. I was just making the point that according to GM itself it had only about 12 billion left. Of course that's operating cash. But even if the 100 billion dollar amount is true ( and I have no reason not to believe you), with inflation (and not the silly number the government trots out, but the one before the Clinton Admin. chose to NOT report the way it was for decades before in order to artificially keep all those Gov. funded liabilities based on inflation from eating up the budget while they were in power, which, of course, Bush the Stupid decided to keep as well) at 8.5% and health care inflation at 10-20%, that CD making 5% for GM is pretty much worthless.
Even when our Dollar was worth something, today 100 Billion won't buy you much.
On Nov 08 07:26 PM XeroJ. wrote:
> Also, with 5% or higher CD rates, that 100 billion will generate
> lots of interest and should last a long long time for them.
Agree 100%. No Pain, No Gain.
Think I'll stick with my Camry. Thanks anyhoo Detroit.
"Time to press CTRL-ALT-DEL on the car industry. Only by letting them fail can a new efficient industry come about. Time to reboot."
Well, you can let them fail, but then you must be prepared to sell them to the highest bidder which in high likelihood will come from either China or India..... OR.... you can nationalise them and tell the UAW what their contract will be. Something like, $30 an hour? Take it and run like a bandit before the offer gets even worse. Don't like it, there's the boxcar outta town. The guys with the guns will show you where they are :) ......
The Big 3 miscalculated by pouring so much money into S.U.V. production right before energy costs spiked.
This country needs to change how we do business and that means:
1) get rid of the unions 2) downsize the government EVERYWHERE
that is a bit to late..............oh well, we can import electric cars too. Ah...
for just one EV-1 in my driveway. oh oh, to bad GM crushed them all.
Umpteen bail-outs later, the British car industry consists of a few small specialised companies and foreign transplants.
Sometimes the rot goes too deep to save.
That or have them start building tanks and guns and maybe a decently armored personnel carrier to replace the Hummer.
We'll need them for the coming war.
www.toyotaproblems.com.../
Small and affordable with new styling built the Japanese market in the sixties.
It is completely obvious what is next for the US.
It will happen because we cant afford to import.
It will happen because we cant afford the gas.
It will happen because we cant afford the labor.
Thats right folks, the new ultra light carbon fiber/solar John Deere commuter lawn mower/tractor.
Small and affordable with new styling built the Japanese market in the sixties.
It is completely obvious what is next for the US.
It will happen because we cant afford to import.
It will happen because we cant afford the gas.
It will happen because we cant afford the labor.
Thats right folks, the new ultra light carbon fiber/solar John Deere commuter lawn mower/tractor.
Small and affordable with new styling built the Japanese market in the sixties.
It is completely obvious what is next for the US.
It will happen because we cant afford to import.
It will happen because we cant afford the gas.
It will happen because we cant afford the labor.
Thats right folks, the new ultra light carbon fiber/solar John Deere commuter lawn mower/tractor.