Who Might Benefit From Detroit's Failings 78 comments
Rick Newman
About this author:
-
Font Size:
-
Print
- TweetThis
You'd think an automotive apocalypse was nigh. In their pleadings to the government, executives from General Motors (GM), Ford (F), and Chrysler make it sound as if the entire U.S. auto industry will crash if they don't get billions in aid. But we're forgetting something: Americans will still need to buy cars, even if they don't say GM or Ford or Chrysler on the badge.
Once the recession fades and prosperous times return, in fact, Americans might buy 16 million or 17 million cars per year, a lot more than the 12 million or fewer they'll buy this year. So who will get all that business? Here's some handicapping on who might benefit from the woes in Detroit:
Ford. GM and Chrysler are both on the brink of insolvency, but Ford says it doesn't need emergency cash right now and might return to profitability by 2011 without any help at all. If Ford turns out to be Ford tough after all, it could be a huge win. Surveys by CNW Marketing Research show that fears of a GM bankruptcy have driven buyers away from the biggest domestic automaker. Ford picked up 19 percent of those buyers, more than any other GM competitor. Honda (HMC) got 15 percent and Toyota (TM) 11 percent.
That makes sense: The top two domestic automakers have a lot of products that compete head-to-head, especially pickup trucks and SUVs. For many buyers considering a GM car, a Ford would be the next best alternative.
There are several caveats. If GM declared Chapter 11 bankruptcy, that would be an obvious chance for Ford to grab market share. But it wouldn't be that simple. A GM bankruptcy would directly threaten dozens of suppliers that Ford depends on, too. So Ford's future is directly linked to GM's ability to muddle through and keep the suppliers in business. If GM went under, Ford's biggest need would be a government plan that protects the supplier base.
Toyota. Detroit doesn't have much that Toyota wants—except for millions of pickup-truck customers. The full-size-pickup market is the last piece of home-field turf the Detroit 3 still control, and so far, Toyota's new Tundra—built at a new, billion-dollar plant in Texas—hasn't made much of a dent. Nissan's Titan has fared even worse. And crafty Honda has dabbled with the playful Ridgeline, which it calls a "sport-activity truck," but stayed away from a pickup that would compete directly with Detroit's work trucks.
Assuming that GM and Ford both stay in business, Toyota's best opening might be a government-brokered marriage between GM and Chrysler. If that happened, GM would own both the Dodge Ram and the Chevy Silverado pickups. And since GM's bailout plan calls for fewer brands, not more, it's plausible that GM could put the Ram out to pasture. GM and Ford would both rush to corral those abandoned Ram buyers—a rowdy, budget-minded lot—but it would be a great chance for Toyota to prove its chops, too. That also holds if Chrysler gets broken up and the Dodge lineup is sold off to competitors.
The southeastern United States. There's already a "new Detroit" flourishing in states like South Carolina, Alabama, Mississippi, and Tennessee—where Toyota, Honda, Nissan (NSANY), BMW, Mercedes, and Hyundai turn out cars built by Americans for Americans. These mostly nonunion factories have sprouted during flush times and could get a bigger boost as the Detroit 3 shrink—or become 2 or 1.
Analyst David Silver of the research firm Wall Street Strategies said:
Imagine if the North American plants for GM or Ford were closed, and every remaining automaker built one or two more plants across the country. That would create a lot of jobs, and while it would be an initial shock to the economy, in the long run, it may not be such a horrible scenario.
The rust belt would reel, as it did during the modernization of Big Steel, but the jobs created elsewhere would be more stable and the companies more competitive.
Consumers. Everybody loves fire sales, and in the car business, they're likely to intensify. As the Detroit 3 shrink and close down divisions, there could be dramatic markdowns on some of the weaker brands under Detroit's umbrella, like Saturn, Pontiac, Chrysler, Dodge, Lincoln, Volvo, and Saab. That will produce "negative pricing power" on competing brands like Honda and Toyota, which is bad news for profitability but good news for the household budget. And the industry has so much excess capacity that even if one or two automakers go out of business, there's still virtually no way for a survivor to corner the market and build a monopoly. That means cars will continue to get better without costing more — unless the government decides to subsidize mediocrity.
Related Articles
|
Find People on SA
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most activeSee all
Instabloggers.
Top Instabloggers » -
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 78 comments:
What about the fact that the Big 3 buy more parts from the US than Toyota and the other transplants?
What happens if the Big 3 collapse and the transplants shut down and move offshore for cheaper labor? They can still import here- we will need cars, but who will get the jobs?
I know these are questions that require thought and these people that write these articles are not keen on critical thinking but that lack of critical thought is what got our country into the economic mess it is in.
"Just as many Americans own stock in them,depend on them for a living and benifits"
This is where you are wrong- far more people rely on the Big 3 than the transplants- suppliers, thousands of retirees and more dealers. This is a very flawed statement- the Big 3 have far more US content in their vehicles than the transplants.
Not any of the big 3.
Not their workers.
Not the union OR management.
Not taxpayers (pension takeover, loss of payroll taxes).
Not other automakers (supplier bankruptcies).
Not the midwest (looking at a regional depression).
Not the rest of the US (regional depressions spread).
The only beneficiary I can imagine would be the Chinese automakers, who would be unaffected and are arriving with their imports within the next 2 years, if we can still afford cars by then.
Most likely, they will get bailed out, and bailed out again, to the tune of about $200B over the next few years before they finally whither to a level that is not "too big to fail". Then they'll fail.
On Dec 03 03:07 PM User 118015 wrote:
> If GM and Chrysler go down the tubes it will be obvious that they
> never learned their lesson when Toyota appeared on the scene and
> started taking market share. In any event just the end of the line
> for a few American Icons that could not adapt to the new rules of
> the game. Too bad, but in the last analysis they were given a chance
> and the combo of the union with excess benefits and a poor small
> care product line did them in....MarvinMBA
For the record i have always owned GM cars,one ford. Never owned a inport.
On Dec 03 03:44 PM User 303820 wrote:
> FIRST OF ALL THIS GUY HAS NO CLUE, AN OTHER EDUCATED SELFISH HYPOCRITE
> FROM THE SOUTH....WE FORGET WHY WE'RE IN THIS MESS...FOR THOSE OF
> YOU WHO CAN'T FIGURE IT OUT... LET ME EXPLAIN IT TO YOU.
> IT'S CALLED "FREE TRADE" WE'VE BEEN LOSING JOBS TO SLAVE LABOR FOR
> YEARS, WE'VE BEEN SHIPPING GOOD PAYNG JOBS TO SLAVE LABOR FOR YEARS...IN
> ORDER TO KEEP THE ECONOMY GOING PEOPLE NEED TO HAVE BUYNG POWER...WITHOUT
> IT WE DON'T HAVE AN ECONOMY..WITHOUT GOOD PAYNG JOBS WE DON'T HAVE
> BUYNG POWER....AFTER OUR JOBS WENT WE REPLACED BUYNG WITH BORROWING
> AND THUS THE CURRENT MESS
I hear there are some auto factories in Alabama, Mississippi, Georgia, Texas, and TN that are hiring. They and their suppliers even make a profit, so the jobs should be more secure.
On Dec 03 03:20 PM Tomas04 wrote:
> And what about the retirees pensions and health care- are those just
> gonna go away? And then the government will have more people without
> health care and retirement.
>
> What about the fact that the Big 3 buy more parts from the US than
> Toyota and the other transplants?
>
> What happens if the Big 3 collapse and the transplants shut down
> and move offshore for cheaper labor? They can still import here-
> we will need cars, but who will get the jobs?
>
> I know these are questions that require thought and these people
> that write these articles are not keen on critical thinking but that
> lack of critical thought is what got our country into the economic
> mess it is in.
SINCE YOU 'D RATHER GIVE THAT MONNEY TO TOYOTA, HONDA, KIA. AND BMW ($3.2 BILLIONS)WITH OUT ANY QUESTIONS ASKED.
omfg, teh lulz are too much too bear in this thread.
1) caps lock is not necessary. we hear you.
2) every korean wanted to kill americans 50 years ago? a clue. buy one. racist remarks show exactly what sort of intellect you are sporting, bubba.
3) manufacturing vehicles in mexico was a decision taken by american execs of an american company. so who's fault is it?
4) thank you "Socailism..." Someone who understands that the government "tit" is a gross distortion of what our government should be.
i could go on for ages, but let me give it a rest, and not derail the thread anymore than i may already have.
NISSAN. TOYOTA AND HONDA CAN ASK THE JAPANESE GOVERNAMENT FOR HELP....OR....SEN. RICHARD SHELBY.
TWO EASY, FREAKIN' STEPS:
1. EVERYBODY HAVE A BREWSKI.
2. GET BACK ON THE ASSEMBLY LINE - ANY WILL DO. IT AIN'T GOTTA BE CARS ER NOTHIN'!
3. HAVE SOME MORE BREWSKIS LATER ON, AND...
4. SPREAD THE FREAKIN' LOVE AROUND!
This is not the time to allow any major institution to fail.
Lehman's failure set the precedent for the whole financial sector and almost derailed the economy.
If we allow GM and Chrysler to fail, the sequential set of events would undermine every economic sector and paralyze investors psyche.
Let the Congress provide the bridge loan to the auto industry and let's enjoy the economic/market rebound in the period ahead.
The current Armageddon has been neutralized .
Let's not "invite"the sequel by preaching economic ignorance.
As for the gent who retired from Ford and said he didn't make $70 an hour, he was correct. The $70/hour number is what is called "fully burdened". That is, it includes wages and all medical expenses and pension contributions (and a few other things). The Detroit product is clearly getting a lot better and now wins quality awards. The problem was the 40+ years from the time the first Datsun 510 hit the US shores to now, so now is almost too late for Detroit.
One (of many) of the reasons the big 3 built cr*p for most of those 40 years was the work rules imposed by UAW contracts that prevented modernization and streamlined production processes. It was an American, Edward Deming, who taught the Japanese quality control and management that Toyota and Nissan use to this day to eat Detroit's lunch.
A Government backed pre-packaged bankruptcy including significant UAW concessions is probably the best way to save the 3 (or a least GM and Chrysler). If we (taxpayer) just throw money at the problem, they will be back for more. Today's estimate is $39B. In February, with a more Union friendly administration in place, the sky is the limit.
WHAT SCREWED THE DOMESTIC AUTO INDUSTRY WASN'T UAW...IT WAS OUR GOVERNAMENT AND THEIR FREE TRADE POLICIES.
IS IT WRONG TO MAKE $28 AN HOUR? (TOYOTA WORKERS MAKE $25 PLUS $6000 TO $8000 IN BONUS A YEAR WHICH COMES TO OVER $30 AN HOUR).
IS IT WRONG TO HAVE HEALCARE BENEFITS? SEN.SHELBY DOES!
IS IT WRONG TO HAVE A PENSION? SEN. SHELBY DOES!
IS IT WRONG TO COLLECT UNEMPLOYMENT. BENEFITS? SEN. SHELBY COLLECTS FULL PAY FOR NOT WORKING THE WHOLE MONTH OF AUGUST AND DECEMBER.
AS FAR AS MY SPELLING...I'M AN AUTO WORKER NOT AN EDUCATED SELFISH WAL STREET HYPOCRITE LIKE MOST IN THIS BLOG WHO'S ONLY INTEREST IS PROFITS
It won't be state and local governments. Every homeowner near a Big 3
plant that is closed will be footing the bill, with HIGHER TAXES to support the loss of revenue that both companies and employees provide.
Real estate values decline, local businesses close, unemployment increases dramatically, which breeds crime. Once this brew starts boiling,
good luck in turning it off.
These companies are VITAL to the long term health of this country.
WAKE UP!
Ya gotta wonder.... Just what has the Democratic Party done for the UAW in the last three decades anyway? NAFTA? No.... Adding China to the MFN list? No..... So what does the guy turning lug nuts in Detroit or Toledo want from their Democratic leadership who they support wholeheartedly? Must be abortion on demand, because that's about all they get.
Old_Rick.
If they gave wage concessions (14.50 hr for new hires) and took on the retires health insurances issues would that would be good?
Because they did that in the 2007 yeah 2007 contract negotiations so how much blood do you want them to give.
Please do research on the works issues first.
On Dec 03 08:48 PM gabe borenstein wrote:
> Another economic nonsense written without any sense of economic reality.
>
> This is not the time to allow any major institution to fail.
> Lehman's failure set the precedent for the whole financial sector
> and almost derailed the economy.
> If we allow GM and Chrysler to fail, the sequential set of events
> would undermine every economic sector and paralyze investors psyche.
>
> Let the Congress provide the bridge loan to the auto industry and
> let's enjoy the economic/market rebound in the period ahead.
> The current Armageddon has been neutralized .
> Let's not "invite"the sequel by preaching economic ignorance.
I'm guessing if there is a bankruptcy filing, the imports will start marking up their prices the next day. The public is going to pay one way or another.
uh2l.blogs.com/things_...
I agree with the earlier comment that industry (and people) will be coming back to the Great Lakes in 10-15 years because they will need WATER, (the next oil). The Southwest and California are running out and Atlanta ran out last year.
You can see why Detroit has never responded to challenges with ANY inspiration. It's business by MBA textbooks. Milk it, pay yourself handsomely, forget about the product beyond some minimal standard.
Many great American manufacturers have gone under thanks to this and our increasingly litigeous, rule-bound society of ever more suits pushing paper upon us and each other, financed by having the reserve currency. Detroit is virtually the only symbol of our once-proud past. Proliferating meaningless, high-paying desk jobs has been the game to reach the shrinking middle class.
We are now like a desparate alcoholic after decades of phony , and the gov't has backed the liquor truck to the bar. Sorry, the MBA's have milked Detroit for decades including the UAW retirees who should well have known the game might not last forever. GM: 750,000 retirees, 250,000 workers. I would like to make that kind of money and I'd be retired now, nice. I've had failing businesses, had to work for nothing and sometimes lose money. Massive pay cuts are a minimum here, execs especially.
Somehow the piper will be paid, unfortunately, seems we're giving trillions of fiat dollars to the perpetrators. Loss of values and education have provided a supine population which wants anything done, even though we're about to have complete corporate/government fascism.
Long term, the American auto industry will not be successful without such a change.
a good 80% is made in usa.
hopefully bmw will take over america then we all force to drive bmws...
Then again... we suppose to not like germans too?
On Dec 03 04:19 PM Dave Patriotic American wrote:
> What an American shame that anti-import Japan has taken over the
> auto Business in America. Japan, Korea ... Thank you Unpatriotic
> Americans for helping Japan and Koreas econmy and killing ours....
> This is a tragedy..... over half of Toyotas vehicles are imported.
> Are debt to Japan for our children to pay if running in the Trillions
> and is unsustainable. A GREAT DEPRESSION TO COME. Thank you import
> buyers..
>
>
> On Dec 03 03:07 PM User 118015 wrote:
On Dec 04 03:05 AM DollarTalkNet wrote:
> Alright, this is definitely a complicated issue, but it is fairly
> clear that these companies have been mismanaged for decades and that
> the unfunded pension obligations will continue to be a difficult
> burden to bear. What I honestly don't understand is why the UAW doesn't
> just buy GM and Ford. Their combined market cap on 12/3/2008 was
> less than $10 billion. This also begs the question of why the government
> would be loaning them between $25-34 billion (depending on the report).
> What bank would loan any of us double to triple the current value
> of our home in order to help us get out of a tight spot? More on
> my blog.
On Dec 04 11:59 AM HBWOW wrote:
> The Japanese have taken the bulk of the electronic business by dumping
> product to eliminate our industry, Zenith, RCA, etc. They have taken
> a lot of other product lines such as lawn equipment, computer chips,
> etc, and continue to make inroads into many product categories, all
> to eliminate our industry which has resulted in our trillion plus
> trade deficit to them. If our auto/truck industry fails, we will
> lose a significant part of our remaining industrial base and be only
> buyers without jobs. There was a old Japanese philosopher who preached
> the way to beat your enemies is via a trade war. WELL. Destroy
> your opponent's industrial base and then their capital base. WELL.
>
On Dec 03 10:08 PM 11togo wrote:
> Who would benefit?
> It won't be state and local governments. Every homeowner near a Big
> 3
> plant that is closed will be footing the bill, with HIGHER TAXES
> to support the loss of revenue that both companies and employees
> provide.
> Real estate values decline, local businesses close, unemployment
> increases dramatically, which breeds crime. Once this brew starts
> boiling,
> good luck in turning it off.
> These companies are VITAL to the long term health of this country.
>
> WAKE UP!
>
On Dec 04 11:59 AM HBWOW wrote:
> The Japanese have taken the bulk of the electronic business by dumping
> product to eliminate our industry, Zenith, RCA, etc. They have taken
> a lot of other product lines such as lawn equipment, computer chips,
> etc, and continue to make inroads into many product categories, all
> to eliminate our industry which has resulted in our trillion plus
> trade deficit to them. If our auto/truck industry fails, we will
> lose a significant part of our remaining industrial base and be only
> buyers without jobs. There was a old Japanese philosopher who preached
> the way to beat your enemies is via a trade war. WELL. Destroy
> your opponent's industrial base and then their capital base. WELL.
>
The sudden (and it was sudden) shift in fuel prices stopped that in its tracks. OK, we can fault them because the Chevy cobalt is nothing close to a Honda or Toyota compact. That would have been a possible plan B.
However, the UAW (I'm a union supporter) has to give. We cannot compete without wage concessions.
I am not sorry for the retiree problem. That money should have been "trusted" out to an insurance company decades ago.
FINALLY bought a 2005 V6 Honda Accord made in Marysville, Ohio.. With 50k on it, ITS THE BEST CAR I'VE EVER OWNED, PERIOD..!!!!!!!!!!!!!!... I can see putting 200k on it with no problem, just change the timing belt at 110k like the book says and water pump and drive on with oil changes, brakes, etc.. WTF.. Why gm, ford, and chrysler can't do it is THEY DON'T CARE ENOUGH at the higher levels in the company.. They can save .45 on a sending unit, so they buy them and KEEP BUYING THEM even if 1000's fail, THEY DON'T CARE..!!!! WHY SHOULD I CARE THEN.. I took a BUTT KICKING ON THAT MALIBU with the trade-in, NOBODY WANTED IT.. IT WAS TRASH.. THAT whole model was trash, THEY MAKE TRASH.. SORRY..!!!
On Dec 03 06:09 PM closed book wrote:
> Chevy makes a wonderful full sized pick up that beats Toyota in every
> way. I will buy another but with only 75,000 miles I expect another
> 75,000 trouble free miles. If your US vehicle is always breaking
> down, try changing the oil once or twice. My wife has a Toyota but
> as a normal size American male I break my back to crawl inside.
WHAT IT COMES DOWN TO IS SIMPLE.
THE UNIONS OWN THE DEMS. . . THE DEMS CONTROL CONGRESS AND THE WHITE HOUSE... PASS ME A COLD COORS, THANK YOU!
On Dec 03 04:29 PM User 303820 wrote:
> FACT.....FOR EVERY $1 PROFIT THE JAPS TAKE .95 CENTS BACK TO JAPAN.
On Dec 03 03:42 PM Tomas04 wrote:
> Blacksilver:
>
> "Just as many Americans own stock in them,depend on them for a living
> and benifits"
>
> This is where you are wrong- far more people rely on the Big 3 than
> the transplants- suppliers, thousands of retirees and more dealers.
> This is a very flawed statement- the Big 3 have far more US content
> in their vehicles than the transplants.
On Dec 04 04:52 PM winnersdon'tquit wrote:
> EVERYONE ON THIS BLOG HAS A STORY TO TELL...AND THEY'VE ALL GOT MERIT.
>
>
> WHAT IT COMES DOWN TO IS SIMPLE.
>
> THE UNIONS OWN THE DEMS. . . THE DEMS CONTROL CONGRESS AND THE WHITE
> HOUSE... PASS ME A COLD COORS, THANK YOU!
>
>
>
The South will rise again!!
if their cars are anything like their motorcycles,atv,s and mopeds, the competition has nothing to worry about!
On Dec 03 03:55 PM Chris B wrote:
> Who might benefit if they fail?
>
> Not any of the big 3.
> Not their workers.
> Not the union OR management.
> Not taxpayers (pension takeover, loss of payroll taxes).
> Not other automakers (supplier bankruptcies).
> Not the midwest (looking at a regional depression).
> Not the rest of the US (regional depressions spread).
>
> The only beneficiary I can imagine would be the Chinese automakers,
> who would be unaffected and are arriving with their imports within
> the next 2 years, if we can still afford cars by then.
>
> Most likely, they will get bailed out, and bailed out again, to the
> tune of about $200B over the next few years before they finally whither
> to a level that is not "too big to fail". Then they'll fail.
The "North American Union " can only work is the wages in the USA go down and the big unions are broken !
They already have the plates to print the AMERO DOLLAR !
Tell me this.
at a price of thirty thousand dollars, who in the hell is going to benefit from the Volt electric car? they need to rethink just who needs such a car how it would benefit The USA.
Drop the price to 12 thousand dollars so that low income people can afford them by the thousands. then build them by the thousands in a war against OPEC. use every plant at their disposal . put it on a war footing. every Volt produced would be a virtual tank to fight against the demand for foreign oil.
online.wsj.com/article...
WSJ
FUJISAWA, Japan -- In the parlance of Japan's new brutal economy, Dan Yamamoto is a "disposable" worker.
On Dec 03 03:52 PM stox2buy wrote:
> let all 3 die if they can't compete, it's been a disgrace the way
> they behave.
On Dec 03 07:25 PM Perception wrote:
> THEM DARN SLANTY-EYED BASTARDS! HURR HURR HURRR, HOW DARE THEY COMPETE
> WITH US AMURICANS. THEM THERE ALL OCHTTA BE RUN OUT OF THIS HERE
> COUNTRY.
>
> omfg, teh lulz are too much too bear in this thread.
>
> 1) caps lock is not necessary. we hear you.
>
> 2) every korean wanted to kill americans 50 years ago? a clue. buy
> one. racist remarks show exactly what sort of intellect you are sporting,
> bubba.
>
> 3) manufacturing vehicles in mexico was a decision taken by american
> execs of an american company. so who's fault is it?
>
> 4) thank you "Socailism...&... Someone who understands that
> the government "tit" is a gross distortion of what our government
> should be.
>
> i could go on for ages, but let me give it a rest, and not derail
> the thread anymore than i may already have.
After we bail out the Big 3, lets bail out the 8 track player companies, Beta max manufacturers, casset tape manufaturers too. Lets bail out EVERY company that makes old fashion technology that does not sell in todays market.
I LOVE HEARING FROM THE REDNECK BUBBA POSTERS ON HERE SAYING I HAVE A CHEVY/FORD PICKUP THATS 20 YEARS OLD WITH 250,000 MILES, NEVER SPENT A DIME ON IT, BEST QUALITY TRUCK ETC....so anotherwords you have not spent anything to help out detroit either.....right? LOL
Also, if you want to see what that stunning piece of american engineering made by the proud UAW will be like in a year....just go rent a few cars from Avis/Hertz etc. Rent both, the big 3 and the compitition. You will see all the Big 3 plastic crap, with gaps that are DRASTIC in the quater panels/hood(no attention to detail at all). Then drive it over a normal road and liten to the squeeks and rattles at 22,000 miles. Ever notice that a rental company NEVER has one of these cars passed the factory warr..??? yea, neither would I..! YES, quality has come a long way.....but its not like the others. Here is a point. Go to any site on the net that sells extended service contracts.....put in some hypothetical cars. 2006 Camry, 2006 Altima, 2006 Accord, 2006 Malibu, all with the same milage, say 60,000....and you'll see for yourself which is the better made car. The malibu warranty is $1013 more. Why? Because the quality is so good? please! THESE ARE THE PEOPLE THAT PAY TO FIX THEM....THEY KNOW THE FACTS AND ACTUARAY REPORTS! Quit reading motor trend and car and driver and wake up.
Ever wonder why the magazines had to come up with "North American Car of the year"..? Because a "Big 3" cant win the over all "Car of the year"...so they had to eliminate the compitition.
VOTE with your feet and your dollars when you make a purchase. you work hard for your money, spend it wisely. Yes, its a personal choice, but demand that quality go up......or.....force the other companies to make a lesser quality car so the Big 3 can compete on a level playing field.
Im done.
On Dec 05 09:48 AM okbtan wrote:
> Let's start to buy cars made in USA. We will end up supporting them
> with tax money anyway. For the next 3-5 years, lets buy a car made
> by the 3 auto-makers.
It is ironic and sickening that our corrupt Washington politicians get to stand in judgement of the Big Three. How quickly they transform themselves into this charade of choirboys, correcting and scolding Detroit's CEOs from behind their slimey political pulpit. It was never financially profitable, prestigious, in vogue or self-advancing for politicians to pay attention to American automotive engineering -- especially when it is housed in old, Black blue-collar towns. Is Washington hoping we have forgotten their own lavish overspending as well as their moral and ethical crimes? What's that ironic twist about the US auto factories building tanks for the Germans during WWII? I would think the Bush family would be greatful . . . .
I'd love to hear a Dennis Kozlowski (Tyco grand larceny) recession reaction interview now. It might throw some light on this hypocracy.
Give the US auto makers financial aid NOW. It will buy the world's stock markets some time to try to escape the same collapse. We are all sitting on the same time bomb.
It will never end. It's like giving intensive care for the next
10 years or more. Just impossible to do that. Plus, the same
old same old will never change. With the bailout money, America
can start a brand new Car company some where in the the Southern
States. Forget about Michigan.
You are right.
But it may not be a good thing.
It's a cancer, you know.
On Dec 04 12:34 PM jamewhiteperson wrote:
> Maybe the us american should start making better product, invest
> more in R&D and that would create more jobs? I have Zenith lcd
> I brought last black friday.. the screen is all in mess up in one
> color now.
The auto industry had a solid plan and was even making money before the banking industry drove the economy into the ground selling liar loans. The southern banks, like Bank of America, were the first to the trough.
I don't know what you have against Michigan but you obviously don't know that Toyota has their US design center here and Honda's design center is a few hours away in central Ohio.
On Dec 06 04:24 AM TenQ wrote:
> Bailing out the Big 3 is like filling a black hole.
> It will never end. It's like giving intensive care for the next
>
> 10 years or more. Just impossible to do that. Plus, the same
>
> old same old will never change. With the bailout money, America
>
> can start a brand new Car company some where in the the Southern
>
> States. Forget about Michigan.
CR also rates a number of US 3 vehicles above the Camry V6 for quality. Car & Driver has hardly been easy on the US 3 for the last 20-30 years, but has grudgingly given them credit when they produce good vehicles. On their latest Top 10 List GM had 2 vehicles, Ford had 1 and Toyota had none. That is not a simple quality assessment, but an assessment of the best vehicle period. It was not unusual 10-15 years ago to not have a single US car on this list.
Lastly, North American Car of the Year simply means you can buy the car in North America. "Car of the Year" wouldn't be very helpful for consumers it was a European only car like the new Ford Fiesta, which will likely earn a few European Car of the Year awards but cannot be purchased in the US until 2010.
Try using a few facts next time.
On Dec 05 12:52 PM iapproveu wrote:
> Just make sure you buy an extended service contract to cover it..!!
>
>
> After we bail out the Big 3, lets bail out the 8 track player companies,
> Beta max manufacturers, casset tape manufaturers too. Lets bail out
> EVERY company that makes old fashion technology that does not sell
> in todays market.
>
> I LOVE HEARING FROM THE REDNECK BUBBA POSTERS ON HERE SAYING I HAVE
> A CHEVY/FORD PICKUP THATS 20 YEARS OLD WITH 250,000 MILES, NEVER
> SPENT A DIME ON IT, BEST QUALITY TRUCK ETC....so anotherwords you
> have not spent anything to help out detroit either.....right? LOL
>
>
> Also, if you want to see what that stunning piece of american engineering
> made by the proud UAW will be like in a year....just go rent a few
> cars from Avis/Hertz etc. Rent both, the big 3 and the compitition.
> You will see all the Big 3 plastic crap, with gaps that are DRASTIC
> in the quater panels/hood(no attention to detail at all). Then drive
> it over a normal road and liten to the squeeks and rattles at 22,000
> miles. Ever notice that a rental company NEVER has one of these cars
> passed the factory warr..??? yea, neither would I..! YES, quality
> has come a long way.....but its not like the others. Here is a point.
> Go to any site on the net that sells extended service contracts.....put
> in some hypothetical cars. 2006 Camry, 2006 Altima, 2006 Accord,
> 2006 Malibu, all with the same milage, say 60,000....and you'll see
> for yourself which is the better made car. The malibu warranty is
> $1013 more. Why? Because the quality is so good? please! THESE ARE
> THE PEOPLE THAT PAY TO FIX THEM....THEY KNOW THE FACTS AND ACTUARAY
> REPORTS! Quit reading motor trend and car and driver and wake up.
>
> Ever wonder why the magazines had to come up with "North American
> Car of the year"..? Because a "Big 3" cant win the over all "Car
> of the year"...so they had to eliminate the compitition.
> VOTE with your feet and your dollars when you make a purchase. you
> work hard for your money, spend it wisely. Yes, its a personal choice,
> but demand that quality go up......or.....force the other companies
> to make a lesser quality car so the Big 3 can compete on a level
> playing field.
>
> Im done.
>
> On Dec 05 09:48 AM okbtan wrote:
If you are working at one of the Auto plants in the south, Michigan has nothing to worry about.
On Dec 05 06:26 AM countrycuz wrote:
> So GM has the audacity to beg for a handout so that they can produce
> more cars that are not needed or wanted by smart shoppers.
> Tell me this.
> at a price of thirty thousand dollars, who in the hell is going to
> benefit from the Volt electric car? they need to rethink just who
> needs such a car how it would benefit The USA.
> Drop the price to 12 thousand dollars so that low income people can
> afford them by the thousands. then build them by the thousands in
> a war against OPEC. use every plant at their disposal . put it on
> a war footing. every Volt produced would be a virtual tank to fight
> against the demand for foreign oil.
That is why it is better to use Consumers Reports or JD Powers to determine the quality of a vehicle model.
What your story does show is problem the US 3 have with their dealers who, in many cases, will tell their customers anything to deflect the blame from themselves. The service manager has no information on how Ford is dealing with the supplier. Honda/Toyota/Lexus/Sat... dealers don't do this and instead help their customers resolve their issues.
All of the OEMs, and I have worked with them all as a supplier, work very hard to reduce cost and none of them is willing to pay extra for quality and all of them monitor it closely and expect it from all suppliers.
On Dec 04 01:41 PM scammy wrote:
> I never owned a foreign car UNTIL ford and gm wore me out.. 2003
> Malibu, sold at 44k, just out of warranty, problems like 1000's of
> others on the internet, brought back (3) times before 35k for front
> brakes that GRINDED bad, never really fixed, ac compressor would
> go on & off at will whether you had temp all the way up or not,
> intake manifold started leaking all over front of engine, that was
> to be a $1500 repair, but traded it in first, then, would NOT START
> until you sat for 10 minutes with the key OFF then ON, then it would..
> Gassing up at a filling station you had to WAIT 10 MINUTES to start
> the sucker.. Rear window defroster STOPPED WORKING.. Need I SAY MORE..
> EVERY FORD I owned NEW since 1993 had the sending units FAIL in the
> fuel tank, thats (4) DIFFERENT vehicles and types.. Kept bringing
> them back, one (5) times. They have to drop the fuel tank, drain
> the gas, replace the sending unit, reverse, a 3 hour job.. A service
> manager told me that Ford takes the lowest cost bid and that the
> subcontractor that makes the sending units was taking them to the
> cleaners and that Ford DIDN'T CARE.. How many OTHER items have similar
> ends..LOL..!! Had two of these fords blow head gaskets BEFORE 50k,
> and I DON'T dog my vehicles..WTF..
>
> FINALLY bought a 2005 V6 Honda Accord made in Marysville, Ohio..
> With 50k on it, ITS THE BEST CAR I'VE EVER OWNED, PERIOD..!!!!!!!!!!!!!!...
> I can see putting 200k on it with no problem, just change the timing
> belt at 110k like the book says and water pump and drive on with
> oil changes, brakes, etc.. WTF.. Why gm, ford, and chrysler can't
> do it is THEY DON'T CARE ENOUGH at the higher levels in the company..
> They can save .45 on a sending unit, so they buy them and KEEP BUYING
> THEM even if 1000's fail, THEY DON'T CARE..!!!! WHY SHOULD I CARE
> THEN.. I took a BUTT KICKING ON THAT MALIBU with the trade-in, NOBODY
> WANTED IT.. IT WAS TRASH.. THAT whole model was trash, THEY MAKE
> TRASH.. SORRY..!!!
>
>
> On Dec 03 06:09 PM closed book wrote:
Another article highlighting a thoughtful approach combined with a lack of industry knowledge.
1. If GM goes down the entire industry in North America is going down for up to 1 year. There is an excellent research paper at cargroup.org that details this scenario. The problem is that every auto plant in North America buys something from the NA supplier base. Suppliers have spent the last 15 years creating a diverse customer base for themselves to reduce their exposure to reductions at a single OEM. However, the big suppliers will still have 15-30%+ of their business w/GM and if GM goes into chapter 11 expect at least 5-15 major suppliers to follow some for financial reasons and some to protect themselves from GM's bankruptcy judge. With credit this tight, production will stop for some period of time, which will hurt everyone.
Chrysler would not be as bad, but in this market it would still cause a shock because the banks will shut off credit to suppliers with Chrysler business and the OEMs do not have the cash to fill the void.
If Ford were to survive, & this is the scenario they want the $9B backstop for, they would benefit from GM or Chrysler customers moving to Ford.
I think Toyota would be a big loser because as the new #1 automaker in the world, and in the US, they will have the big target on their back that GM used to wear. They will be blamed by many people for the failure of the US OEMs (this would not be fair, but neither is the bulk of the criticism of GM), they will have to spend billions of dollars cleaning up their supply chain issues, and any big surge in sales from displaced GM customers would force them to make decisions they are not comfortable making, like significantly expanding their dealer base. They will be under huge pressure from the states & feds to make up for the 4-6K dealers that would go under with GM & Chrysler. They have been unwilling to do this in the past, I don't see why this would drastically change.
The southeastern US states are living a fantasy if they think the remaining automakers will just simply build a bunch of new plants. Honda & Toyota built small car plants in the US in '80s because they were worried about getting locked out of the market by the feds. In the last 10+ years all of the new factories built by foreign automakers have been for vehicles that Americans buy a bunch of but their home markets do not (that would trucks & SUVs). The only reason Toyota is building the Prius in Mississippi is because they won't be able to sell the trucks they planned to build there. I would not expect to see a single new plant built after what happened in 2008. If the US moves to smaller cars like the rest of the world, they will be built with Europe's and Asia's small cars either in the OEM's home country or in China. Especially if Americans refuse to pay a premium for small cars like Europeans & Japanese do (the cheapest comparable Yaris in the UK is $1,300 more expensive than the US). With the lack of a US energy policy, which causes gas prices, and consumer demand, to fluctuate wildly, the soaring cost of healthcare premiums (doubled since 2000), the fact that the US market will not grow significantly (getting back to norm is not growth) in the next 10-15 years, and if Americans start buying what the rest of the world buys, the foreign automakers will stand pat and using their existing capacity to meet demand and importing the rest. It worked well so far, why change? If a company wants to make cars here there would be a number of fairly new GM or Chrysler plants that they could buy super cheap and they would have their pick from a pool of highly experienced autoworkers in the Great Lakes region. Honda has been working in Ohio, which has almost as many UAW jobs as Michigan, for 30 years without problems. It wouldn't make any sense to build from scratch and train a new workforce.
Lastly, consumers are in for a real shock in a couple of years, sooner if Chrysler & GM go down. All of the automakers are re-sizing their business for a 12-13 million vehicle market and they will use any increase in the market to drive up prices to pay for all of the new CAFE mandates, healthcare increases, etc. The overcapacity will be gone either way, but if GM and/or Chrysler go down it will be eliminated almost overnight. Buy a car or truck right now if you can because they will never be this cheap again.
On Dec 03 11:18 PM PCguy wrote:
> A Government backed pre-packaged bankruptcy including significant
> UAW concessions
> Old_Rick.
>
> If they gave wage concessions (14.50 hr for new hires) and took on
> the retires health insurances issues would that would be good? <br/>
>
> Because they did that in the 2007 yeah 2007 contract negotiations
> so how much blood do you want them to give.
>
> Please do research on the works issues first.