Tiny weeny little people,electic cars and countries

[ManualOnly]

IMHO, one of the reasons why Detroit is dead.

And US media isn't helping.

Video - CNBC.com

[jdonalds]

Not sure about the tiny weeny little people comment but I do believe the US indigenous auto industry is near death. I see several reasons for it, the biggest being unions.

Compare what Toyota and Honda product lines look like vs the US industry. They spend a lot of time developing a model and come out with a new model every 4 or 5 years. The US industry is stuck with a new model or major changes every year. This adds extra cost to each new model year and has not proven to sell more cars.

The US generally missed the fuel efficient switch. They are coming in late and have not established a reputation in that area. They simply blew it here.

Reliability is my reason for making the switch away from US cars about 15 years ago. This one, in my opinion, is also tied to the union problem. Reliability has improved but not enough to draw me back even if the companies were financially sound.

Unions are great when there is a need. But there is a line under which the employee is treated improperly by the company and above which the company is being treated improperly. Once unions help the employee push up to that line where there is a balance the union should dissolve or go into sleep mode. But they stay in action and must justify themselves by ever putting pressure on the company to increase salaries, health care, and retirement benefits. As the company profits are squeezed the only way to compete is to cut corners in research, materials, and production methods which impacts reliability. Union workers pay union dues and expect more and more from the union. Strikes are forced on the workers and union cover during strikes bleeds the employees. The employee/company balance was upset many years ago and has destroyed the industry.

I'm sure greed, corruption, and poor decisions are all part of the mix too but to me the overwhelming fault lies with the unions.

[Ogo]

Workforce related costs are just little part of the story. Of course those issues accelerated Detroit's demise, but in my opinion, Detroit can not blame unions on its demise. They should blame it on the decades of bad decisions they have made.
Instead of changing and reinventing themselves for a better future, Detroit was trying to change everybody else and even whole world, usually through influence in politics.
Of course they failed. They just postponed the inevitable. Change is inevitable fact of life. You either change and adopt to new times or you die. They selected to die through bad decisions they have been making.

[patsparks]

Originally Posted by jdonalds

Not sure about the tiny weeny little people comment but I do believe the US indigenous auto industry is near death. I see several reasons for it, the biggest being unions.

Compare what Toyota and Honda product lines look like vs the US industry. They spend a lot of time developing a model and come out with a new model every 4 or 5 years. The US industry is stuck with a new model or major changes every year. This adds extra cost to each new model year and has not proven to sell more cars.

The US generally missed the fuel efficient switch. They are coming in late and have not established a reputation in that area. They simply blew it here.

Reliability is my reason for making the switch away from US cars about 15 years ago. This one, in my opinion, is also tied to the union problem. Reliability has improved but not enough to draw me back even if the companies were financially sound.

Unions are great when there is a need. But there is a line under which the employee is treated improperly by the company and above which the company is being treated improperly. Once unions help the employee push up to that line where there is a balance the union should dissolve or go into sleep mode. But they stay in action and must justify themselves by ever putting pressure on the company to increase salaries, health care, and retirement benefits. As the company profits are squeezed the only way to compete is to cut corners in research, materials, and production methods which impacts reliability. Union workers pay union dues and expect more and more from the union. Strikes are forced on the workers and union cover during strikes bleeds the employees. The employee/company balance was upset many years ago and has destroyed the industry.

I'm sure greed, corruption, and poor decisions are all part of the mix too but to me the overwhelming fault lies with the unions.

I'm a union member and I feel it's like insurance. I'd rather not use it but I'm glad it's there.
Every 3 years my union negotiates my wages and conditions for me and other workers who work for the government department I work for. I'm guessing the management would rather deal with 3 union representatives during these negotiations than see each of us individually.

Apart from these negotiations my union provides training in ocupational safety, managing retirement, reclasification aplication writing, first aid and all that useful stuff. I think unions do a great job and would vanish when all employers become fair. That is a long way off.

[BRK]

I think its unfair to Ford to lump them in with Chrysler and GM. Chrysler's dire position is related to the utter failure of the Daimler merger. And their quality is an issue. GM's dire position is related to not have a clear vision and understanding of what their customers actually want and instead trying to give them whats best for GM. They are not top tier in quality but not bad either. Certainly not as bad as Damlier or Land Rover. Don't blame the issues at GM on unions. There is a whole culture of greed and entitlement at GM well beyond only the unions. Ford is actually in a pretty good position. They have a better labor deal if I remember correctly, they seem to get the whole product line mix idea, have gotten their quality levels up. I think Ford will emerge as the top American car maker over the next 10 or 20 years.

[jdonalds]

Originally Posted by Ogo

Workforce related costs are just little part of the story. Of course those issues accelerated Detroit's demise, but in my opinion, Detroit can not blame unions on its demise. They should blame it on the decades of bad decisions they have made.
Instead of changing and reinventing themselves for a better future, Detroit was trying to change everybody else and even whole world, usually through influence in politics.
Of course they failed. They just postponed the inevitable. Change is inevitable fact of life. You either change and adopt to new times or you die. They selected to die through bad decisions they have been making.

Quote by Kevin Hassett, director of economic policy studies at the American Enterprise Institute (leadingauthorities.com)

"GM is in deep trouble mostly because the United Auto Workers have festooned the company with rigid work rules and extravagant costs. The 2007 collective-bargaining agreement, for example, required the automaker to pay up to $140,000 in severance to a worker whose position was eliminated. And that is nothing compared to the enormous health-care costs these companies are laden with. The average cost of employing a worker at the Big Three, including benefits, was nearly twice that of Japanese automakers. No wonder the automakers are hemorrhaging cash."

[Shawn Clark]

GM, Chrysler, and Ford haven't been in trouble because of unions. They've been in trouble because they are shrinking. Any mature company that goes into decline will get into similar trouble. It's a tipping point kind of issue that has played out many times. Doesn't help that U.S. healthcare is the most expensive in the world and inflates at about twice the rest of the economy's inflation rate every year (and has done so for decades.)

Why were foreign competitors gaining on them over the past several decades: quality/reliability was a big factor. Folks have been willing to pay more for the equivalent vehicle made by many foreign manufacturers. That's not an issue with unions, it is one of design, execution and focus. It took them at least 25 years for domestic automakers to adapt...but the rep won't go away soon.

GM, Ford, and Chrysler hung their hats on the bigger, more powerful, types. When that became unsustainable they were in much worse shape than other companies. At the same time foreign manufacturers had successfully penetrated the final domestic bastions (full size trucks, etc.)

American Enterprise Institute is bunch of discredited conservative political operatives. "Kevin Hassett served as an economic adviser to the George W. Bush 2004 presidential campaign and as Senator McCain’s chief economic adviser during the 2000 presidential primaries. He also served as a senior economic adviser to the McCain 2008 presidential campaign." Do you really believe anything coming from someone with those supply-siding credentials?

If the unions were gone tomorrow the Big Three would still be in a world of hurt.

[ManualOnly]

Guys, I doubt the Union can single handedly brought down the once proud US auto industry. It was, and still is, a combination of factors and one cannot avoid the irony of how GM is on its knees today when that "tiny weeny little electic car" called "EV1" could have been its savoiur not too long ago.

[markderail]

GM is *very* good at making trucks, busses, and SUV's, at a *profit*.
There will always be demand for these vehicles.

IOW, each American auto company should focus *only* on car makes that are profitable, and sell-off the rest.

Let Honda, Toyota and Mazda fight it out for the consumer sedan that is efficient and priced for the masses.

What's to point to GM/Chrysler fighting for market share against the Ford Fiesta, Honda Fit or Toyota Yaris?

IOW forcing GM to have a fleet MPG average of 30 or higher, when they are excellent at making lower MPG quality trucks, is counter-productive.

Even as a hybrid, a large V6 hybrid truck doesn't get anywhere near 30 MPG n'or can it ever attain it with current technology.

[BRK]

Its an interesting point to have GM focus soley on what they are good at. Just focus on building what you're good at and be the best at it. The problem with that is that it is impossible to really know where the market will go. Just look at what happened to the SUV market when gas prices rose to $4 / gallon. If that's your niche, you're screwed. You need a balanced product portfolio to help insulate your company from market forces you don't have control over. It's why Honda and GM build cars with Fuel Cells. IMHO, where GM failed was their desire to build the best of anything other than trucks and SUV's. They built sedans and small cars because they felt they had too but never tried to make them great. Maybe in fear of pushing people who would buy GM cars from buying more profitable SUV's into less profitable sedans. On top of that, other companies made better sedans and they certainly knew it. GM has the resources and know how to be great at something (see SUV's and Trucks). But like many corporations, they are lazy. They give up on minivans because they feel they can't compete with Chrysler (didn't stop Toyota). They give up on small cars because they can't compete with Toyota and Honda (they can't even compete with Hyndai). Maybe they are smarter than all of us and know that their labor costs and the profit margins on these vehicle will never match up. But then like you say, be strong enough to walk away from them.