Here are some interesting comments on the automotive industry (from the blogging stocks website)...
<<...11-18-2008 @ 10:40PM
Goodgojuice said...
More and more people continue to have opinions about an industry they have not worked in nor have an understanding of what it takes to succeed, nor do they do they know what is taking place in the industry other than what they get from 30 second sound bites from the news media. I just have a hard time getting my head around the fact that people stand on the outside and say "let the industry go through reorganization, force heavy losses upon the employees of the industry, cut the number of brands that are being carried" and all along they haven't seen that the current economic "event" that we are in has been brought about by "monied interests" operating in the financial markets who drove up the housing market at inflationary rates of 10 to 15% per year until it flattened and began to decline then moved their money into every commodity market and inflated the price of fuel, food and raw materials for manufacturing to the tune of 250%, and then lost there a** on that bet when the demand fell like a rock. Hey, these financial types have screwed us all, but we are all willing to give them $700 billion for doing it to us, but let the one industry that built the middle class in this country get in trouble and the first thing out of everybodies' mouth is to "let them fail." I just don't know where these people live???...>>
<<...11-18-2008 @ 6:44PM
Bill Cawthon said...
Talk about living in a vacuum:
The prevailing UAW wage is $28.00/hour. The average wage paid at Toyota's Georgetown, Kentucky, plant is $25.00/hour. According to the 2007 UAW contracts with all three U.S. automakers, new hires in non-assembly jobs can be paid half the regular rate and be given reduced benefits. For Mr. Cohan's benefit, that's $14.00/hour.
For comparison, unionized auto workers in Germany make about $33.50/hour and the unionized workers in Japan make about $20.49 (Yup, Toyota's got unionized workers, too).
Overhead is the real killer and that's where most of the scare statistics come from. And the biggest villain of the piece is healthcare costs which have gone through the roof for every American business. GM happens to be the third-largest healthcare provider in the U.S. If you want to deal with the big cost issue, push for serious healthcare reform.
Also part of the 2007 contract, retiree healthcare costs are to be shifted to the union in return for investments from the automakers. This was a program the car companies wanted because it allows them to offload those costs at about 60 cents on the dollar. The union agreed and now the car companies are asking the government to make the payments for them. Nasty, evil, bad union! Trying to take care of those employees the automakers have been forcing into early retirement for the past 15 years.
I agree the jobs bank has got to go; it's a leftover from the 1980s when it was supposed to cover short-term furloughs between production cycles and adjustments to the production levels. It's an unaffordable luxury now.
And the benefit of GM merging with Chrysler is exactly what? The way Mr. Cohan describes it, Chrysler simply goes away except for some tooling. That's not a merger. Chrysler's debt is more than the $7.4 billion it owes the bankers and GM would also have to make Chrysler's VEBA contribution as well as buying the 19.9 percent of Chrysler still owned by Daimler. Why should GM shoulder an additional $20-$30 billion in debt for Jeep, a minivan and a redundant pickup? I thought one of GM's problems is that it can't get financing for any more debt. Adding more debt is the solution? I've thought this was one of the stupidest ideas I have seen in years, and it's got a lot of competition.
Bankruptcy wouldn't work: Chapter 11 would quickly become Chapter 7 and literally millions of people would be out of work and hundreds of businesses would fail. The analogy with the airlines is not valid; you get an airline ticket, you're stuck for one flight if the company goes south. Buy a car and you're stuck for years. So people would avoid buying cars from the bankrupt automaker, meaning it would not have anything to reorganize. Won't matter that it's prepackaged bankruptcy; people won't pay anymore attention to that than most of the people posting "kill the union" stuff without having a clue about the real situation.
The real hurter for all the automakers right now is that no one predicted the extent of the slump in sales. Everyone knew 2008 was going to be a weak year, but estimates ranged from 14.5 million to 15.5 million light vehicles. As of October, the sales rate was about 10.5 million and it's likely the year-end total will be somewhere around 13 million. That's a huge drop from the 16.1 million sold in 2007. Based on the typical transaction price, the industry will do about $70 billion less business this year. That's a bunch. And last time I looked, the automakers had nothing to do with the meltdown in the financial and credit markets...>> |
