At least the auto industry gets it

[I.P. Freley]

Amercian car companies go to great lengths to promote the "buy American" aspect and patriotic bull####, yet make almost every part in Canada and Mexico and put two rivets into it in final assembly in America and call it American made. Then they say that they can't compete with the Japanese because they use American labor and have to pay more for it.

The Japanese car companies make their cars in the US, using US labor, and do it cheaper. Plus, they make a better product.

The top three manufacturing plants (according to the quality of the product) in the Americas (N and S), according to J.D. Power, are GM plants. I know that's not representative of all manufacturing plants, but the blanket statement "they make a better product" isn't necessarily true.

Also not true is your baseless comment that "American" car companies make almost every part in Canada and Mexico. Go to a car lot and look at the Domestic Content label and you'll see that you're way off base for the "average" domestic car... Excepting, of course, those domestic models that are manufactured across the border. The very nature of auto production suggests that most content will be local to the point of manufacture, aside from the drivetrain, which might be shipped in.

 

[iaflyer]

Also not true is your baseless comment that "American" car companies make almost every part in Canada and Mexico. Go to a car lot and look at the Domestic Content label and you'll see that you're way off base for the "average" domestic car... Excepting, of course, those domestic models that are manufactured across the border. The very nature of auto production suggests that most content will be local to the point of manufacture, aside from the drivetrain, which might be shipped in.

Huh? I don't know if you work in the auto industry, I don't either. However, I worked for an airline where 95% of the business was auto freight. Believe me - more than just the drivetrain is made outside the US. We carried almost every part for cars out of Mexico and Canada to final assembly plants in the US. We also to did the opposite, carrying various parts from factories in the US to final assembly plants in Mexico too.

The cost nature of the auto industry means that parts will be made where it is cheapest, in absense of other requirements. Mexican workers will assemble stuff for a whole lot cheaper than in the US. Even when you factor in shipping costs, it's much cheaper to produce parts and assemble cars outside the US.

iaflyer

 

[h25b]

Heh, well the '06 Civic wasn't available to me in Nov. of 2000.

Yo' homey, not trying to be illin' your whip.... I merely was making the point that as the years go on, Honda is widening the gap between itself and the competition.

Why am I not surprised that the CREW CAR wasn't in good shape? That car has been abused by crews for an indeterminate period of time... It could be six years old and have led a very hard life indeed. The only reason I even bothered mentioning the buzzing Toyota I rented was that it had only 3k miles on it... Using rentals or loaners as a point of reference is unfair unless the car is practically new.

That crew car I was talking about only had 18,000 miles on it. I don't care if it's a rental or crew car but anything with that low of mileage shouldn't be having problems.

I guess I got what I paid for, eh? Blanket statements about "domestic" cars aren't always accurate, nor are blanket statements about Hondas.

I have to disagree, especially with regards to blanket statements about Hondas. As a manufacturer they are amongst the highest ranked in terms of quality and resale value. This is also why you typically can not beat the lease terms against Honda, because their residual values are so high. And I have never (done it twice) had an issue turning in a leased Honda early on its lease because they are always still worth the payoff... Try doing that with a Ford Focus.

 

[atpcliff]

Hi!

GM/Ford and Cessna/Piper are in the same boat as Delta/Eastern.

They all make an inferior product that is not worth it, or it's priced too low (because of competition) to support the costs of delivering the product.

Toyota/Honda make a modern auto within an efficient system, that's why they're killing the big 3. Cirrus makes a modern airplane (except for FADEC, which is coming) with an efficient system, and they are killing the big 2. Jet Blue/Ryan air are very efficient and are killing their older, dinosaur competitors.

The earth is rough. If you have an organization/organism that is to survive for extended periods of time, it much be able to adjust to severe change. If it doesn't, it goes the way of the Dodo bird.

Cliff
GRB

PS-I like earth. Oftentimes it sucks, but I like the challenge.

 

[atpcliff]

Hi!

Here's a couple of other points.

Autos:
Yes, you will find Honda's and Toyotas that are lemons, but their numbers are far lower than other manufacturers.

I know a guy that bought and sold used cars on the side. He often did it with Honda CRXs. He bought one with 450,000+ miles on the original motor, and re-sold it. It ran great. My dad's Ford Probe has had 3 engines within 200,000 miles, and it runs like crap.

US Auto Parts:
Mexico is only the beginning. We often pick up car parts in LAX coming off a -747 freighter out of China, and fly them to factories in Mexico, and then fly those finished parts to an assembly line in the US for installation.

Ford has said within 4 years they will have Fords made in China being exported to the US. Will they be sold in Wal-Mart???

GM+:
Their quality is actually very good right now, it's just that they're not building cars that Americans want, and their costs are out of control (just like Delta).

According to the investors that hold bonds and other GM instruments, they believe that GM will be Chapter 11 in 6-12 months. The US auto companies (GM/Ford/Delphi/Visteon) will dump their pensions just like the airlines did/are doing, and we, the taxpayers, will be stuck with the bill while years of incompetent management will walk away with big severence packages.

Toyota/Honda: If you buy a Avalon/Camry (made in KY), or a Civic (made in OH), your US parts content will be much higher than many models of "Big 3" autos, even those with final assembly lines in the US.

Cliff
GRB

PS-I hope Delta/GM, etc., etc. all make it. I hope they can adopt, and I hope America can retain it's position as one of the major countries in the world. It's not looking good, however. I just talked to my kids about learning Chinese.

 

[Falconjet]

What is a Honda CR-X?

Maybe Honda CR-V? Or maybe something else? Not the old motorcycle was it?

Even though US automakers use a lot of plants in Mexico and Canada they do still manufacture a lot of products in the states. Ford has truck plants in Norfolk, KC and GA I think and of course GM makes the Vette only in Bowling Green, KY.

You should buy whichever vehicle meets YOUR needs, in my humble opinion. If the US automakers want to survive they need to improve their products or they will only be able to sell trucks in a few more years as Honda and Toyota (not to mention the rest of the Asian invasion) will eat their lunch in the car wars.

FJ

PS: Cliff I don't mean to be picking on you.

 

[atpcliff]

Hi!

The CRX was the 2-seat Honda. It was a Civic with the back seats removed, and a smaller body. It was a great car for 2 people. It had TONS of room in the back (it was a hatchback) and had a higher performance version, with the largest civic motor, or a tiny CRX-HF with only a 62 hp motor.

I once did a highway trip at 55 mph (the speed limit at the time) in my HF, and got about 55 mpg. Normally, I got 45 mpg in and out of town as I redlined each shift to get enough torque to get around.

The only reason I sold it was we needed a bigger car. We now have an Avalon and a Civic Si (+ an airport car). I'd rather buy American, but I don't want to get screwed. My first car was a Chevy. It caught fire as I was cruising down the highway. I also had an '89 Chevy and an '89 Ford as airport cars. They were/are both crap.

If we are ever going to buy another new car, the lowest mileage number on the sticker must be 45. I would prefer a plug-in hybrid. I also would prefer to buy a 4-dr. hatch or a wagon, as they are the most practical cars. They don't make many in America, but there are tons of European ones. I wish GM made the Prius. I would've already purchased one with the employee discount.

The perfect car for us now would be a vehicle like the Honda Element that seated 5, and got at least 45 mpg using a plug-in hybrid drivetrain.

Cliff
GRB

 

[atrdriver]

So you imply that raising prices is the answer? Kinda selfish don't ya think.

How about indusrty consolidation?

No, I don't think that raising prices so that they are above the cost of production is selfish at all.

 

[h25b]

No, I don't think that raising prices so that they are above the cost of production is selfish at all.

That has always been exactly my point. Establishing the fair price of production is the problem. Southwest is making money. So they are obviously pricing themselves above the price of production. The other carriers are left with the choice of competing or giving up market share.

The interesting part is the fact that the SWA labor force is being compensated quite fairly in the process. It's now just a matter of which legacy carriers can hang on until Southwest's fuel hedging runs out.

Just raising tickets prices is just robbing Peter to pay Paul. The legacy carriers are too busy figuring out how to survive.

 

[73-Driver]

By DEE-ANN DURBIN, AP Auto Writer 12 minutes ago


DETROIT - General Motors Corp. will eliminate 30,000 jobs and close nine North American assembly, stamping and powertrain plants by 2008 as part of an effort to get production in line with demand and position the world's biggest automaker to start making money again after absorbing nearly $4 billion in losses so far this year.
The announcement Monday by Rick Wagoner, GM's chairman and CEO, represents 5,000 more job cuts than the 25,000 that the automaker had previously indicated it planned to cut.
The 30,000 job cuts represents about 9 percent of GM's global work force of about 325,000 people.
"The decisions we are announcing today were very difficult to reach because of their impact on our employees and the communities where we live and work," Wagoner told employees. "But these actions are necessary for GM to get its costs in line with our major global competitors. In short, they are an essential part of our plan to return our North American operations to profitability as soon as possible."
The plan will cut the number of vehicles GM is able to build in North America by about 1 million a year by the end of 2008.
GM said the assembly plants that will close are in Oklahoma City, Lansing, Mich., Spring Hill, Tenn., Doraville, Ga., and Ontario, Canada. A shift also will be removed at a plant in Moraine, Ohio.
An engine facility in Flint, Mich., will close, along with a separate powertrain facility in Ontario and metal centers in Lansing and Pittsburgh.
Wagoner said GM also will close three service and parts operations facilities. They are in Ypsilanti, Mich., and Portland, Ore. One other site will to be announced later.
GM said the plan is to achieve $7 billion in cost reductions on a running rate basis by the end of 2006 — $1 billion above its previously indicated target.
The company said it would take a "significant" restructuring charge in conjunction with the changes and any related early retirement program. Details of those charges would be released later, GM said.
Any early retirement program would require an agreement with its unions, which GM said it hopes to reach soon.
GM shares rose 12 cents to $24.17 in morning trading on the New York Stock Exchange. Its shares traded below $21 last week at an 18-year low.
Wagoner said last month the automaker would announce plant closures by the end of this year to get its capacity in line with U.S. demand. GM plants currently run at 85 percent of their capacity, lower than North American plants run by its Asian rivals. The plant closings aren't expected to be final until GM's current contract with the United Auto Workers expires in 2007.
GM has been crippled by high labor, pension, health care and materials costs as well as by sagging demand for sport utility vehicles, its longtime cash cows, and by bloated plant capacity. Its market share has been eroded by competition from Asian automakers led by Toyota Motor Corp. GM lost nearly $4 billion in the first nine months of the year.
The automaker could be facing a strike at Delphi Corp., its biggest parts supplier, which filed for bankruptcy protection last month. GM spun off Delphi in 1999 and could be liable for billions in pension costs for Delphi retirees.
GM also is under investigation by the U.S. Securities and Exchange Commission for accounting errors.
Last week, after the automaker's shares fell to their lowest level since 1987, Wagoner sent an e-mail to employees saying the company has a turnaround strategy in place and has no plans to file for bankruptcy.

GM is not the only U.S. automaker faced with the need to cut costs.
Last week, Ford Motor Co. told employees it plans to eliminate about 4,000 white-collar jobs in North America early next year as part of a restructuring plan. Ford said the cuts will be made in part through attrition and elimination of some agency and contract positions.
The plans were outlined Friday in an e-mail to employees from Mark Fields, president for the Americas.
The cuts will be in addition to 2,750 North American salaried jobs that Ford earlier said it wanted to cut by the end of 2005. Ford started the year with about 35,000 salaried workers in North America. Dearborn-based Ford reported a third-quarter loss of $284 million, including a loss of $1.2 billion before taxes in North America.

 

[Hamburgler]

GM just announced they are cutting 30,000 jobs. They bought BIG into the large SUV craze and based their line on Tahoes, Hummers, etc. and now are paying the price as SUV sales dip so low (20% or more year over year). They are rushing some of their hybrid technology (due out in 2007 on the Tahoe I believe) and more deisel options - but they are on hard times to be sure.

From Chicago Sun Times 2 hours ago:
General Motors Corp. will eliminate 30,000 manufacturing jobs and close nine North American assembly, stamping and powertrain plants by 2008 as part of an effort to get production in line with demand.

The announcement Monday by Rick Wagoner, chairman and CEO of the world's largest automaker, represents 5,000 more job cuts than the 25,000 that the automaker automaker had previously indicated it planned to cut.

GM said the plants that will close are in Oklahoma City, Lansing, Mich., Spring Hill, Tenn., Doraville, Ga., and Ontario, Canada.

Wagoner said GM also will close three service and parts operations facilities.

"The decisions we are announcing today were very difficult to reach because of their impact on our employees and the communities where we live and work," Wagoner told employees. "But these actions are necessary for GM to get its costs in line with our major global competitors. In short, they are an essential part of our plan to return our North American operations to profitability as soon as possible."

GM said the plan is to achieve $7 billion in cost reductions on a running rate basis by the end of 2006 - $1 billion above its previously indicated target. The number of job cuts also was above earlier estimates.

GM said earlier this year it planned to cut 25,000 jobs by 2008, mostly through attrition.

General Motors Corp.'s restructuring announced Monday includes the following cuts:

ASSEMBLY PLANTS:

• Oklahoma City, Okla., will cease production in early 2006.

• Lansing, Mich., Craft Centre will cease production in mid-2006.

• Spring Hill, Tenn., Plant/Line No. 1, will cease production at the end of 2006.

• Doraville, Ga., will cease production at the end of its current products' life cycle in 2008.

• Third shift will be removed at Oshawa Car Plant No. 1, in Ontario, Canada, in the second half of 2006. Oshawa Car Plant No. 2 will cease production after the current product runs out in 2008.

• Third shift will be removed at Moraine, Ohio, during 2006, with timing to be based on market demand.

STAMPING, SERVICE AND PARTS OPERATIONS AND POWERTRAIN FACILITIES:

• Lansing, Mich., Metal Center will cease production in 2006.

• Pittsburgh, Pa., Metal Center will cease production in 2007.

• Parts Distribution Center in Portland, Ore., will cease operations in 2006.

• Parts Distribution Center in St. Louis, Mo., will cease warehousing activities and will be converted to a collision center facility in 2006.

• Parts Processing Center in Ypsilanti, Mich., will cease operations in 2007.

• One additional Parts Processing Center, to be announced at a later date, will also cease operations in 2007.

• St. Catharines Ontario Street West powertrain components facility in Ontario, Canada, will cease production in 2008.

• Flint, Mich., North 3800 engine facility ("Factory 36") will cease production in 2008.

 

[M3pilot]

Is it just me or is comparing the automobile industry to the airlies a lot like pitting Michael Vick against Shaq to see who's the better swimmer?

No flame intended, just trying to lighten it up a bit...

M3

 

[I.P. Freley]

That crew car I was talking about only had 18,000 miles on it. I don't care if it's a rental or crew car but anything with that low of mileage shouldn't be having problems.

I have to disagree, especially with regards to blanket statements about Hondas. As a manufacturer they are amongst the highest ranked in terms of quality and resale value. This is also why you typically can not beat the lease terms against Honda, because their residual values are so high. And I have never (done it twice) had an issue turning in a leased Honda early on its lease because they are always still worth the payoff... Try doing that with a Ford Focus.

This shows a very odd understanding of how leasing REALLY works. You may have gotten a good leasing deal on a Honda at some point, probably funded by Honda Motor, but in the world of leasing, theory and fact rarely meet.

In theory, yes, the lease payments you make are intended to cover depreciation plus some amount of profit. However, with desirable cars that have high residuals, you don't get propotionately small monthly lease payments. There are some cars that maintain such high percentages of resale that the lease should only be about $100/mo. In the case of a BMW M3, for instance, the model that hit the road a couple of years ago, when new, would have had a montly payment of about $250/mo for a two year lease that only covered depreciation. You couldn't get a lease on that car for less than three times that, however, with a huge down payment. And right now (using an admittedly silly example), if you could get your hands on a Ford GT, you should be able to have them pay YOU for a two year lease on it... Cuz it'll be worth more used than new.

As for how you're violating the terms of your lease without penalty, I can only guess. My ex-gf got taken for a ride when she tried to end her Civic lease early to get, hey, another Honda, from the same dealer.

It's obvious that you have a bias against any American machinery. That's typical these days, I guess, but using a CREW CAR as an example? You don't know what kind of life that car has led, 18000 miles or not. Maybe the reason it was a crew car to begin with is that it was a salvaged wreck and was sold for a song. Using this logic, the Toyota taxicab I was in a month ago would be indicative that all Toyotas are garbage.

Also, your assertion that Honda is "widening the gap" between itself and the competition? That has no basis in fact. Now maybe if you'd said TOYOTA I'd come close to agreeing with you... If you wish to look at more objective sources than your OPINION, all domestic manufacturers are NARROWING the gap between themselves and their Japanese competition in terms of near and long-term quality. Have they caught them? No. But they are, in fact, narrowing the gap on quality. It's just that, as Cliff said, they aren't making products that are as compelling as the competition. That is why I don't own what is nominally, at least, an "American" car anymore.

US automakers have had an atrocious past, quality-wise, which drove millions of their customers over to foreign automakers. Now they are having a hard time winning those customers back, which isn't helped any by the fact that many view the GM and Ford offerings as less desirable than those from Asia and Europe... And in most cases, they're right.

 

[proftomda]

Very unfortunate news about the auto industry but its really not new. Newsweek published an article in 2001 about GM which illistrated that based on projections, all their 2008 estimated profits would be spent on retirement benefits, no investment in new product. In fact, thats what has brought the US auto industry to its knees, a blind disregard for the competition and keeping their products competative on the technological, safety, quality, and consumer desire forfronts. Quality has certainly improved in some areas, but the bottom line is that in many classes of cars, the US automakers continue to emit lackluster, low demand vehicles that are only appealing to car rental companies. Lets not blame it on the worker, management and engineering are the culprits.

There certainly are parallels to the airline industry!

Prof
Airline pilot, ASE technician for the $$.

 

[RichardRambone]

I just bought a brand new Stang and its beautiful!