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      12-09-2008, 06:23 PM   #1
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How Detroit Drove Into A Ditch II

Here's a link to the first page of the original "How Detroit Drove Into A Ditch," http://www.1addicts.com/forums/showt...t=18273&page=3

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      12-09-2008, 06:26 PM   #2
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I am ready for a depression, I think it would teach people to be more responsible with there money. Plus it would be a good time to build my portfolio. I am not a fan of unions, but there are a number of problems with their companies that led to this position.
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      12-09-2008, 06:48 PM   #3
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All three of these companies have to deal with the problems at both ends. They need to start at the top and the bottom, and get back to building quality cars that will turn a profit.

Right now I feel like GM has the best new product offerings, but obviously they're in the worst shape financially. Ford took out a large line of credit earlier so they're OK for a while even without the Federal loans. I can see both of them returning to viability, but Chrysler seems like a lame duck with very little hope.
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      12-09-2008, 06:52 PM   #4
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I want cadilac to get the new srx out, that is really what I am interested in as a possibility.
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      12-09-2008, 08:39 PM   #5
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If they can get this "car czar" to do a non-bancrupcy court restructuring (legally impossible?), then they have a chance of surviving long term. Anything less is wasted money. Chrysler, frankly may deserve nothing at all unless they go public again.
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      12-10-2008, 09:13 AM   #6
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Quote:
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If they can get this "car czar" to do a non-bancrupcy court restructuring (legally impossible?), then they have a chance of surviving long term. Anything less is wasted money. Chrysler, frankly may deserve nothing at all unless they go public again.


Right now Chrysler's product offerings are so weak I have to think it will take a fortune to return them to profitability. Their interiors are still just as bad as they were 10 years ago IMO, and they just keep using the parts on their new cars. The Challenger has a ton of bad interior parts (mainly the switchgear and steering wheel) that are carried over from the Charger/300.

I go through two or three rental cars a month, so I get to sample a lot of stuff first hand. Right now I feel like GM and Ford are both offering decent quality and good value, even if the vehicles still have some shortcomings. I hate having a Chrysler product as a rental though. I actually completely refuse to take a PT Cruiser.
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      12-10-2008, 02:42 PM   #7
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Unfortunately, there are idiots who think that unions are a big part of the problem, when everyone knows that the German and the Japanese unions are much more powerful that UAW. In Germany, companies typically have to give IG Metall workers one year's severance pay, to give just one example.

Nor do these UAW critics ever acknowledge the fact that it's pretty tough to demand more productivity out of someone getting 25 dollars an hour when the CEO is getting paid 25,000 dollars an hour AND getting a multi-million-dollar golden parachute after his 25,000-dollar-an-hour expertise turns out to be worthless.

But lots of people seem to think that seeing something happen on an assembly line translates into understanding how a global industry works.
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      12-10-2008, 03:03 PM   #8
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I don't know why you insist on brining up other country's unions, the desire is for the American automakers to produce affordable, quality cars in America. The bottom line is they can take a union job and have someone else in the U.S. do just a good of a job for less money. Yeah the CEO's are overpaid, but they are in most other companies as well. The Top needs to be restructured as well. The UAW is hindering the Big Three to compete with other automakers that are producing vehicles in the U.S. without UAW labor. The top level management and design sucks too, but you can't say the UAW has nothing to do with it. GM is coming along as they are proposing some new vehicles that have better quality and are more appealing, but they have a long way to go to be profitable.
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      12-10-2008, 04:00 PM   #9
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UAW is a huuuuge "burden" upon the auto industry. Not saying that there should not be a Union, but do to normal inflation it is becoming more expensive to maintain an American work force AND be competitive. For the poster that mentioned Germany...the difference there is the base pay of the workers. It is considerably less than the American worker given the cost of living in Germany... Even the UAW realizes the burden and made "some" concessions (as testified before Senator Dodd and others) to "help" the Big 3. The problem is not ONLY the UAW, but the UAW is a very large chunk of it.
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      12-10-2008, 04:08 PM   #10
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Because the discussion is about how Detroit drove into a ditch.

Quote:
Originally Posted by ARES45 View Post
I don't know why you insist on brining up other country's unions, the desire is for the American automakers to produce affordable, quality cars in America. The bottom line is they can take a union job and have someone else in the U.S. do just a good of a job for less money. Yeah the CEO's are overpaid, but they are in most other companies as well. The Top needs to be restructured as well. The UAW is hindering the Big Three to compete with other automakers that are producing vehicles in the U.S. without UAW labor. The top level management and design sucks too, but you can't say the UAW has nothing to do with it. GM is coming along as they are proposing some new vehicles that have better quality and are more appealing, but they have a long way to go to be profitable.
And the example of European and Japanese automakers proves that the Big Three are not in a ditch because of unions except in one sense: The Big Three's management, which is more highly paid than management at any other car company in the world, is so atrocious that workers have to be paid much less than workers at European and Japanese companies in order to make up for it.

My car was built in Leipzig, by IG Metall workers.
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      12-10-2008, 05:23 PM   #11
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I agree with you that the Big Three's management has been poor, and have made many mistakes, one of which was letting the UAW get them by the balls.
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      12-10-2008, 05:44 PM   #12
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What is very interesting is the silence from Toyota, Honda, Nissan and BMW over the bailout question. They have major manufacturing operations in the US and so their cost basis is easier to compare to Detroit's than completely foreign companies. Strictly in terms of hourly labor costs, the differences aren't that great. In terms of legacy costs though, forget it. The 800lb gorrilla that is crushing Detroit are the legacy costs from years of stupidity, years of making decision about pensions, benefits, healthcare, debt, dealers, brands, models, etc, that kept deferring the ultimate costs to 'tomorrow'. The other autimotive companies don't have these background costs at anything approaching the scale of the Detroit dinosaurs. The only way out will be to cut those costs, either by bankrupcy or pseudo bankrupcy (if Congress makes that possible). The UAW and executive pay is utter chicken scratch compared to those issues. Unfortunately, that may be all that the politicians talk about or act on.

Sadly, the whole episode may be a precursor to what may happen to the US for many of the same reasons - one day you can't live off your fat and the bills come due.
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      12-10-2008, 05:58 PM   #13
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. . . one day you can't live off your fat and the bills come due.
Or an entire generation (the largest one at that) decides to retire all at once. Us Baby Boomers demand to live the life we're accustomed to (the narcissists that we are ; -).
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      12-10-2008, 06:00 PM   #14
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I'm not sure about Nissan and BMW but Toyota and Honda have business plans that reach out 5, 10, 25 and 50 years. If GM had plans like that and stuck to them they would have electric cars by now and would have been far ahead of the curve as evidenced by the EV1.

But, short term strategies that require them to maximize margin for their stock values sake make them go towards high margin pickups and SUV's.
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      12-11-2008, 01:16 PM   #15
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Unfortunately, there are idiots who think that unions are a big part of the problem, when everyone knows that the German and the Japanese unions are much more powerful that UAW. In Germany, companies typically have to give IG Metall workers one year's severance pay, to give just one example.

Nor do these UAW critics ever acknowledge the fact that it's pretty tough to demand more productivity out of someone getting 25 dollars an hour when the CEO is getting paid 25,000 dollars an hour AND getting a multi-million-dollar golden parachute after his 25,000-dollar-an-hour expertise turns out to be worthless.

But lots of people seem to think that seeing something happen on an assembly line translates into understanding how a global industry works.
Welcome to corporate America--this is commonplace and can't be used to support a "poor me" mentality. And honestly, $25 hr to do assy line work is good pay, especially considering the educational requirements. Sorry, no sympathy for the greedy UAW workers.
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      12-11-2008, 01:48 PM   #16
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I read this, any thoughts? (sorry it's lengthy)

Interesting Article !

*Incredible editorial from one of our Dealers in the
Pittsburgh Region. *
*Attached is a well written "Letter to the Editor" from
Elkins Fordland*
*. *
*Editor: *
*
As I watch the coverage of the fate of the U.S. auto
industry, one alarming and frustrating fact hits me right
between the eyes. The fate of our nation's economic survival
is in the hands of some congressmen who are completely out
of touch and act without knowledge of an industry that
affects almost every person in our nation. The same lack of
knowledge is shared with many journalists whom are
irresponsible when influencing the opinion of millions of
viewers.

Sen. Richard Shelby of Alabama has doomed the industry,
calling it a dinosaur. No Mr. Shelby, you are the dinosaur,
with ideas stuck in the '70s, '80s and '90s. You and the
uninformed journalist and senators that hold onto myths that
are not relevant in today's world.


When you say that the Big Three build vehicles nobody wants
to buy, you must have overlooked that GM outsold Toyota by
about 1.2 million vehicles in the U.S. and Ford outsold
Honda by 850,000 and Nissan by 1.2 million in the U.S. GM
was the world's No. 1 automaker beating Toyota by 3,000 units.

When you claim inferior quality comes from the Big Three,
did you realize that Chevy makes the Malibu and Ford makes
the Fusion that were both rated over the Camry and Accord by
J.D. Power independent survey on initial quality? Did you
bother to read the Consumer Report that rated Ford on par
with good Japanese automakers.


Did you realize Big Three's gas guzzlers include the 33 mpg
Malibu that beats the Accord. And for '09 Ford introduces
the Hybrid Fusion whose 39 mpg is the best midsize, beating
the Camry Hybrid. Ford's Focus beats the Corolla and Chevy's
Cobalt beats the Civic.


When you ask how many times are we going to bail them out
you must be referring to 1980. The only Big Three bailout
was Chrysler, who paid back $1 billion, plus interest. GM
and Ford have never received government aid.


When you criticize the Big Three for building so many
pickups, surely you've noticed the attempts Toyota and
Nissan have made spending billions to try to get a piece of
that pie. Perhaps it bothers you that for 31 straight years
Ford's F-Series has been the best selling vehicle. Ford and
GM have dominated this market and when you see the new '09
F-150 you'll agree this won't change soon.


Did you realize that both GM and Ford offer more hybrid
models than Nissan or Honda. Between 2005 and 2007, Ford
alone has invested more than $22 billion in research and
development of technologies such as Eco Boost, flex fuel,
clean diesel, hybrids, plug in hybrids and hydrogen cars.

It's 2008 and the quality of the vehicles coming out of
Detroit are once again the best in the world.


Perhaps Sen. Shelby isn't really that blind. Maybe he
realizes the quality shift to American. Maybe it's the fact
that his state of Alabama has given so much to land
factories from Honda, Hyundai and Mercedes Benz that he is
more concerned about their continued growth than he is about
the people of our country. Sen. Shelby's disdain for
"government subsidies" is very hypocritical. In the early
'90s he was the driving force behind a $253 million
incentive package to Mercedes. Plus, Alabama agreed to
purchase 2,500 vehicles from Mercedes. While the bridge loan
the Big Three is requesting will be paid back, Alabama 's
$180,000-plus per job was pure incentive. Sen. Shelby, not
only are you out of touch, you are a self-serving hypocrite,
who is prepared to ruin our nation because of lack of
knowledge and lack of due diligence in making your opinions
and decisions.


After 9/11, the Detroit Three and Harley Davidson gave $40
million-plus emergency vehicles to the recovery efforts.
What was given to the 9/11 relief effort by the Asian and
European Auto Manufactures? $0 Nada. Zip!


We live in a world of free trade, world economy and we have
not been able to produce products as cost efficiently. While
the governments of other auto producing nations subsidize
their automakers, our government may be ready to force its
demise. While our automakers have paid union wages, benefits
and legacy debt, our Asian competitors employ cheap labor.
We are at an extreme disadvantage in production cost.
Although many UAW concessions begin in 2010, many lawmakers
think it's not enough.


Some point the blame to corporate management. I would like
to speak of Ford Motor Co. The company has streamlined by
reducing our workforce by 51,000 since 2005, closing 17
plants and cutting expenses. Product and future product is
excellent and the company is focused on one Ford. This is a
company poised for success. Ford product quality and
corporate management have improved light years since the
nightmare of Jacques Nasser. Thank you Alan Mulally and the
best auto company management team in the business.


The financial collapse caused by the secondary mortgage
fiasco and the greed of Wall Street has led to a $700
billion bailout of the industry that created the problem.
AIG spent nearly $1 million on three company excursions to
lavish resorts and hunting destinations. Paulson is saying
no to $250 billion foreclosure relief and the whole thing is
a mess. So when the Big Three ask for 4 percent of that of
the $700 billion, $25 billion to save the country's largest
industry, there is obviously oppositions. But does it make
sense to reward the culprits of the problem with $700
billion unconditionally, and ignore the victims?


As a Ford dealer, I feel our portion of the $25 billion
will never be touched and is not necessary. Ford currently
has $29 billion of liquidity. However, the effect of a
bankruptcy by GM will hurt the suppliers we all do business
with. A Chapter 11 bankruptcy by any manufacture would cost
retirees their health care and retirements. Chances are GM
would recover from Chapter 11 with a better business plan
with much less expense. So who foots the bill if GM or all
three go Chapter 11? All that extra health care,
unemployment, loss of tax base and some forgiven debt goes
back to the taxpayer, us. With no chance of repayment, this
would be much worse than a loan with the intent of repayment.


So while it is debatable whether a loan or Chapter 11 is
better for the Big Three, a $25 billion loan is definitely
better for the taxpayers and the economy of our country.


So I'll end where I began on the quality of the products of
Detroit . Before you, Mr. or Ms. Journalist continue to
misinform the American public and turn them against one of
the great industries that helped build this nation, I must
ask you one question. Before you, Mr. or Madam Congressman
vote to end health care and retirement benefits for 1
million retirees, eliminate 2.5 million of our nation's
jobs, lose the technology that will lead us in the future
and create an economic disaster including hundreds of
billions of tax dollars lost, I ask this question not in the
rhetorical sense. I ask it in the sincere, literal way.


*Can you tell me, have you driven a Ford lately?*
*Jim Jackson **
*Elkins **
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      12-11-2008, 02:20 PM   #17
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Quote:
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Unfortunately, there are idiots who think that unions are a big part of the problem, when everyone knows that the German and the Japanese unions are much more powerful that UAW. In Germany, companies typically have to give IG Metall workers one year's severance pay, to give just one example.

Nor do these UAW critics ever acknowledge the fact that it's pretty tough to demand more productivity out of someone getting 25 dollars an hour when the CEO is getting paid 25,000 dollars an hour AND getting a multi-million-dollar golden parachute after his 25,000-dollar-an-hour expertise turns out to be worthless.

But lots of people seem to think that seeing something happen on an assembly line translates into understanding how a global industry works.

Idiots huh?

What union do you work for by the way? Only another union member would blindly support the idiocy that is the UAW today.

No one EVER said that managment didn't bear a lot of the blame in this situation. I'm not so sure why that seems to be left out of your responses in every thread like this. You are intent on convincing people the UAW isn't the problem, but the reality is, anyone working in the industry KNOWS they're part of the problem. It's not even open for debate. Comparing salaries to workers in other countries is completely useless. There are a million different variable that come into play, including taxation, health care, retirement benefits, and cost of living. Why you insist on using workers in other countries as examples of why the UAW is Ok is beyond anything I can understand.

I've worked in dozens of union plants that run smoothly. I've NEVER been in UAW plant that did. The problem isn't unions in general, it's THIS union.
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      12-11-2008, 05:19 PM   #18
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^^Blackjack: Great article. Well said by that dealer...Despite the current situation I have more faith now in the current American automotive lineups than ever before.
Jeremyc74: Well said!
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      12-12-2008, 09:32 AM   #19
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I'm wondering if there's even a chance for this going through on a second try at this point.

I'll be spending the Christmas holiday job hunting, just in case. If GM goes tits up, the manufacturing sector in this country is in deep shit.
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      12-12-2008, 02:21 PM   #20
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If our goverment had let the free market deal with Chrysler back in 1979 would American automakers be in this situation today?
Just a thought...
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      12-12-2008, 05:23 PM   #21
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Quote:
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If our goverment had let the free market deal with Chrysler back in 1979 would American automakers be in this situation today?
Just a thought...


Calling what the US has a "free market" isn't anywhere close to the truth.
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      12-12-2008, 05:30 PM   #22
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That article is full of so many wrong "facts" it's not even funny. Selling more than Toyota "to car rental fleets". The Malibu get's better mileage than the Accord "in a controlled envoronment". GM and Ford offer more Hybrid "models" but they are all the same chassis so that statement is complete bullshit. "Quality shift to American", boy he pulled that one out if his a**. Of course you can't compete on cost effectiveness, the fat cats at the top are paid too much and the UAW makes sure the folks on the line are certainly overpaid too. Oh, and the auto industry DID NOT build this counrty. This country's citizens built the auto industry. Quit taking credit for other people's work dag-nabbit.

I have driven a Ford lately...I couldn't wait to get out if it.
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