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  1. #51
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by Modern Nomad View Post
    I'd have to point to Toyota, Honda, BMW, Hyundai car plants in the US, and point out that the cars manufactured at those plants, have similiar quality to the ones made back home.
    Sorry, I ran out of time before bed so I realise I didn't respond to clarify what I meant.

    I don't mean that management is good, but management themselves have to manage the companies existing obligations and situation. I don't think management has done a good job, but I think a the majority of the issue is that there is nothing they can do. They are hemmed in from one side with unions and labor issues, including the political pressures involved... and then are hemmed in on the other side, with debt and financial obligations.

    It's what happens when the overpaying of labor and the buyout of unions in the past with benefits catches up to a company. In a strange way, it reflects the government social security situation too.

    That fact alone makes it a management issue. Its either that, or workers in the south (North Carolina, Alabama, etc... have these Toyota, BMW, etc... plants) are better than workers in Detroit. I'd go for the former hypothesis.
    One of the reasons I disagree is because the US companies have highly efficient plants as measured by production (high employment costs do that). It's the companies, as a whole, that are falling apart. They produce domestic cars for domestic services using domestic labor with domestic designs. Highly inefficient, not diversified and not competitive.

    Lots of factories are closing or idling right now including Asian or European parent companies. But the failure of the US big three seems systemic to the US parent companies (including their management styles). It could be explain by various moral hazards (been protected too long), but I think it's a cycle.

    Essentially, the political body wants votes, and so they "pay off" labor to get them. That makes the big three a non-company, for a lack of better words, simply because they can't do what they need to do as easily. This also applies historically - the benefits being covered by government/etc - which has made them financially burdened during globalisation. And so they get protected, which increases their dependence on government/etc. and the cycle goes on.

  2. #52
    mountain surfing nomadic's Avatar
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    wat foreign auto plants are closing? audi has actually increased sales this past month. links please.

  3. #53
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by Modern Nomad View Post
    wat foreign auto plants are closing? audi has actually increased sales this past month. links please.
    This is the article that I got emailed to me;

    BMW and Daimler to idle car plants as sales crash : Business

    But there are plenty of related articles through google news:

    car plants (idle OR closing) - Google News

  4. #54
    mountain surfing nomadic's Avatar
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    Quote Originally Posted by ptgatsby View Post
    This is the article that I got emailed to me;

    BMW and Daimler to idle car plants as sales crash : Business

    But there are plenty of related articles through google news:

    car plants (idle OR closing) - Google News
    I don't see what US based foreign auto plants are closing.

  5. #55
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by Modern Nomad View Post
    I don't see what US based foreign auto plants are closing.
    Hmmm... maybe we are talking at cross purposes.

    What I'm saying is that the pain automakers are suffering is universal, but their ability to cope with the change is different. That is, unlike many other parent companies, the big three in the US are likely to head into bankruptcy/become insolvent. Their obligations far exceed their ability to weather the storm, so to speak.

    My view is that the problems for these companies are systemic. The US (and Canadian) plants are very efficient, etc. It's just the way the companies are situated and their obligations that weigh them down enough (along with a little long term dose of moral hazard) to more or less make them insolvent, no matter what is done (by current management - past management was ridiculously bad, and yet pretty rational given the government pressure).

  6. #56
    mountain surfing nomadic's Avatar
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    ^ just sounds like excuses to me.

    southern california is the largest auto market in the entire world. i can't think of a single person i know who would rather have a $30,000 ford/gm/chrysler over a $33,000 bmw. people don't care how efficient the auto plant is when they buy a car.

    the lack of quality means they have to compete on price alone.

  7. #57
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by Modern Nomad View Post
    ^ just sounds like excuses to me.

    southern california is the largest auto market in the entire world. i can't think of a single person i know who would rather have a $30,000 ford/gm/chrysler over a $33,000 bmw. people don't care how efficient the auto plant is when they buy a car.

    the lack of quality means they have to compete on price alone.
    It's too bad that BMWs aren't even on the radar as far as car sales go, while the ford/gm/chrysler sells 19 times more cars than BMW, even after the 30-45% decline in their sales.

    Anyway, you can believe whatever you want. Here's plenty of data, if you care to take a look - Auto Sales - Markets Data Center - WSJ.com

    I have seen no evidence of poorer quality or lower efficiencies in the big three, both as parents or as individual plants. What I do see is that they all suffer from very narrow markets (American only), are unable to weather change and have huge political and financial obligations slowing them down.

    It doesn't matter how good of a product they make, IMO, because they are essentially the 'walking dead'. Insolvent due to existing obligations. It slowly grinds away at capital investment, prevents risk taking, reduces research and design and so forth. Anything they do right is eventually taken on by others, and they are left with the obligations, time after time.

  8. #58
    mountain surfing nomadic's Avatar
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    Quote Originally Posted by ptgatsby View Post
    It doesn't matter how good of a product they make, IMO, because they are essentially the 'walking dead'. Insolvent due to existing obligations. It slowly grinds away at capital investment, prevents risk taking, reduces research and design and so forth. Anything they do right is eventually taken on by others, and they are left with the obligations, time after time.
    big 3 cars are cheap, and come with a lot of rebates. if they made a good product, they could charge more obviously.

    i can't think of a single industry where a producer makes a superior product in big ticket items, and perform poorly relative to their peers.

    Can you? It still all sounds like excuses to me.

    I can see how old pensions can drag down big 3 R&D and profitability. But the cars still suck.

  9. #59
    Senior Member dga's Avatar
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    The big 3 are fully themselves to blame for the mess they are in.

    1. they balked at a more socialist 10 cent per hour pension fund offered by the union decades and decades ago in favor of their own plan, which is killing them now. There is a nice long article in the new yorker on this.

    2. Too many crappy designs.

    i moved to germany almost 6 years ago, which is a bit mroe sociliast than the states, and i find the system here to be a lot better. Knee surgery for basically free vs what would be thousands and thousands in the states.

  10. #60
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by Modern Nomad View Post
    big 3 cars are cheap, and come with a lot of rebates. if they made a good product, they could charge more obviously.

    i can't think of a single industry where a producer makes a superior product in big ticket items, and perform poorly relative to their peers.

    Can you? It still all sounds like excuses to me.

    I can see how old pensions can drag down big 3 R&D and profitability. But the cars still suck.
    In economic terms, think of it this way: Two companies produce exactly the same product in every single way. But one company has to pay more for their labor. It's not enough to be unprofitable, they still break even "financially". In the long run, what happens to the companies? Eventually the company that pays more will be replaced. It doesn't matter if it is profitable, financially, because competitors will join and do a better job. It won't be able to reinvest its profits or raise the same amount of capital. Financing will be less attractive. The market, in some way, will end up eroding the weaker company unless it manages to catch up.

    This is especially true in cases where the company attempts to recapture profit by specialising in niches - in other words, trading risk for higher profits. Both geographic and by preference (ie: light trucks in the states). The problem with risk is that you need a sort of... sinking fund... to weather the bad times. If you are recycling the profits to simply pay for labor (cost of production), you have only increased your risk - the risk profile changes, yes, but the net risk doesn't.

    In the end, everything is done at the margin... and it can't be changed, unfortunately.

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