On Wed, December 10, 2008 8:58 am, Jared Earle wrote: > On 10 Dec 2008, at 13:50, Charles Bennett wrote: >> The thing is, when they say the "auto industry is in crisis" they >> only mean Detroit. > > > They also apparently mean all the supply chain as well, which is > stupid. Suppliers will just switch to a more profitable brand. If the > Big 3 fold, it's not like everything just disappears in an instant. > Spares are still required, cars are still required. Ford Europe is > still doing quite well, for instance, and could be spun off, as could > the other international wings.
Indeed - there will be a mess during the crossover, but people still want cars, so if the Big Three don't exist (extreme case) the demand will shift to the more competent manufacturers. Jobs making cars, jobs making parts, jobs providing service, will exist - if not at their current levels, some approximation of them at least. Some myths that bug me: 1. It's the union contracts; first, I have heard figures for the average cost of labor per vehicle in the 8-12% range for UAW union brands. UAW itself says 8.4% (http://www.uaw.org/barg/07fact/fact02.php) - I've heard no one seriously challenge this number. That means that if we had no union labor contracts in the Big Three, and managed to cut labor costs across the board by 50% (huge) we're still looking at a marginal price reduction in the final sales price of a vehicle. That said, I've heard "legacy costs" (pensions, healthcase for retirees, etc) are enormous, and I'm willing to believe that - but that's a legacy problem which is largely due to failure to properly fund the investments in these programs over many decades. It's not a cost of producing new vehicles, it's a corporate financial liability. 2. It's the economic disaster that's hurting them - bullshit! Until this summer I worked in a company that made the majority of its revenue in automotive advertising work. I sent out perhaps 5 memos in the first quarter of 2008 (and several at the end of 2007) about the disaster in the American new vehicle market we were already seeing then - sales were down sharply overall, sales shifted massively to small, cheap cars where margins are much smaller (compared with the huge margins on big trucks and SUVs), and sales at the Big Three were sharply down across the board. These guys were on the ropes *long* before we ever heard of "credit default swaps". I left that company precisely because we weren't in a good position to weather those changes - some of our products were sold on a per-dealership "rooftop" basis (and all of the Big Three had signaled a desire to consolidate dealerships, meaning less revenue for us even with the same product/audience), we had SLAs in place with some customers that were tied in part to trim counts (and the Big Three were already cutting trim numbers, including Ford postponing indefinitely at the time the launch of the 2009 F-Series). I could go on, but the writing was on the wall, at least as far back (for me) as Q4 2007... I left that company for precisely that reason - my small shares in the company were worthless, we were serving a market that was about to tank, and we had obligations we could no longer keep. 3. The whole "Buy American" thing. Well, you know, the last two Hondas we bought were made in the US - can't say the same for many American cars. Nissan, Toyota, and many other foreign brands make many, if not most, of their American-sold products right here. And last I checked, the nonsense about "sending profits oversees" is absurd - this is a global economy... I can buy stock in Honda or Toyota today and keep those profits here in the states. Frankly, I find it offensive to even consider buying inferior, over-priced products from companies that have been mismanaged for decades, simply out of some lame nationalism. Oy, end of rant. If you ask me, let those fuckers go Chapter 11 - can the execs, open the books, and start making the hard changes. If you can't compete, no amount of government backing is worth it. I wonder, what will the rest of the world think about the US Govt. subsidizing American car manufacturing? Are we going to get into a tradewar if we do go through with a "bail out"? _______________________________________________ OSX-Nutters mailing list | [email protected] http://lists.tit-wank.com/mailman/listinfo/osx-nutters List hosted at http://cat5.org/
