bailout plan may widen to more industries

[maladroit]

Wide array of U.S. companies start competing for bailout money
Published: Sunday, October 26, 2008 | 2:20 PM ET
Canadian Press: Martin Crutsinger, THE ASSOCIATED PRESS

WASHINGTON - The bailout is now the hottest lobbying game in town.

Insurers, automakers and American subsidiaries of foreign banks all want the Treasury Department to cut them a piece of the largest government rescue in U.S. history.

The betting is that many with their hands out will be successful, especially with financial markets in a stomach-churning dive and predictions the economy is about to tumble into a deep recession.

These groups argue that the credit squeeze is so severe and the risks to the economy so dire that their industries need financial support as well.

The Treasury is considering requests from a variety of industries, but has not decided whether to expand the program, officials said Saturday.

Lobbying efforts are intensifying.

The Financial Services Roundtable wrote Treasury officials on Friday requesting that the initiative to buy $250 billion in bank stock grow to cover insurers, auto companies, securities dealers and U.S. subsidiaries of foreign companies, including banks.

The Treasury's plan is intended to bolster banks' tattered balance sheets and get them to resume making loans.

As the Treasury now interprets it, these additional groups would not participate in the bank stock program.

They could receive help from a separate part of the $700-billion rescue that will buy bad assets from financial institutions.

Steve Bartlett, the president of the Roundtable, urged the Treasury to broaden the definition of those eligible for the stock purchase program.

"The institutions that are excluded play a vital role in the U.S. economy by providing liquidity to the market," Bartlett wrote Neel Kashkari, the Treasury Department official running the bailout program.

Referring to U.S. subsidiaries of foreign companies, Bartlett said: "This is a global crisis and to not recognize the U.S. firms controlled by foreign banks or companies would create further impediment to the market's recovery."

A financial industry official said Treasury Secretary Henry Paulson met over the past week with various groups, including hedge fund managers, that were petitioning for assistance.

The official spoke on condition of anonymity because the Treasury has not made a decision.

This official said the discussions with insurance industry executives were being held in advance of what are expected to be disappointing earnings reports by some insurance companies in the coming week.

The official said the insurance industry would like to get government purchases of their stock on a mandatory basis, duplicating the agreement Paulson struck two weeks ago with nine major banks.

Paulson pressured the big banks to go along with the program as a way of removing the stigma that might be attached to the payments if only a few major banks had received them.

[maladroit]

"the insurance industry would like to get government purchases of their stock on a mandatory basis, duplicating the agreement Paulson struck two weeks ago with nine major banks."

- now the insurance agency is begging for socialism! after the banks, wall street traders, big insurers, and automakers embrace socialism, who is left to support capitalism?


to the last capitalist to leave the economy: please turn off the lights...

[TheNugget]

"the insurance industry would like to get government purchases of their stock on a mandatory basis, duplicating the agreement Paulson struck two weeks ago with nine major banks."

- now the insurance agency is begging for socialism! after the banks, wall street traders, big insurers, and automakers embrace socialism, who is left to support capitalism?


to the last capitalist to leave the economy: please turn off the lights...

What's capitalism? Oh that's right.....dead.

[maladroit]

capitalism will never die, but it might spend some time in the emergency room...y'know what might end up on life support? globalization!

the usa can't compete with cheap foreign labour...north american automakers can't even compete with foreign automakers who build car plants in north america...we traded our jobs for a bunch of appliances and widgets that we bought with money borrowed from the countries that made them...that worked in the short term, but it cannot work in the long term...the recent economic crisis is a warning that will be ignored because we love cheap appliances and borrowed money

[flyingimam]

capitalism will never die, but it might spend some time in the emergency room...y'know what might end up on life support? globalization!

the usa can't compete with cheap foreign labour...north american automakers can't even compete with foreign automakers who build car plants in north america...we traded our jobs for a bunch of appliances and widgets that we bought with money borrowed from the countries that made them...that worked in the short term, but it cannot work in the long term...the recent economic crisis is a warning that will be ignored because we love cheap appliances and borrowed money

well put.

[Revanche21]

you mean giving alcohol companies money wasnt enough? :D

[maladroit]

FACTBOX-Industry bailouts agreed or called for | Markets | Markets News | Reuters (http://www.reuters.com/article/marketsNews/idUSLS37957120081028)

FACTBOX-Industry bailouts agreed or called for
Tue Oct 28, 2008 10:25am EDT

GENEVA, Oct 28 (Reuters) - Bailouts for industrial sectors hit by the financial crisis are open to challenge under international trade rules, lawyers say.

The following lists major measures called for or agreed to help industry:

* A $10 billion rescue package to support a merger between the biggest and third biggest U.S. carmakers, General Motors Corp (GM) (GM.N: Quote, Profile, Research, Stock Buzz) and Chrysler, mostly owned by Cerberus Capital Management LP [CBS.UL]. [ID:nN27356776]

* A call by congressmen from Michigan, the home of the Detroit-based carmakers, for a bailout for all three U.S. manufacturers, including second-place Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz). [ID:nL0520213]

* The U.S. Congress approved $25 billion in low-interest loans last month to GM, Ford and Chrysler to help them meet a federal target for more fuel-efficient cars.




"Should the government bail out private enterprise? The answer is no, it shouldn't."
- President George Bush, July 2008, responding to a question about a possible government bailout for General Motors

[GoldenBoy812]

capitalism will never die, but it might spend some time in the emergency room...y'know what might end up on life support? globalization!

the usa can't compete with cheap foreign labour...north american automakers can't even compete with foreign automakers who build car plants in north america...we traded our jobs for a bunch of appliances and widgets that we bought with money borrowed from the countries that made them...that worked in the short term, but it cannot work in the long term...the recent economic crisis is a warning that will be ignored because we love cheap appliances and borrowed money

Labor unions cause outsourcing. Tell me, why is it that Toyota has plants here i the US? I cannot wait to hear your answer:jointsmile:

[maladroit]

labour unions drive up the cost of labour, but even without unions, american labour could not compete with foreign sweatshop labour

why are you asking abourt toyota? toyota doesn't operate sweatshops and the average wage in japan is the highest of all asian countries, and higher than some western countries

i hope that was worth the wait!

[GoldenBoy812]

labour unions drive up the cost of labour, but even without unions, american labour could not compete with foreign sweatshop labour

That is a pretty big claim. Productivity trumps low cost labor every time. Outsourcing should only exist when it is unprofitable to produce. An examle would be paying equal to / more than minimum wage to a set of workers who can produce y amount of goods in x given time when a foreign factory can produce the same amount in the same period of time. It only hurts consumers to keep this hypothetical factory flowing...


why are you asking abourt toyota? toyota doesn't operate sweatshops and the average wage in japan is the highest of all asian countries, and higher than some western countries

i hope that was worth the wait!

Toyota is a non union employer. Thats not the point, why does Toyota have US factories when they can get lower labor input elesewere???

[maladroit]

"why does Toyota have US factories when they can get lower labor input elesewere??? "

- there are a lot of reasons for that...import tarriffs, stringent US vehicle regulations that cost a lot to modify imported cars, buy american psychology, expensive transportation costs, and US government pressure/threats on foreign auto manufacturers...that's just off the top of my head...let me turn the question back on you: why do toyota and other japanese auto manufacturers still export $54 billion worth of automobiles, auto parts, and accessories to the usa in 2007? why are US vehicles barely making a dent in the japanese market?

[GoldenBoy812]

"why does Toyota have US factories when they can get lower labor input elesewere??? "

- there are a lot of reasons for that...import tarriffs, stringent US vehicle regulations that cost a lot to modify imported cars, buy american psychology, expensive transportation costs, and US government pressure/threats on foreign auto manufacturers...that's just off the top of my head...let me turn the question back on you: why do toyota and other japanese auto manufacturers still export $54 billion worth of automobiles, auto parts, and accessories to the usa in 2007? why are US vehicles barely making a dent in the japanese market?

You missed the most important one. The productivity of the American auto worker. Combine that with the high cost of transportation of larger goods, and there is something good at work. American jobs are created, without a labor union as their representative backer. Which begs me to ask, how is this possible when GM pays much more in labor costs, yet productivity is relativily similar? The answer is, it is not, as we can see with GM's current financial situation.

US auto producers would not be allowed to own any factory operated in Japan, which is a law against foreigners holding the means of production in Japan. Therefore the cost associated with reducing transportation costs are non existant in retrospect to Toyota's ability to build heavy/ large goods here i the US. Protectionist measures have then succeeded in reducing the ability of entry (lack of free market) on many levels of Amercian cars in the Japanese market.

[maladroit]

if the productivity of the american worker is so high, why is the usa importing $54 billion worth of cars and car parts from japan? that doesn't even include the cars the usa imports from other foreign countries

[GoldenBoy812]

if the productivity of the american worker is so high, why is the usa importing $54 billion worth of cars and car parts from japan? that doesn't even include the cars the usa imports from other foreign countries

:jointsmile:(US worker productivity exceeds that of Japan):jointsmile:

The same reason any company would import, it is either too expensive or inefficient to produce in the US. For example, would it be more profitable to produce a part using more automation that is allowed due to the lack of labor unions demands, or building them here paying union labor with less automation? Consumers make up for the decreased cost in purchasing. The unions that represent the workers (UAW) of the big three US makers are killing off the businesses that employ them. The airlines, automobile, and teachers unions are three big examples where the industry they represent is failing.

BTW, over 45% of the US auto market is foreign. I would expect big imports from Japan.

[maladroit]

why is 45% of america's auto market foreign if us productivity is superior?

even without unions and superior productivity, usa workers are unable to compete with labourers making $250 a month in china (a country that has much stronger productivity growth than the usa)...as i said earlier, japan and especially japan's auto industry isn't a good example because it has the highest wages in asia...most of the rest of asia's low wages overcompensate for their lower productivity

[GoldenBoy812]

why is 45% of america's auto market foreign if us productivity is superior?

[QUOTE]even without unions and superior productivity, usa workers are unable to compete with labourers making $250 a month in china (a country that has much stronger productivity growth than the usa)...

Their economy is growing due to population, as well as the implementation of market mechanisms. US productivity was at 100%, and in times of recession we could very well see US productivity over 100% due to the cuts in production and potential high unemployment.


as i said earlier, japan and especially japan's auto industry isn't a good example because it has the highest wages in asia...most of the rest of asia's low wages overcompensate for their lower productivity

Keep in mind other input costs along with capital expenditure required to produce in say China. Most multi-national productin facilities are not intended for the short run, which is why wage barriers force jobs out. This is not necessarily a bad thing, as new skill sets come into demand therefore further increasing productivity.

[allrollsin21]

:jointsmile:(US worker productivity exceeds that of Japan):jointsmile:

The unions that represent the workers (UAW) of the big three US makers are killing off the businesses that employ them. The airlines, automobile, and teachers unions are three big examples where the industry they represent is failing.


Close but not quite. Poor management is what is ailing the US Automakers. Poor decision making. Gambling.
Repeat after me...SUV.
Gas prices rising.
People don't want SUV's.
No more capital.

[GoldenBoy812]

No it is the Unions. Why does Toyota have no problem placing manufacturing plants throughout the midwest? They are non union, therefore they do not have to deal with the overhead discrepancy. Why else is GM buying out employees?

[maladroit]

the unions may be hurting US automakers by foolishly clinging on to hopeless ideals like living wages and job security and benefits, but those automakers were doing very well not too long ago even though they had unions...if you kicked out all those unions tomorrow, it wouldn't create a demand for poorly built gas guzzlers...the us auto industry misjudged the market by focusing on big engine cars and light trucks, and had to cut prices, issue low interest loans to high risk customers, and offer incentives to get rid of excess inventory...in contrast, toyota doesn't build cars until there is a demand for them


toyota doesn't build cars in america just because of unions or american productivity...toyota is building a new plant in mississipi because of: "fears among company executives about a U.S. political backlash over imports...They also need another plant to address their rising imports, which have gotten quite high."
Toyota to build $830 million plant in Mississippi - International Herald Tribune (http://www.iht.com/articles/2007/02/27/bloomberg/sxtoyota.php)


the us government has a history of threatening japan over auto imports...back in 1980, the reagan administration bullied japan into voluntarily reducing it's vehicle exports to the united states (they started building cars in the usa within 3 years)...later the clinton administration threatened to impose 100% tariffs on japanese cars unless japan forced it's citizens to buy more US cars (!!!)...those tactics are why japan builds cars in the united states:
Averting an Automotive Trade Wreck With Japan (http://www.heritage.org/Research/AsiaandthePacific/asb136.cfm)

[GoldenBoy812]

Japan builds cars in the US to offset cost of shipping large products thousands of miles. It is much more logical to produce the most spacious aspects of production near the market area if the labor pool is able to achieve production efficiency (not just cost efficiency). There is no union representation, where as GM, Ford, and Chrysler have to deal with the UAW.

The US auto market is the largest in the world, and cost efficiency is killing off American automakers. This should be apparent...

[GoldenBoy812]

oops, my bad:hippy:

[maladroit]

"No it is the Unions."

- if unions are the underlying problem of the US auto industry, then why are germany's automakers so successful? they have stronger unions, higher wages, longer vacations, and funny accents!

[GoldenBoy812]

"No it is the Unions."

- if unions are the underlying problem of the US auto industry, then why are germany's automakers so successful? they have stronger unions, higher wages, longer vacations, and funny accents!

Labor cost per hour, wages and benefits for hourly workers, 2006.

Ford: $70.51 ($141,020 per year)

GM: $73.26 ($146,520 per year)

Chrysler: $75.86 ($151,720 per year)

I highly doubt German manufactures face such costs. Not to mention the non existence of large scale American manufacturing on German soil.

You will need to find some stats on German labor costs to make such accusations. Otherwise, i am left to believe you are making low quality and ill informed assumptions...

[maladroit]

goldenboy...welcome back
we missed you


labour standards in germany require employers to provide 30 paid vacation days per year compared to ZERO days in the usa:
CBC News Interactive: Vacation nations (http://www.cbc.ca/news/interactives/map-vacation-days/)



http://www.nytimes.com/2005/10/26/business/worldbusiness/26labor.html?pagewanted=print
"The average hourly cost of an auto worker in western Germany is the highest in the industry, at $40.80. That compares with $35.40 in Japan, $34.80 in the United States, $27.60 in France and $5.40 in Slovakia, where Volkswagen has an assembly plant."

[GoldenBoy812]

goldenboy...welcome back
we missed you

Thanks, i have been pretty busy:thumbsup:



labour standards in germany require employers to provide 30 paid vacation days per year compared to ZERO days in the usa:
CBC News Interactive: Vacation nations (http://www.cbc.ca/news/interactives/map-vacation-days/)

Straw man! The US does not require any business to provide paid vacations. Instead, the UAW has paid vacations built into the labor contracts themselves.

Try not to skew the facts next time...

Holidays - 2003 UAW GM and Delphi Report (http://www.uaw.org/contracts/03/gm/gm18.cfm)

From UAW's own site (GM/Delphi):
A total of 67 paid holidays will be provided to UAW GM and Delphi workers over the four-year term of the proposed agreement. The tentative agreement adds a local Election Day holiday on Nov. 8, 2005, and retains the two national Election Days negotiated in the last agreement.

The holidays will celebrate Veterans Day in each year.

The tentative agreement also maintains the Monday after Easter, the day commemorating the birthday of the late Rev. Dr. Martin Luther King Jr., and the paid Christmas through New Yearâ??s shutdowns.

This of course is only based on holidays. As a rule of thumb for the UAW, they give you also three weeks of paid vacation for under ten year employees. After ten years in the UAW, you will get three weeks plus 1 day per year over ten.


http://www.nytimes.com/2005/10/26/business/worldbusiness/26labor.html?pagewanted=print
"The average hourly cost of an auto worker in western Germany is the highest in the industry, at $40.80. That compares with $35.40 in Japan, $34.80 in the United States, $27.60 in France and $5.40 in Slovakia, where Volkswagen has an assembly plant."

Another straw man! The $34.80/ hr does not include the wonderful benefit package UAW members are also entitled to which is right around $35/ hr. What is Volkswagen's (or any German company for that matter) labor cost per hour?

Of course it is much less than that of the US auto worker, which goes very far in explaining US worker productivity dwarfing that of Germany.

[maladroit]

"Straw man! The US does not require any business to provide paid vacations. Instead, the UAW has paid vacations built into the labor contracts themselves."

- not straw man...german automakers give their employees more vacation than american automakers...that means volkswagon has to hire more people



"Another straw man! The $34.80/ hr does not include the wonderful benefit package UAW members are also entitled to which is right around $35/ hr."

- that's not a straw man either...it's a fact that german automaker pay more per hour, and germany has stronger unions...according to the IMF, germany's unionized employees have benefits and bonuses too



"Labor cost per hour, wages and benefits for hourly workers, 2006.
Ford: $70.51 ($141,020 per year)
GM: $73.26 ($146,520 per year)"

- since then, the united auto workers union inked a deal to significantly reduce labour costs from $78/hour to $26/hour, and transfer almost $50 billion in health care benefit liability to the union, but i don't expect BMW and volkswagon to close their expensive unionized factories in germany and import their cars from america:
http://www.thefreelibrary.com/GM+says+UAW+contract+to+transfer+$46.7B+in+health+ care+liability+to...-a01610785359




"Try not to skew the facts next time..."

- yeah, nice chatting with you too! here's a little debating tip for ya: straw man has something to do with distorting your opponent's position, and attributing opinions to him/her/it that they do not hold

Straw man - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Straw_man)

[GoldenBoy812]

Your entire debate on Germany is a big straw man (more on that later). I have to believe that you are so wrapped up in building men of straw, you do not even notice what you are doing.


not straw man...german automakers give their employees more vacation than american automakers...that means volkswagon has to hire more people

Your initial statement on vacations is nothing more than a straw man. Labor costs in the US are higher than Germany, one reason is because they do not have to pay health care costs.


that's not a straw man either...it's a fact that german automaker pay more per hour, and germany has stronger unions...according to the IMF, germany's unionized employees have benefits and bonuses too

It is a straw man because you were quick to bring up salary of workers, yet reluctant to address German auto labor costs. Instead, you hide behind a number you were able to manipulate in an attempt to prove your point.

Remember, my original claim was that unions drove up input costs, due to high labor cost. Instead of admitting it, you try to save face.


since then, the united auto workers union inked a deal to significantly reduce labour costs from $78/hour to $26/hour

Hmmmm... Your article does nothing but further support my claims.


Under the contract, GM will institute a lower wage for some noncore, non-assembly employees and will switch all new hires to a defined contribution retirement plan. GM estimated that more than 16,000 of its 74,000 hourly workers would be eligible for the noncore wages, which start at $14 per hour compared to $28 per hour for existing employees.

GM said wages and benefits for its noncore workers would be $25.65 per hour, compared with $78.21 for existing GM assembly workers. Toyota pays U.S. workers an estimated $48 per hour.

Under the above scenario, GM's total assembly labor cost is reduced to $66.85/hr on those 74,000 employees.

Also:
GM said wages and benefits for its noncore workers would be $25.65 per hour, compared with $78.21 for existing GM assembly workers. Toyota pays U.S. workers an estimated $48 per hour.

I do believe this pertains to the original question i asked, but more on that in a bit.



and transfer almost $50 billion in health care benefit liability to the union, but i don't expect BMW and volkswagon to close their expensive unionized factories in germany and import their cars from america:
http://www.thefreelibrary.com/GM+says+UAW+contract+to+transfer+$46.7B+in+health+ care+liability+to...-a01610785359

Maybe your just blazed, but lets try this again from the article:
The VEBA will take over $46.7 billion of GM's $64.3 billion in retiree health care obligations, or about 73 percent. GM will be left with $17.6 billion in retiree health-care obligations, including costs for salaried employees and hourly workers who belong to other unions.

Now, how does that prove that GM has drastically reduced labor input costs? What that illustrates is that GM would have not been able to survive another 6 months unless UAW contracts were renegotiated.



yeah, nice chatting with you too! here's a little debating tip for ya: straw man has something to do with distorting your opponent's position, and attributing opinions to him/her/it that they do not hold

Straw man - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Straw_man)

Although it is often difficult to recognize when you build a straw man, you are going to have to pay much more attention.

Remember what we were talking about? Ill refresh your memory. Here is the entire quote of which you only addressed the first sentence.


No it is the Unions. Why does Toyota have no problem placing manufacturing plants throughout the midwest? They are non union, therefore they do not have to deal with the overhead discrepancy. Why else is GM buying out employees?

You went right on to build a straw man by replying:
if unions are the underlying problem of the US auto industry, then why are germany's automakers so successful? they have stronger unions, higher wages, longer vacations, and funny accents!


I let it slide, but you magnified it to epic proportions, so now i have to drop the hammer. Our original debate was based on US auto unions harming companies that they are in contract. Because Toyota has many US auto facilities that are non union, the comparison was quite valid. But to drag German into the mix gives an invalid comparison at best, but could show how wrong you really are. Reason be, in what country is the parent company of Chrysler located?

[maladroit]

"Your initial statement on vacations is nothing more than a straw man."

- i'll explain straw man to you again: if i replied to your assertion that american labour costs more by saying that your assertion was based on your hatred of the working middle class american, that would be a distortion of what YOU said...if i say that germans get more vacations and are paid a higher wage, it's not a distortion of anything you said


"Now, how does that prove that GM has drastically reduced labor input costs?"

- the link didn't work so you didn't see the entire article...the 16,000 workers who are on the new low pay are the ones who are currently working at GM and are immediately eligible...65% of unionized employes at GM are eligible for retirement now, and 75% will be eligible by 2011...GM will be handing out incentives to encourage retirement, and significantly reduce it's average labour cost over the next few years:
Financial > 2007 GM ââ?¬â?? UAW Labor Agreement - The Automotive Lyceum (http://www.christonium.com/automotive/ItemID=11933346768436)





"What that illustrates is that GM would have not been able to survive another 6 months unless UAW contracts were renegotiated."

- the contracts were renegotiated and gm might not survive another six months anyway



"You went right on to build a straw man by replying:
Quote:
if unions are the underlying problem of the US auto industry, then why are germany's automakers so successful? they have stronger unions, higher wages, longer vacations, and funny accents! "

- that's not a straw man at all because it doesn't distort your assertion...you say unions are the underlying problem of the auto industry but unions don't make decisions about what cars to build...the underlying problem with the US auto industry is bad management

[Stoner Shadow Wolf]

Unions work to help people keep their jobs, and earn fair pay.

if management had it's way, we'd all be slaves, and get payed NOTHING.

That's what a union is, a united group working to benefit each other.

That is what the UNITED states is SUPPOSED to be. but right now, we've let management get ahold of too much power, and we've almost completely destroyed any union we might have ever had in the states.


We wouldnt NEED unions if management RESPECTED it's workers.

Do you know how workers' unions BEGAN in the first place? a little history lesson, which i am not privy to teach since i dont know all the facts, but it is a very telling story between the PEOPLE and the "authority".


Management: i hold my workers to high standards and they had better work hard

Union: we hold our employers to high standards, and they had better treat us fairly.



that's about it, in a nut shell. we'll work as hard as you treat us respectfully.

[GoldenBoy812]

i'll explain straw man to you again: if i replied to your assertion that american labour costs more by saying that your assertion was based on your hatred of the working middle class american, that would be a distortion of what YOU said...if i say that germans get more vacations and are paid a higher wage, it's not a distortion of anything you said

Wikipedia might not be the best place to reference logical fallacies, but lets give it a shot:thumbsup:

Person G: Position X= Unions are ruining the US Auto companies. Premise X= Toyota is non union, but still operates in the US.

Person M: Position Y (distored version of position X)= German auto unions are strong, and so are the companies that they represent. Premise Y= Vacations, etc...

You were unable to refute my claim, so instead of fessing up to it, you compared them to German auto makers and their union because you believed it to be an easy target.




the link didn't work so you didn't see the entire article...the 16,000 workers who are on the new low pay are the ones who are currently working at GM and are immediately eligible...65% of unionized employes at GM are eligible for retirement now, and 75% will be eligible by 2011...GM will be handing out incentives to encourage retirement, and significantly reduce it's average labour cost over the next few years:
Financial > 2007 GM ââ?¬â?? UAW Labor Agreement - The Automotive Lyceum (http://www.christonium.com/automotive/ItemID=11933346768436)

The reduction of pay to those 16,000 workers amounts to a reduction of 12$/hr on all GM factory employees. This is still noticably more than the $48/hr Toyota pays. Care to respond to this?

Again, your article did nothing but refute your claim. It proves that the UAW has had a strangle hold on GM. Had they done this ten years ago, GM would not be blowing through their cash as they are now.


the contracts were renegotiated and gm might not survive another six months anyway

In what year were they renegotiated? And.... Does Toyota's US facilities have similar overhead?


that's not a straw man at all because it doesn't distort your assertion...you say unions are the underlying problem of the auto industry but unions don't make decisions about what cars to build...the underlying problem with the US auto industry is bad management

Instead of refuting my point, you built an weak target to attack. That is a straw man!

No wonder why you tend to ignore the majority of my posts, you are unable to refute them:jointsmile:

[maladroit]

"You were unable to refute my claim, so instead of fessing up to it, you compared them to German auto makers and their union because you believed it to be an easy target."

- i will never be able to refute your claim to your satisfaction, just as you will never be able to convince me that US automakers wouldn't be in trouble if it weren't for unions...the US automakers were making money when car sales were increasing, and they were losing money when car sales were decreasing...unions have little or nothing to do with car sales...since north american workers have superior productivity, $73 per hour isn't much of a disadvantage when only 15 - 30 hours of labour goes into making a car...japanese and german made cars cost more and americans are still buying them because they are better cars...i might agree with you if you could blame the US automakers management decisions and vehicle quality on unions



"The reduction of pay to those 16,000 workers amounts to a reduction of 12$/hr on all GM factory employees. This is still noticably more than the $48/hr Toyota pays. Care to respond to this?"

- if us autoworkers average wage dropped to $48 per hour tomorrow morning, and the us automobile manufacturers pass the entire $750 labour savings along to the consumer (based on 30 hours labour per car), people would still be buying more expensive japanese and german cars because they're better...THAT is the main problem with the US auto industry, not unions



"Instead of refuting my point, you built an weak target to attack. That is a straw man! "

- what target did i attack? germany's unions? i did not distort your position...i refute your assertion that unions are the problem and provide an alternate example...that's not a straw man
Fallacy: Straw Man (http://www.nizkor.org/features/fallacies/straw-man.html)


here is a better example of a straw man fallacy:
i claim that unions aren't the problem, and you claim that i am distorting your position with a straw man fallacy...you are distorting my position

[GoldenBoy812]

i will never be able to refute your claim to your satisfaction, just as you will never be able to convince me that US automakers wouldn't be in trouble if it weren't for unions...

It has nothing to do with my satisfaction, you have not offered one bit of proof.


the US automakers were making money when car sales were increasing, and they were losing money when car sales were decreasing...unions have little or nothing to do with car sales...

Care to explain why Toyota is not facing the same consequences?


since north american workers have superior productivity, $73 per hour isn't much of a disadvantage when only 15 - 30 hours of labour goes into making a car...

That is correct, north American auto workers have high productivity, even the ones employed in Toyota plants across the US. The overhead gap between GM and Toyota is considerable, although their productivity levels are similar.


japanese and german made cars cost more and americans are still buying them because they are better cars...

Subjective Fallacy. Over the long run, Toyota produces the best car for the price. The main reason they are able to do so is because of significantly less overhead! Repeat after me, Toyota has less overhead.


i might agree with you if you could blame the US automakers management decisions and vehicle quality on unions

You are correct in one aspect, management made the decision to cut out specific costs that reduce the overall quality of the vehicle's. While this may be a serious mistake, it was made on behalf of cost analysis because there is no way to compete with both the price and quality at which Toyota can. Again, this is due to what????? Repeat after me, Toyota having less overhead.


if us autoworkers average wage dropped to $48 per hour tomorrow morning, and the us automobile manufacturers pass the entire $750 labour savings along to the consumer (based on 30 hours labour per car), people would still be buying more expensive japanese and german cars because they're better...THAT is the main problem with the US auto industry, not unions

ROFL, you must be high on something other than dro! If labor input costs were reduced by 20%, what effect would that have on the price? GM has been selling their vehicles at a loss. Regardless of whether or not Toyota gained market share, GM would still have been able to make a profit the last few years if their input labor costs were %20 less.


i refute your assertion that unions are the problem and provide an alternate example...that's not a straw man

The following quote is a straw man...


if unions are the underlying problem of the US auto industry, then why are germany's automakers so successful? they have stronger unions, higher wages, longer vacations, and funny accents!

Why??? Because it was your reply to this statement:


No it is the Unions. Why does Toyota have no problem placing manufacturing plants throughout the midwest? They are non union, therefore they do not have to deal with the overhead discrepancy. Why else is GM buying out employees?

Instead of facing up, you attempted to distort my position on the grounds of German auto unions, probably because you believed them to be larger, more costly, nice. My position and premise are concerned with the UAW, not all unions. Germany's auto unions seem to be working just fine in Germany. Since you barked up this tree...

Chrysler, formerly majority owned by Daimler AG (until 2007), the same Daimler AG that produces Mercedes, was reporting billions of dollars in losses. Yet they were still able to make a profit in Germany.

Why was Daimler able to make a profit in Germany, but take a major loss in the US??? Similarly, why is Toyota able to make a profit in the US, but Daimler unable?

Afraid to answer?


here is a better example of a straw man fallacy:
i claim that unions aren't the problem, and you claim that i am distorting your position with a straw man fallacy...you are distorting my position

Your position is that foreign auto companies are better! What does that have to do with anything? Why is it that only the auto companies in the US market that are UAW represented are facing losses? Given the history of your POV, your position is a tad bit subjective wouldn't you say?

[maladroit]

"It has nothing to do with my satisfaction, you have not offered one bit of proof. "

- i provided proof that automakers with unions can be successful


"Care to explain why Toyota is not facing the same consequences? "

- toyota is not facing the same consequences because they make better cars that are in better demand despite being more expensive, and they have better management in general



"While this may be a serious mistake, it was made on behalf of cost analysis because there is no way to compete with both the price and quality at which Toyota can. Again, this is due to what????? Repeat after me, Toyota having less overhead."

- american cars were of comparitively lower quality before toyota was a serious competitor or made cars in america...american auto manufacturers have proven that they are more than capable of competing with the price that toyota can...repeat after me: toyota cars cost more...as for overhead, toyota plants operate at near 100% capacity while GM has to bear the overhead cost of idled plants and employee buyouts



"Regardless of whether or not Toyota gained market share, GM would still have been able to make a profit the last few years if their input labor costs were %20 less."

- at $73/hour for 30 hours of labour per vehicle, a 20% savings would be $440...in 2005, GM lost over $1270 per vehicle sold, and stupidly continued to make large gas chugging vehicles while oil prices were doubling...in 2006, GM cut that loss to $150 per vehicle...in 2007, GM lost $38 billion or about $4000 per vehicle sold...i don't think GM was ever in a position to make a profit because 1) they aren't operating at high enough capacity to overcome fixed costs, and 2) they offer price incentives/reductions that are greater than the difference in health care costs among non-unionized toyota plants



"Instead of facing up, you attempted to distort my position on the grounds of German auto unions, probably because you believed them to be larger, more costly, nice."

- that does not distort your position at all because it is my position that foreign automakers make a profit despite unions, not yours...again, you just used a straw man fallacy by distorting my position that i *probably* believe german auto unions are larger, nice...here is what i believe: unions aren't the problem, and the US big three auto industry would still be in the dumper if it was not unionized



"Why was Daimler able to make a profit in Germany, but take a major loss in the US??? Similarly, why is Toyota able to make a profit in the US, but Daimler unable? Afraid to answer?"

- i must admit that i am daunted by your logic IED's, but i enjoy a challenge...daimler makes quality expensive cars in germany, and even makes a profit exporting them to the usa in increasing numbers even while US auto sales were slumping...daimler also owns a mercedes car factory in alabama that has been making a profit for years, and cut production by 10% for the first time in july 2008...unfortunately, daimler owns chrysler which makes much less expensive lower quality cars that don't sell as well (on a year-over-year basis) compared to higher quality more expensive mercedes and toyota cars...therefore, daimler has been taking a loss on it's chrysler holdings which they are trying to unload



"Your position is that foreign auto companies are better! What does that have to do with anything?"

- finally! you have accurately summarized my position...despite having unions and more expensive vehicles, foreign auto companies are able to make a profit shipping cars across the ocean to the usa because they are better at making and marketing cars that people want to buy...if murkan cars cost $750 less per vehicle in union benefits, US big three auto sales would still have slumped...if toyota's US factories were paying $73/hour instead of $48/hour, toyota would still have made a profit...therefore unions aren't the main problem



"Why is it that only the auto companies in the US market that are UAW represented are facing losses?"

- the US auto companies were saddled with the UAW decades before foreign auto companies were serious competition or built cars in the usa...by the time the superior foreign manufacturers built factories in america, unions were not as politically or socially influential as they were back in the 50's and 60's so foreign automakers could open non-unionized plants...the UAW contributes to higher labour costs, but that doesn't explain why car sales are declining or why big three auto management stubbornly sticks to wrongheaded manufacturing and distribution/marketing policies...i see a lot of blame on union benefits, and there is an additional cost there, but benefits/unions are not responsible for the significant slump in big three auto sales beginning in 2004 that wasn't happening to the more expensive foreign vehicles sold in north america



"Given the history of your POV, your position is a tad bit subjective wouldn't you say?"

- given the history of your pov, i am starting to think you might have an ideological knee jerk opposition to unions...NOW you can rightfully accuse me of employing the straw man fallacy...ha ha?
seriously though: it sounds like your objection is benefits rather than the UAW (which has accepted significant benefit reductions that will affect a majority of their members over the next few years)...you could help to level the playing field by supporting universal health care in the US...then the cost difference between union/non-unionized, and private/public health care regimes would be reduced to the point where a corporation's success would have to be based on product and management rather than health care benefits...unless of course you have a subjective POV that will never accept universal health care


this is a good discussion btw...i am learning a lot

[GoldenBoy812]

i provided proof that automakers with unions can be successful

That's the straw man! We were never debating over automakers with unions as a whole, instead US companies. Unions seem to be working in Germany, mostly because they have a less competitive market.

You have yet to show proof that US automakers with Unions are successful. After all, this is what we were talking about, right??


toyota is not facing the same consequences because they make better cars that are in better demand despite being more expensive, and they have better management in general

Where is the proof? The only evidence put forth was a few articles that explicitly stated Toyota pays less in labor cost per hour. If a firm is able to spend less on labor cost, they have the ability to to produce a better quality car at an equal price. For example, if a firm has an annual labor cost advantage of $1 billion, they can either lower the overall costs of auto's giving that firm a price advantage, or spend that money on improving the quality at near equal costs.

"While this may be a serious mistake, it was made on behalf of cost analysis because there is no way to compete with both the price and quality at which Toyota can. Again, this is due to what????? Repeat after me, Toyota having less overhead."


american cars were of comparatively lower quality before toyota was a serious competitor or made cars in america...american auto manufacturers have proven that they are more than capable of competing with the price that toyota can...repeat after me: toyota cars cost more...as for overhead, toyota plants operate at near 100% capacity while GM has to bear the overhead cost of idled plants and employee buyouts

You provided no evidence that suggests Toyota cars cost more on the average. BUt as far as demand, there is no evidence that suggests that foreign cars have a significantly higher demand than domestic cars overall.

Auto Sales - Markets Data Center - WSJ.com (http://online.wsj.com/mdc/public/page/2_3022-autosales.html)

Notice the significant difference in global presence?


1) they aren't operating at high enough capacity to overcome fixed costs, and 2) they offer price incentives/reductions that are greater than the difference in health care costs among non-unionized toyota plants

Do you agree it would be much easier for Toyota to curtail production as opposed to any UAW represented company? Secondly, you offer no proof that the decreased price exceeds the savings Toyota benefits from with less labor input.



"Instead of facing up, you attempted to distort my position on the grounds of German auto unions, probably because you believed them to be larger, more costly, nice."


that does not distort your position at all because it is my position that foreign automakers make a profit despite unions, not yours...again, you just used a straw man fallacy by distorting my position that i *probably* believe german auto unions are larger, nice...here is what i believe: unions aren't the problem, and the US big three auto industry would still be in the dumper if it was not unionized

Why would we bring up foreign auto Unions when we are debating the costs of US auto unions? You stated the Unions were stronger, more costly etc... Even if it were true, it has nothing to do with our debate. We are comparing non union companies who produce autos in the US, with UAW companies that produce autos in the US. Never once have i stated that auto unions in general kill the companies they represent. That is why it is a straw man...


i must admit that i am daunted by your logic IED's, but i enjoy a challenge...daimler makes quality expensive cars in germany, and even makes a profit exporting them to the usa in increasing numbers even while US auto sales were slumping...daimler also owns a mercedes car factory in alabama that has been making a profit for years, and cut production by 10% for the first time in july 2008...unfortunately, daimler owns chrysler which makes much less expensive lower quality cars that don't sell as well (on a year-over-year basis) compared to higher quality more expensive mercedes and toyota cars...therefore, daimler has been taking a loss on it's chrysler holdings which they are trying to unload

Daimler no longer controls Chrysler. But when it did, why was their business model unable to turn a profit in the US? This is the same Daimler who produces vehicles at a profit in Germany. It must have been the management:D



finally! you have accurately summarized my position...despite having unions and more expensive vehicles, foreign auto companies are able to make a profit shipping cars across the ocean to the usa because they are better at making and marketing cars that people want to buy...

Right now, all the big auto firms are not making a profit. Is it me, or does the fact that ONLY UAW represented companies are going under in this recession prove my point. You have yet to address this! Try not to build a straw man when refuting this point.


if murkan cars cost $750 less per vehicle in union benefits, US big three auto sales would still have slumped...if toyota's US factories were paying $73/hour instead of $48/hour, toyota would still have made a profit...therefore unions aren't the main problem

On top of labor cost, you would have to include liabilities. Toyota slashed their profit forecast by more than half. GM has been forced to blow through cash for the last decade, as their cost gap with Toyota was a much as $4,000 in 2005 source (http://www.accessmylibrary.com/coms2/summary_0286-33064099_ITM).


the US auto companies were saddled with the UAW decades before foreign auto companies were serious competition or built cars in the usa...by the time the superior foreign manufacturers built factories in america, unions were not as politically or socially influential as they were back in the 50's and 60's so foreign automakers could open non-unionized plants...the UAW contributes to higher labour costs, but that doesn't explain why car sales are declining or why big three auto management stubbornly sticks to wrongheaded manufacturing and distribution/marketing policies...i see a lot of blame on union benefits, and there is an additional cost there, but benefits/unions are not responsible for the significant slump in big three auto sales beginning in 2004 that wasn't happening to the more expensive foreign vehicles sold in north america

In a competitive market, the firm who possesses a comparative advantage will be able to outperform their rivals. You are in no position to challenge that idea because their are far to many hypothetical's that need to be confirmed in order to do so. Are you able to prove that had GM and Toyota face similar input costs, and total business expenses, business models would remain static? Similarly, why is it GM buys out its employees?

The big three are failing not because of the mere presence of unions. They are failing because their competition does not face the same constraint. Also, it is invalid to compare


given the history of your pov, i am starting to think you might have an ideological knee jerk opposition to unions...NOW you can rightfully accuse me of employing the straw man fallacy...ha ha?
seriously though: it sounds like your objection is benefits rather than the UAW (which has accepted significant benefit reductions that will affect a majority of their members over the next few years)...you could help to level the playing field by supporting universal health care in the US...then the cost difference between union/non-unionized, and private/public health care regimes would be reduced to the point where a corporation's success would have to be based on product and management rather than health care benefits...unless of course you have a subjective POV that will never accept universal health care

Please remember, my position has nothing to do with the existence of unions. It is that the big three's actual competition (BMW and Mercedes dominate the luxury car market) does not have to abide by the UAW. Therefore, the US firms face a higher opportunity cost.


this is a good discussion btw...i am learning a lot

Good:jointsmile: Me too!

[Stoner Shadow Wolf]

wait a cotton picking second!

isnt civilization supposed to make survival EASIER for the herd???


so... job competition = we have to compete to survive = WHAT THE FUCK IS THE POINT OF CIVILIZATION IF WE ARE STILL COMPETING FOR FOOD?!?

idiotic.

[GoldenBoy812]

wait a cotton picking second!

isnt civilization supposed to make survival EASIER for the herd???


so... job competition = we have to compete to survive = WHAT THE FUCK IS THE POINT OF CIVILIZATION IF WE ARE STILL COMPETING FOR FOOD?!?

idiotic.

This is a competition for resources! There is no possible way everyone could satisfy their every desire as well as need.

Once you take away desire, your post will come true.

[maladroit]

"That's the straw man! We were never debating over automakers with unions as a whole, instead US companies."

- even if the entire thread was solely about the UAW, it still wouldn't invoke the straw man fallacy when *I* raise the issue of foreign unions because it doesn't distort your position on the UAW...the way you interpret straw man, anyone who puts forth a position that is not within your narrow parameters is guilty of the straw man fallacy...that is not how that particular fallacy works



"You have yet to show proof that US automakers with Unions are successful. After all, this is what we were talking about, right??"

- us automakers with unions WERE successful before they started making bad management decisions...i agree management could cut costs by booting out the unions, but the union is not the most serious problem facing the big three automakers, and it certainly didn't cause the sales of their automobiles to plunge over the past four years



"Where is the proof? The only evidence put forth was a few articles that explicitly stated Toyota pays less in labor cost per hour. If a firm is able to spend less on labor cost, they have the ability to to produce a better quality car at an equal price."

- check out this article from the wall street journal explaining why toyota won - it doesn't cite unions among the five fatal flaw of GM/Ford:
Why Toyota Won - WSJ.com (http://online.wsj.com/article/SB113980175982572192.html)



"You provided no evidence that suggests Toyota cars cost more on the average."

- everytime i go shopping for a car, toyota cars cost more, even if they're built in canada, even if they are used...i could spend hours doing a price comparison between each line of cars but it's not worth my time to prove the obvious



"Why would we bring up foreign auto Unions when we are debating the costs of US auto unions?"

- because foreign unionized automakers are very successful at selling their more expensive cars here, even though they have to pay to ship them across the ocean on top of their unionized wages and benefits



"Never once have i stated that auto unions in general kill the companies they represent. That is why it is a straw man..."

- then what did you mean earlier in this thread when you wrote: "No it is the Unions." in response to allrollsin21 who wrote: "Poor management is what is ailing the US Automakers."? US automakers were successful for decades despite having unions...foreign unionized automakers continued to increase sales of their cars in the usa after the 2004 plunge in big three automakers sales...the difference isn't because of unions or no unions: it's because of management


"Daimler no longer controls Chrysler. But when it did, why was their business model unable to turn a profit in the US?"

- when i use an argument like that, you falsely accuse me of employing the straw man fallacy!



"Right now, all the big auto firms are not making a profit. Is it me, or does the fact that ONLY UAW represented companies are going under in this recession prove my point."

- the big three auto firms were posting losses and eating through their cash reserves and idling plants since 2004 while the foreign automakers were increasing their sales, building cash reserves, and operating at near capacity...the failure of the big three proves my point that they are managed poorly...see that wall street journal article for more details


"Try not to build a straw man when refuting this point."

- still not getting it, eh? ok...here's how the straw man fallacy works...if i responded to your question about the big three automakers going under in a recession by asking why you hate america so much, that would be a distortion of your position, and i would be attacking the straw man instead of your argument...you claim that talking about anything outside of the UAW is a straw man argument, when it is merely a related issue...you can argue that the related issue of foreign unions isn't a valid comparison, but you can't argue that i attributed the issue of foreign unions to YOU and then attacked you for bringing up foreign unions



"GM has been forced to blow through cash for the last decade, as their cost gap with Toyota was a much as $4,000 in 2005."

- i read that article...a $4000 labour cost gap per vehicle is impossible...at $73/hour, that would add 55 hours ON TOP of toyota's labour cost per vehicle...the average labour per vehicle is only 30 hours...as the article notes, $2000 of that $3200 savings was in the form of employee reductions and plant idling because sales were dropping, and that has nothing to do with unions (and more to do with management)...the labour cost savings from wage and benefit negotiations was only $400 which is less than the cost of adding undercoating to a new vehicle...saving $400 per car on wages/benefits wouldn't have saved GM and it certainly won't save it now



"In a competitive market, the firm who possesses a comparative advantage will be able to outperform their rivals. You are in no position to challenge that idea."

- i don't challenge it...i embrace that idea by saying that toyota has a comparative management/quality/reputation advantage which far outweigh it's labour cost advantage...toyota would still be making a profit if it paid it's us workers $73/hour instead of $48


"Similarly, why is it GM buys out its employees? "

- for the same reason toyota would buy out its employees if they were unable to sell enough cars and they were facing bankruptcy



"The big three are failing not because of the mere presence of unions. They are failing because their competition does not face the same constraint."

- that's like saying, the boxer is losing not because of the repeated blows to his face and upper body...he is losing because his opponent does not face the same beating...it's not the unions, it's the unions...interesting logic...there must be a fallacy for that


"Please remember, my position has nothing to do with the existence of unions. It is that the big three's actual competition (BMW and Mercedes dominate the luxury car market) does not have to abide by the UAW."

- it's not the unions, it's the united autoworkers union...i looked at the profit per vehicle for toyota and honda and they would have made a profit even with the UAW while the big three were bleeding red ink for years...not having the UAW is an advantage, but having the UAW isn't why the big three are failing

[maladroit]

Why Toyota Won - WSJ.com (http://online.wsj.com/article/SB113980175982572192.html)

Why Toyota Won
By JAMES P. WOMACK

The latest bad news is now in from GM and Ford: 60,000 U.S. and Canadian jobs will go in the next few years, 24 giant factories will close, and North American losses in the billions will continue. Clearly MoTown needs a new approach and it's natural in the car industry to think that the secret must be a killer model -- a Toyota Prius hybrid or some other concept to replace the big pickups and SUVs that floated the American firms for 15 years.

Actually, it's not a new car model that's needed. It's a new business model. Toyota is leading the charge against Detroit -- largely from inside the U.S. -- with a fundamentally different approach to business that my MIT research team in the 1990s labeled "lean" enterprise. Compared with these Toyota practices, GM and Ford's approach has five fatal weaknesses:

* GM and Ford can't design vehicles that Americans want to pay "Toyota money" for. And this is not a matter of bad bets on product concepts or dumb engineers. It's a matter of Toyota's better engineering system, using simple concepts like chief engineers with real responsibility for products, concurrent and simultaneous engineering practices, and sophisticated knowledge capture methods. The Prius is not the result of a hunch or luck but rather the likely result of a development system that tries out many approaches to every problem, then gets the winning concept to the customer very quickly with low engineering cost, low manufacturing cost, and near perfect quality. (That's not to say that Toyota can't produce a dud -- the first-generation Previa minivan and Tundra pickup stand out -- but the likelihood of producing winners is higher than with traditional development systems.)

* GM and Ford are clueless as to how to work with their suppliers. Sometimes they try to crush their bones -- which only works when the suppliers have any profits to squeeze, and few currently do. Then they embrace contentless cooperation that makes everyone feel better briefly but fails to produce lower costs, higher quality, or new and better technology. Toyota, by contrast, is getting brilliant results and lower prices from American suppliers like Delphi while also giving suppliers adequate profit margins. How? By relentlessly analyzing every step in their shared design and production process to take out the waste and put in the quality.

* GM and Ford have miasmic management cultures. These turn competent people into Dilberts. By contrast, Toyota does a brilliant job of making one person responsible for every key business process, like the chief engineer overseeing each new model. And it teaches managers how to ask the right questions (rather than give the usual big-boss answers) in order to engage everyone involved in every process to go faster and do a better job with fewer resources. A Dilbert-free environment naturally emerges, but not because everyone has received cultural training to spur teamwork. Rather, if ordinary people -- Dilberts even -- are put in a great business process they become great team players.

* GM and Ford cling to their wide range of brands: Chevy, Pontiac, Buick, Cadillac, Saab, GMC, and Hummer at GM; Ford, Mercury, Lincoln, Mazda, Jaguar, Volvo, Aston Martin, and Range Rover at Ford. And they still talk about brand revitalization as the way ahead. Yet the most successful car companies in the world -- Toyota and BMW -- have only two or three brands. And this is not an accident. Indeed, it's hard to see how any modern-day car maker can support more than three truly distinctive brands -- a buzzy, "what's new" brand (Scion, Mini); a value-for-money, hassle-free-transportation brand (Toyota); and a distinctive "aspirational" brand for folks who just need something better than the other fellow's (Lexus, BMW). A plethora of brands that can't pull their weight drains management energy and company coffers.

* GM and Ford still treat customers as strangers engaged in one-time transactions. Toyota's Lexus, by contrast, has created a new and better customer experience. Customers cheerfully pay more for the car and the service and then come back for more cars because they love the treatment. As Toyota applies its fabled process management to retailing to take out costs, which it is now starting to do at Lexus, customer touch becomes the final weapon in the Toyota arsenal.

But note: I haven't mentioned the creaky factories, vast pension obligations, and cranky unions that commentators on the current situation seem obsessed with. In fact, Ford and GM's factories are now good enough to compete in terms of labor productivity and quality. They just can't support employees with no work in "job banks" and unsustainable pension and healthcare benefits for retirees as the companies continue to shrink. Union and management both know this, yet no accommodation has been reached on these issues because their conversation has broken down. With zero confidence that management knows what it is doing, a union will try to get what it can now rather than look at the long term. In consequence, unless GM and Ford soon present a plausible path to a brighter future -- combining a better business model with significant short-term pain during the transition -- there may be no long term.

There is no mystery about the lean business model. All of the elements are operating in this country every day at Toyota and at many other American companies in a range of industries. What is mysterious is why GM and Ford can't embrace it. And what is dismaying is how many of their employees are likely to suffer if they don't. But finally, what is reassuring for the country is that if GM and Ford can't fix their problems, they will simply be replaced by new players in America, led by Toyota, who can.

Mr. Womack is president of the Lean Enterprise Institute

[GoldenBoy812]

even if the entire thread was solely about the UAW, it still wouldn't invoke the straw man fallacy when *I* raise the issue of foreign unions because it doesn't distort your position on the UAW...the way you interpret straw man, anyone who puts forth a position that is not within your narrow parameters is guilty of the straw man fallacy...that is not how that particular fallacy works

It was based on the UAW, and the fact that other auto firms do not have the same opportunity costs as those that are locked into the UAW. You refuted this by building a straw man, in the form of stating that the UAW cannot be the cause because Germany has unions and they do just fine. That is a fallacy...


us automakers with unions WEREsuccessful before they started making bad management decisions...i agree management could cut costs by booting out the unions, but the union is not the most serious problem facing the big three automakers, and it certainly didn't cause the sales of their automobiles to plunge over the past four years

LOL, so now we are debating about profit? I thought it was that UAW represented companies were failing (bankruptcy concern), and your position was that it is not caused by the UAW.


check out this article from the wall street journal explaining why toyota won - it doesn't cite unions among the five fatal flaw of GM/Ford:
Why Toyota Won - WSJ.com (http://online.wsj.com/article/SB113980175982572192.html)

Toyota has won, this is true. But the reason GM is blowing through $40 billion a year is not because Toyota has won. They have structured contractual liabilities.

And i guess JAMES P. WOMACK is the authority on auto firms? You will have provide something with substance, not rhetoric.


everytime i go shopping for a car, toyota cars cost more, even if they're built in canada, even if they are used...i could spend hours doing a price comparison between each line of cars but it's not worth my time to prove the obvious

Is this another way of saying, you are guessing?


because foreign unionized automakers are very successful at selling their more expensive cars here, even though they have to pay to ship them across the ocean on top of their unionized wages and benefits

Are they? Did you read the sales numbers from last year? Is this another instance of you making a guess?


then what did you mean earlier in this thread when you wrote: "No it is the Unions." in response to allrollsin21 who wrote: "Poor management is what is ailing the US Automakers."? US automakers were successful for decades despite having unions...foreign unionized automakers continued to increase sales of their cars in the usa after the 2004 plunge in big three automakers sales...the difference isn't because of unions or no unions: it's because of management

Way to take my quote out of context:thumbsup: Care to address why you felt obligated to leave out the remainder of my quote?


No it is the Unions. Why does Toyota have no problem placing manufacturing plants throughout the midwest? They are non union, therefore they do not have to deal with the overhead discrepancy. Why else is GM buying out employees?

:jointsmile:



when i use an argument like that, you falsely accuse me of employing the straw man fallacy

It pertains to the context of your statements. You claim that it is management, so i asked you why a company that runs a tight ship in Germany cannot produce the same results in the US? Do you care to answer?


the big three auto firms were posting losses and eating through their cash reserves and idling plants since 2004 while the foreign automakers were increasing their sales, building cash reserves, and operating at near capacity...the failure of the big three proves my point that they are managed poorly...see that wall street journal article for more details

In any business without contractual constraint, when your liabilities exceed your revenue, you cut costs. Do you honestly believe GM would not cut labor costs to curtail production due to lessoning demand if they were legally able? An examination of both GM and Toyota's books show something quite remarkable. There is a $15 billion dollar difference in labor cost even though they have a similar production output (roughly 10 million vehicles per year).




still not getting it, eh? ok...here's how the straw man fallacy works...if i responded to your question about the big three automakers going under in a recession by asking why you hate america so much, that would be a distortion of your position, and i would be attacking the straw man instead of your argument...you claim that talking about anything outside of the UAW is a straw man argument, when it is merely a related issue...you can argue that the related issue of foreign unions isn't a valid comparison, but you can't argue that i attributed the issue of foreign unions to YOU and then attacked you for bringing up foreign unions

I listed a source that provides the volume of vehicles produced by German manufactures sold in the US. With all German auto representing roughly 10% of the market, Say's law becomes important. Supply creates its own demand. Do you understand?

Now, with that in mind, why would you try and refute this quote:
No it is the Unions. Why does Toyota have no problem placing manufacturing plants throughout the midwest? They are non union, therefore they do not have to deal with the overhead discrepancy. Why else is GM buying out employees?

with a premise based on German unions outside of the US? It has become painfully obvious: you cannot stay within the realm of the debate to prove your point, and gravitate towards other positions in an attempt to do so.




i read that article...a $4000 labour cost gap per vehicle is impossible...at $73/hour, that would add 55 hours ON TOP of toyota's labour cost per vehicle...the average labour per vehicle is only 30 hours...as the article notes, $2000 of that $3200 savings was in the form of employee reductions and plant idling because sales were dropping, and that has nothing to do with unions (and more to do with management)...the labour cost savings from wage and benefit negotiations was only $400 which is less than the cost of adding undercoating to a new vehicle...saving $400 per car on wages/benefits wouldn't have saved GM and it certainly won't save it now

Cost gap does not = labor cost gap... The only person to bring up a $4,000 labor cost gap was you.


i don't challenge it...i embrace that idea by saying that toyota has a comparative management/quality/reputation advantage which far outweigh it's labour cost advantage...toyota would still be making a profit if it paid it's us workers $73/hour instead of $48

Labor cost is only part of the problem. Liabilities owed to unions is another. If Toyota had to operate under this constraint, they would be going under as well.


for the same reason toyota would buy out its employees if they were unable to sell enough cars and they were facing bankruptcy

Toyota does not have to buy a union worker out. :thumbsup:


that's like saying, the boxer is losing not because of the repeated blows to his face and upper body...he is losing because his opponent does not face the same beating...it's not the unions, it's the unions...interesting logic...there must be a fallacy for that

Very bad analogy... The boxer is losing because he is unable to maneuver out of the corner because the ref will not allow it. There we go much better. Can you debate without taking things out of context or resorting to fallacies?


it's not the unions, it's the united autoworkers union...i looked at the profit per vehicle for toyota and honda and they would have made a profit even with the UAW while the big three were bleeding red ink for years...not having the UAW is an advantage, but having the UAW isn't why the big three are failing

Another guess!

GM Balance Sheet (http://finance.yahoo.com/q/bs?s=GM&annual)

Toyota Balance Sheet (http://finance.yahoo.com/q/bs?s=TM&annual)

GM had over $461,000,000,000 in total liabilities in 2005, compared to Toyota's $154,000,000,000. Nice try, better luck next time...

[maladroit]

"LOL, so now we are debating about profit? I thought it was that UAW represented companies were failing (bankruptcy concern), and your position was that it is not caused by the UAW."

- they wouldn't be failing if they were making a profit, and they wouldn't have been profitable over the past four years even if they cut wages and benefits to match toyota



"You claim that it is management, so i asked you why a company that runs a tight ship in Germany cannot produce the same results in the US? Do you care to answer?"

- daimler can produce the same results in the usa and they do at their mercedes plant in alabama...they can't turn chrysler into daimler overnight by buying stock and sending a few german executives to detroit...it takes years to retrain management, retrain workers, retrain dealers, redirect suppliers, redesign cars, retool factories, etc...they also have to deal with the comparitively poor goodwill that is attached to american cars...in addition, they are competing more directly with the other two US automakers who price reduced themselves to the point of bankruptcy



"An examination of both GM and Toyota's books show something quite remarkable. There is a $15 billion dollar difference in labor cost even though they have a similar production output (roughly 10 million vehicles per year)."

- wow...that would be remarkable if toyota wasn't paying most of it's employees in yen and other asian currencies



"Say's law becomes important. Supply creates its own demand. Do you understand?"

- i don't accept that supply creates its own demand...if it did, excess inventory would be good



"Cost gap does not = labor cost gap... The only person to bring up a $4,000 labor cost gap was you. "

- check your link...the $4000 labour cost gap was clearly identified in the article you linked here:
UAW deal puts GM on Toyota's heels; Agreement pares labor gap to $800 per vehicle. (01-OCT-07) Automotive News (http://www.accessmylibrary.com/coms2/summary_0286-33064099_ITM)


"Labor cost is only part of the problem. Liabilities owed to unions is another. If Toyota had to operate under this constraint, they would be going under as well."

- general motors has the most overfunded pension fund in the industry, and they're tapping into it to keep themselves afloat:
Allan Sloan - GM's High-Performance Pension Machine - washingtonpost.com (http://www.washingtonpost.com/wp-dyn/content/article/2007/04/09/AR2007040901262.html)



"Toyota does not have to buy a union worker out."

- i think they have to in japan, and maybe even in the usa too...just because toyota's US employees are not in a union doesn't mean they don't have employment contracts and benefit plans...the neighbourhood pub prime rib dinner special is calling my name so i don't have time to look it up



"GM had over $461,000,000,000 in total liabilities in 2005, compared to Toyota's $154,000,000,000. Nice try, better luck next time..."

- toyota has more liabilities than GM right now...gm had more liabilities in 2005 but they magically wiped out over $240 billion in long term liabilities without affecting the income/cash statements...under the same conditions and with the same $73/hour wage, toyota would have still generated a profit



"Can you debate without taking things out of context or resorting to fallacies?"

- perhaps we could agree to debate and leave the snarky comments aside...i enjoy discussing financial stuff with you and i don't want it to lean towards nasty

[GoldenBoy812]

Something interesting to ponder.GM becomes top-selling foreign automaker in China (http://www.detnews.com/apps/pbcs.dll/article?AID=/20060105/AUTO01/601050436/1148)

For some reason, GM is highly competitive in China, and is/has been the top selling foreign auto maker in China. Which begs me to ask; why is it in a market that is UAW absent, GM exceeds Toyota, certis paribus? It must be the management:thumbsup:

An Auto Bailout Would Be Terrible for Free Trade - WSJ.com (http://online.wsj.com/article/SB122714450941743143.html)

From the article:


GM continued to lead in market share and became the first global auto maker to surpass the one-million mark in single-year unit sales in China.

[VapedG13]

FACTBOX-Industry bailouts agreed or called for | Markets | Markets News | Reuters (http://www.reuters.com/article/marketsNews/idUSLS37957120081028)

FACTBOX-Industry bailouts agreed or called for
Tue Oct 28, 2008 10:25am EDT

GENEVA, Oct 28 (Reuters) - Bailouts for industrial sectors hit by the financial crisis are open to challenge under international trade rules, lawyers say.

The following lists major measures called for or agreed to help industry:

* A $10 billion rescue package to support a merger between the biggest and third biggest U.S. carmakers, General Motors Corp (GM) (GM.N: Quote, Profile, Research, Stock Buzz) and Chrysler, mostly owned by Cerberus Capital Management LP [CBS.UL]. [ID:nN27356776]

* A call by congressmen from Michigan, the home of the Detroit-based carmakers, for a bailout for all three U.S. manufacturers, including second-place Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz). [ID:nL0520213]

* The U.S. Congress approved $25 billion in low-interest loans last month to GM, Ford and Chrysler to help them meet a federal target for more fuel-efficient cars.




"Should the government bail out private enterprise? The answer is no, it shouldn't."
- President George Bush, July 2008, responding to a question about a possible government bailout for General Motors


I dont see the auto industry trying to make money to bail themselves out

Why dont they lower the selling prices(they have huge profit margins) and give 0 % apr.....fire your upper executives who get the big bonus

[maladroit]

"why is it in a market that is UAW absent, GM exceeds Toyota, certis paribus? It must be the management"

- FIRST: all other things are not equal...toyota was one of the last carmakers to build factories in china, toyota cars cost more, chinese disposable income is lower, almost all the cars GM sells in china are made in china, and some of toyota's car sales in china were imports (china imposes a 25% import duty on cars)

SECOND: GM is not outselling toyota in china...it is the other way around despite the lack of *ceteris* paribus:
GM's car sales slide in China, outsold by Toyota - China automotive news (http://www.gasgoo.com/auto-news/1007873/GM-s-car-sales-slide-in-China-outsold-by-Toyota.html)



so what do you think about the wall street journal article that is critical of the auto bailout? is the bailout a bad idea for the auto business, bad for the US dollar, and bad for the general economy?

[DaBudhaStank]

"why is it in a market that is UAW absent, GM exceeds Toyota, certis paribus? It must be the management"

- FIRST: all other things are not equal...toyota was one of the last carmakers to build factories in china, toyota cars cost more, chinese disposable income is lower, almost all the cars GM sells in china are made in china, and some of toyota's car sales in china were imports (china imposes a 25% import duty on cars)

SECOND: GM is not outselling toyota in china...it is the other way around despite the lack of *ceteris* paribus:
GM's car sales slide in China, outsold by Toyota - China automotive news (http://www.gasgoo.com/auto-news/1007873/GM-s-car-sales-slide-in-China-outsold-by-Toyota.html)



so what do you think about the wall street journal article that is critical of the auto bailout? is the bailout a bad idea for the auto business, bad for the US dollar, and bad for the general economy?

The bailout in general is a bad idea, of all these companies. The country has said a VERY resounding NO to every bailout proposition. I personally am willing to take a serious hit to my wallet and my lifestyle if it means we can take one step closer to destroying corporate greed and excess. This is about way more than money, its about ethics. We have to send a message to these companies and to the government that this behavior wont be tolerated. Whatever happened to free enterprise? Pull yourself by your own bootstraps? If you can't do the job we'll find someone who can? If a company can't compete it DESERVES to fail. NO company (or 3) is so important that it can't die. None.

[maladroit]

it looks like canada is getting set to bail out the american auto manufacturers

the auto industry claimed that canada's economy would be destroyed if one or more of the automakers failed...i don't believe that

[VapedG13]

rich stay rich......why do you think gas was so high 3 months later its more than $2 a gallon less......someone is making alot of money

[maladroit]

CEO's of big three automakers fly private jets to washington with their begging buckets:
Breitbart.tv » CEOs of Big 3 Automakers Fly Via Private Jet to Ask for Billions in Bailout Cash (http://www.breitbart.tv/?p=224543)


we're stupid, give us money so we can lose more money...WAH! you owe us...PAY UP OR ELSE WE TAKE THE ECONOMY DOWN WITH US!!

[maladroit]

good news everybody...congress is going to bail out brazil!



Latin American Herald Tribune - General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program (http://www.laht.com/article.asp?ArticleId=320909&CategoryId=12396)

General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program

By Russ Dallen
Latin American Herald Tribune staff

General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

"It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.

Meanwhile, he cut the company's revenue forecast for this year by 14% to $9.5 billion from $11 billion, as the economic crisis began to cause rapid slowdowns in sales.

GM already announced three programs of paid leave, and Ardila added that GM Brazil "is going to wait and see how the market behaves in order to know what decision to take" with regard to possible layoffs.

For Ardila, the injection in Brazil's automobile sector of 8 billion reais ($3.51 billion) recently announced by the federal and state governments of Sao Paulo "has already begun to revive sales," which fell by 12% in October.

The executive said that the company will operate a "conservative" scenario in 2009 with an estimated production of 2.6 million units, and another more "optimistic" that contemplates sales of 2.9 million.

This year sales will reach 2.85 million vehicles, which represents a growth of 15% over last year.

[GoldenBoy812]

SECOND: GM is not outselling toyota in china...it is the other way around despite the lack of *ceteris* paribus

Toyota did have an equal opportunnity, or so i would believe, to explore Chinese markets.

From your article:
The figures exclude minivans, trucks and other vehicles.

GM was the first foreign auto maker to sell 1 million units in China.

Source:General Motors First Global Automaker to Sell 1 Million Vehicles in Single Year in China (http://www.theautochannel.com/news/2007/12/23/073987.html)



so what do you think about the wall street journal article that is critical of the auto bailout? is the bailout a bad idea for the auto business, bad for the US dollar, and bad for the general economy?

After keeping a close eye on the situation this past week, chapter 11 bankruptcy is the only thing that will void UAW contracts.


Peter Morici:"The simple fact is that the best solution for Chrysler is Chapter 11 to remove the burdens of the UAW (the industry trade union) contract and scale down the company to something one half to two thirds its current size. That would serve GMâ??s interests tooâ??both Ford and GM would benefit from some capacity and cars going off the market."

Remember when we talked about Say's law. Supply does create its own demand. What this law states is that different levels of supply will be accompanied by different levels of demand. Low supply creates high demand, therefore Say's law is correct!

[DaBudhaStank]

The only company too big to fail is the U.S. government. Not one of these bastards deserve a dime. Sucks for the workers who'll get laid off, but thats where the chips fall. You think any of these fucks are actually gonna change? Do you really think they wont be back in a few months for another hand out?

[Sage]

Social/economic engineering. Get used to it. That's the soup du jour.

Peace, Sage

[Shelbay]

Hyundai,Toyota,Mercedes-Benz all locoated here in Alabama & not asking for bailouts..no unions involved in the South;)

Damn Yankees stay in the mess you created & stop moving here....LOL.

Oh we almost had VW but TN got that one..again no unions:thumbsup:

[RamblerGambler]

how can anyone say with a straight face that unions are the reason for the auto industry's woes? Toyota, and Mercedes-Benz have and continue to make efficient and well made cars. Meanwhile, Detroit decides that the SUV was the flagship of the American auto industry, almost fighting change tooth and nail. Now we see how well that worked out.

[GoldenBoy812]

how can anyone say with a straight face that unions are the reason for the auto industry's woes? Toyota, and Mercedes-Benz have and continue to make efficient and well made cars. Meanwhile, Detroit decides that the SUV was the flagship of the American auto industry, almost fighting change tooth and nail. Now we see how well that worked out.

As if any of those mentioned above did not produce multiple models of SUV's.

[maladroit]

japanese auto management techniques dictate that they don't start building a car until there is a demand for it (pull production)...there is a demand for some SUV's, and they manufactured to meet the market

american auto management chose to focus on the most profitable models with big engines and matching price tags, and then crafted marketing campaigns to sell vehicles that were not in high demand (push production)

that partly explains why japanese-owned factories operated at close to 100% capacity for years while US automakers were idling plants


What is Pull Production?

Originating from the infamous Toyota Corporation, pull production is a process that aims to arrange an organization so that customer preference or orders are what cause materials to be "pulled" through a system. The idea is that the manufacturer only produces what the consumer wants when the consumer wants them. In other words, a product need only be produced at the same rate that they are being sold. In a pull production system inventory is reduced, work in progress is not exceeding demand, and the need for raw materials is comparable to the demand for the product.

[RamblerGambler]

Interesting article: 10 Cars That Sank Detroit - FlowChart (usnews.com) (http://www.usnews.com/blogs/flowchart/2008/11/14/10-cars-that-sank-detroit.html)