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The Speech

I'd like to hear it.

As Michigan native myself, I can say that the UAW IS A MAJOR reason for the death of the Auto Industry.

It's just been impacted more lately due to the increased cost of oil and less demand for SUV's.

It's really not. Consider who made what decision. The Big 3 spent 50 years not competing with one another and because of that they could give anything they wanted to the UAW and pass on all the costs to the consumer, while not investing to improve product or process.

So what happens when competition comes along is that the competition is simply better than they are. Japanese cars individually were not better than American cars when they hit the market in the 70s, but the difference was that they continually invested in both product and process for the purpose of building a better car at a better price.

What was the Big 3 doing at that time?

Not a damned thing. Go ask Ross Perot. He tried and failed to reform GM in the 80s.

The Big 3 lost their market share because their products suck. Do not ever pretend that anything else is true. It is the one and only reason.

The perception among the American auto consumer is that the American car simply is not as good as the Japanese, Swedish, and German cars. (except for the recent improvement of Korean automaker fortunes, all other nations are bit players at best in the US auto market. In terms of brand at least, there are a lot of cars with a "brand" of one of those nations that is made in a 3rd nation.) Now that perception is correct, or at least it has been untill just the past few years. The American brand cars have completely sucked. And the consumers have known this and acted accordingly. The Big 3 said to themselves, "well Americans will keep buying American cars, so we don't have to do anything to earn their business". Well they were wrong, and they never corrected their problems.

Now that the US automakers have more or less gotten parity in quality, the consumer simply does not believe that. And the fact that the US companies have lagged in every area, like warantees, mean that they simply have not taken actions intended to win back the American auto buyers.

The perception among the buyers remains that the foreign cars are better.

People will pay more for a Camry or an Accord than they will for a Taurus or an Impala.

So you can take your costs and shove them. If people are willing to pay more for your competitors product than they will for your product, then your costs are not the cause of your problems. I was in the auto business in the 90s: The US automakers were putting huge incentive deals on their cars. The Japanese brands were not.

The problems of the US automakers is that they a) refused to invest to make a product of comparable quality and desirability as their competitors until they had badly lost market share and customer loyalty. b) refused to invest to raise productivity to offset any cost disadvantage until long after said cost disadvantage had already badly impacted their bottom lines. c) refused to look at what the customer wanted and deliver it. d) refused to plan for the long term costs of their contracts. e) refused to plan for the future where they were told flat out decades ago that the price of oil would one day go way up, so they've screwed themselves with over commitment to types of vehicles that they cannot currently sell at a profit.

So the decisions made which resulted in where they are now were all made by management. Not a one of them was made by labor.

Now labor is not big on giving back what it has fought so long and hard to get. Do you blame them? They know that the problems are caused by the bosses, so it is rational that until the bosses get it right, they should be vary reluctant to give anything back. Also, there is the equity issue: The bosses are making huge paychecks for their incompetence. If labor gives anything back, management takes it in bonuses or the owners take it in dividends. So there is no gain to the company. They gain nothing by giving back, so why would it make sense for them to do so? Maybe they are short sighted and confrontational. But they didn't call the shots.

Read "A Farewell to Alms" http://www.amazon.com/Farewell-Alms-Economic-History-Princeton/dp/0691121354 American Labor kicks ass. We are more productive, and that offsets our greater costs.

Read "The Reckoning" http://www.amazon.com/Reckoning-David-Halberstam/dp/0688048382
 
Actually, I have read quite a bit about the american auto industry. It is a textbook case of unions gone mad.

Anyway, it is pretty hard to argue against the basic fact that UAW made a Michigan auto-worker immensely more expensive than one in, say, Japan. Can you possibly deny this basic truth?

Yes. Because it is false. The cost of a unit of labor is a factor of both what it costs and what it produces. If I pay labor $1 an hour and in that hour it makes something worth $1.10, or I pay labor $50 an hour and in that hour it produces something worth $100, then clearly I am better off paying $50. Again, read "A Farewell to Alms".
 
Cutlass, are you a UAW memeber?

If you really think that people who are paid 80k a year to turn bolts dont have any affect on a company, you're mistaken.

Let's not forget to that once they reach their quota they go sit on their asses and play cards all day.

They're also on strike more than any workers I have ever seen...whether it's at a car plant or plant that produces parts.

Those are facts.

The US companies do sell popular vehicles...SUV's, pick ups, G6.

The UAW isnt totaly to blame, but to think that they dont do anything to cause downfall of the companies is very naive.
 
No you are being naive. Because you simply refuse to pay attention to one overriding issue: The decisions to create the entire mess were made by management.

The unions may take advantage, but the management made the decisions to cause the opportunities. All that you are doing is to apologize for the incompetence of the management by calling their screw ups as someone else's fault.
 
No you are being naive. Because you simply refuse to pay attention to one overriding issue: The decisions to create the entire mess were made by management.

The unions may take advantage, but the management made the decisions to cause the opportunities. All that you are doing is to apologize for the incompetence of the management by calling their screw ups as someone else's fault.

Actually, as I have posted 20 times before, the UAW ISNT THE ONLY REASON.

Also, the UAW wasnt created yesterday...when they go on strike and take out a good chunk of the work force and possibly have the ability to shut down a whole plant...they have management by the balls. They may have been created by a management 30 years ago that isnt in place today...but today they're causing problems for the those in charge of today.

Again, the UAW has to go.
 
Good grief Cutlass, you are completely out in left field here.

Do you know what happens when, because of the need to reduce manufacturing supply, an American autoplant closes for a few days?

Do you understand that the per-car profit in the US is non-existant, while in Japan it is an average of $3000?

Do you realize that GM pays out nearly $2,000 in health care benefits per car?

The Unions have crippled the auto industry. They cannot make money. Don't give us this bull about quality...your stuck in the 1980's. American cars and trucks frequently rank very high in consumer quality rankings. The safety records of American cars are excellent. It is not the product, it is the costs!

You are right about one thing, the quality levels of currently produced automobiles are partly to blame. Instead of buying new cars left and right, Americans are keeping their cars longer because they can.

Productivity in the American auto industry is in the toilet, while in nearly every other American productivity is first-class. Why? Because these unions imposed hourly standards, while in Japan such standards don't even exist. UAW wants (and gets) 2X overtime pay...who the hell can afford that?

Constant, crippling strikes don't help either Cutlass. Remember that stirike last year at GM that lasted for 5 days? Do you know what the union was crying for? A STOP TO THE OUTSOURCING! As well as increased retirement packages and part-time full-time conversion. It really is a joke.

You say it is not costs--explain how Toyota and GM both make nearly the same revenues every year and yet Toyota turns billions in profit while GM loses billions? Perhaps it is the underlying costs of producing one car?

Merk addressed the union problems pretty well. I don't need to repeat everything he wrote. But you haven't addressed any of his arguments, including why foreign automakers in the US have such greater profit margins per car than do American ones. You probably don't even need a hint.

Labor Unions have lost much of their power in the last 30 years. American productivity has increased too. However, and unfortunately, the labor stranglehold on the auto industry is alive and well.

One thing is for sure, if I were operating an auto manufacturer, I would get out of the US and go elsewhere. Dump the union whiners and find people who really want to work hard to earn a fair wage.

Floor workers at American Axle make on average $70 an hour.

There is no way a Union stranglehold on any American Company won't prevent the inabliity to compete on a global market. There is two ways an American auto manufactuer can save themselves: lower costs (including wages and employee packages) or move offshore. Guess what won't work?

~Chris
 
Yes. Because it is false. The cost of a unit of labor is a factor of both what it costs and what it produces. If I pay labor $1 an hour and in that hour it makes something worth $1.10, or I pay labor $50 an hour and in that hour it produces something worth $100, then clearly I am better off paying $50. Again, read "A Farewell to Alms".

You're way off.

Once again, I'll say that what bankrupted the US auto industry was not a lack of sales, unlike what you imply in your other post. It was all about costs. You are mad if you think american labour is that much productive than japanese labour to justify such colossal difference in payment and benefits. Fact is it isn't.

If there was the costs were offset by the increased production, as you falsely claim, then the car makers would not be moving out of Michigan, which they are. GM in Brazil has huge profits, I think even their european division is profitable. It's all about insane labor costs.

Now, you won't see any argument from me that management was irresponsible to allow it to get this bad. They should have presented an ultimatum to UAW much sooner : back down or we're out of here. Now there is an unwritten ultimatum, anyway.

Edit: sonorakitch said it all better. Ultimately it all comes down to the fact that per-car profit of GM and Ford is close to zero, while it is significant in many other auto-makers; and that Toyota manages to have a huge profit with a total revenue not much bigger than GM (in fact smaller untill very recently), while GM is always reporting losses, so it is obviously about costs.
 
A company that can't properly handle its labor issues deserves to get b-slapped by the invisble hand.

It sure does, and the workers that failed to realize that their overpayement was destroying the company deserve to be jobless and just as broke as their former company.
 
A company that can't properly handle its labor issues deserves to get b-slapped by the invisble hand.

You're right about that. Agree 100%. Problem is, new management is trying to fix the cave-ins of the old management, and the damn workers STRIKE!

How's that for fixing an industry?

~Chris
 
It sure does, and the workers that failed to realize that their overpayement was destroying the company deserve to be jobless and just as broke as their former company.
They got the price the employer was willing to pay - it's not their fault that the employer was willing to overpay. If they didn't gain skills necessary to adapt once the management started making ******** product mix decisions, well yes, they deserve what they get.
 
You're right about that. Agree 100%. Problem is, new management is trying to fix the cave-ins of the old management, and the damn workers STRIKE!

How's that for fixing an industry?

~Chris
I haven't see a real strike lately. New management caves too easily and then blames the people they didn't even stand up to.
 
Back to the speech.

Delivery: A+
Content: D-

Which works for Obama pretty well since most people listening are blindly following him anyways and could care less about what he actually said.
 
I haven't see a real strike lately. New management caves too easily and then blames the people they didn't even stand up to.

http://money.cnn.com/2007/09/24/news/companies/gm_uaw_strikedeadline/index.htm
http://www.wsws.org/articles/2008/apr2008/axle-a08.shtml

A strike lasting a few days can really clean up profits. The UAW's penchant for striking is certainly effective.

I do agree with you. They cave too easily. I'd of left a long time ago.

~Chris

PS--We are completely on a tangent here...
 
They got the price the employer was willing to pay - it's not their fault that the employer was willing to overpay. If they didn't gain skills necessary to adapt once the management started making ******** product mix decisions, well yes, they deserve what they get.

It's as much their fault as it is manegement's fault. It's not like the managers offered them those absurd sums - they achieved them through strikes, threats and an overall war strategy. Michigan unions are considered the most combative in the world. That can't be good for business. I don't deny that management should have stood up to them, but it didn't.

Anyway, organized labor was greedy and wildly irresponsible; ultimately they destroyed their own jobs (or the jobs of their children), and are reduced to voting for populist politicians that promiss them welfare and protectionism.
 
I enjoy my American-made Honda.
 
American oil traders don't seem to think like this. When the announcement was made the more drilling may happen, the price of oil dropped significantly. When Russia went into Georgia, it went up significantly (although there was some slack here). Anti ANWR people can prattle on all they want about how it'll only lower the cost of a barrel of oil 1 dollar nominally due to global supply. But I gaurantee you that if on Tuesday, Bush said "We've reached a deal to drill in ANWR, and expand domestic oil production" that the price of oil here will plummet.

If Hormuz is closed, then we don't have any oil period. None. Nadda. Zilch. 25% of our oil just...goes away. Prices may go up if we drill in ANRW in the global market, however, we'll still have access to that supply instead of having nothing at all.

And this is why oil prices shoot up $5 a day when there is unrest in Nigeria. And $7 a day when Hugo makes vague threats. And $4 a day when Mahmoud feels like being frisky when he talks about Iran.

This isn't remotely responsive to what I wrote. What does ANWR have to do with what I wrote? Did I even mention ANWR? Were you responding to someone else?

Cleo
 
Anyway, organized labor was greedy and wildly irresponsible; ultimately they destroyed their own jobs (or the jobs of their children), and are reduced to voting for populist politicians that promiss them welfare and protectionism.

Which makes me have to buy crappier products at higher prices.

Management just should have just fired them and hired cheap immigrant labor. I despise Obama's protectionist policies(overall against outsourcing and not giving tax breaks to companies that outsource). It just results in me having to buy crappy products at higher prices. Globalization is happening, whether you like it or not.
 
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