The right to work...Death of the Big Three

[HOZ]

Written by Megan McArdle on the demise of the Big Three and especially the UAW.

I don't see all three dying but certainly at least one likely disappear. I see the big three going into bankruptsy. If they don't it and they get a bailout, it will just be a continuation of the craptastic car making they have done over the past 3-4 decades. Time to put the buggy in the shed and the horse out int he pasture. Going to a lot of hurt all around!!

Right to Work

Nor do I think it's funny to see autoworkers who lived quite a bit better than most of America get their comeuppance. It really doesn't matter what you make; losing everything, most especially your dreams and your sense of security, is one of the worst things that can happen to a person. Laid-off consultants don't starve, of course, but neither will laid-off auto workers. They'll just be forced several rungs down the economic ladder. It will be humiliating, difficult, and it will sour a number of them permanently on life, and their country. If I could stop that from happening to people, without making some other aspect of life much worse, I would.

But whatever your feeling about government intervention in the economy, or the correct level of income inequality, I think there's one thing we can all agree on: for the world to get better, things that don't work have to fail. We cannot keep alive every company, every car and every job that someone once liked, because that way lies stagnation and death. Places where production decisions are made based on how much labor they can consume, rather than how much value they can produce, make everyone in society worse off in the long run.

So while I fully understand the human cost (I think), it has to be borne, for the same reason we couldn't save all the folks who loved their gentle home-weaving traditions, or their jobs making buggy whips. This is, of course, easy to say, when I am not bearing it. But I'm not against helping the auto workers transition to doing something else; I think unemployment assistance is a good idea, and should be extended during this crisis to at least 52 weeks. I would be fine with a job training program, if we could find one that works (so far, government training programs seem to run from useless to actively harmful). I'd be happy to take some of the money we aren't using bailing out auto companies, and offer relocation assistance to people who are trapped in factory towns.

[MelBridgeman]

I don't disagree

[Dion]

I don't agree with bailouts to automakers for poor business decisions. Maybe the big 3 should start focusing on fuel efficent vehicles as opposed to their gas guzzling pickups and SUV's.

I own a 05 Ford Escape and absolutely love this vehicle i'm driving. Outside of that model there isn't another Ford product i'd ever buy in the future.

[photon]

If the government is going to get involved with bailouts, maybe the bailouts should be based on some conditions...

Take the opportunity to revamp the automakers to become more like other places with a focus on smaller, more efficient vehicles.

Not sure how, but if the makers are in big trouble anyway, can the whole industry be rebooted with a different focus? Can changes be made now that couldn't normally be made?

[4X4]

As far as I'm concerned, they can take care of themselves. Especially GM. What's with the 30 different brand names? And a dealership on every corner? And the Hummer? The Hummer makes me laugh. Latches all over the stupid thing for what - in case you need to pick it up with a helicopter?
These companies have grown too big for their britches. They seem to think that they need to compete in every single niche in the auto business. That's what's killing them. Look at GM. They have about 50 different cars and trucks. Everything from tiny hatchbacks to gargantuan trucks. How is that necessary? How is that sustainable? I mean, I like variety, but do I really need to be able to choose from a sunfire and a cavalier? What's the difference? And do I really need to choose from an Impala or a Malibu? What's the difference? Half a litre of engine displacement and an extra inch of legroom in the Impala?
If they had less models and less factories and less dealers, they'd be able to respond to market demands alot more efficiently. The way it sits, they have a different factory for every car. If a certain car isn't selling, they can't just lay the people off because of the unions. If they had less factories and were able to switch which car they were making in that factory, they would be able to respond to current demands with less chance of having to shut down a factory.

IMO, GM should file chapter 11 and go into receivership. Fire the entire board and tear up the union contracts. Shut down at least 25% of all their dealerships and reduce their brands down to two or three for the various types of vehicles (ie, GM for trucks, Pontiac for Cars, Caddilac for luxury).
Renegotiate with the union and tell them that they're no longer simply button pushers or bolt tighteners. They are now versatile employees that show up for work prepared to change out certain equipment in the factory to accomidate a building spree on whatever model is selling the best.

I guess I'm just an armchair quarterback here, but hearing about the constant aid packages that these companies are getting is just so annoying. Thye government is practically forced to do it because if the company goes under, they'll have hundreds of thousands of new faces in line at the welfare office.

Force these gigantic companies to be competitive. But stop bailing them out. Capitalism, baby.

[Vulcan]

Well the UAW has been making concessions so I don't see how we can throw all the blame on the workers.
http://www.financialpost.com/story.html?id=964043


Maybe if they built a better product or got better reviews because for the last number of years it's been cool to lambaste N. American cars and from my experience it isn't called for. If we continue to buy only foreign goods, we deserve it when our economy goes in the tank.

Sometimes in life we have to hold our noses and ante up and this bail out is one of those times.

[redforever]

Originally Posted by Vulcan

Well the UAW has been making concessions so I don't see how we can throw all the blame on the workers.
http://www.financialpost.com/story.html?id=964043


Maybe if they built a better product or got better reviews because for the last number of years it's been cool to lambaste N. American cars and from my experience it isn't called for. If we continue to buy only foreign goods, we deserve it when our economy goes in the tank.

Sometimes in life we have to hold our noses and ante up and this bail out is one of those times.

I agree. All American made vehicles are not of poor quality. Many are great products. But the problem that arose was the excessive focus on all the SUV's and big honking trucks.

Now that was not all the fault of the automakers, basically they were just responding to the demand at the time. And no one can deny that in North America, SUVs were and to some extent, still are, king of the hill. The problem that arose is the automakers never responded quickly enough when the demand for smaller, more fuel efficient cars arose.

And at the same time, the buying power of North Americans was extremely high, so they had the money to buy the imports that were small, were fuel efficient and were very well made, even though they were more expensive.

I think we are seeing a turning point of buying foreign products, imported products, just because they are cheap. The results of that in the toy industry are not pretty. There are scandals in all kinds of products now, milk, Oriental food products, toothpastes, paint products, .....

If you emphasize cheap at the expense of quality, the scenario is not pretty.

[Phanuthier]

Originally Posted by Vulcan

Sometimes in life we have to hold our noses and ante up and this bail out is one of those times.

Didn't we already do that in 2003 when we bailed out GM?

5 years later, they need a bail out, again.

[4X4]

Originally Posted by Vulcan

Maybe if they built a better product or got better reviews because for the last number of years it's been cool to lambaste N. American cars and from my experience it isn't called for. If we continue to buy only foreign goods, we deserve it when our economy goes in the tank.

Sometimes in life we have to hold our noses and ante up and this bail out is one of those times.

Screw that. Survival of the fittest, I say. My sis bought a new Acura back in 03 or 04 and has never had to bring it in for anything except regular maintenance. My dad bought a new Buick in 02 and the thing has been in for everything from the windshield wipers to the transmission. It has been in for repairs at least 6 times. Simply from things ceasing to work. On a brand new car. And let me tell you, if I had to lend my truck to either of them, it'd be my dad. Dude drives like an old man (because he is).

My buddy bought an 05 Dodge Ram a couple years ago and has spent thousands of dollars fixing random crap that breaks. Even my old Jimmy would break down on me constantly (but dang, I loved that truck).

This time I bought a Toyota. I'll not buy another domestic until they get a bunch of years of good press for being quality vehicles. And it's not just me. One by one, people I know are switching to Toyota or Honda. IT may be a little more expensive, but I just simply don't want to spend any time at the repair shop. I don't care if it's covered by warranty, like in my dad's case. He bought from Shaganappi but he lives in the south. Taking the car in for repairs is a major pain in the arse, even when the warranty covers it.

The big three need to fix their own sh1t. I won't spend a nickle on their products until they're worth buying again.

[Dion]

Originally Posted by redforever

Now that was not all the fault of the automakers, basically they were just responding to the demand at the time. And no one can deny that in North America, SUVs were and to some extent, still are, king of the hill. The problem that arose is the automakers never responded quickly enough when the demand for smaller, more fuel efficient cars arose.

They responded to the demand of a certain segment of the vehicle buying public and basicly put all thier eggs in one basket. For years Ford ignored the small fuel efficent vehicle rolling in and out half hearted efforts that never survived. Pickups and SUV's dominated the lots and for a period of time made Ford money. Oil started to rise dramaticly and they were left scrambling. The Fusion and the Focus are the latest models to attract the small car buyer, however they entered the market too late as the Japanese had solidified it's base of buyers with consistantly good quality products.

[Dion]

Originally Posted by 4X4

My buddy bought an 05 Dodge Ram a couple years ago and has spent thousands of dollars fixing random crap that breaks. Even my old Jimmy would break down on me constantly (but dang, I loved that truck).

To be fair my 05 Escape has cost me nothing except regular maintinence in oil changes. Not all NA vehicles are lemons and such, one has to do thier research and check the vehicle reliabilty history.

[4X4]

Originally Posted by Dion

They responded to the demand of a certain segment of the vehicle buying public and basicly put all thier eggs in one basket. For years Ford ignored the small fuel efficent vehicle rolling in and out half hearted efforts that never survived. Pickups and SUV's dominated the lots and for a period of time made Ford money. Oil started to rise dramaticly and they were left scrambling. The Fusion and the Focus are the latest models to attract the small car buyer, however they entered the market too late as the Japanese had solidified it's base of buyers with consistantly good quality products.

Exactly. And that's why you own an Escape. It fit your needs and Ford has a pretty good rep for duty vehicles. Would you have purchased a focus over a civic? Probably not, especially if a few extra dollars per month was not an issue.
So this is a perfect illustration of why the big 3 are failing. They've been focusing on one thing but also trying to compete in every single other niche. That's like a framer trying to also do roofing and siding and painting and electrical and plumbing and flooring etc. Just pick what you're good at, do it. Do it right, and then consider adding to it with a similar product.

[Bend it like Bourgeois]

Originally Posted by 4X4

The big three need to fix their own sh1t. I won't spend a nickle on their products until they're worth buying again.

Amen to that.

The earlier comment about the dealer networks was interesting though. There was a huge fight when GM killed Oldsmobile - it cost them big to shut down a brand and some dealers. I read a businessweek article recently that 30% of current dealers may fail and the big 3 will not only let it happen, they're helping.

[Bend it like Bourgeois]

Originally Posted by redforever

If you emphasize cheap at the expense of quality, the scenario is not pretty.

In the context of cars does this mean anything though? The domestics are domestic in their of head office, but little else is different. Their product is just generally crappier.

[4X4]

Originally Posted by Bend it like Bourgeois

Amen to that.

The earlier comment about the dealer networks was interesting though. There was a huge fight when GM killed Oldsmobile - it cost them big to shut down a brand and some dealers. I read a businessweek article recently that 30% of current dealers may fail and the big 3 will not only let it happen, they're helping.

I am not anywhere close to an expert on this topic, all my posts are opinions based on reading the news. But that said, good. Let 30% of them fail. It's annoying to watch an industry artificially keep itself afloat by constantly putting guns to heads.
The unions threaten management, management threatens the government, the government pays out and we, the taxpayers buy big three products whether we like it or not.

Seriously, how many GM dealers can you think of off the top of your head in Calgary?

the one in douglasdale, the one at mcleod and 78th, jack carter (which may be the one in douglasdale), the one by the greyhound station, the two in northland mall, the one or two in the auto mall, there's sure to be one in the NE... And Toyota dealers? Um, Heninger, charlesglen, the one by the airport, the one at fish creek... There may be a couple more, but there's certainly less than there are GM dealers and Toyota is the biggest auto company in the world. So... What's up?

edit* I don't know if this post sounds snotty towards you, BLB, I'm being snotty towards GM.

[Dion]

Originally Posted by 4X4

Exactly. And that's why you own an Escape. It fit your needs and Ford has a pretty good rep for duty vehicles. Would you have purchased a focus over a civic? Probably not, especially if a few extra dollars per month was not an issue.
So this is a perfect illustration of why the big 3 are failing. They've been focusing on one thing but also trying to compete in every single other niche. That's like a framer trying to also do roofing and siding and painting and electrical and plumbing and flooring etc. Just pick what you're good at, do it. Do it right, and then consider adding to it with a similar product.

From 01-04 the Escape had a very poor reliability record which is why i bought the 05. With the 05 model they corrected the earlier problems.

I should also add that my previous vehicle - 91 Explorer - was a piece of crapola. My fault for not doing the research.

Woud i buy a Focus over a Civic? I don't like either model but if the Focus was a car i liked and had a good reliability history i'd probably buy it. Thing is i'll buy from any manufactuer as long as the vehicle has good reliability.

[redforever]

A lot of the present problem also goes back to all the previous bail out packages. The automakers were given packages and then they never really addressed the issues that got them in the mess.

If bailouts were not necessarily the norm all the time, then the problem would not have self perpetuated as long either.

[browna]

And I've had an Acura for 2 years that I had to sink $8K into. All of my GM cars have had very few issues in my ownership...so it goes both ways.

It goes both ways, North American cars have made leaps and bounds in quality over the past 5-7 years, and some Japanese, especially Toyota, have been sinking like a stone in the quality department the last few years.

Part of the problem for GM and the big 3, that the Japanese have yet to have to really saddle them is, the UAW. They've become so bloated that GM has these workers...they're going to be getting paid whether they sit at home or make vehicles.

GM's been saddled with these contracts...some plants are truck plants, some are car plants, and they can't retool them, and some of the workers have to be doing certain tasks for thier payscale.

Buying them out has been done, but with all the UAW beneifts, its virtually like paying these guys deemed redundant about 5 years worth of wages just like that.

SO, they're making vechiles that sit in dealer lots, its cheaper then laying off a crew of workers for 4 weeks.

It takes forever to alter production of current vehicles and introduce new ones because of the UAW provisions for producing new vechiles, then making sure that thousands of parts are going to be available for new models.

Point being, GM isn't flexible to change, or downsize, now or in the past, their hands tied by its sheer size, its sheer size in large part thanks to the UAW holding them at gunpoint over the years in negotiations.

The Japanese aren't fairing much better in the automarket, although that's not as big a story here, even with the US plants, as the employee numbers dwarf what's it Oshawa, Detroit, Texas and all the other North American operations plants.

[mrdeeds]

I'm no believer in corporate welfare, but this will have a crater effect in the Canadian economy. I am not in favour of a bailout per se, but tax incentives for more eco-friendly auto manufacturing and investment in retraining would be a start. The downfall of the Big Three is their own hubris in not investing more in international sales and reliance on the North American market.

I wonder what would have happened if a 1990 Senate bill that was defeated by 3 votes had passed.

http://washingtonindependent.com/123...-protectionism

I guess the other side

[browna]

Originally Posted by 4X4

Seriously, how many GM dealers can you think of off the top of your head in Calgary?

the one in douglasdale, the one at mcleod and 78th, jack carter (which may be the one in douglasdale), the one by the greyhound station, the two in northland mall, the one or two in the auto mall, there's sure to be one in the NE... And Toyota dealers? Um, Heninger, charlesglen, the one by the airport, the one at fish creek... There may be a couple more, but there's certainly less than there are GM dealers and Toyota is the biggest auto company in the world. So... What's up?

http://www.thestar.com/Business/article/529734

Probably because GM sells almost twice the number of vehicles in Canada then does Toyota, a over 1/5th of the total cars sold in Canada in 2008.

...combined sales of its Toyota- and Lexus-branded cars and trucks were ahead 9.4 per cent to 15,843 units from 14,484 in October 2007.
"Toyota came in at second place again this month and now are building a strong lead year-to-date over both Ford and Chrysler for the No. 2 spot," DesRosiers said.
"This would be a first. Chrysler on rare occasions have beaten Ford for the No. 2 position but never has an import nameplate OEM come in second in the Canadian market."
Chrysler's Canadian sales rose 1.5 per cent in October while Honda Canada sales of Honda and Acura-branded vehicles increased by about 0.7 per cent.
In contrast to Toyota's numbers, General Motors' industry-leading volume (including the Saab brand) was nearly twice as big at 28,220 vehicles sold in Canada in October, but that was down 6.1 per cent from a year earlier. GM's share of the Canadian market for the first 10 months of 2008 was 21.9 per cent.