SearchMaster
Diamond Member
- Jun 6, 2002
- 7,791
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x 2.
My dad works in the UAW as a Millright. I know the salaries are high, but they sure aren't as high as the Upper/Senior Management folks that made the decisions that got them into this mess.
It's not the price of the cars that people have a problem with on American made vehicles - it's the quality and features (gas mileage included) that dings them on sales.
It doesn't take a genious to figure out that if you have an American car that gets worse gas mileage (because of Management decisions), lacks features (because of Management decision), has poor part quality (because of Management decisions), has poor assembly quality (because of Management decisions - you don't have F'ing time to do your job perfect every time when the cars are whizzing by a car every 55 seconds; and Management won't take the $$$ hit to either slow down the line, or add additional QA checkers into the Process), and then poor support after the sale (sorry, your $30k American car that's relatively just out of warranty ((which is less than the competition)) is going to cost $$$ to fix...we won't reward you for buying American and take care of that, we'll stick you with the high bill).......Now do that for decades, is it any wonder why people are buying foreign????
I remember in the 80's Management asked the Union for concessions, said the Jap's are killing us, we need concessions to compete. Union gave concessions. Management gave themselves raises. Vehicles cost the same, were the same.
US auto crippled by Unions?? Haha...I just laugh...
Chuck
- Mar 20, 2000
- 102,402
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toyota had an average profit margin of 6.8% last quarter. now, we all know that lexus and trucks have a higher percent profit margin than corollas and camrys, but for this we'll ignore that. just keep it in mind.
invoice on a base 2008 corolla is $13,324. if that is why toyota actually sells it at, given their 6.8% profit margin that is a profit of $906. toyota doesn't actually sell it at that because of holdback (2%), and toyota's unique distribution setup in the US (toyota factory sells to a regional distributor, which then sells to the dealers). so, $906 is overstating it just on that basis, and then remember that profit margin is certainly lower on cheaper cars.
for historical reasons, GM can't sell an exact duplicate of a corolla for the same price as toyota can. so that eats into the tiny profit margin. even if the car were exactly the same feature for feature, quality for quality, it wouldn't happen (well, at least until people realized that the vibe and matrix roll out of the same line, which seems to be happening, finally).
then add in GM's huge historical labor cost disadvantage. it used to be $2500 per car. i'm sure it's lower now with the labor concessions. but i bet even today it'd wipe out whatever profit was left.
anyway, back to the historical, if just making a small car cost you $1500 (or more), you're going to do anything to reduce the cost. you don't actually want to sell any more than are necessary to meet CAFE.
management was basically forced into the product mix that it has historically had by the giant millstone of the labor contract around their necks. they couldn't be flexible, they couldn't devote gobs of money to products that simply lose money on every vehicle. they had to do what they knew and what would keep more money coming in than going out, which was making trucks.
anyway, that's the historical problem. considering the new labor contract is less than a year old, and product development of cars takes several years, it'll be a while before you start seeing cars designed with the easier constraints of the new labor contract in mind. so it'll probably appear for a while that GM is just making the same 'bad business moves'
AMCRambler
Diamond Member
- Jan 23, 2001
- 7,715
- 31
- 91
Don't forget all the sub prime crap that hit the fan. People with sub prime mortgages on their houses so they could drive Escalades are suddenly not able to make payments. With less money to spend I think people are buying more used cars rather than buying new cars.
Lets say all your numbers are correct.
Tell me how that equates into designs where the gaps engineered into interior and exterior panels are so wide? Tell me how that equates into engine designs that don't measure up to the competition in efficiency or power? Tell me how that equates into poor Stealership experiences? Tell me how that equates to just flat out bad design decisions? Tell me how that equates into out of control Leadership salaries?
Not one of those is impacted by Union labor costs. Not one. It costs the same to design a bad engine as it does a good engine. It costs essentially the same to source good parts as it does marginal parts.
People aren't buying foreign because someone from the Union makes too much money. They're being foreign because of their view on reliability, efficiency, features, etc. None of that is impacted by wage cost.
Chuck
- Mar 20, 2000
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the designs are like that because they can use parts built to lower tolerances. parts built to lower tolerances means cheaper to build with less parts scrapped due to not meeting spec. a decision driven by costs.
pushrod engines cost less than DOHC engines, though they generally make less peak power for the same displacement. so GM uses those in cost-conscious applications. wow, another decision driven by cost.
feature content is most certainly a cost driven decision, so i don't know how you could say that doesn't have anything to do with the union contract.
cadillac's V6 is up there in power numbers with everyone else's. toyota was lying for the better part of a decade about how much power it's 3 liter V6 was making. chevy, GM's only full line, compares favorably to toyota in fuel mileage. GM's engines and transmissions have been generally bulletproof.
dealership experience is like that because GM can't really tell it's bad dealers to piss off. that's a whole separate issue.
out of control leadership salaries are a problem with american business, not GM in particular. GM has to compete with other companies for people at the top.
pushrod engines cost less than DOHC engines, though they generally make less peak power for the same displacement. so GM uses those in cost-conscious applications. wow, another decision driven by cost.
feature content is most certainly a cost driven decision, so i don't know how you could say that doesn't have anything to do with the union contract.
cadillac's V6 is up there in power numbers with everyone else's. toyota was lying for the better part of a decade about how much power it's 3 liter V6 was making. chevy, GM's only full line, compares favorably to toyota in fuel mileage. GM's engines and transmissions have been generally bulletproof.
dealership experience is like that because GM can't really tell it's bad dealers to piss off. that's a whole separate issue.
out of control leadership salaries are a problem with american business, not GM in particular. GM has to compete with other companies for people at the top.
It doesn't cost any more to make an injection molded plastic part correctly, vs. incorrectly. In the grand scheme of costs, it doesn't cost any more - in relation to better quality, which boosts sales and lowers warranty costs - to ensure quality is coming into the parts pipeline. $1M a year at every plant is not even a blip on GM's radar. $5M a year at every plant might show up as a blip, but it'd be a very small one.
I worked on the assembly line making Taurus/Sable for one long summer. I can flat out guarantee you: Management - even at the lower levels - doesn't give one flying F about quality when it really comes down to it. As long as cars are rolling off that line, that's all that matters.
You think spending $100 more on the carpet and upholstery quality, another $100 on plastics quality, and/or another $100 on engineering quality, per car, wouldn't be worth it? That's a hell of a lot of extra quality built in, but, Management isn't willing to do that?
Ask yourself why - and it isn't because of Union salaries - and you'll arrive at the true reason the Big 2 are in the hole.
Chuck
It's well known that GM has long been losing money on its small cars. Would you spend $200 more for better carpets and plastics just so you could lose even more money per car?
It's simply a fact that overpaid union workers are preventing the Big 3 from putting more money into the construction of their cars. It's not the only thing, but there is absolutely no way anyone can claim that they have not been at a significant disadvantage for many years because of it. The only people who are incapable of seeing that are the UAW members.
EightySix Four
Diamond Member
- Jul 17, 2004
- 5,122
- 52
- 91
You seriously think none of that is affected by how much they have to pay their workers?
Lets use a hypothetical situation here:
Company a and b both have 1 laborer able to produce 1 car an hour.
Company a pays his laborer $10 an hour
Company b HAS to pay his laborer $15 an hour
Where are they going to make up the extra $5 an hour? Can't pass the increase in price on to the consumer, because then they'll but company A's car for cheaper. So instead they lower the price of the COMPONENTS used to produce that 1 car, or the amount of testing done to that one car, or the amount of money spent engineering the car in the first place.
So cost of labor does affect all of those things.
boomerang
Lifer
- Jun 19, 2000
- 18,883
- 641
- 126
I was going to make this comment also. Individuals that don't have any experience in manufacturing think this stuff is all easy.
I worked in producing tooling for automotive sheet metal stampings for nearly 30 years. No matter how perfect they thought the designs were, the panels never come out correct. We worked on the body side panels for the new Malibu for two years to make those panels right. They've now even developed processes to compensate for the flexing of the tooling as the parts are being stamped. The old adage, "If this stuff was easy, everybody would be doing it" applies.
You know what, you're right, I should have been more specific: It doesn't cost significantly more per car to make injection molded plastic correctly, vs. incorrectly.
Chuck
To the degree Management and Union bashers portray? No, I don't.
You forgot the Management and cost, design, and quality decisions in there. Lets re-calculate:
Company a pays his laborer $10 an hour. It also uses good quality parts, good designs, and spends money focusing on quality, netting it increased sales, increased market perception, lower warranty costs, and more repeat and dedicated buyers. It also keeps it Management costs in line.
Company b HAS to pay his laborer $15 an hour. It uses poorer quality parts, worse designs, spends less money focusing on quality (which can't make up for the worse parts and worse designs), netting it decreased sales, decreased market perception, higher warranty costs, and less repeat and dedicated buyers. Management salaries are runaway in relation to company performance.
Hmmm...that $5 labor cost, given all the management decisions that they didn't have to make, isn't looking that worse now is it?
Look at it this way:
Say it takes 2 days to make a car, from start of each line to off the line. 8 hours * $75/hr Union cost * 2 days. That's $1200 in Union labor cost to make that car.
If the non-Union cost to say Toyota for a US based plant is half that, we're talking $600 extra cost to say, GM, because of using Unionized labor.
$600. I don't want to say it's meaningless cost, but if you transport yourself back to the late 70's/early 80's (when the cost wouldn't have even been close to $600) when Japenese auto's really started making headway into the US market, there was still a huge "Buy American" attitude then. People wanted to buy American, they were just fed up with the poor choices and quality. And each year, US Management kept rinsing and repeating, depending on the US consumer to keep buying their same products as they'd always done when there was no real competition.
Well, fast forward to today. Their strategy of "Buy American" isn't working, because they've been F'ing consumers - relative to the competition - for so long now, their name is trashed. And the "Anything but Jap, America F Yeah" crowd is a dieing breed. So, rather than spending $2.1B on doing a new vehicle right, they spend $2B on doing it marginal. Then when it doesn't sell, they run around blaming high labor costs.
I don't know about you, but I'd spend $1k extra on a US Co. vehicle made here rather than a foreign vehicle, if I knew I was going to be getting the equivalent ride. And, most people who aren't just already brainwashed into foreign that I know would say the same too.
US Management doesn't want to do that, don't you see??? They've now got what they wanted from the Union's the whole time. And, we're starting to see some life out of Detroit. But, do not mistakenly think it's because of Union concessions. The same Detroit, back when it had money, could have designed, engineered, and sourced these same better design's all along, it just didn't want to. Now that they've got their huge Union concessions though, magically they have better engineers? Magically they have better designers? Come now, lets be real here on real Union labor costs and their real affect...
See above.
Chuck
EightySix Four
Diamond Member
- Jul 17, 2004
- 5,122
- 52
- 91
The problem with your ENTIRE argument is that most people are NOT willing to buy an "equal" American vehicle that costs $1000 more. Look at WalMart, why did it get so big? The products aren't better... THEY'RE CHEAPER.
The concessions that UAW made didn't suddenly give them better designers and engineers just as you said. IT GAVE THEM LESS LIMITATIONS AS FAR AS COST. It didn't have to do with BAD engineers/designers it had to do with the concessions they had to make so they could afford to produce them with ANY level of profitability.
Maybe I'm missing something -- and I probably am -- but don't the cuts in this article refer to the non-union employees and former employees of GM?
With the terrible reputation that the typical American car has earned over the past couple of decades, even if they were the same price as imports, I doubt most people would buy American at this point. Americans are cheapskates if nothing else. Where do you think the titanic trade deficit we have comes from? So many things are FAR cheaper to produce elsewhere than they are domestically, and Americans don't care where it's made, they want it for less. America is about the only place on earth where someone will spend $2 more on gas to save $1 on a bag of potato chips.
I actually laughed when I read you thought "most people" would spend $1000k more on the same car because it was American. Not the America I've been living in. My current car is Amercan (sort of, actually Australian), and my previous car was American, so I have nothing against domestics. If I wanted to buy a Toyota Camry and GM produced the exact same car and sold it for the same price, I would by the GM for no other reason than it being American. If GM charged me $1000 more for the car, I would buy the Toyota, because spending $1000 more on the exact same product because of where it was made is retarded.
I haven't read the whole thread, so I apologize if you mentioned it earlier, but are you a member of the UAW chucky2?
You're right, today a great deal of people - it may even be most - are not willing. The question is why aren't they willing to do it??? They're not willing to do it because they'd know they're not only paying more, but there's an unacceptably high chance vs. the cheaper alternative's that it'll cost more to operate. And getting cooking untensils at Wally World isn't spending $20k on a car...it's not the same thing. Had US Management back in the 70's stopped their practices they've just recently mostly shrugged off, pepples attitudes towards US auto wouldn't be what they are today.
Except, once you setup the forms and molds, the cost is: The same. If you have an engineer spend 2000 hours on an engine design, there is no difference in having him spend another 100 hours making it better, x 50 engineers. If you design a seat and it ideally has x amount of foam and fabric, and Management says cheapen it up (because hey, you have to drive profits to boost that stock price, right?), the cost differential is a pittance. The additional money is, in the grand scheme of things, not significant. If you want your stampings to be within 1/8 inch side to side and they're within -1/2 inch side, and you didn't spend the $120k a year at each plant to have a human check that (which is a pittance to these companies), then it's now that much worse.
I have absolutely zero doubt the people that engineer and design the past US vehicles aren't/weren't capable of putting out awesome product. The problem is Management looks at it and it's either too good (not good if you put out too nice of a car, that hurts in the long run), or it'll cost more than what Management wants to sell it for. Not because people wouldn't have bought them, because Management wants to make the $$$$ now, regardless of the long term affects of those decisions down the road.
Chuck
Yeah, because after 20-30 years of people being able to buy either cheaper, or now in many cases more expensive, but higher quality foreign options, that has become the prevailing attitude. I still know a large amount of people that would buy (and do buy) US product, because they want to support American companies. I'll personally take that hit if I know the product I'm getting is at least as good as what my other options are. You won't? That's fine, I'm sure Mr. Honda appreciates your business...
I know, it's a sad state of affairs when we can't even support our own isn't it?
Really? That extra $1000 went to a US company, and you live in the US. I can understand everyone has their threshold where they'd break at, but if the GM was $10 more, would you still buy the Toyota?
Nope, I'm Management myself at a multi-$B telecomm. My dad though is in the UAW, and as I said earlier, I did a summer on the line while I was in college. I used to think my dad was telling stories about how F'd up Management was there...until I experienced it myself. I cannot tell you how many times I saw - easily correctable no less - quality issues (or future quality issues) and pointed them out to my line forewoman/foreman, and got told, Yeah, OK. That went on for months (and we're talking JIT manufacturing here, so it's not like there's millions of these things coming down the parts line), with no change. Towards the end, when I'd be complaining to the other Union folks at lunch, they'd just look at me with this sorta PO'd/frustrated/dejected look and go, What did you expect son, them to actually do something about it???
Again: GM/Ford/Chrysler Management wants it this way. If they didn't, it'd have been changed long ago.
For some stuff, it's the same where I'm at now...except now I sometimes get to be on the calls where the Upper/Senior Management decisions are made. When it comes down to doing something right or half@ssed, it never comes down to whether it should be done right or half@ssed, it comes down to $$$. Even though we make $B's, they're still pinching those pennies. Save pennies today, to throw away nickles and dimes and dollars tomorrow...sometimes to the detriment of our product. But, Hey, the stock price will go up this year...next year is next year...
Chuck
They are slowly ridding themselves of the union handicap. Going to take awhile longer, but they are getting there. It's not all the union's fault, but a good percentage is.
Yea, for $10 extra on the price of an average car, who cares? But the reality of it is, that the UAW has been adding a whole lot more than $10 to the average price of an American car.
Another reason I wouldn't spend $1000 more just because it was American, is because being American doesn't mean what it used to mean. I own a Pontiac currently, American car, right? No, not really, it was designed and built in Australia, and shipped straight to US dealerships. The previous GM car I owned? Built in Canada. I know BMW, Nissan, Toyota, and I'm sure other imports have plants in America. So what is better for the US economy, buying imports made in America, or buying domestics that aren't? The line between domestics and imports is getting pretty blurry.
That doesn't exactly make you an impartial judge in this matter.
I don't disagree with this, but the union, if they really did give a damn about the quality of American cars, could have done something about it. However, they were just as selfish and out to line their own pockets every time a labor contract was up for vote as management was. Both sides cared more about what was in their wallet a that very moment, than the long term health of their company which would have made them richer in the long run. Now both side are paying the price.
A rather amusing comment about GM from everyone's favorite US basher, Jeremy Clarkson:
"Mainly, I suspect this is because Vauxhall?s a part of General Motors which, so far as I can tell, is a bit of a misnomer. It seems to concentrate mainly on pensions and healthcare and for as long as I can remember has seen the carmaking side of the business as an expensive loss-making nuisance."
Last time I checked, the company signed the union contracts. If they thought they couldn't afford the wages and benefits maybe they shouldn't have signed.
And all of these costs were known, they have lots of accountants that can do the math.
When they were making 10k on an SUV they didn't care how much the union guys made.
They had a captive market of buy American types that would buy anything they put out.
Now the market has suddenly changed and they are left with their pants down.
And all of these costs were known, they have lots of accountants that can do the math.
When they were making 10k on an SUV they didn't care how much the union guys made.
They had a captive market of buy American types that would buy anything they put out.
Now the market has suddenly changed and they are left with their pants down.
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