I believe that technically you are correct. But I think far beyond that. Healthcare and retirement benefits should not be employer based. I have seen too many jobs lost to our unions who insisted on health insurance packages. They were lost to Canada who’s companies under bid ours by thirty percent…the exact savings their companies incurred with their national healthcare plan. Your solution is…just work for lower wages and limited or no healthcare and retirement package. Our country is suffering financially with these technically correct but short sighted solutions…of blame the unions with no national alternative. You have yet to mention an alternative. Just grin and bear it like the rest of the third world inhabitants. Their future and ours is grim indeed unless healthcare is addressed. It IS that simple. .
Are you paying in full for your coverage like you are asking union workers to do ? Are you already collecting your retirement like you are asking union workers to give up ?
MikeinNH…I mimic your sarcasm and agree. I have no more praise for GM then I do any other global industry who has found it necessary to conduct business differently then in the past; in order to survive at all. If their management could increase profit with no contribution to our work force at home, they would do it in a heartbeat. They do and have. They are but mules pulling a wagon and it’s up to we the free market and our elected officials to hold the carrots properly to keep them on a courses that benefit the rest of us in the wagon.
“Market realities” are determined by people and currently we are allowing the wrong people to make the determinations.
dagosa…agree 100%. American companies like GM are still running their company from one quarter to the next. Their short sightedness is KILLING them in the US market.
Agree with Mike; THe “tyranny of the quarterly dividend” makes for very bad decison making. Japanese. Korean and European manufacturers have a lot longer planning horizon. I’ve held two positions in the past in corporate and product planning. In both cases, we had to have a 20 year planning horizon to develop new products. In one case we had to try to forecast a range of oil, gas and coal prices to design an new type of boiler.
dagosa, I demand an immediate apology. You are not allowed to put words in my mouth. I never offered any solutions, yet you attribute them to me. Apologize now, like right now, and before you lay any other falsehoods at me feet.
There are two issues at work here, not addressed by any poster. First, even Robert Reich, Clinton’s secretary of labor, did not fully grasp that employees are a company’s most important asset. These employees have brawn and brains. The UAW patently refused to let employees have their brains utilized, while Toyota, Honda and others realized that to improve job performance, the employees themselves would make a major contribution, in additon to the production engineers. Toyota implements thousands of suggestions every year and pays the workers who suggested them.
Hence the incredilble productivity of those plants and their low maintenance costs. GM spends 3-4 times the money to maintain their plants than Toyota does. If you can capture the employees ideas and apply them you are a real winner. The UAW’s rigid work rules and proliferation of job descriptions ruled out any useful empoloyee input!! In Germany there are only 5 or 6 unions and they cover a very broad range of trades, making work flexibility easy.
The second major issue is Globalization and Law of Comparative Advantage. Economists like Adam Smith and Ricardo were well aware of these. This is all about having the highest value added at the least cost. In the electronics business, we might design something in Silicon Valley , Korea, Japan, or Taiwan. But actually building it is a global effort, with the most difficult parts, such as computer chips made in the US, Japan, Taiwan or Korea. The simpler parts can be made in China, Malaysia and a host of other developing countries tha focus on high tech industries. The whole item may be assembled in China, Thailand, Malaysia, Mexico.
This accomplishes a number of goals; increased properity in developing countries, lower cost to the final consumer and an opportunity for developing coutries to move up the technology ladder. The German appliance and razor company Braun (owned by Gilette) does exactly that. All their products are developed and tested in Germany, but they are either made in Spain or Mexico. Very few are still made in Germany.
If any of this is confusing, imagine a low tech product like a coffee machine designed by an expensive US engineer and built with old style UAW labor rates virtually working to rule. That $25 machine would likey end up costing $50 at least.
We have a high quality 50" Panasonic Viera HD television. On the back it says: “Made in Mexico form imported components”. If the old UAW had built the whole thing I would not have been able to afford it!
JT…Please read.“The likely solution is to go where Tata and Chery don’t in the auto industry, and be where they aren’t in business in general.” Sounds like your solution is to just build products that these two companies don’t. If these companies expand, where would GM turn ? That is short sighted IMO if that is all there is.
your other quotes…"The younger workers should not be pleased with this predicament, but if they plan on building cars and trucks in 30 years, they need to understand that they don’t have any choice. So, how simple is it THAT THE UNION HAS TO ADJUST TO TODAY’S MARKET when they are trying to please the membership? " when "Unfortunately for them, the membership wants to maximize todays benefits at the expense of their future. " “And the UAW is shortening its life by insisting on high wages and way above average benefits.” BENEFITS THAT INCLUDE RETIREMENT AND HEALTHCARE.
YOUR STATED SOLUTIONS are to simply “adjust to today’s market” and build products that two foreign companies don’t …without addressing our responsibility as a fellow citizens to provide them and the rest in the same predicament with an alternative in retirement and healthcare.
You are taking my statements out of context…your solutions are incomplete. Unions are not the problem. The problem is with those of us who think Unions should abandon any benefits package that can"t be made up by ANY OTHER MEANS.
All unions have shortened lives when the car companies they worked for have been mismanaged into the predicament they are in. No apologies…yet. The statements certainly look like solutions to me, albeit incomplete.
Fortunately, and I say this with some reluctance as I’m sure many will disagree, Obamacare can’t arrive none too soon. If it does with all of it’s provisions remaining in tact, then your “stated” solutions will have VERY reasonable validity. Til 2014, they don’t IMO. Until then, if I criticize unions for going after benefits I already enjoy, I would feel like a hypocrite.
I’m puzzled as to what dagosa is getting at. Toyota and Honda, as well as Hyundai have very good health care packages in the USA, pay on average equal or better wages than the Big 3, and run circles around them because they have 1) no constricting unions, 2) they practice Total Quality Management manufacturing processes, and 3) have superior management.
Obamacare is use as a red herring here, all European car manufacturers have state health care which costs on avergae $7500 per year per citizen in England, France, Sweden, Holland, Italy, Australia, Germany and Canada. There are two main outliers; the US spends about $12,000 per citizen with 30 million without coverage, and Japan spends only $4000 per citizen, and they outlive all the other countries mentioned.
Please read my pevious post to identifiy where the inefficiencies lie.
German car companies pay their workers 13 months pay per year for 11.5 months worked!! This results in very high labor costs, but that labor is used very efficiently and unions sit on the company boards.
The blanket statement that unions need to adjust without offering alternatives is aptly address by your statements as to what Toyota and Honda do. IMO, number 1 is in place because 2and 3 are not at GM. Unions aren’t needed when the employee needs are met.
So Doc…why is Obama care a red herring when the countries you mention have more efficient HC systems then ours , the only employer based HC system in he world. I look at Obamacare as a step into that necessary single payer or non profit direction.
Single payer(socialized medicine) seems inevitable and the vast majority of the American public will benefit when it arrives.
dagosa, Obama care is more of a stopgap measure than a real fundamental change in how health care is delivered. It will not reduce the overall cost of health care, but will provide coverage for those at the margin. Under Obamacare the US will still have the world’s most expensive health care system. As Rod Knox points out, a single payer system with standardized costs and limits on what doctors can charge is needed to control costs and streamline deliverability. My brother is doing a PhD in healthcare management and the US system is normally held up as how NOT to do it.
The car business cost factors show that in an integrated North American industry, the cost advantage of Canadian over US plants was only about $8 per hour due to health care BASICS being provided by the Canadian goverment. The companies still had to provide dental, eye care, and drugs as part of the employee package.
The total hourly cost of labor to the Big 3 was around $75 per hour! Toyota’s cost was in the mid 50s at that time with a much more efficient use of that labor. The enormous UAW legacy costs of the pension plans represented a large part of that $75 per hour.
What I’m driving at is that a US Toyota plant with all its health care burdens was much more cost-efficient than a Canadian plant owned by the Detroit 3 and having the restrictive work practices of the UAW in house.
The trends are to more manufacture in Mexico however. Last year Mexico produced 20% of cars and trucks, Canada 17% and the US 63% of total North American production.
Doc"…
Provisions like limiting profit on policies to a percentage that is close what officially is allowed for non profits; providing policies that eliminate any denial due to pre existing conditions; providing subsidies both privately and small businesses based upon ones ability to pay help pay for policies; providing coverage that is at least equal to what exist in plans offered by both Medicare and private policies now; allowing individuals to belong to consortiums to purchase HC at lowest price.
IMHO, Obamacare is not a red herring. All of these provisions which along with mandatory enrollment is about as close to non profit healthcare as the persent politics will allow. It would be effective enough to help alleviate the near 30% overhead that businesses that offer healthcare coverage could begin to climb out from under.
Canada has driven industries out of our state over the past 30 years using , in the words of one of their ceo’s, this 30% advantage. National healthcare IS an economic stimulus of huge proportion for small businesses who’s hireing practices must be trailered to that crushing yearly cost.
Healthcare had to be addressed early because the unemployed need coverage and any gains in wages and stimulus to get off welfare in general is eaten up by an individual’s personal HC cost. It was a no brainer for small business and conservatives know that if it ever catches hold, like Medicare, it works and the people will prefere it over our present for profit system.
Regarding U.S. exports, agriculture is a sizable piece of that pie but protectionism efforts by foreign governments continues to be a great hindrance. Individual states are lobbying foreign leaders to gain special status in their efforts to open the market one country at a time.
As long as SS offers only marginal subsistence, the retirement packages are a must.
Bull. Outside of taxpayer funded or union employees, you could count on one hand the number of companies offering retirement packages to their employees since around 1995. Most offer some form of 401k with %match up to some maximum amount. Most people have to save for retirement themselves. Exercising some personal and fiscal responsibility to put 10% in savings instead of spending every dime you take in is a more “real world” solution.
I get a chuckle everytime I see someone tout Canada as the example of socialized medicine. One of our subsidiaries is there and the guys there think it stinks. Sure they pay for your care, WHEN you can get it. One guy needed a CT scan- 30 days wait. They carry supplemental insurance paid for out of their own pockets to insure they get timely care.
I happen to live in MA which already has mandatory health insurance. Sold on the premis that increasing the pool would lower costs. Right. Not even a blip in the costs to reflect this promised solution. In fact, my insurance went up 19% this next year. I have the high option (90/10 coinsurance, $4000 deductible, $25 co-pay per visit) and I pay $8500+ out of my own pocket for my up front share of the costs. Don’t come whining about your union benefit package co-pay that might have to go from $5 to $10. And we continue to fund public union employees after they stop working!!
Docnick December 9 Report
A typical Toyota car built in the USA has about 85-90% US content. A typical Ford Crown Victoria when built in the USA had 50% or so US content. My friend had one where even the gas tank came from Spain!
The number of Americans employed per 100 cars manufactured is a function of both the local content and the EFFICIENCY of the manufacturing process. Ford had their best figures with the Taurus assembled in Atlanta before that plant closed. It had 22 assembly hours per car. And that was achieved with a lot of sub-assemblies bought from Mexico. That’s a lot more hours than Toyota uses. And their imports of non-US parts is about the same as US manufacturers.
The best assembly hours per car I’ve come across is the Nissan plant in Sunderland, England, of all places. They put a Micra model together with 12 manhours or less!
The overall US content is the key figure, and the Camry traditionally has generated the most US jobs per 100 cars.
Sorry, Docnick, but much of what you say simply isn’t true.
First off, the Ford Crown Victoria hasn’t been built in the USA in ages - and it isn’t even built anymore, as Ford closed the plant in Canada that made it. When it was built, though, it had very high domestic content - it was at 90% domestic content in 2010, the highest of any vehicle available in the US.
As for the number of Americans employed, you are correct that the efficiency of the process plays greatly in this - and this is also the greatest source of job losses at the domestic makers - in the early 1980s, it wasn’t uncommon for an assembly process to take over 100 man hours of labor to complete. Now it barely cracks 20. Simple math says you’ll need to lay a lot of people off because of that, but people don’t give the domestic makers a break for this.
As for the Taurus, it rarely used significant content from Mexico - and in recent years has often been at the top of the list for domestic content.
As for Toyota, when they do assemble vehicles in the US, they do tend to use a nice high amount of domestic content. However, they still import most of what they sell, and the Camry is NOWHERE near the top for most US jobs per 100 cars sold. You’re neglecting all white collar jobs to be able to make that claim.
Bull. Outside of taxpayer funded or union employees, you could count on one hand the number of companies offering retirement packages to their employees since around 1995. Most offer some form of 401k with %match up to some maximum amount.
The 401K IS the companies retirement package. Many companies don’t offer a 401k plan. And it’s nearly impossible to save enough for retirement on just what you can contribute to a IRA. You can contribute a lot more to a 401K plan then an IRA. Yes it’s no longer fully funded by the company, but I find it a lot better.
I get a chuckle everytime I see someone tout Canada as the example of socialized medicine. One of our subsidiaries is there and the guys there think it stinks. Sure they pay for your care, WHEN you can get it. One guy needed a CT scan- 30 days wait. They carry supplemental insurance paid for out of their own pockets to insure they get timely care.
Not too sure how well Canada’s plan is…but I do know several people who are from Canada living here in the US…and who have gone back to Canada for medical care. Maybe it was the type of medical problem they had.
Sold on the premis that increasing the pool would lower costs.
It did lower costs at the low-end policies. Not sure why your insurance is so high. You actually have a pretty lousy insurance plan compared to mine and others I know. I have $0 deductible…and only a $15 co-pay per visit…and $0 co-pay for prescription drugs. The insurance company our company buys from didn’t raise their rates one bit…and before you ask…yes I live in NH…but I work in MA.
I’m still not convinced of the universal health care…But I’ll be on it in a few years when I reach 65.
And have you EVER seen me complaining that Toyota sends profits to Japan? No - I don’t care where a company is based. I care where the JOBS are based.
In terms of jobs in the US per 100 cars sold in the US, GM’s drops over the decades can be traced entirely to productivity improvements. The scale in the gap between Toyota and GM simply has not closed in the least in over a decade.
Has Toyota opened new plants in the US? Yes. But they haven’t increased capacity at the same rate (or better) as their sales have increased. The gap is STILL THERE. And with the recession and their falling sales, they’ve had time to correct that gap. But they haven’t - in fact, they let it get worse by closing down operations at NUMMI.
However, they still import most of what they sell, and the Camry is NOWHERE near the top for most US jobs per 100 cars sold.
Well that’s debatable…
If you looked at those lists 30 years ago…100% of that list would be American cars…with well over 90% content of their vehicles were American. Now it’s changed.
The problem with using the figure of using the US jobs per car is that…Toyota and Nissan have much more efficient plants then GM and Ford. So they’ll use less labor to build the same number of vehicles. Using the number of jobs per cars sold doesn’t take that into account. It’s like giving GM and Ford a pat on the back for being inefficient.
Using the AMI (American Made Index) I think is a better indicator.
Here’s the AMI for 2007.
Now for 2010
I see a trend there…
It’s merky at best. Let’s see what the list is like in another 4 years.
MikeInNH,
The “American Made Index” is a horrid indicator because it simply takes those vehicles with 75% or higher domestic content and reranks them based on sales numbers - which tells you NOTHING about how many americans are employed. Would you rather have a vehicle that sold 100,000 vehicles per year that had 2000 Americans employed in support of it, or one that sold 400,000 vehicles per year that had 1000 Americans employed in support of it. Cars.com’s list that you think is a better indicator would say the latter is the “more American”, though it employed 1/4th as many Americans per car sold as the former.
As for the ABC story you linked, it takes the # of workers in Kansas City doing final assembly of Escapes and compares it to the number of workers at Toyota’s Georgetown plant - including all the workers assembling Camrys, Avalons, Venzas, AND those assembling engines and powertrain components. Of course the Camry comes out better in that comparison - you adding in people assembling unrelated cars built at the same plant (the Avalon and Venza) in the case of the Camry but not in the case of the Escape (F-series). You’re also counting in powertrain workers in the case of the Camry but not in the case of the Escape. The comparison isn’t even CLOSE to valid.
And as for overall efficiency of the plants, well, you’re wrong there, Mike - In 2008, Chrysler narrowly won out for the most efficient plants in North America. Toyota was right with them. The WORST of the D3 for productivity then was Ford, at 33.88 man hours per vehicle compared to Toyota’s 30.37. That’s assembly, stamping, engine, and transmission combined. That gap had narrowed from 8.59 hours in 2003 to 3.51 in 2008.
Oh, and Nissan? They came in at 32.96 man hours compared to Ford’s 33.88, GM’s 32.29 and Chrysler’s 30.37.
Much more efficient my…