Wall Street Journal - May 23, 2007
..With the collapse of the DaimlerChrysler experiment, it might be
useful to stop referring to "domestic" and "foreign" auto makers. The
important distinction is between auto makers bound by UAW contracts and
those that aren't.
Chrysler's labor costs are $30 an hour higher than Toyota's, headed for
a gap of $45 by 2009. Chrysler pays the same wage to UAW janitors and
skilled craftsmen. It carries idle workers on its books when no jobs
are available. Most of all, it's on the hook for the untrammeled health-
care spending of 134,000 unionized workers, retirees and dependents --
an $18 billion liability that Toyota, Honda and Nissan don't face. This
alone adds a cost of $1,500 per car.
How it got this way is no longer interesting -- the tired debate over
which stick figure, "labor" or "management," is responsible for
Detroit's uncompetitive labor deals. Both operated under the incentives
of the Wagner Act, the 1935 labor law that entrenched the UAW as the
monopoly labor supplier to the Big Three.
Detroit draws on the same talent pool as the rest of global industry,
and must pay a competitive wage. Its executives are no more overpaid or
incompetent than anybody else's. Nor is it necessary to rub its face in
the superiority of the Toyota Camry and Honda Accord. No car company
could humanly hope to compete in the basic sedan segment with a
deadweight cost disadvantage of thousands of dollars per car. Detroit
would be foolish to try...
On May 23, 8:00 am, George Orwell <Use-Author-Supplied-Address-
Here's what America needs to do ASAP:
1) ban the unions;
2) socialize health care
Thing is that BOTH issues cannot be put on an agenda of any ruling
"party" ( i.e. neither democrats nor republicans). So, sorry guys but
you are facing a tough choice: either pay that extra $ 1 ,500 and buy
a domestic car OR buy Japanese...........hehe
I don't fall on either side of the arguement, but I thought Toyota took over
a GM plant in California, used the same UAW workers and made it profitable.
I have always though management structure was a bigger problem than the
It's the health care costs. And union contracts that pay the same wage to
janitors and skilled workers is dumb.
"Detroit draws on the same talent pool as the rest of global industry, and
must pay a competitive wage. Its executives are no more overpaid or
incompetent than anybody else's. Nor is it necessary to rub its face in
the superiority of the Toyota Camry and Honda Accord. No car company could
humanly hope to compete in the basic sedan segment with a deadweight cost
disadvantage of thousands of dollars per car. Detroit would be foolish to
try." - Excerpt from Same Article
You need to remember here that the reason legacy costs hurt is that there's
shrinkage instead of growth. If the company grows today, then the amount of
retiree cost per car is smaller today. If the company shrinks, then the
cost goes up, and the company has more and more difficulty competing. In
Ford's case, the shrinkage is getting to be pretty painful. Even if the Big
3 stayed the same size, Toyota's growth still helps Toyota work at an
The California plant is a joint venture where the worker are represented by
the UAW with a contract that requires that 70% of the part used be made in
the US. GM and Toyota have always made a profit on the vehicles made in
that plant. It proves Toyota could offer the workers in their other plant
the same wages and benefits, build the cars with parts made in the US and
still earn a reasonable profit. They chose to not do that so they can earn
higher profits at the expense of Americans.
On 24 May 2007 10:09:25 -0700, email@example.com wrote:
Van Nuys was built in 1946 as part of Al Sloan's "replace transit with
cars" campaign, in which GM gobbled up and shut down transit
operations, notably electric streetcar operations, all over the US and
Canada. At the time, GM was already getting the Key System in the Bay
Area disassembled and replaced with GM Coaches, and had their sights
on Pacific Electric in LA, and the Fremont and Van Nuys plants were
supposed to sell Chevies to all those who formerly rode street cars in
Originally, Van Nuys was dedicated to Chevrolet production only, as
the huge neon "bow tie" sign on top of the assembly building
proclaimed. Higher end cars, such as the Pontiacs, Buicks and
Oldsmobiles, were built at the nearby South Gate plant on a rotating
basis....one week Oldses, one week Buicks, etc. Cadillacs still only
came from Lansing at that time. Later, during the "Roger Rabbit" era,
the Van Nuys plant was folded into GM Canada's operations, and made
only Camaros and Firebirds starting with the "new" '79 year model.
Just before that, Van Nuys was the assembly plant for Chevy's best
seller in California, the Malibus, including the SS variants.
GM lower and middle management at Van Nuys and South Gate were some of
the worst, most incompetent anywhere in the corporation, and UAW
simply reacted as they should to protect their membership. After many
tries at getting GM to save Van Nuys (South Gate was gone by the '70s)
by offering "collaborative" work rule deals, GM simply hosed it all
off and bulldozed the plant rather than concede any power. The real
shame was that the plant, a state-of-the-art facility in '46, was
built to an "open" floor plan and could have assembled any number of
vehicle types. GM simply strung the UAW along until it was ready for
the unsuccessful "new" Cramaro/Fireturd series to be built in
Youngstown using Buick V6s on a much-belated new platform. The F car
platform that GM was cranking out until the end of the '92 run had
been around, essentially unchanged, since 1979!
The local economy after the GM closure, which nearly coincided with
the Lockheed plant closings in nearby Burbank, was decimated, as tens
of thousands of well paying jobs evaporated overnight, causing a
record tanking of the real estate market around both plants. The San
Fernando Valley has never recovered from the loss, and all those lower
budget houses and apartments that formerly housed UAW and IAM plant
workers and their families are now chock full of illegal aliens.
Thanks, GM. Hope you go bankrupt.
On May 23, 6:00 am, George Orwell <Use-Author-Supplied-Address-
Pretty much what I expected. Many American companies no longer provide
any health care for their retirees. This requires more to work until
65, so they can get on Medicare. Yes, there is Cobra, but most don't
have the $1000 or more a month to pay, and it is only good for 18
On 24 May 2007 09:48:54 -0700, firstname.lastname@example.org wrote:
...unless the employee retired under a contract demanding it.
Currenlty, many unionized (and recent union buster) companies which
have reneged on their pension obligations under ERISA are being hauled
into Federal courts for ERISA violations. With Bush Bird on the
skids, buried alive in his foolish "war for oil" backfire, and
Congress belonging to the opposite team, this may turn out to be a
losing proposition for the corporate creeps.
How it got this way is _highly_ interesting, if one studies the case of
In the '80s Caterpillar's union was looking for the same sort of
baksheesh the automakers' unions got, and went on strike. Cat stared them
down and said "NO". The strike was long and difficult, but Cat won.
Today, Caterpillar is the antithesis of the automakers, competing very
handily against foreign competitors, even at home.
In whose dreams? Koobies and Mitsies are trash. Post-strike Cats
aren't much better. The way they compete against jap trash is to
engineer every nickel out of everything they make. Look at a D-series
big bore versis the cheesy 3500 and 3600s made today. No comparison;
the later engines were designed to eliminate ANY assembly operations
they could and still throw the piece of shit together. The old
D-series engines were labor intensive, but much better engines (and
long lived) overall. To compensate, Cat just threw a ton of turbo
boost on the new ones. They're crap.
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