The real culprit in all this is over-regulation by the federal government. All of the "safety" and "emissions" regs the automakers have to put up with are driving the cost of vehicles beyond the point where someone making an average salary can't afford one. I was just reading today that the average US family income is $34,500. The average cost of a new car is up around $22,000. By that token a new car costs 2/3 of income. And a lot of the cost is all this safety and emissions equipment. And the feds keep piling it on. I heard somewhere that in the 2010 model year all cars are required to be drive-by-wire with electronic stability control. By the time the feds are done regulating only CEO's and Senators will be able to afford a new car!
The "problem" is Charles M. Nudo, Jr. of Drums, PA...the "Jelly Jar King of Drums," as he's known by, a paranoid delusional nut case who likes to make his own reality as he goes along. This nutbag has had no less than 14 (soon to be more) Google Groups accounts shut down for spam, harassment, posting of personal information, and other miscues. There is NO reasoning with this fucktard....just kill file him. He's too stupid to use a newsreader, so he thinks that by "bumping" posts he'll remain on top of the thread list. Little does he realize that only works in Google, which no one with a brain uses.
GM itself proved this with the Saturn project. When people found out that non-commissioned sales people would be simply filling orders for new cars, Saturn took off like a Saturn rocket. However, GM, always looking to screw people, started allowing their Saturn dealers to start doing "workarounds" to the non-commissioned sales rule, tacking on huge "spiffs" onto things like finanacing, insurance and dealer "add-ons." Now, most Saturn dealers are just as bad as the rest of them, and falling Saturn sales tell the tale.
Ford, over the years, has had some of the worst dealers of all, both for sales abuse and service. "Fence jobs" in Ford service departments were the rule...take the car in, decide the customer's a dumb shit, park the car along the back fence for about a week, call the customer for pick-up, charge them $500 for transmission work, "tune up", whatever. They tried to "fence job" me on a new '70 Ford with a 3-2 part throttle downshift flare, and I caught them. Ford's zone office paid me for my trouble and made the dealer pay an independent shop for a new intermediate band servo seal job.
To be fair, I caught a Toyota dealership doing this with '70s Toyotas with B-W automatics. They'd take the cars in, tell the owner that the transmission was "shot," "fence line" it, then deliver the car in a week with not a wrench being put to it. A seal placed on the transmission pan told the tale. Toyota refused to revoke the dealer's franchise, and that was back years ago, but the state threatened to take away their license unless full refunds were paid out.
After Billy Boy Ford's mismanagement, he has a LOT of clean-up work to do, probably as much or more than Iacocca did when he started to turn Chrysler around in the '70s. Billy Boy thought that people would come in droves to buy things like F-150/250s, Expeditions and Lincoln pickups, while neglecting and not fixing problems with the Focus project, following King Henry II's dictum of "mini cars, mini profits," and banking the whole company's "car" future on the 500 project, which is turning out to be a turd, as is the Tempo-esque "Fusion." The "retro" Mustang has a limited market at best, and their callous marketing ploys (you can only get upgraded interior and appearance packages like the GT with a V8, silly in that sized car) have dampened a lot of sales.
The challenge to Mulally will be to put Ford's money where their mouth is on the fuel cell project. If they can crack that nut, the Japs, finally, will be in big trouble. It will require regime change in Washington (part of which will happen in about 10 days) and rejetion of many Ford family paradigms. The Ford family, like everyone in power at GM, is too tied to the oil industry to be useful in converting the country away from petroleum-based fuel. For a turnaround to work, the Ford family MUST be removed from company operations, once and for all time.
The Ford family will NOT try to take the company private again. They're not THAT stupid. Doing so would rather be like Cunard launching a new "Titanic II" in 1913. The running away of Billy Boy pretty much showed the family's hand...rats running from a sinking ship.
Oh...before you decide to go for that V8 Mustang or F-150 gas guzzler, oil spot market prices are back on the rise again, over $60/bbl and rising as I write this. Looks like the Saudis aren't waiting for the election!
On 25 Oct 2006 04:45:22 -0700, "duty-honor-country" wrote something wonderfully witty:
While all true, and even more so since corporations never really pay taxes only collect them from me & you to pass them on to the government anyway the entire thing is eyewash anyways. Many people just don't understand this. When a company, any company, sets a price on a product the tax liability of the profit is factored in yielding a net profit after tax. The tax bite is already calculated and it is on the consumer end. The consumer is always the one who is ultimately paying the tax.
What is hurting Ford is the layoff & early retirement packages they are having to give to people at some of the plants they are closing. This is upfront cash in todays dollars. At my local plant here in Norfolk Va workers will be seeing a $100,000 or 140,000 pre-tax cash payout depending on years service if not eligible to retire and do not move to another plant. They are estimating around 1800 people are going to take that buyout. That's hundreds of millions to cough up sometime in `07 at just one plant. How many are they closing?
That amount of money along with rebates & slow sales hurt at the cash register. Not to mention losing on currency conversion with the Euro whopping the dollars ass on the global exchange rate.
On Tue, 24 Oct 2006 23:18:12 GMT, "Whitelightning" wrote something wonderfully witty:
I don't know if they deliberately drove down the stock in order to do so, but I do believe your right that the family would love to take the company private again for the reasons you've listed and many more. It would be great to be able to run a car company for the long term as opposed to short sighted return on investments & bond ratings. We actually get to see some really interesting products and some true research into alternatives.
I think Bill being a car guy really had something to do with some recent Ford products that did turn out to be successful. Without his input/control there might not have been much soul in the Mustang redo. We might have saw a four-banger econobox version instead of pretty closer to performance six as the baseline offering.
On Wed, 25 Oct 2006 02:28:49 GMT, SnoMan wrote something wonderfully witty:
Without a doubt something has to be done to control labor & benefits costs. I really do think that the quality paradigm is a figment of Consumers Reports. I am more then happy with my Ford & Lincoln products from a quality standpoint. The only major complaint I have is the interiors still seem to wear faster then on my GM products, but that just maybe my perception.
I think all corporations in America are battling major costs in the benefit arena regardless if they are Unionized or not. Health care expenses are completely through the roof. My own organization has been experiencing double digit increases in premiums for a number of years now. Since our creation over two decades ago we offered no cost coverage to all our employees with only a small additional charge for family coverage. Four years ago we simply could not eat the entire increase in the premium and were forced to charge each employee $15 a payday for primary coverage with a $10 co-pay. This year that charge has risen to $45 with a $20 co-pay with the company picking up $417.00. You really don't want to know what family rates are.
We pay a decent local wage, but no where near what people at the local Ford plant (which will be closing next year) make for similar jobs. Their health care plan also covers a lot more then ours does as well and offers a lot more benefits with a more comprehensive dental plan. However, later next year all of our employees will have a job and the poor guys & gals over at the Ford plant won't be working there. I hope they find something, but it won't be making $70,000 a year for putting on door handles.
On Tue, 24 Oct 2006 23:46:30 -0400, "Roy" wrote something wonderfully witty:
Well seeing as the majority of us who are employed pretty much see 30% of our wages go to the man, when the big 3 ain't paying taxes were left picking up the slack.
Ford's marketing tends to turn everything they touch bad if it wasn't already a bad idea from the get go.
The problem is not using petroleum-based fuel, as there is enough oil in the americas alone to keep using gasoline. The problem is that oil isn't a free market. Huge barriers to entry from infastructure to regulation to politics allow big oil to do as they please. That's where a non-petroleum-based fuel comes into play, to turn the fuel business back to something more like a free market. Exactly what large corporations do not want. They want the market fixed in their favor as much as possible.
Actually I am not going to make my next purchase based on fuel economy. I'd rather have a car I'll enjoy and use my bicycle (which I also enjoy) to compensate for any shortage in fuel economy. Now what would have been nice is to have had something come of the super-stallion project.
On Wed, 25 Oct 2006 04:32:29 GMT, SnoMan wrote something wonderfully witty:
The issue with the automakers & the airlines is a different economic model. The don't have to run an entire plant just to make one run of cars, but they do have to run a flight if it isn't fully booked. The Airline business is very capital (fixed asset) intensive. The variable costs per passenger is pretty small.
When auto sales slow down they can idle a plant, cut back shifts, layoff workers. When planes are flying at less then capacity its a bitch.
However, I agree with you that something has to be done to control the escalating labor costs facing domestic automakers. Hyundai must be making a small fortune on its vehicles because I know they don't pay their workers at the same level as us. I personally haven't seen that big of a price differential between their cars and domestically produced Big 3 ones. Perhaps I'm missing something.
On Wed, 25 Oct 2006 01:10:48 -0400, "Roy" wrote something wonderfully witty:
Well if I was a Ford Assembly Line worker at a plant facing closure I think I just might take a 30% pay cut as opposed to a 100% one. So I go from making $70k to $49k a year to screw on door handles. Its still better then food stamps. (BTW those are real numbers as a guy I used to work with went on with the plant three years ago. We still keep in touch. He was making about $32k a year as an industrial mechanic when he worked with me.)
The Norfolk Va F-150 plant is closing sometime in 2007. Ford claims that it costs $300 per unit more to make a F-150 at that plant then any other one making F-150's. The plant is old, not as highly automated as some others and not worth the capital investment even though it makes Ford's best selling vehicle. Do you think that labor at that plant got together and said "Ok for the sake of our jobs will reduce labor by $305 per unit to make us the cheapest plant making F150's"?
It could have been done, but it would have been unprecedented. Union labor working with management to cut production costs and save jobs. Perish the thought.
On 25 Oct 2006 09:00:18 -0700, "Nemisis" wrote something wonderfully witty:
It isn't just but other things that the Feds have mandated that large employers must have as well. Workers Compensation, Unemployment Taxes, Social Security Taxes, Health Insurance, the list goes on. On average it is safe to assume about another 33% over and above salary in additional costs for each employee. So the Bubba making $34,500 is costing the company $45,885.00.
On the other hand poor Bubba isn't seeing his $34,500 because the Feds & the State are chewing away from it at the other end as well. Same story for Bubba. He's got to pay Social Security taxes, FICA, State Taxes, Medicare, Health care, Sales Taxes and his list goes on. Usually again to the tune of about 33% so when all is said and done his $34,500 magically turns into $23,115 which is right about the price of a new car. Bubba can't freakin win.
Show me that they can "write it off." Sure, their taxes will go down. But, they don't have an unlimited supply of cash.
Actually, there was a negative cash flow of $3,000,000,000 at the end of the quarter, meaning the company spent $3,000,000,000 than it took in.
No. But they don't make up for Ford's othter losses.
Actually, I don't know everything. But I know that if you have a minus $3,000,000,000 cash flow each quarter for a few years, you will not have a company.
I also know that the market cap of Ford is about $15B, less than the cash it has in the bank. That should tell you something about the underlying value of the company.
Plus the health care costs for employees and retirees and pension costs for retirees. It is eastimated that over $1000 per car sold goes to pay for these.
Actually, the currency conversion doesn't matter that much, because Ford cars sold in the US are not made in Europe. However, any profits in Europe would actually increase, because of the rate.
Really? I see what you mean. There are fewer and fewer cars on the road and fewer and fewer cars sold every year. Families have fewer cars than ever before.
In real life, more often, there are families with more cars than drivers.
Actually, adjusting for inflation, is the cost of a car more or less than it was say 30 years ago? Actually, about 0.2% more for domestic cars. Then, also adjust for the fact that cars last longer no than 30 years ago. So the price of a car has actually been falling when adjusting for inflation, decreased maintaince and increased life-span.
You can always by a used car without airbags, antilock brakes or other safety equipment.
Requiring drive by wire in 2 1/2 years? Are you nuts? No one does than now. It will take more than 2 1/2 years to bring that on. It might be that some cars will be drive by wire, but not more than a few.
You can be #1 in sales, but still taking losses if it it is costing you too much per vehicle to produce. Toyota can be #4 for that matter and be making a killing. For example, Ford can cut the price of their vehicles in half. Sales would go way up as people flocked to get half price cars, but they could not exist long in doing so. John John
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