accounting practices for things like this are somewhat "elastic". i.e.
you can load a foreign operation with a bunch of your domestic expenses
to "help" the reported profits and tax burden, etc. bottom line, g.m.'s
[better managed - better product, more competitive] foreign operations
have been carrying the company for years, the european one particularly,
even though the european is a very high [real] cost environment.
I don't agree that GM's European operation have been carrying the
company for years. In fact, I suspect the opposite is true recently.
Opel has been struggling for decades. Saab is gone. GM does actually
sell a significant number of "Chevrolets" (mostly rebadged Daewoos)
and Cadillacs in Europe which is surprsing (at least to me). As you
say, interantional companies can and do manipulate earning transfers
between countries mostly to try and minimize taxes.
Your comment about Europe being a very high cost environement is true
but you ignore the fact that the playing field is much more level in
Europe. European countries all have government run health care
programs, so GM is not saddled with paying for deluxe health care for
workers while some competitors with younger non-union work forces
don't have the same high health care benefit costs. Western European
countries all have strict pension rules, so while GM may have high
pension costs in Europe, so do all the competitors.
"recently" being the last couple of years. prior to that, it was solid
blackline. and don't forget the accounting flexibility - internationals
have considerable latitude in how they report these days and right now,
to attract more of the bailout €'s the germans have been throwing about,
you can bet that g.m.'s euro ops are "losing money".
not true. they have enjoyed significant profits, and have been ranked #
1or 2 in the euro sales leagues for ages. see above.
saab was already gone. g.m. should never have bought it. but they sure
did hasten saab's demise.
and whine for subsidy €'s.
you've been suckered in by too much propaganda. european employers get
charged directly by the state for health care. as do employees. when i
was last there, it was ~10% employee, with an additional ~10% employer.
that's a 20% total wage burden, which of course is effectively all
paid by the employer. [this is in addition to income tax of course. it
all amounts to the same thing, but i guess differentiation is one of
those deceits that makes it more acceptable to an electorate.] then
there are all the other local and state taxes they pay, which also have
public health components. the only thing that keeps this whole thing
manageable is that through their centralized systems, inefficient though
it may appear, their percentage of gdp spent on health care is roughly
half that of what we spend.
and massive union burdens too. you cannot fire underperformers in germany.
indeed, they have significantly higher costs, but can still make a
profit. whereas they say they can't here. what is wrong with this picture?
I did not say GM doesn't have higher costs in Europe. They do. I said
the playing field was more level in Europe. It is. In the US, GM has
to go head to head with Asian car makers that have much lower benefit
and pension costs. In Eurpoe, all automakers work under the similar
constraints (even Nissan, Toyota, and Honda). Eurpoeans restrict
imports to a degree unknow in the US. Despite years of trying Toyta
has never passed a 6% market share in Europe.
While I agree that in the past Opel made moeny and much of the profit
was shifted to GM in the US (mostly for tax reasons), I don't see how
you are assuming Opel is making money now and GM is hiding it. Opel's
European market share has recently been below 7%. This way down
compared to the past. GM is closing at least one Opel factory and
others cuts are planned. GM would have sold Opel, except they realized
with all the US cuts, they needed Opel's engineering to help with
smaller cars. Opel is in just about the same state as is GM in the US.
Here are some references:
That's a good way to look at it.
They also pay a large part of the cost of my favorite sport, NASCAR.
Let's see: Not having to think about body odor, free basketball and
other sports plus NASCAR?
Or, another way to think about it: You paid for the basketball,
deodorant-free games and NASCAR when you bought your last car.
According the first law of thermodynamics, there is no free lunch. And,
the second one says you can't even break even.
Ford sells around 1.5 million vehicles a year and spends about $1.5
billion on advertising. That's about $1000 per vehicle. Now, that's a deal.
Actually, it is added to the cost of the cars. From the graph to which I
linked before, it is clear that paying $1000 per car for advertising has
been going on for years.
The advertising includes all types of ads, including dealers' ads in the
newspapers, TV and radio advertising, ads on TV and ads on the internet.
Ads on the internet are, of course, growing, while TV, radio and
newspaper ads are shrinking B-). I have a smiley there because I pretty
much skip all ads when I read a newspaper or magazine. IMHO, it is a
waste of paper. Actually, newspapers and magazines are wastes of paper,
too, now that I can get them on the internet for free (and soon, I hope,
on my iPad - and, no - the iPad isn't an internet feminine hygiene product).
Have you actually gotten an iPad? Till now I have avioded Apple
products for my own use. But the SO has an iPod Touch which she really
likes. My son has a regular iPod Classic which he likes. I keep
hearing the hype about the iPad and think I might get one, but I am
not sure if I'd really use it. If you have one, I'd love to hear your
I had been planning on replacing my iPhone with the latest version when
it comes out over the summer. Now, I am thinking about getting the iPad
(just WiFi) and keeping the old version of the iPhone for another year
(I have a year-old 3G 16 GB version).
I won't be able to get 3G data on the iPad, but I am in places where I
can get WiFi enough (like my home and work), that that shouldn't be an
I wish I knew what the 4G iPhone will do when it comes out. I suspect
that only important thing I will be giving up is a better camera. I
shall live without it, I think.
By obsolete, I mean no longer useful or being way too old. I have an
iPhone 3G. It's been out for almost 2 years already. Although there is a
new model out for about 9 months, it's not obselete. Nor is my iPod
touch, which I think has been out for about 2 1/2 years. I doubt the
iPad will be obselete in a year, even if there is a newer model. Just
like my old Ford Contour is not obsolete, even if they haven't made them
for about 10 years.
Certainly, I can update my iPhone 3G and get the 3GS, but I am fine with
the 3G and the extra $500 in my pocket (that's would it would cost for
an upgrade). I had planned on doing that when the iPhone 4G comes out in
the late spring or early summer, but I may be better off keeping the
iPhone and get the iPad or just getting nothing and using what I have.
Really? By that argument, there are no good cars. Each car maker
advertises. They all go to the big auto shows (LA, Detroit, NY, Geneva,
etc.). They all spend money on TV. Many put big money into NASCAR and
Indy racing (why, I don't know - Indy sucks). Some, like Hyundai, did so
to get into the market. Others that are already in the market have to
advertise to keep market share, including letting comsumers know about
new models and their efforts to repair defects (like the sticky
accelerator and mentally deficient drivers who either fake it getting
stuck or press the gas when they want to stop.)
Likewise, there are many who believe that Apple, HP and Dell make good
products. However, Apple still spends $0.5 billion just to advertise.
The iPad has great reviews and lots of buzz on the internet,
particularly the geek sites. Yet, Apple still chooses to advertise it.
All the car makers (and makers of most types of good products) advertise
because people won't buy something if it isn't in their mind (and that
means in front of them on the computer, TV, iPhone or iPad screen) or in
front of them on the racetrack or newspaper, magazine or other print medium.
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