GM leaving town

More info at:

Bob

Thank you Bob. Here's a snip from your article ... the most telling:

"GM has been crippled by high labor, pension, health care and materials costs as well as by sagging demand for sport utility vehicles, its longtime cash cows, and by bloated plant capacity. Its market share has been eroded by competition from Asian automakers led by Toyota Motor Corp."

-Philip

How about, GM lost market share by building cars with cheap feeling controls and inferior materials?

How many times has an owner or manager of a poorly operated small business been quoted as saying "The economy killed my business"?

GM's management must have gone to the same schools as those managing many airlines, phone companies, etc...

Economies don't kill businesses, managers do.

They were crippled by making lousy cars for the last 30 years. They would have been helped out if they had let Clinton come up with a national health plan. They got theirs.

Another foolish statement by Art.

It only sounds foolish if you are asleep or not paying attention.

Bob

If the garbage you just spewed had come to pass, then WE the Taxpayers would be funding those 'rich' Union medical benefits. A corporate welfare subsidy by us taxpayers.

It sounds foolish if you're asleep ... and pencils out as hideously expensive when you're awake.

"Bob Bitch'n" >> >

In article , "Bob Bitch'n"

You misunderstand me. I was simply agreeing with Art when he wrote "They were crippled by making lousy cars for the last 30 years. They would have been helped out if they had let Clinton come up with a national health plan. They got theirs."

I still think that Art's statement is true. I never said that the Clinton health care plan was a good one, just that GM's position would have been helped.

Bob

Actually I think many executives for old line manufacturing companies, like GM, were all for the government taking over health care exactly because it would have helped bail them out. The groups against it were the one who profit from out current national health care system - Hospitals, HMOs, Insurance Companies, Pharmaceutical Companies, Trial Lawyers. I still haven't figured out how these groups managed to pull the wool over "our" eyes. And for any of you who think we don't have a National Help Care system, you are dreaming. We have a system, almost the worst one that could be concocted if your goal was delivering decent health care efficiently and economically. However it serves the interests of the Insurance and Drug companies nicely.

Here is food for thought - Who's going to take care of all those US Toyota workers when they turn 65?

Ed

I know I feel a lot better funding Pharmaceutical Companies, Insurance Companies, HMO's, Trial Lawyers, etc.

So when the US Toyota workers retire, who'll be finding their medical plans?

Ed

Toyota.

I like the answer. But why won't Toyota have the same sort of problems as GM? I know how my company is handling the cost of health care for retirees- they are screwing the people who are retired. They increase the co-pay every year and force them into HMOs that make the worst Government system you can imagine look good.

Ed

I am not a market analyst so this is pure speculation on my part, based on business articles and personal experience meeting with Toyota's upper management.

AFAIK, the Toyota's only UAW assembly plant is NUMMI and so they are not saddled with above-market benefits. In other words, the pay and benefits for the markets where the assembly plants are located are in line with local conditions and not with a national contract.

Toyota's sales, service, and parts operations in the U.S. are much leaner than GM, Ford, and Chrysler operations. Many of my former co-workers came from GM, Ford, & Chrysler and they were all amazed Toyota's offices were staffed with much fewer people. If that is true, then Toyota has a much lower overhead and fewer people with retirement liabilities per vehicle sold than GM & Ford.

I've heard complaints in the past that Toyota's assembly operations are too automated and that Toyota should hire more people instead of letting robots do the work. The problem with that argument is that not only do those people cost more today than a robot because of salaries and benefits, they continue to cost more even after they are done working because of retirement benefits.

According to this article

is the world's most valuable car maker at $165 billion. Toyota just reported that their 3rd quarter 2005 operating profit was down to $3.45 billion, with net profits of $2.59 billion because of heavy investment in new plants. If you annualize the net profit and round down to $10 billion net profit. Not only are Toyota's vehicle sales trending upward, so are their net profits.

IMO, Toyota's biggest long-term advantage over GM and Ford is that Toyota's sales come from a much broader global market. According to that article,

60% of Toyota's sales come from areas outside of Japan, and as you probably know, Toyota invests heavily in assembly plants is their major markets. They have 52 overseas manufacturing plants in 26 different countries and sell through 160 importers/distributors. I do not know what the percentage of overseas sales are for GM and Ford, but my impression is that the ratio of domestic vs. overseas sales is the opposite and so an increase or downturn in business in their home market has a proportionately bigger effect on their bottom line. In other words, Toyota has done a better job of hedging its bets by entering multiple markets.

Toyota does not have the corporate arrogance that GM, Ford, and Chrysler once had. When the Hyundai Excel and Yugo were introduced and became the poster boys for poor quality, Toyota still studied their competition and I heard predictions from upper management that the Korean brands would one day vie for the same customers as Toyota. Toyota was also aware that their customer base was aging and that they were in danger of becoming the favored brand of retired folks like Buick. Toyota introduced the Scion to make sure they found new customers and were able to compete at the entry level as well as the upper levels.

Toyota has a business plan that goes out 20 years, and they share their plans with their employees. Toyota's current sales are well ahead of what was projected when I left the company in 1993.

I've heard the argument that Japan's automotive market is very protected, and I agree. On the other hand, GM and Ford did not have left-hand drive vehicles for the Japanese market. Ironically, Japan's import barriers and right-hand drive vehicles made GM and Ford cars a status symbol among the yakuza. Since the yakuza favored GM and Ford, the average mainstream Japanese citizen wouldn't be caught dead driving one.

It's a new world economy. Get used to it. Bolting on bumpers for 65 dollars an hour (wages+benifits) won't cut it any more. Working class Americans are destined to a working class standard of living.

I agree that the labor heads are cozy with the Democrats but my understanding is that the typical union members voted for whoever promised a tax cut and of course that was the Republicans since that is all they know how to do.