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November 25, 2008 5:34 PM   Subscribe

"Engineers Rule" and "The Toyota Way": How Toyota and Honda have bested the Big Three.
posted by rollbiz (131 comments total) 15 users marked this as a favorite

 
Hondas are the best cars in the world. They will run forever with amazing mileage. If you dont mind driving a boring honda that is.

Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly.

Did Obama work at Toyota?
posted by Glibpaxman at 6:03 PM on November 25, 2008 [3 favorites]


Larry, Curly and Moe could have bested the Big Three.
posted by gman at 6:09 PM on November 25, 2008 [4 favorites]


Wow - after reading the biography of Soichiro Honda in the "Honda" link, I totally would watch a film dramatization of his life. And it sounds like it wouldn't need much dramatization.
posted by Salvor Hardin at 6:09 PM on November 25, 2008


Of course, the single biggest difference between them is the United Auto Workers Union.
posted by Class Goat at 6:14 PM on November 25, 2008


The Big Three have been relying way too much on cutting corners and their insanely productive workforce. (The Japanese, German and now Korean and Chinese manufacturers are opening shop here for a reason - American blue collar labor. Expensive, but you get what you pay for: fewer mistakes, more units per hour, eagerness to adopt and master new processes as they're rolled out, love to put in for overtime when available, less sick leave taken and fewer days of paid leave expected.)

American engineering speaks for itself - pick the most complex and intricate product you can think of at any given moment in time, and it's being designed and manufactured by American companies. Right now, this is microprocessors and GPUs, biotech (medicine and agribusiness). The US military is, as we speak, outfitting aircraft with laser cannon. Laser. Freakin'. Cannon.

The problem is in "mature" sectors, where innovation comes from the edges and not in big leaps and bounds.

This is because American business management is atrocious, and has been since the 70's. Arrogant, out-of-touch, all of them members of a deranged cult of entitlement that divorces pay from performance, and an overall poor value for money. Startups are run by their founders, who had to scratch and claw their way to the top. Take, for instance, Google and Apple (compare! With Jobs... and Without Jobs... and with Jobs once again.) Once those founders leave, or are forced out, trouble follows, in hand-tailored suits and private jets. (What happened to DEC? Compaq? Word Perfect? Caldera? The entire passenger jet industry except for Boeing?)
posted by Slap*Happy at 6:16 PM on November 25, 2008 [32 favorites]


Please expound Class Goat.
posted by Eekacat at 6:17 PM on November 25, 2008


Fun list: Top 10 selling cars in Europe in 2007:

10th: BMW 3 Series (295,312, +2%)
9th: Volkswagen Passat (300,566, -9.4%)
8th: Ford Fiesta (300,566, +0.6%)
7th: Fiat Punto (377,989, -5.9%)
6th: Renault Clio (382,041, -11.5%)
5th: Opel/Vauxhall Astra (402,044, -7.9%)
4th: Opel/Vauxhall Corsa (402,173, +41.7%)
3rd: Ford Focus (406,557, -7.5%)

2nd: Volkswagen Golf (435,055, +4.5%)
1st: Peugeot 207 (437,505, +105.5%)

The American brands are in bold. The Japanese brands are not present.
posted by smackfu at 6:17 PM on November 25, 2008 [4 favorites]


a boring honda

au contraire, mon frere! the Honda Fit is anything but boring!!!
posted by supermedusa at 6:24 PM on November 25, 2008


why not blame everything that doesn't work right on ---the unions? That makes it easy, right?
Big three CEOs come to DC for handout of billions and they do not even have a plan to present!
Blame that too on the unions.
posted by Postroad at 6:25 PM on November 25, 2008 [21 favorites]


You know what I blame Detroit's terrible design and business decisions on? Union workers. Oh and not enough bailouts.
posted by DU at 6:26 PM on November 25, 2008 [4 favorites]


How Toyota and Honda have bested the Big Three: Foresight.

That's pretty much the long and short of it. Detroit (and American companies in generally) focus on the next quarter's profits, while Japanese auto companies seem to be looking at to next decade and long-term growth.
posted by lekvar at 6:30 PM on November 25, 2008


I remember reading a year ago or so that NASCAR ordered Toyota to cut HP from its engines in one series because they were winning all of the races.

That just about says it all.

Please die, Big Three. Your cars have been irrelevant since the Ford Model T disappeared. For too long you relied on the "buy American" type- and now those people are either too old to buy cars or they finally had enough of your shitty quality and poor gas mileage.
posted by Zambrano at 6:32 PM on November 25, 2008


Re the UAW: it's a monopoly and has the Big Three over a barrel. As a result of that, since the Big 3 have no choice but to give in to extortionate demands, it now costs them about $73 per hour in total for all labor wage and benefits.

Honda and Toyota's operations in the US are non-union. They're paying their workers well, but nothing like that well; total labor cost for them is about $42 per hour for their American workers. (I don't remember the exact figure.)

As a result, it turns out that Ford (for example) is losing upwards of $1000 on every car they sell. The Big 3 still sell more than half the cars purchased every year in the US, but all three of them lose money on every car that goes out the door. At that same price point, Honda and Toyota are profitable.
posted by Class Goat at 6:33 PM on November 25, 2008


Please die, Big Three.

And before anyone cries about the workers: Obama, hire these guys to rebuild our existing infrastructure and farm them out to various big alternative energy projects.
posted by DU at 6:34 PM on November 25, 2008


...it now costs them about $73 per hour in total for all labor wage and benefits.

More, which is to say more honest, information.
posted by DU at 6:37 PM on November 25, 2008 [15 favorites]


Michael Moore on Larry King.
posted by gman at 6:38 PM on November 25, 2008


By the way, that's why so many commentators are saying that GM, Ford, and Chrysler should all go into Chapter 11 bankrupcy before there's any bailout. Chapter 11 appears to be the only way for them to get out from under the ruinous labor contracts that are killing them off.

And until they do, bailout money only defers their day of reckoning. And it doesn't defer it all that long; the rate at which they are losing money is astounding, hundreds of millions of dollars per day.
posted by Class Goat at 6:39 PM on November 25, 2008


By the way, that's why so many commentators are saying that GM, Ford, and Chrysler should all go into Chapter 11 bankrupcy before there's any bailout.

And threads are saying the same thing.
posted by gman at 6:42 PM on November 25, 2008


Yes. Engineers rule.

Politicians and CEOs rule.

Dictators are the rulest of them all.
posted by dirty lies at 6:43 PM on November 25, 2008


Please die, Big Three. Your cars have been irrelevant since the Ford Model T disappeared.

I am admittedly the worse person to discuss new cars (I've owned 50-100 cars, but I've never had one new enough to have a "check engine light" or a third brake light), but are new american cars that bad? At work, we rented a car to drive from Bozeman, MT to Denver (a chevy impala) and it seemed pretty nice. I recorded the mileage (I had a gps along to double check), and it got an amazingly consistant 29.5 mpg. This is a big car and we were driving 80-85 mph.
posted by 445supermag at 6:43 PM on November 25, 2008


Don't feed a troll to the goat, folks...


That said, my CRX, while I've been informed it will likely never pass inspection without more than it's worth, still gets 36 mpg and handles like a dream at 230k miles.
posted by notsnot at 6:45 PM on November 25, 2008


We in the US were all panicked about the rise of the superior Japanese quality / manufacturing methods back in the mid-80s. The Big Three embraced it for a few years, then moved on to other "management fads." Honda and Toyota persevered.

Fuck the Big Three; they're reaping what they've sown.
posted by ZenMasterThis at 6:46 PM on November 25, 2008 [1 favorite]


DU, that article isn't denying the total expense, it's just showing where where the money is going. Honda and Toyota don't have all those same expenses, and the Big 3 can't compete as long as they do have.

A bailout alone won't change that situation. That's why Chapter 11 is needed.
posted by Class Goat at 6:46 PM on November 25, 2008


Hondas are the best cars in the world. They will run forever with amazing mileage. If you dont mind driving a boring honda that is.

That's true, but Hondas are very easy to break into. The only reason I know this is because I towed cars for a short time and had to do lockouts. They're targets for thieves. I personally prefer Toyota, but YMMV, literally.
posted by krinklyfig at 6:50 PM on November 25, 2008


A bailout alone won't change that situation. That's why Chapter 11 is needed.

There is no financing available to do it, so it would end up being Chapter 7.
posted by krinklyfig at 6:51 PM on November 25, 2008


I'm confused why the government couldn't agree to finance them through Chapter 11 thereby solving the lack of credit issue. I haven't seen any arguments discuss this and maybe there are legal issues. For that matter, perhaps have a government organization that offers Chapter 11 financing to all companies that qualify (have a realistic shot of turning a profit at some forseeable point in the future).
posted by Octoparrot at 7:04 PM on November 25, 2008


Krinklyfig, the proposal was that after the Big 3 filed Chapter 11, THEN the government would offer them money to help them keep operating during the restructuring.

I don't know if I think that's a good idea, but it looks like it's the only one that will prevent Chapter 7 for them all.
posted by Class Goat at 7:04 PM on November 25, 2008


Please die, Big Three.

And before anyone cries about the workers: Obama, hire these guys to rebuild our existing infrastructure and farm them out to various big alternative energy projects.


Leaving aside the hatefulness of the sentiment and the loss of jobs it would absolutely entail (absurd scenarios involving "alternative energy" notwithstanding), you guys do realize if we let the Big 3 implode we will not have an economy or much of a country left? No one will buy a car from a company in chapter 11, wondering if that company will exist next year to honor its warranty.

Most of the comments above read like a bunch of Bill O'reilly talking points. No one except a liberal socialist strawman is proposing a huge bailout with no strings attached. I think this is a great, historic opportunity to bail them out WITH CONDITIONS. Like the condition they build more green, fuel-efficient vehicles, like the ones that sell so well in Europe.
posted by drjimmy11 at 7:06 PM on November 25, 2008 [6 favorites]


The Big Three have already reworked their union contracts and will no longer be responsible for health care and pension legacy costs after 2010 (IIRC). In addition, what is often conveniently forgotten are the huge R&D subsidies that most foreign auto makers receive from their respective governments, and the nationalized health care that most of the non-US workers enjoy, which are not paid for by the manufacturers.
posted by sfts2 at 7:08 PM on November 25, 2008 [4 favorites]


(the above scenario is not my original thought but EXACTLY what has been proposed by Pelosi and Reid in their letter to the big 3 chairmen. (along with other conditions like limiting golden parachutes and honoring pensions)

Her's a link to their letter
posted by drjimmy11 at 7:09 PM on November 25, 2008


Also, the problems now have very little to do with quality and more with the lack of consumer credit and overall general economic malaise.
posted by sfts2 at 7:10 PM on November 25, 2008


..it's just showing where where the money is going.

You didn't read the article. Lemme form this into talking points for you, since you seem to enjoy that format:
The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages--again, $28 per hour--and you get the $70 figure. Voila.

Except ... notice something weird about this calculation? It's not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that--probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees--in other words, the cost of benefits for other people. One of the few people to grasp this was Portfolio.com's Felix Salmon. As he noted yesterday, the claim that workers are getting $70 an hour in compensation is just "not true."
Notice that $28/hr wages + $10/hr wages = $38/hr. That's LESS than the $42/hr you claimed the Japanese companies were paying American workers. (Talking point version: "38 is less than 42")
posted by DU at 7:10 PM on November 25, 2008 [8 favorites]


The American brands are in bold. The Japanese brands are not present.

Know what's even bolder? Can't buy any of those American-brand cars in America.

I keep hearing people lambasting the big three for not making the cars they want, which are nimbler, better-built, more efficient, better-looking cars ... ie, exactly the ones they already make here. The new Euro Fiesta is a great little car -- and you can get it in models that get 70+mpg and still do sub-10s 0-60mph and top 120mph. And they've got built quality you only see in BMWs in the US.

It's utterly baffling that they don't just phone up their European divisions and ask them for the plans. Is it the time difference? Don't the executive jets have enough range? What?
posted by bonaldi at 7:16 PM on November 25, 2008 [22 favorites]


and the nationalized health care that most of the non-US workers enjoy, which are not paid for by the manufacturers.

This has been too easily overlooked. In delmoi's link, they point out that one of the biggest costs is in payout to retirees' health benefits. A decent national health insurance plan could go a long way to making the US companies more competitive.

Also overlooked is that one of the reasons for foreign automakers to have US plants is to avoid future protectionism (or with regard to Mexican plants, to benefit from things like Nafta).
posted by drezdn at 7:16 PM on November 25, 2008 [3 favorites]


Once again, Class Goat tells lies. He tells us that UAW workers get $70+/hr, but of course that simply isn't at all true. That number relies on counting all costs of retired workers who are drawing pension, but then dividing the grand total by the number of working workers.

It's the typical sort of deceptive bullshit that idiot union-bashers love to spew.

Now don't get me wrong: the only support unions get from me is that I recognize that with some employers, unionism is the only way workers can get a fair shake. Good companies that respect their employees, like Honda and Toyota, treat their workers well enough that they don't want a union. Bad companies, and I'll warrant the Big Three back in the day were the prototypical Bad Employer, essentially force their workers to unionize.

Anyhoo, point of fact is that it is not union wages that are at fault for the Big Three's troubles. It's the burden of the retirement package, which I believe includes health care coverage that would be unnecessary if the USA were to become a modern society with socialized medicine, that is crippling them.

Blame the government: it should have introduced universal healthcare three decades ago, so that US employees could compete in the global market.
posted by five fresh fish at 7:18 PM on November 25, 2008 [5 favorites]


This is an excellent post and I think precisely why the big three are in trouble. (As an engineer, I may be biased) There are charges that the UAW drives up the cost of Detroit's cars. Probably true, but by now they have lost so much influence that I doubt that the UAW aspect of the cost difference amounts to much anymore. There is the famous $2,000 difference number that keeps being bandied about, and I have never really seen it definitively refuted, but that is more old costs for retirees and health insurance, than UAW. The real problem in Detroit is momentum. These companies are like huge supertankers and they don't turn on a dime. They are also hooked on volume and the need to please investors in the short term. Given that their costs are higher they needed to sell more expensive vehicles to recoup those costs. Huge SUVs were the easy way out, but not the smart way out. They should have launched new luxury brands, like Accura and Lexus, and given them all the resources to be truly luxury. Cadillac almost pulled it off, but they can't get beyond their stodgy image. That's where a new brand with an emphasis on quality, luxury and above all else, world class engineering could have helped. It was impossible though as all three companies have been in crisis mode for decades. For the volume you need to provide value and they have focused all the value effort on cost reduction, not a better engineered vehicle. Is there a better car than the Honda Accord for the same money, even for $2k more? Not really, and certainly not from Detroit. I rent a lot of cars and the Detroit cars do not stand up. They all seem to have some defect. Most of the cars I rent fall into the compact or medium size category and this is Detroit's absolute worst area it seems. Every one I rent seems to have some major issue, bad seats, poor driveability, rotten ergonomics, cheap looking interiors, etc. The big cars are fine, and the small cars are cheap, cheapish in quality, but more importantly very cheap in price (and these are the cars that keep them alive in foreign markets). In the sweet spot of the US market, the compacts and medium sized vehicles, they have been totally out engineered by Honda, Toyota etc.
posted by caddis at 7:21 PM on November 25, 2008 [1 favorite]


so we need nationalized health care to save big business? i like this marketing strategy.
posted by Glibpaxman at 7:22 PM on November 25, 2008 [1 favorite]


I don't know if I think that's a good idea, but it looks like it's the only one that will prevent Chapter 7 for them all.

Yeah, that's the only way it would work. But bankruptcy could cause other issues. There's no way any of the three will get back to anything resembling "normal" without radical restructuring, though. I think the executives are still in denial about this, considering their recent trips to Congress, hats in hands, but they'll have to face the music soon enough.
posted by krinklyfig at 7:25 PM on November 25, 2008


And threads are saying the same thing.

Yep, this is covering pretty much the same ground as the thread from a week ago.
posted by smackfu at 7:28 PM on November 25, 2008


bonaldi: It's utterly baffling that they don't just phone up their European divisions and ask them for the plans. Is it the time difference? Don't the executive jets have enough range? What?

It's probably an image thing. The only people in the US who still like the US automakers and don't work for them tend to drive huge, compensatory trucks and occasionally SUVs. When's the last time you saw a car with a calvin-pissing-on-the-opposing-automaker's-logo sticker?
posted by Mitrovarr at 7:31 PM on November 25, 2008 [3 favorites]


I keep hearing people lambasting the big three for not making the cars they want, which are nimbler, better-built, more efficient, better-looking cars ... ie, exactly the ones they already make here. The new Euro Fiesta is a great little car -- and you can get it in models that get 70+mpg and still do sub-10s 0-60mph and top 120mph. And they've got built quality you only see in BMWs in the US.

Will they go 15 years/200K+ miles with only routine maintenance? That's the primary thing that matters to me. I bought my '97 4Runner with 150K on it and am coming close to 180K now. Never needed anything but maintenance. I will drive it until something major goes wrong, and then I'll probably buy another Toyota, but I'm hoping we'll be getting more alternative energy sources and innovative, energy saving designs.
posted by krinklyfig at 7:34 PM on November 25, 2008


So the argument the fiscal 'conservatives' are making is that the people who build the cars, who drive a large part of the economy, who made the leased corporate jets possible, are the ones who need to take a hit. It couldn't possibly be the executives who decided to leave the small-car market to the Japanese companies and concentrate on SUVs and trucks who are to blame.
posted by Huck500 at 7:35 PM on November 25, 2008 [4 favorites]


Once again, Class Goat tells lies. He tells us that UAW workers get $70+/hr, but of course that simply isn't at all true. That number relies on counting all costs of retired workers who are drawing pension, but then dividing the grand total by the number of working workers.

I didn't say that. What I said was that labor cost as a whole came to about $70 per hour. In other words, if you take the corporate labor budget, and divide it by the number of hours worked, that's what it comes to.

Yes, it's true that a lot of that expense is going to retirees. What of it? No matter who the money is going to, it's a real expense to the corporation and one that ultimately it cannot afford. And the reason it's stuck with those expenses is UAW demands in earlier contract negotiations.
posted by Class Goat at 7:35 PM on November 25, 2008


It's probably an image thing. The only people in the US who still like the US automakers and don't work for them tend to drive huge, compensatory trucks and occasionally SUVs. When's the last time you saw a car with a calvin-pissing-on-the-opposing-automaker's-logo sticker?

Yeh, I get this -- Ford and Vauxhall (GM) have pretty big image problems in the UK too. Ford has been making great cars for well over a decade now, but they're still tarred with their image from the days when they made utter shite. It doesn't help that fleet buyers put zillions of them on the roads, so they've no chance of being cool.

But even all that against them doesn't stop them being best-sellers. If US buyers are hurting as badly as they say there from high gas prices -- and with the amount of driving required there, I believe it -- then a hyper-efficient car (by US standards) that's also built like a BMW would surely persuade folks it's worth a go, no?
posted by bonaldi at 7:37 PM on November 25, 2008


FWIW, GM's UAW retirement benefit cost comes off of GM's books in 2010 due to the VEBA deal the UAW did in the last contract renegotiation.
posted by theclaw at 7:38 PM on November 25, 2008


Two decent perpectives from a conservative:

As GM Goes, So Goes the GOP;
Who Killed Detroit?

Makes some decent points; doesn't "union bash;" places the blame on the dominant free-trade dogma of both parties of the last thirty years.

I don't agree that the Big Three are dying because they don't make the little green cars Americans want. Ask every suburbanite with kids in America (and that's a lot of us): she has just the car she wants, and it ain't small. How can the automakers be blamed for people's misplaced tastes/wants? I understand that they shape demand to some extent, but by and large these guys are just trying to figure out how to sell something, anything, in large enough numbers to keep the ship afloat from year to year. They're all after the next minivan, Explorer, Mustang, etc. Once the American people are brainwashed enough to want a tiny green car (and I hope we're seeing the beginnings of this), then that's what they'll buy.
posted by resurrexit at 7:43 PM on November 25, 2008 [3 favorites]


Ask every suburbanite with kids in America (and that's a lot of us): she has just the car she wants, and it ain't small
Right, which is why the Honda Civic is nowAmerica's best-selling car. Oh, wait.

A Civic gets about 30mpg. Ford already make a Civic-sized Civic-quality car that gets 47mpg petrol and 65mpg diesel. They just don't offer it for sale to you.
posted by bonaldi at 7:50 PM on November 25, 2008 [1 favorite]


I thought it would be interesting to link to photos and specs for each of the American cars that are on the top 10 list in Europe. I do this simply to illustrate an opinion that has irritated me for years: American car companies are selling far more interesting cars in the EU than they are in the US. Why? In some cases because of seemingly silly US regulations (eg. the Smart car was too small), but otherwise I assume its because management at the Big 3 didn't think American's would buy them. I think all 4 of these cool, efficient cars should be sold in the US as soon as possible. With more acceptance of clean diesel powertrains we'd have even more options to choose from.

8th: Ford Fiesta (300,566, +0.6%) 40-50mpg! Photos | Specs
5th: Opel/Vauxhall Astra (402,044, -7.9%) 33-60mpg! Photos | Specs
4th: Opel/Vauxhall Corsa (402,173, +41.7%) 38-60mpg Photos | Specs
3rd: Ford Focus (406,557, -7.5%) 35-42mpg! Photos | Specs
posted by pkingdesign at 7:51 PM on November 25, 2008 [1 favorite]


It might seem that perhaps now isn't the right time do discuss nationalized healthcare in the U.S.; however, it remains the primary legacy cost the the big 3... And nationalized health care would a) buy something people already want, and b) allow U.S. companies to compete with a global market where their competition doesn't pay their workers health care as it is provided by governments.
posted by acro at 7:57 PM on November 25, 2008


Americans like big, comfortable cars that carry lots of people and lots of stuff. It's mostly to do with American suburbs - you have to drive anywhere to do anything, and if you're out to go get the groceries, might as well stop off to pick up some clothes and some stuff at the hardware store (or mega-store) while you're at it. Americans have to drive so much, they hate it... they want it to be with as much comfort and convenience as possible. That means no running off the road in the snow, buster!

Hence, the SUV.

But, here's the hell of it... with direct-injection gasoline diesels featuring "camless" electronic valves and dynamic cylinder deactivation feeding an eight speed dual-clutch "shiftless" tranny in a nano-paper unibody chassis, the US automakers can bring a 400hp V8 SUV up to 30mpg, easy. The Big Three have the tech, and it's lightyears beyond the Japanese and the Europeans, but their stupid management refuses to risk it. These are the bozos who fought disc brakes, seat belts, airbags and safety glass, despite inventing all of it, until the Japapnese made it standard equipment, or the government told them to.
posted by Slap*Happy at 7:58 PM on November 25, 2008


Yes, it's true that a lot of that expense is going to retirees. What of it? No matter who the money is going to, it's a real expense to the corporation and one that ultimately it cannot afford. And the reason it's stuck with those expenses is UAW demands in earlier contract negotiations.

The $70/hr figure gets dragged out because it's an !!OMG!! point. "Wow, they get THAT much? I get a tenth of that at the Burger Shack." Of course, we have no information in that figure exactly what the company can afford to pay.

But the figure still has merit because it can be compared to wages in other, similar companies. If you compare those figures from Japanese and American automakers, it seems obvious that American workers are overpaid....

...IF the two figures actually are comparable. If the Japanese figure doesn't include pensions, but the American figure does, then that comparison basis is invalid, and we're back to not having enough information to decide based on this point. Meaning we go to the other points, which nearly all reflect badly on the companies: American automaker's storied resistance to innovation, asking for federal assistance, PR disasters like Flint, Michigan, the burying of the EV cars, their creation of astroturf organizations to boost their credence in the press, and so on.
posted by JHarris at 8:01 PM on November 25, 2008 [1 favorite]


Of course folks like Class Goat will blame the workers at these companies rather than the leaders that run them. I'm not sure why they do unless they feel that the leaders of these companies are incredibly inept, and need special treatment as such. I mean, it's not like they're running the business or anything after all... oh wait...
posted by Eekacat at 8:05 PM on November 25, 2008


I think all 4 of these cool, efficient cars should be sold in the US as soon as possible.

From what I've heard, the US Mazda 3 uses the same base as the Euro Ford Focus. (The US Ford Focus does not, for whatever reason.) One major difference is that the Euro Focus has 1.4L and 1.6L versions, while the US Mazda 3 starts at 2.0L and is available in 2.3L. More power, which Americans like for highway driving, but worse mileage.
posted by smackfu at 8:07 PM on November 25, 2008


The Goat is really Best.
posted by Burhanistan at 8:14 PM on November 25, 2008


dual-clutch "shiftless" tranny in a nano-paper unibody chassis

In a what now?
posted by krinklyfig at 8:16 PM on November 25, 2008


"The Goat is really Best."

Really? Hmm.
posted by bardic at 8:21 PM on November 25, 2008


Dual clutch tranny - like a manual transmission, only a computer shifts for you, and yes, it's smarter than you are when it comes to shift points. Nano-paper is the next level of material science, funded by Detroit dollars... carbon fiber's lighter, stronger, sexier cousin.
posted by Slap*Happy at 8:26 PM on November 25, 2008


It's also worth noting that a euro Focus in the UK starts at £12,795 (~$20,000), whereas the US-spec Focus is $16,180 (according to a quick glance at Ford's UK and US websites.) It's easier to build a better product when people are willing to pay for it.
posted by theclaw at 8:39 PM on November 25, 2008


Counterpoint from today's Washington Post. To sum up:
* $70 / hour is a myth, and includes benefits paid to retirees.
* Toyota, Honda, etc benefit from national industrial policy in Japan. Something we don't do.
* Overpaid pundits feel that autoworkers are overpaid.
* If you want more efficient vehicles vote yourselves a hefty fuel tax like in Japan and Europe until then STFU.
* Ford and GM now have more hybrid options than Toyota and Honda.
posted by humanfont at 8:40 PM on November 25, 2008 [1 favorite]


FWIW, GM's UAW retirement benefit cost comes off of GM's books in 2010 due to the VEBA deal the UAW did in the last contract renegotiation.

One way or another it's going to end sooner than that. If nothing changes, GM will be in Chapter 7 within a year.

Of course folks like Class Goat will blame the workers at these companies rather than the leaders that run them. I'm not sure why they do unless they feel that the leaders of these companies are incredibly inept, and need special treatment as such. I mean, it's not like they're running the business or anything after all... oh wait...

My opinion is that the managers are idiots, and part of any bailout deal should be a wholesale replacement at the top. But there's plenty of blame to go around, and the UAW deserves its share of it.
posted by Class Goat at 8:48 PM on November 25, 2008


The Big Three have the tech, and it's lightyears beyond the Japanese and the Europeans, but their stupid management refuses to risk it. These are the bozos who fought disc brakes, seat belts, airbags and safety glass, despite inventing all of it, until the Japapnese made it standard equipment, or the government told them to.

Without getting into it too much, one of the articles discusses this in the context of saying that the carmaker found it advantageous to release these "cutting edge" features ASAP, because they could charge for them as options. Once the competition does it, you're paying the same amount of money for the innovation but you can't really collect a premium for it.

I find it interesting because I agree with you, and the approaches of Honda or Toyota as opposed to say, GM, seem so incredibly different.
posted by rollbiz at 8:51 PM on November 25, 2008


But there's plenty of blame to go around, and the UAW deserves its share of it.

What did the UAW do? its duty is to get the best benefits and wages for its members. management is supposed to say "no" to labor's terms when they think its not beneficial. Obviously management said "yes" so the only group not doing its duty is... management for having short term sales and engineering plans in place.
posted by Glibpaxman at 8:57 PM on November 25, 2008


* Ford and GM now have more hybrid options than Toyota and Honda.

I agree with the rest of the list, but isn't this particular item due to those "fake" hybrids?
posted by smackfu at 9:02 PM on November 25, 2008


Funny you mention dual-clutch transmissions, Slap*Happy; Chrysler was building a plant to produce them in the US, but their European partner can't get the necessary loans to finish the factory, due in part to the credit crisis.
posted by theclaw at 9:02 PM on November 25, 2008


So, what exactly is the UAW's share?
posted by Eekacat at 9:04 PM on November 25, 2008


W. Edwards Deming has a lot to do with why Japanese industry is the way it is. On factory floors in Japan you will see control charts right out of the Western Electric SQC manual, something you hardly -ever- see on US factory floors (even comparing Japanese and American factories of the same company). Part of the reason why you don't see them much in America is quite a bit like the reason only the officers were navigators on British ships up until Sir Cloudesley Shovell ran aground on the Isles of Scilly: line workers in America are not empowered to do anything but turn the same old bolts. In Japan they're empowered to fix problems and should someone have a better idea it will be heard - very slowly, and with lots of meetings, but it -will- be heard.

Deming said that 85% of all factory problems are directly traceable to management. The management of the Big 2.8 are entrenched and they are the ones who tell engineering what to do. David Halberstam discusses this in more detail than most people want to read in The Reckoning.

There is nothing magical about Japanese engineers or management. Prototype hardware in Japan is the god-awfulest mess, but the engineers just keep developing it. Tinkering with such prototypes is evolutionary and the result is manufacturable equipment that works. What you will not see in Japan is micromanagement of engineering and that's why things get engineered right there. To be in a Japanese engineering team is to be very often frustrated because it takes time for everyone on the team to get up to speed - but by God the problem is going to be solved, and developed, and tested exhaustively, and then introduced as a working system.

The Truth About Cars has had articles about Detriot's travails for a couple of years, and you can look a lot of their problems up there. They come down to ham-fisted, disengaged and isolated management. Any bailout that doesn't involve a management house-cleaning will be good money after bad, and no Chapter 11 reorganization is going to involve such a house-cleaning. I earnestly desire these manufacturers to liquidate.
posted by jet_silver at 9:24 PM on November 25, 2008 [9 favorites]


agree with the rest of the list, but isn't this particular item due to those "fake" hybrids

Ford and Toyota have similiar techologies based on the "pure hybrid" model. Honda and GM us a different model that is lower cost but doesn't achieve the same fuel savings. The Honda Accord hybrid which was pulled last year was actually developed to provide better acceleration and performnace rather than fuel economy. It flopped so much for Japanese forsight.
posted by humanfont at 9:28 PM on November 25, 2008


FYI, the euro focus is the same as the Volvo C30 in the US.
posted by OldReliable at 9:30 PM on November 25, 2008


I remember reading a year ago or so that NASCAR ordered Toyota to cut HP from its engines in one series because they were winning all of the races.
NASCAR vehicles are nothing like production cars. They're still carbureted, for example.
This has been too easily overlooked. In delmoi's link, they point out that one of the biggest costs is in payout to retirees' health benefits. A decent national health insurance plan could go a long way to making the US companies more competitive.
Hah. I would have posted that if I'd been around, but actually that was DU.
One way or another it's going to end sooner than that. If nothing changes, GM will be in Chapter 7 within a year.
They won't be chapter 7, because they'll get bailed out. Aren't you paying attention? Right now no one can buy cars because they can't get auto loans and no one wants to buy a car because they don't even know if they'll have a job next week, but GM in particular was in the middle of a restructuring that could have saved the company if it hadn't been for the financial crisis.
posted by delmoi at 9:34 PM on November 25, 2008


The Japanese, German and now Korean and Chinese manufacturers are opening shop here for a reason - American blue collar labor. Expensive, but you get what you pay for: fewer mistakes, more units per hour, eagerness to adopt and master new processes as they're rolled out, love to put in for overtime when available, less sick leave taken and fewer days of paid leave expected.

I'm sorry, but that simply is very far from true. Not any of those points other than 'expensive'. The single reason for building plants in the US, where raw materials, labour, cost of land and infrastructure is comparatively very expensive is that the US (the biggest automotive market in the world for these manufacturers) slaps HUGE premiums on foreign built cars being sold there. And I mean, in terms of the profit margin of a modern car, these are massive premiums. The only way these foreign manufacturers can compete is to invest in the more expensive production facilities in the US so that they can ultimately make a profit by being allowed to sell their cars at a comparable rate. The money they lose building less cost-efficiently in the US is less than the 'you didn't build it here' tax. It's purely and simply that.

Well, that and the only way some US'ians will consider a Japanese car is "Well. At least americans put it together". And that is very much a fact.

if you seriously think that the Japanese work force (to pick just one) are more inclined to take sick days and less inclined to work overtime than US workers, you live on the moon. The only reason US workers are so keen for overtime is that they get time and a half. Or more. Or can smoke spliffs while they build doors on the early shift, because the supervisor isn't in (true story). I'm sure that is GREAT for the accuracy rate.

All the perceived 'advantages' you quote are the very same marketing shite that has kept the US automotive market believing it is the bees knees for so many years, when it's quality and innovation has plummeted. These tax premiums for foreign built cars were lobbied for by the self serving Auto unions that have, through greed, killed all the available profits for the US manufactures that has destroyed their R&D budgets and meant that they have produced essentially the same car for far longer than any other major manufacturers product life. I mean, this is an industry that was producing, selling and claiming 'cutting edge' for 'performance cars' that had solid rear axles 40 years after the rest of the industry had dropped it as the shite that it is. An industry that promotes itself with a racing industry STILL using that 'technology' some 60 years after it was dropped in racing. Both of these periods, by the way, are now or in the last 5 years.

American car manufacturers have been beating the "Buy Domestic" drum for very many years (even now, just listen to the subtext of the adverts - "America's toughest truck" etc) because they are terrified that the buying public WILL look elsewhere and notice just how archaic and backward the products they are being offered are. The only way they have been able to compete is by saving money on tooling and R&D by (here it is again) stretching product and technology far past the lifetime considered feasible in the more competitive world car market - which is again made isolated by the extensive costs attached to trying to sell cars in the US. Their last minute attempts to hit the market standard has meant that they have bought, whole and complete, developed systems from all the other (mostly European) manufacturers and for the large part even hired European automotive consultancies to tell them how to put them on. A lot of my friends are in this industry back in the UK and have been truly stunned to see how lacking the development departments of the Big Three have been, by comparison to that which they normally see.

Basically, the reason some modern american cars don't seem to bad is that they are either re-badged European/Malaysian (etc) models, or feature a strong element of bolted on non-US developed technology that is quite often badly integrated into the car (from an outsiders perspective). Its just that they are, by comparison, so much better than the stuff you are used to, they seem 'not that bad'. I am really not exaggerating that much, either. Almost every time I drive an american car, I spot old technology lifted from another model in the family, and/or am appalled by the ride and handling (the biggest failing of ALL american cars after fuel efficiency). Ride, they can do. Handling as well? For some reason, US car manufacturers seem to think that one precludes the other.

This Ostrich policy was an entirely self serving, and incredibly stupid and short sighted, survival strategy by these companies to just stick their heads down, cut (essential) costs and keep on selling the same old crap. And it has just fallen on its arse. Now is the time to admit that the whole thing is fucked, not to bang the drum and pretend all these successful, profitable and powerful, innovative companies are coming here "because they just don't make 'em like we do". That is the exact same, utterly delusional, horseshit that got you lot in this mess.
posted by Brockles at 9:42 PM on November 25, 2008 [11 favorites]


I'm confused why the government couldn't agree to finance them through Chapter 11 thereby solving the lack of credit issue.

Well, they could, but that would probably cost in the neighborhood of $30-40 billion dollars. Understand that people are whining and moaning piteously about the $25 billion bailout, which is, you know, less.
posted by mightygodking at 9:47 PM on November 25, 2008


American car companies are selling far more interesting cars in the EU than they are in the US.

Oddly, none of the cars you list are, strictly speaking, made by American car companies. Ford Europe has been a separate company for many, many years and Opel/Vauxhall vastly predates being brought into the GM umbrella. Both Ford and Opel/Vauxhall are largely separate from their US owners in terms of management and largely with respect to strategic planning.

Being owned by a US car company is distracting. The fact that the easiest thing for the US companies to do would be to rebadge these successful, well developed, models rather than make separate ones themselves only recently seems to have occurred to them. There seems to be some dick waving about giving in and selling the products those pesky foreigners have designed and made, though. That's the only possible explanation I can think of, and it has amazed me for years that blank refusal to do so has been allowed to cost these parent companies so much money. They certainly can't sell any reasonable volume of US developed models anywhere else.
posted by Brockles at 9:54 PM on November 25, 2008 [1 favorite]


Ford is actually positioned quite well right now, but is burning through their cash reserves at a pretty alarming rate. They've estimated they'll need loans next summer if the economy continues the way it is, but they have no immediate need.

The thing that mystifies me is that the Big 3 are still hanging on to legacy brands that hardly anyone buys anymore, like Lincoln, Mercury, Buick and the like. I can't imagine producing these cars produce any real profit when compared with the infrastructure needed to support their production.
posted by electroboy at 10:08 PM on November 25, 2008


It isn't fair to blame the unions for Detroit's problems. Korea has unions. Unions that RIOT IN THE FUCKING STREETS. Since all men have compulsory military service and compulsory martial arts training, when people decide to throw down, it gets ugly. 15 years ago Hyundai was a joke. By 2003 Consumer Reports found that their quality second only to Toyota.

Thus, one can't blame aggressive unions for GM's issues. It is pretty damn hard to be more aggressive than Korean labor unions.
posted by wuwei at 10:11 PM on November 25, 2008 [12 favorites]


All this talk about the superiority of Japanese engineering is pure crap. I've personally worked with both Japanese and German tier 1 suppliers and after spending many hours debugging their HWIO software can say that their engineering is no better than ours (GM).

On preview, Brockles is really showing his ignorance. GM has been doing global design for many years now. All of those European GM cars that are so much better than the domestic ones have their engine controls and software developed in Michigan, for example.
posted by rfs at 10:14 PM on November 25, 2008 [3 favorites]


smackfu, I don't have a detailed list, but GM & Ford have made significant increases in the number of 'full' hybrids they offer.

I find the 'fake' hybrid label a little unfair to the simpler systems. At a minimum, they allow the car to shut off the engine when it isn't needed, improve efficiency (~10%) and are simple, inexpensive modifications to existing platforms to improve efficiency and address changing customer preferences. I think the Lexus LS 600h L, which gets equivalent mileage to the non-hybrid LS, is more deserving of the 'fake hybrid' label.

Brockles, I believe you're misinformed w/r/t import duties on foreign cars in the U.S. The U.S. has one of the lowest tariffs in the world on car imports at 2.5%. If it was just a tariff issue, they could set up plants in Canada, Mexico or one of the other nations that have bilateral free-trade deals with the U.S. and import them duty-free.

electroboy, badge engineering is cheap; once you've developed a Saturn Outlook it's cheap to stick different sheet metal over it, spend a few more dollars on the interior, put some bolt-on bells & whistles on it, and call it an Buick Enclave. The problem is GM has 7,000 dealers left over from the market share of the 1960s, but only need 2,500. you can pay them to go away, but that takes lots of cash and time (for reference, GM spent $$$ unwinding Oldsmobile.)
posted by theclaw at 10:26 PM on November 25, 2008


GM obtained an 80% stake in Adam Opel AG in 1929 and owned 100% by 1931. GM bought Vauxhall outright in 1925.
posted by rdone at 10:26 PM on November 25, 2008 [1 favorite]


The "why don't they sell their European cars here" question comes down to a few simple things:

1. American preferences were different for a long time; they wanted bigger cars with plusher rides. Fuel economy was irrelevant with cheap gas. Trust me, Ford and GM both tried selling euro models here and they died in the marketplace.

2. Americans won't pay what Europeans will pay for a small car. Historically, size = value to Americans.

Maybe YOU wanted these things long ago, but most Americans didn't. (Unless you believe U.S. automakers made Americans buy all those big SUVs against their will.) In both cases, I think American tastes have changed enough that bring euro cars here will work. Ford certainly thinks so -- they're betting big on this. We'll see in model year 2010.

3. Exchange rates can wreak havoc. GM currently imports the Opel Astra hatchback and sells it as a Saturn, or tries to -- but Americans think the car is priced too high, it's not selling well, and GM isn't making anything on the ones they do sell. Yes, Asian companies have to deal with exchange rates too, but they have currency advantages.
posted by pmurray63 at 10:32 PM on November 25, 2008 [2 favorites]


W. Edwards Deming has a lot to do with why Japanese industry is the way it is.

And he was in Japan in large part because America didn't want him. He tried to introduce his ideas to America. American management was having none of it.

And that, I believe, is the core of the problem for so many of America's ills: managment that is dumber than rocks and a near-complete inability to think toward the long term. It's all stockholder payout and CEO bonuses with US companies, screw the consumer and screw the company's long-term health.

The longer this financial crisis continues, the more I find myself leaning toward free-market principles: let the corporations who failed to keep their shit together die, so that good companies might take their place.

Darwinian evolution: it's the law.
posted by five fresh fish at 10:32 PM on November 25, 2008 [3 favorites]


GM has been doing global design for many years now.

Soooo. They deliberately choose to sell the better stuff over there and keep the shit in the US then? Or are you saying that the US models are every bit as good as the US ones, then? Chevy Malibu, anyone? Is the US public to blame for just buying the cheap crap, then?

I do suspect that may well have been an element, however. If you have a captive audience that you can persuade to buy domestic at all costs, and can legislate to keep realistic competition at a higher price as well, why on earth would you spend development money that didn't get you sales. The strength of the 'Buy american at all costs' marketing that the country has is astoundingly successful with the masses. However, I really don't think it is helping the consumers in the long run.

But yes, I was generalising about the Euro/Japanese/Malaysian vs US divide. But no, the vast majority of models available in the US have not comparable in quality to European/Japanese models (with the possible exceptions of the last two years of US models as my experience of them is limited. But the older one? Piles of shit that constantly surprised me weren't 10 years older than they actually were). The rest of the world is doing to the Big Three precisely what the Japanese did to the British motor industry in the 70's and 80's. Their aggressive development and superior products (and rate of availability of technology) killed the industry and some fantastic engineering companies by fortuitous timing. They had a significantly better product at time of unrest/economical difficulty that meant the UK industry simply couldn't respond to. The vast majority (now nearly all) of the British Car manufacturers bit the dust as a result.

Survival of the fittest is, I think, long overdue in the US in the same vein. You'll only get better cars as a result.
posted by Brockles at 10:32 PM on November 25, 2008 [1 favorite]


American blue collar labor. Expensive, but you get what you pay for: fewer mistakes, more units per hour, eagerness to adopt and master new processes as they're rolled out, love to put in for overtime when available, less sick leave taken and fewer days of paid leave expected.

You must be kidding. Korean companies thinking that American workers possess those qualities in excess of Korean workers at home? Um, no (other than possibly 'fewer mistakes' -- there is little to no tradition in modern Korea of craftsmanship, though this is changing).

(On reading before posting for a change, I see Brockles has covered this already upthread.)
posted by stavrosthewonderchicken at 10:34 PM on November 25, 2008


* If you want more efficient vehicles vote yourselves a hefty fuel tax like in Japan and Europe until then STFU.

This may be in the offering in your neck of the woods in the near future. Here in California we have a (projected) $17B budget deficit, and we can assume that figure will only go up in the coming months until the broader economy turns around. I, for one, think we should absolutely have higher fuel taxes for many reasons, only one of which is to promote fuel efficiency. Another reason is that people were happy to pay 50% more for gas with very little change in behavior earlier this year. That's money on the table as far as I'm concerned, and money that's sorely needed.

FYI, the euro focus is the same as the Volvo C30 in the US.

Not the same, but similar. They're based on the same chassis and have some other similarities, but the engines and drivetrains offered a substantially different on the Euro Focus. Of course the body is also very different on the volvo. The Mazda 3, Volvo S40/V50, Volvo C30, and Euro Focus are all based on the same platform.
posted by pkingdesign at 10:47 PM on November 25, 2008


Given how many billions are being given to Wall Street bankers without any strings attached, one wonders if withholding funds from Big Three is more about the GOP's last twist of the knife in organized labor's back, one last chance to bust up a large union before Bush is dragged out of office.
posted by Blazecock Pileon at 11:05 PM on November 25, 2008 [3 favorites]


Japanese style manufacturing practices, W. Edwards Deming style devotion to quality, empowering of workers (with the union changing some of their rules too) were all tried by GM with the Saturn project. It was working too. The Saturn had devoted customers, even a cult following. Then the other divisions of GM started complaining: "why are you spending all this money over there when it was our products that got us where we are today?". They flinched, and the Saturn experiment lost its influence and focus in the company. (Some of this history here).

On the other hand, the last time the government bailed out the auto industry, the loans were paid back and the government made a profit. I guess the government, like any investor, has to decide if the investment is worth it.
posted by eye of newt at 11:17 PM on November 25, 2008 [3 favorites]


Class Goat: And the reason it's stuck with those expenses is UAW demands in earlier contract negotiations.

So, clearly, the retirees should be stripped of their pensions and health benefits.
posted by Rumple at 12:29 AM on November 26, 2008


The US taxpayer is going to have to shoulder the same burden as the UK taxpayer did in the 70s and 80s - namely having to pay for an outdated auto industry that is simply "too big to fail". In my book it's more like "too big to fail gracefully".
posted by Harald74 at 1:15 AM on November 26, 2008


Malaysian? Do you mean Korean?
posted by ryanrs at 1:40 AM on November 26, 2008


If you dont mind driving a boring honda that is.

Whenever I think of the NSX or the S2000 'boring' is the first word that comes to mind.

and the nationalized health care that most of the non-US workers enjoy, which are not paid for by the manufacturers.

They're paid for out of general taxation. Which includes - surprise! - corporate taxes.

So, clearly, the retirees should be stripped of their pensions and health benefits.

Oh, absolutely. One should be free to dishonour any contract freely entered into once it becomes inconvenient to maintain.

Unless you've purchased a car on finance, of course.
posted by rodgerd at 1:59 AM on November 26, 2008 [1 favorite]


I've been trying to explain this to my more backwards relatives for 20 years... there's no reason to buy an inferior product just because Ford and GM cars USED TO BE made in America. Just buy the best car; many of Toyotas parts are US-made anyway. The fact that an engine plant went in nearby just underscored my point, I thought.

*sigh* You can take the boy out of the trailer park...
posted by chuckdarwin at 2:29 AM on November 26, 2008


GM has many problems, and obviously labor costs being higher than competitors' is one. But that's just one of their problems. Some of these also apply to the other two of the Big Three.

Not only does GM have bigger labor costs per man-hour they also take use more man-hours to build their cars. Their factories are not as flexible as the Japanese manufacturers, who have very purposefully designed their models and factories so that they can build different models on the same lines with only a few changes. This is very important in the automotive industry which sees big changes every decade in trends and technology.

Also, GM's product development cycle is slower and far more bureaucratic than the cycles of other companies. This is the core reason why they are late responding to new trends. GM also has twice as many dealerships as Toyota to sell as many cars. They have twice as many brands as Toyota to sell as many cars. This all means overhead overhead overhead. All in all, GM's problem hasn't been in engineering. It's been in business management. This includes labor relations, they were very happy to cave in to the UAW when the going was good.

The UAW is a labor union. A labor union's job is to play hardball against the companies so that the employees get as much money as possible. If the companies cave in, it's not really feasible for the union to not take the benefits offered.

GM management has been afraid to make any real changes for a long time. Certainly, they are getting better now but it still seems too little too late. And indeed, america should be vary of going the "American Leyland" route.
posted by Authorized User at 3:54 AM on November 26, 2008


8th: Ford Fiesta (300,566, +0.6%) 40-50mpg!

As I mentioned in a comment to another post, Ford is retooling some of their North American plants to produce the "euro" Focus and Fiesta in 2010. There are also plans to bring the Kuga and C-Max here. Hopefully it's not too late.

5th: Opel/Vauxhall Astra (402,044, -7.9%) 33-60mpg!

The Astra is already sold here, and it's wildly unpopular with the American car-buying public. In fact, GM is losing money on every unit they sell here, and you can't blame that on the American unions.

4th: Opel/Vauxhall Corsa (402,173, +41.7%) 38-60mpg


If they can't sell the Astra here, what makes you think they can sell a smaller car?

3rd: Ford Focus (406,557, -7.5%) 35-42mpg!

See the comment for the Fiesta, there are plans to build the Euro version here. And as much as I don't like the current American Focus, it's selling.

I believe another reason that we haven't seen the ultra-high fuel mileage diesels here is because they have not met American pollution standards. Oh, and they tend to be performance slugs.
posted by SteveInMaine at 3:55 AM on November 26, 2008


It's also worth noting that a euro Focus in the UK starts at £12,795 (~$20,000), whereas the US-spec Focus is $16,180 (according to a quick glance at Ford's UK and US websites.) It's easier to build a better product when people are willing to pay for it.

It would be easier only if that money actually ended up at Ford.

Here you can download the dutch price list for the Ford Focus. The smallest model sets a consumer back EUR 19.275. In reality that would be a bit over EUR 20k, since the dealer will add some fees for paperwork and getting the car ready (an issue worth another discussion another time). Anyway, included in that amount are sales tax (19%, around EUR 3k) and "BPM", a special usage tax on cars, which is about EUR 3.5k. So the dealer realistically only gets EUR 13.287. Dealer margin is usually about 6 or 7% for cars like that, so Ford gets about 12.5k for that car.
posted by DreamerFi at 4:13 AM on November 26, 2008


American blue collar labor. Expensive, but you get what you pay for: fewer mistakes, more units per hour, eagerness to adopt and master new processes as they're rolled out, love to put in for overtime when available, less sick leave taken and fewer days of paid leave expected.


As stavros and Brockles have pointed out, that is completely ludicrous. The reasons why foreign companies put up factories in the US are:

1) Import taxes. As it has been pointed out, these are relatively low now. However I suspect this would hardly be the case if those foreign manufacturers hadn't "home bases" in the US and Southern lawmakers defending their case in Congress.
2) Shorter supply chains. When everybody in the industry is moving towards "just in time" deliveries, having a significant part of your turnover stuck in a RoRo ship in the middle of the ocean is not an attractive prospect.
3) Currency fluctuations. German and Japanese manufacturers have set up shop in the US when the exchange rates have reached the pain threshold. Think of those plants as brick-and-mortar currency hedges.
4) Cheaper workforce. Do you really think that the transplants' non-unionized workforce is more expensive than German and Japanese workers? Boy, are you way mistaken...
5) State incentives. The states where those transplants have been set up have practically bankrolled the whole thing. That kind of subsidies are completely banned by EU competition rules.

In fact, far from enjoying the "superior" workforce, all those foreign manufacturers have suffered quality problems big enough to give them second thoughts about their decision. Alabama-built Mercedes SUVs were a particular headache, and BMW has also had its share of quality problems. And despite the fact that much of the current Chrysler lineup is actually made up of rebadged, Detroit-made Mercedesses, it's quite obvious that their quality is nowhere near the same level as their German brethren. This is not a matter of US workers being more stupid or lazy than foreign counterparts: quite simply, the US does not have the same kind of vocational training as Germany or Japan.
posted by Skeptic at 4:36 AM on November 26, 2008 [3 favorites]


Also, those who are comparing car prices in Europe and the US should take into account that in Europe, all advertised prices include taxes: VAT (15-21%) and road tax. Moreover, in the particular case of the UK, advertised car prices are artificially inflated by the fact that, due to tax advantages for company cars, most car sales are hugely discounted fleet sales.

Guys, don't compare apples and oranges.
posted by Skeptic at 4:41 AM on November 26, 2008 [1 favorite]


Well, we clearly need nationalized health care. Legacy health care costs seems to be one of the big problems U.S. corporations have in competing with foreign firms, which don't have those costs (because THEY have nationalized health care). The health insurance companies are willing to go for it too, if there is a mandate that everyone have health insurance. Which sounds exactly like Clinton's idea, and is the main reason why I supported her over Obama until he won the nomination.

What I find sad is that employer benefits are slowly going extinct. Health care benefits provided by employers are shrinking. Fixed-benefit pensions? Almost a thing of the past now. (My significant other has a fixed-benefit pension, as a retired educator, and man, I cannot express how nice that monthly check is. It's even inflation-adjusted up to 5 percent per year.) It used to be that government jobs paid crap, but had good benefits to offset the lower pay. Now the pay is comparable to the private sector, or even better, and government jobs are now one of the few places remaining to get a fixed-benefit pension.

A lot of companies just offer 401k's now, so far as retirement goes, and employer-matching on 401k's is in decline. That is a very poor alternative to a fixed-benefit pension. Let's say you make $50k/year and put 10 percent into your 401k, and your employer matches all of it, so you're racking up $10k/year toward retirement that way. Sounds okay, and it might not actually be all that bad, but employers are cutting the matching funds. Without the matching funds, you're down to $5k/year. Let's say that's your retirement plan, and you work 30 years. You'll probably have around $350k when you retire, assuming some reasonable return on your funds. Doesn't sound too awful. But compare that to my significant other's pension: she worked 33 years, paying between 10 and 12 percent of her income toward the pension the whole way. But now she gets a $6000 check (before taxes), every month, for as long as she lives, and it adjusts for inflation. If she lives 40 more years (which is quite possible, although not incredibly likely), that'll total out to well over three million dollars, almost 10 times the 401k plan without employer-matching, and at least 4 times a 401k plan *with* 1-to-1 employer matching.

The days of nice, safe, hard-earned pensions seem to be almost over, unless you get a government job. The days of employer-sponsored healthcare seem to be entering the endgame too. Unless we do something, like nationalized healthcare, I really feel sorry for those who are just entering the workforce, or who have a decade or more until retirement, because as bad as things are now, it's going to get much worse.
posted by jamstigator at 5:01 AM on November 26, 2008


How about this theory: people buy new cars when they have lots of disposable income. Right now, people are worried about their incomes, their jobs, their savings. So they're not going to buy a new car. Every car maker - inlcuding the wondrous Japanese - are getting hit hard right now.

You could pay US autoworkers $10/hour, retool the cars so they get 60 mpg, and make them look fancy like a Lamborghini, and people still wouldn't buy a new car because one needs money to buy a new car. Plus there's lots of great used cars out there.

The whole discussion is starting from the wrong position. People don't need cars any more!! Build trains, muthafuckas!!
posted by billysumday at 5:03 AM on November 26, 2008 [1 favorite]


If you dont mind driving a boring honda that is.

Yeah. Personally, I find hideous styling, outdated technology, poor handling* poor fuel consumption and IT WAS BUILT BY MERKINS, DAMMIT! Fascinating and exciting as a consumer choice.

Honda is not the most dynamic manufacturer, when all is said and done, but like for like it does hold its own. It gets the job done with little fuss and is very good at it. And generally they run forever. How dull of them.

*(which is, let's remember, what Primary Safety - is all about airbags, crumple zones and seat belts are Secondary Safety . This is often skimmed over by the US motoring media, unsurprisingly)
posted by Brockles at 5:04 AM on November 26, 2008


if you take the corporate labor budget, and divide it by the number of hours worked, that's what it comes to.

Yes, but you didn't cast the claim this way originally. You said that UAW workers "get $73/hr". They don't. Management pays $73 for each hour of labor they get but the workers don't get $73/hr.

You see the difference? In your statement, there is an implicit blaming of the greedy workers. In the more neutral statement, labor is properly cast as one of many costs management has to balance. Balancing costs and profits is, after all, management's job. If they can't cut the mustard, they need new management.
posted by DU at 5:06 AM on November 26, 2008


Wow, jamstigator, that just sounds unconscionable to me. How can that not be a pyramid scheme? I suppose it could be bubble-fueled delusions about rates of return, but it's not clear to me that's any better. If everybody got a deal like that, where would the funding come from?
posted by MadDog Bob at 6:20 AM on November 26, 2008


billysumday: How about this theory: people buy new cars when they have lots of disposable income...


Bingo.

Doing an autopsy on the big three right now is really just deck-chair-arranging on the Titanic. If the US hadn't hit the credit "iceberg", the US automakers would still be staggering along as in 2007. Precariously, to be sure, but not so close to falling over.

But you can't blame the auto-makers for trying to get into the queue for free money. I'm not surprised that their CEOs showed up in DC without extensive plans; after all the banks and investment houses didn't even have to pick up the phone to get their bailout. Which apparently hasn't improved the availability of credit. (Geez, I hope the gov't kept the receipt. It's probably a tax writeoff. )
posted by Artful Codger at 6:39 AM on November 26, 2008 [1 favorite]


Incidentally, a British gallon is larger than an American one, so to even start to compare UK and US mpg, you need to multiply by 0.83.

30 MPG => 25 MPG
40 MPG => 33 MPG
50 MPG => 41 MPG
posted by smackfu at 7:05 AM on November 26, 2008 [2 favorites]


Doing an autopsy on the big three right now is really just deck-chair-arranging on the Titanic

What an excellent analogy. That amuseth me.
posted by Brockles at 7:16 AM on November 26, 2008


Wow, jamstigator, that just sounds unconscionable to me. How can that not be a pyramid scheme? I suppose it could be bubble-fueled delusions about rates of return, but it's not clear to me that's any better. If everybody got a deal like that, where would the funding come from?

It would be no different then having an expensive 401k with a lot of employer matching. Where I work my retirement gets matched double what I put in, so for every $1 I put in, $3 is saved. Of course I've lost like 40% of what I'd put in in the past few months, but that's beside the point.
posted by delmoi at 7:17 AM on November 26, 2008


Americans have to drive so much, they hate it... they want it to be with as much comfort and convenience as possible. That means no running off the road in the snow, buster!

Hence, the SUV.


The perception is that SUVs are better on the road. The reality is they're wider, taller, and heavier, making for terrible snow handling without good winter tires, like any other car. Every year after the first blizzard here in the suburbs of Toronto, you'll see an SUV in the ditch or spinning out every few kilometres. This is thanks to all the marketing victim moms and dads who think their new SUV is some kind of all-terain Sno-Cat.
posted by autodidact at 7:26 AM on November 26, 2008


Americans prefer SUVs and trucks for one reason only (and it's not compensatory). They buy them because those vehicles are agressively marketed to them. And why are they marketed so heavily? Because they're much more profitable than passenger cars. As much as we all like to think we're above it, marketing creates demand and it works very well.
posted by rocket88 at 7:57 AM on November 26, 2008


The whole discussion is starting from the wrong position. People don't need cars any more!! Build trains, muthafuckas!!

That ignores the fact that most of the planning over the past 100 years has taken transportation by automobile as a given.
posted by electroboy at 8:01 AM on November 26, 2008


That ignores the fact that most of the planning over the past 100 years has taken transportation by automobile as a given.

The year: 1908
The place: The White House

Secretary of Transportation: Mr President, we need modernize. Build roads for these "automobiles"!
President: That ignores the fact that most of the planning over the past 10,000 years has taken transportation by foot or horse as a given.
posted by DU at 8:13 AM on November 26, 2008 [1 favorite]


Yeah, pensions aren't a pyramid scheme at all. My significant other was earning around $85k/year in the final years, and 12 percent of that was taken for her pension, so that's around $10k or $11k out of her pocket per year at the end. Obviously, she made significantly less in the 70s, 80s and 90s, and paid less of a percentage too (people didn't live as long 30 years ago so they didn't need to take out as much). But 33 years of pension contributions, with her employer adding some more in, plus more than 3 decades of interest on all of it and there's the money to cover her six grand a month. Pension funds have to think very long-term. The big ones are all fully backed by the gubment too, so they can't fail (unless the gubment itself collapses into anarchy, in which case some missing pieces of paper in the mail would be the least of our problems).

It appears to me that there is a big ongoing shift to throw the costs associated with retirement and health care entirely onto the backs (and paychecks) of employees, so that the businesses themselves can be more competitive in a global marketplace. That makes some sense. But if employee paychecks aren't going up in size (and they're not), well, that is really going to downgrade the standard of living for most people, because that money's increasingly going to be coming from their paychecks. Or people will just skip retirement planning and health care entirely, and thereby shunt that burden onto the U.S. taxpayer in the form of emergency room visits and old-age/poverty aid.

I don't know what the full solution is, or even if there is one, but universal healthcare would at least be a start.
posted by jamstigator at 8:28 AM on November 26, 2008


That ignores the fact that most of the planning over the past 100 years has taken transportation by automobile as a given.

Yeh, now if you're looking for a programme of public works that will bust a recession *and* employ a shit-ton of engineers, mass transit ticks all sorts of boxes.
posted by bonaldi at 8:46 AM on November 26, 2008 [1 favorite]


GM should buy these guys! That's my solution. A $25b investment plus regulatory relief should do the trick. Why build new roads? Solar panels and fiber on on all the super highways! Problems solved.
posted by sfts2 at 8:54 AM on November 26, 2008


electroboy: "The thing that mystifies me is that the Big 3 are still hanging on to legacy brands that hardly anyone buys anymore, like Lincoln, Mercury, Buick and the like. I can't imagine producing these cars produce any real profit when compared with the infrastructure needed to support their production."

It's not trivial to ditch the brands because of the binding franchise agreements with the dealer networks. I can't find a citation but I remember that it took billions of dollars for GM to get rid of Oldmobile. I agree though, GM should probably just be Chevy and Cadilac, Ford should just be Ford and Lincoln.
posted by octothorpe at 9:18 AM on November 26, 2008


Another reason to build in the US besides those stated upthread, is political. Foreign automakers now have a congressman or two that they can influence because of the manufacturing presence. Build enough in certain sunbelt states and maybe you influence a larger political bloc and a senator or two. Just a thought. A long term thought.
posted by jadepearl at 9:22 AM on November 26, 2008


It's utterly baffling that they don't just phone up their European divisions and ask them for the plans.

I imagine the marketers (who are probably right) know that the Euro Fiesta aint gonna sell to Main Street USA. Americans want performance cars and trucks. The auto makers need to appeal to this market. Europeans and Asians dont seem to have such a need for these types of cars (outside of a niche) and accept that a good high mpg car is a good idea. Here its "wimpy."

I dont have much sympathy for the big three, but I wouldnt want to run any of those companies. I think American culture needs to change first. The first one of these companies that goes high-mpg and electric only will fold. Perhaps the best thing to happen to us is the gas price rise of this summer. The performance and truck culture of the US is slowly learning that their demands arent feasible.

Even if they changed their tune, the average age of a new car buyer in the US is 48. 48! At that age you would want a nice big sedan. The people willing to buy an econo-box is a minority.

I am curious why young people cant afford new cars. Is it because the car makers are focus on performance vehicles and trucks too much and the economies of scale arent good enough to make cheap reliable high mpg cars? Is it became of low wages? Student loans?

I see a lot of wrong here and its just not the CEOs. If anything its surprising they kept these companies afloat for this long.
posted by damn dirty ape at 9:25 AM on November 26, 2008


I imagine the marketers (who are probably right) know that the Euro Fiesta aint gonna sell to Main Street USA. Americans want performance cars and trucks.

Piffle. Americans want to get to work, soccer practice and the grocery store. The only place you see Americans who care (or even know) how many horsepowers or "Vs" their engine has in the pages of the masturbatory car mags.

If the car manufacturers stopped building to get good reviews in these mags (even Consumer Reports has a 0-60 rating, I think--IDIOTS!), they might sell some serious car.

...the average age of a new car buyer in the US is 48. 48! At that age you would want a nice big sedan. The people willing to buy an econo-box is a minority.

You have this exactly backwards. You think young people don't drive cars? No, they are getting cheap hand-me-downs from those 48 year olds. If an econobox existed, they could buy new. It isn't a desert, it's a huge, untapped market!
posted by DU at 9:41 AM on November 26, 2008


The only place you see Americans who care (or even know) how many horsepowers or "Vs" their engine has in the pages of the masturbatory car mags.

I used to hear plenty of complaints about the weak cars that had a hard time getting up to speed to merge on the highway. You don't hear them so much anymore because they stopped selling the cars.
posted by smackfu at 10:08 AM on November 26, 2008


That ignores the fact that most of the planning over the past 10,000 years has taken transportation by foot or horse as a given.

Oh, I see what you did there. Very clever. Except cars could run on the roads that horses used and trains can't so much.
posted by electroboy at 10:39 AM on November 26, 2008


I agree though, GM should probably just be Chevy and Cadilac, Ford should just be Ford and Lincoln.

Lincoln?
posted by electroboy at 10:39 AM on November 26, 2008


If an econobox existed, they could buy new. It isn't a desert, it's a huge, untapped market!

Like say the Chevy Aveo. Note its 7K less than the Smart, gets better milage and seats 5 very close freinds.
posted by humanfont at 10:40 AM on November 26, 2008


I used to hear plenty of complaints about the weak cars that had a hard time getting up to speed to merge on the highway. You don't hear them so much anymore because they stopped selling the cars.

I own a DaewooChevrolet Matiz. It has an 796cc engine, delivering 51 horses.

I have not trouble at all getting up to speed to merge on the highway. Is it fast? No. Is it fast enough? Yes.
posted by DreamerFi at 12:05 PM on November 26, 2008 [1 favorite]


electroboy: "I agree though, GM should probably just be Chevy and Cadilac, Ford should just be Ford and Lincoln.

Lincoln?
"

Yea, that seems like a good model: having one standard brand and one upscale brand. No one's going to buy a luxury Ford. Or maybe ditch the Lincoln name and come up with a new Luxury brand but lots of the big car companies seem to do well with that two brand structure: Honda -> Acura, Toyota -> Lexus, VW -> Audi, Nissan -> Infiniti. The problem with the current brand structures of Ford and GM is that they compete with themselves. What's the difference between a Ford and Mercury? Or Chevy and Pontiac? Not much.

I haven't mentioned Chrysler because I think that they're pretty much un-savable. At best, they'll probably be able to sell the Jeep nameplate to Tata or Chery and maybe the mini-vans to VW. I can't see either the Chrysler or Dodge nameplates existing in two years.
posted by octothorpe at 12:20 PM on November 26, 2008


humanfront, did you read Edmund's review of the Aveo? I was considering buying one until I read the editor's review. It's pretty damning.
posted by lekvar at 12:22 PM on November 26, 2008


"Yes, it's true that a lot of that expense is going to retirees. What of it? No matter who the money is going to, it's a real expense to the corporation and one that ultimately it cannot afford. And the reason it's stuck with those expenses is UAW demands in earlier contract negotiations."

Well, uh, then it's not really a labor cost, is it? That's like factoring in OSHA regulations into the per-hour cost of labor, or complaining that the UAW is responsible for the cost of robots.

And yeah, one of the biggest reasons for nationalized health care is to finally be able to recover our manufacturing base, freeing them from the entitlement and legacy costs. That's one of the few places where Big 3 management has been really "progressive" in the last five years or so.

But man, y'know, looking at the hit 401ks etc. have taken, it sure is a good thing that we ignored Bush on his "Ownership Society" bullshit that would have scrapped Social Security, right?
posted by klangklangston at 1:49 PM on November 26, 2008 [1 favorite]


Yea, that seems like a good model: having one standard brand and one upscale brand. No one's going to buy a luxury Ford.

Yeah, good point. Although Lincoln seems like a pretty dated brand as well. Other than the Town Car, which is bought mostly by car services, I can think of very few Lincoln cars that sell particularly well. Or that aren't ugly as sin.

Agreed on Chrysler. If any of them are allowed to fail, that's definitely it. As much as I like Dodge muscle cars, they haven't done anything new in quite a while.
posted by electroboy at 2:12 PM on November 26, 2008


From the Honda Article:

"A second crash soon after, in which he drove off a bridge with several geishas in the car (everyone survived)"

That's awesome.
posted by pakoothefakoo at 2:54 PM on November 26, 2008


My brother in law is in the steel business, and had a couple "nice" Lincolns as company cars. Both of them had interior panels popping off by the time the leases were up, and the cars were just ugly.
posted by autodidact at 3:17 PM on November 26, 2008


Sorta OT: It was my understanding that European automobiles have different emission standards than US cars, i.e. less worried about sulfur emissions, hence high-MPG diesels. It's not like you can just import one of them nice 47MPG cars from Europe and drive it here in America.
posted by Ron Thanagar at 4:43 PM on November 26, 2008


It was my understanding that European automobiles have different emission standards than US cars, i.e. less worried about sulfur emissions, hence high-MPG diesels. It's not like you can just import one of them nice 47MPG cars from Europe and drive it here in America.

You've kind of got some twisted wires here - the main issue is that the diesels in Europe were designed to run on the better quality fuel you get in Europe. The stuff available in the US was, until very recently, pretty bloody horrible and it wasn't possible to meet emissions standards if they were burning the fuel available here. Most European cars are designed to global emissions standards, of which California is one of the strictest. Now diesel fuel quality is up, you can bring those cars over here, hence this entire thread...
posted by Brockles at 4:53 PM on November 26, 2008


It was my understanding that European automobiles have different emission standards than US cars

IIRC, it was because US standards were aimed at smog (because they were the strictest in CA), while Euro standards were aimed at greenhouse gases? Or something like that. I tried to look it up but I give up, because there are all sorts of tiers and levels and Euro III/4/5, plus they use different units for Euro vs US.
posted by smackfu at 5:49 PM on November 26, 2008


Smog (in the modern sense) is photochemical in nature and has little to do with diesel's primary disadvantage, i.e. particulates (soot).

At the risk of seeming paranoid, you could question whether the US (and specifically California's) atmospheric requirements with regards to particulates, which hit diesels hard, were written (or at least weighted) in order to protect US-sourced automotive manufacturers (almost exclusively gasoline-powered) vs European ones (who have invested very heavily in modernising diesels).
posted by Nice Guy Mike at 8:25 PM on November 26, 2008 [1 favorite]


Oh, and I largely agree with Brockles on most of this (although he holds VW in slightly higher regard than I do :-) ), so I'll merely favourite a few of his comments and leave it at that, but I do feel the need to respond to the latter part of:

I believe another reason that we haven't seen the ultra-high fuel mileage diesels here is because they have not met American pollution standards...

As pointed out by Brockles, above, it's because of the crap quality (specifically high-sulphur content) of american diesel.


This bit in particular:

...Oh, and they tend to be performance slugs.

Complete and utter piffle. You obviously have never driven a modern diesel.
posted by Nice Guy Mike at 8:34 PM on November 26, 2008


"I am curious why young people cant afford new cars. Is it because the car makers are focus on performance vehicles and trucks too much and the economies of scale arent good enough to make cheap reliable high mpg cars? Is it became of low wages? Student loans?"

One argument I've heard within the last year by an "auto industry analyst" on the radio was that the new car market is saturated, particularly at the mid- and low price ranges. He said that GM's strategy of moving units for practically no profit, just to get a car into the hands of a future loyal brand purchaser was a big part of the reason for their cash flow problems.

On the bright side, apparently GMAC has applied to be registered as a bank, so maybe they'll benefit from those incipient bailout dollars sooner than we thought.

Finally: Build trains!
posted by sneebler at 9:23 PM on November 26, 2008


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