OT: why American businesses are in trouble

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Japanese company (Toyota) and an American company (General Motors) decided to have a canoe race on the Missouri River . Both teams practiced long and hard to reach their peak performance before the race.
On the big day, the Japanese won by a mile.
The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.
Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing.
Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents and 1 assistant superintendent steering manager. They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the "Rowing Team Quality First Program," with meetings, dinners, free pens, and a certificate of completion for the rower. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices, and bonuses.
The next year the Japanese won by two miles.
Humiliated, the American management laid off the rower (a reduction in workforce) for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year's racing team was "outsourced" to India . .
Sadly, the End.
However sad but oh so true! Here's something else to think about:
Ford has spent the last 30 years moving all its factories out of the US, claiming they can't make money paying American wages. Toyota has spent the last 30 years building more than a dozen plants inside the US.
The last quarter's results:
Toyota makes $4 billion in profits, while Ford racked up $9 billion in losses. Ford folks are still scratching their heads.
IF THIS WASN'T SO SAD IT MIGHT BE FUNNY.
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Jimbo wrote: ...

...
You might want to look at _where_ in the US those plants are located and see if that is, perhaps, enlightening...
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Please enlighten me.
Toyota prefers Canada to the Southern US. Sad NYTimes article : http://www.nytimes.com/2005/07/25/opinion/25krugman.html?_r=1&oref=slogin
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Toyota may prefer Canada but they have a brand new plant in San Antonio Texas that builds some the new and very popular Tundra's.
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Leon wrote:

Just plot the existing facilities on a US map...
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dpb wrote:

Certainly might be, but not for the reasons you are thinking.
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Mark & Juanita wrote:

How do you know that? :)
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Reminds me much of IBM. I think the problem started with the hiring of middle management.

They don't have the baggage the American big three must carry.
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Hank wrote:

I believe I've read that the Big three have a labor/benefit cost of nearly $75.00 per hr where-as Toyota has one of $45.00...not a insignificant difference.....Good medical and retirement packages do not come cheap.....Rod
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So how do you propose to fix things, with crappy medical and retirement packages? Or do you want the .gov to deliver those plans? And what's the problem we're trying to solve? Unemployment is pretty low so this sounds like a lament for the auto industry. Personally, I wish Detroit designed cars I wanted to buy. Sadly, they don't.
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Jeff wrote: ...

... The latter is the Japanese way which is a major part of the cost differential. Secondly, they don't have the other 50 years of operations prior to WWII to add that legacy overhead of facilities, etc.
As for the solution, I don't have a great "magic bullet", but definitely isn't level field at present...
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dpb wrote:

Maybe we should start a war with the Japanese and this time let _them_ bomb _us_ into rubble. I mean it worked for _them_.
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dpb wrote:

I don't get that comment regarding "legacy overhead of facilities ...". The fact is, that if the infrastructure in facilities is that old, it has been paid in full for a number of years compared with the real cost and overhead of having to build new infrastructure in a place you've never done business before. *That* should be an advantage for the US automakers, not a detriment.

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Mark & Juanita wrote:

...
...
Not entirely--US manufacturers are in very large, high-volume production facilities that are a product of the path by which they arrived in the current position based on their overall business experience. From there being a relatively small number of models to today when iirc I saw just the other day over 850 separate models are now in the US market, there is a much more fragmented market so these large facilities aren't as efficient as the smaller facilities. Making that transition is _VERY_ expensive. The Japanese, otoh, had very tight land restrictions and not a very large home market so their facilities were never nearly so large. That's not anything the US manufacturers did "wrong", it was simply the result of being in business where they were when they were in the market they were in.
Add to it, of course, the difference in labor which also has a long history behind it of how they got there--at least 30 years longer in real volume manufacturing as compared. One cannot make a point comparison today w/o accounting for the marked difference in path by which the two reached their current positions.
Were there mistakes made on the way? Of course, but it's much easier to point the finger now than it was to have been so prescient at the time in the place...
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That paid for building of 60 years ago may be very inefficient for today's production. Sometimes it is best to bring in the bulldozer and start fresh.
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Edwin Pawlowski wrote:

Agreed. Even in that case, the land is paid for, so I still don't see why having land / buildings one owns can be considered a detriment relative to someone coming in new who has to buy both land and put buildings and deal with new regulations regarding where and how they can build. At worst, I'd say it's a wash, at best a slight advantage to the companies already in place.
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Mark & Juanita wrote:

...
So, they have land now that has their _CURRENT_ production facilities on it and you expect them to raze that and build new facilities on the same site? What are they going to do about production (revenue) while that is going on? Meanwhile, there's no market for the existing facilities--so they couldn't come close to recouping their investment were they to try to sell...that's not even breaking even, what more being an advantage.
And, of course, in the US, the EPA and other regs apply to rebuilding as well as the new, so you would have to add in the restoration/recovery costs which would undoubtedly be astronomical in some instances.
All in all, they're not in an enviable position and not all the grief by far is terminal stupidity as most try to make it to be...
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dpb wrote:

What is the company that is coming to a new area, getting land use permits, going through environmental impact studies, and then building their facilities doing about production while all of that is going on? I still don't see the disadvantage.

But at least the land that they are rebuilding on has already been used for the same purpose, so they aren't having to deal with the people who come out of the woodwork trying to save some endangered bacteria or wooly caterpillar when someone tries to build somewhere new.

I will agree that they are hobbled by the labor mindset in the areas in which they are situated -- that can be a huge disadvantage.
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Mark & Juanita wrote:

They're either expanding production or building entirely new -- they're not removing current production for two years while doing so. If you can't see a disadvantage, you're not looking.

Even if so, it doesn't eliminate any of the contamination issues, etc., that don't go away on re-permitting. And, of course, it doesn't address the issue of disposal of the present facility, much of which may qualify as hazardous waste as well. Such costs are potentially deal-breakers and are the reason many industrial sites are abandoned currently.
It's certainly not nearly the economic "advantage" you would like to make it seem.
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"Jeff" wrote:

If you want an argument, change the subject.
The US auto industry is simply reaping the rewards of their arrogance of the last 50+ years of building a poor product and thinking their customers would continue to buy that poor product offering indefinitely.
Bring back those big tailfins and the chrome rings on the Buicks of the mid 50s used to distinguish a new model year.
NOT
Lew
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