OT: why American businesses are in trouble

[Mark & Juanita]

My understanding is that the companies like Toyota offer competitive medical and retirement packages as everyone else. What they don't do is offer to make those medical benefits free for life, even after retirement.

*That* is what is killing the big 3. They made promised back during the heyday of unions and strikes that is now coming back to haunt them. Read a while ago that for each car GM ships, something on the order of $1200 (may be more, but I don't want to exaggerate a number I read several years ago) of that car goes to pay for retiree benefits.

[Phil-In-Mich.]

Yes, it is funny.

Humor aside, that has not been my experience.

In the war between style and substance, it is a complete rout by the forces of style. No one can envision any rally by the forces of substance to form a rear guard defense.

It matters less, in my experience, the numbers of managers but the quality, and competence of the managers. Many of the managers and supervisors I have worked for could have only been chosen for their "style" and golf game.

In so many instances, it is the marketing plan, and the pretty, and oh-so stylish veneer than matters. What exist under the veneer, is of less importance. Even when dealing with subordinates, the how you say it matters more than what you say. Seriously, go into many automotive supplier around Detroit, each workstation has the mandatory QA book for that station. But don't ask if the workers at that station can read, or understand, standard English language.

Look less to how many, instead look to the corporate culture on how the managers are selected, and promoted. And by whom!

Sorry for the rant.

[dpb]

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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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[dpb]

Last I saw was $1500. But, "they" didn't make that decision in a vacuum--labor was a willing co-conspirator (and, of course, were really the leader, not the follower).

I've not researched the actual US structuring of their wage/benefits packages--in Japan, much of the burden is shifted to the government, not them. Whether there's a way they get some of their costs back in a home government subsidization arrangement or not, I don't know. Wouldn't put it totally out of the realm of possibility to maintain the competitive edge...perhaps WTO tentacles are strong enough; I have my doubts.

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[Edwin Pawlowski]

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.

[Mark & Juanita]

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.

[jo4hn]

Much has to do with the management attitude that its customers are not the consumers but rather the stockholders. Build a car that is reliable and efficient (see Toyota, Honda) and I will buy it. gloom, jo4hn

[J. Clarke]

There was't a loan from the government. What Chrysler got from the government was "loan guarantees", in other words the government effectively cosigned the Chrysler loan application. The taxpayer would only have been on the hook if Chrysler defaulted, which they did not.

That's my big objection to socialized medicine. It gives the government a legitimate reason pry into matters that traditionally have remained private.

[dpb]

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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...

[Robatoy]

Add safety and performance and an assured resale value and that car becomes expensive. Reliability and efficiency isn't enough, IMHO.

Another factor, and I'll mention a local example of this, is service. A local dealer of a pretty good car is a rip-off artist. He doesn't get many sales "because you gotta be nuts to own that car in this town." Today's car buyer wants everything for nothing. They all promise you the moon, but the wars are won in the service departments. As consumers we are very vulnerable in service related matters.

likes to go fast

r

[Virgle]

Lew you are correct. I bought a new Chevy in the 50's and financed it for 3 years The metal rusted out under the back window before I got it paid off. The only reason the quality improved was because of the imports.

Virgle

[Robatoy]

You mean like the Hundai Pony? The Yugo?

[Leon]

Last I heard, $2200 per vehicle 3 years ago.

[dpb]

Leon wrote: ...

I think they've managed to pare it down some, but I wouldn't say it's not--I don't know how old the number I recall hearing is...

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[Mark & Juanita]

... snip

Yep, same here where we are. There are two Toyota dealers, after mistakenly stopping at one of them to compare to the first dealer we visited, I can emphatically state that I will never darken their door with my presence again. I thought that style of "what's it gonna take to get you to drive out of here with this today?" high-pressure sales tactics had gone by the wayside in the 70's. Sadly not so. OTOH, the dealership we did buy our Toyota (good sales staff, no pressure, etc) from appears to have put all their weasels in the service department.

This has been the case forever and in more than just cars. Years ago, you could drive around the country and tell which tractor dealerships had the best sales and service by looking at the predominance of a specific brand.

[Mark & Juanita]

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.

[Leon]

I bought my first Toyota, the Tundra in July. Had Honda offered a bigger pickup I may have gotten one of those. My local Toyota dealership was/is very easy to deal with and treated my wife and I like royalty even after the sale. Normally you pay for that type service when buying the vehicle and expecially when there is no high pressure. They invited me to shop the competition and their prices and then come back and buy the Tundra. I am sure I probably could have gotten it cheaper but "drive out", $6k under sticker was good enough for me. I figure close to $8k off when considering the savings of TTL, alarm, and tinted glass being included in the drive out price. I did notice a small ding in the quarter panel after going home and was provided a free rental car while they massaged the ding out and a free rental car again when the brake light switch failed. They will be seeing me again.

[Leon]

They probably have reduced it with the latest labor agreement. Additionally I believe GM is actually making money again. Ford may go down the tubes.

[Tanus]

I can see your tongue planted firmly in yer cheek, Rob.

The Pony was a POS for sure, but I also remember the early Toyotas from the late

60s, early 70s that rusted even in Sarnia, where not as much salt is used.

I don't know about the durability of the current Hyundais, but there are a hell of a lot of them on the road, so I'm assuming that at least some of the owners are pleased with them.

Toyota seems to have corrected their initial foray into North America.

The Yugo. 'Nuff said there.

[Leon]

It seems that if the Japanese are controlling their products they do well. But, do you remember the British built Sterling? It was an Acura in disguised but built by the British. It did not last very long. I don't know if it was POS, or if it was a marketing nightmare, or too little selection. IIRC there was only 1 model in the US.