Topic: "Big 3" fate in the hands of?

[Mdxtasy]

http://www.freep.com/money/autonews/caw12e_20050512.htm
http://www.freep.com/money/autonews/caw-box112e_20050512.htm

[saint_satan]

Buzzed Hargrove should address the real issue.  The Asian brands would not have even gotten a foothold in North America if the Big Three had kept their prices reasonable and offered quality products.  I'm not a union basher, but if it costs $135K+ for each UAW line worker, Buzzed may be the architect of his own demise.    Besides, the customer service at a Big Three is rotten from the CEO to the Service Manager.

[tpl]

How about: "offered innovative products"  Sad to say if it wasn't for Honda and the rest we'd all be driving the MKIV Pinto.

Be that as it may, In Canada at least they have lost, permanently, a whole pile of customers to Honda, Toyota and the rest.  In my department at work we have 1 NA car owner...he has an Expedition, a Lincoln LS ( the winter beater!!) and a C5 Corvette( the midlife crisis). Then we have 2 Mazdas, 2 BMWs, 1 Volvo, 1 Audi, 1 VW, 1 Infiniti, 6 Hondas and a Toyota... before one of the guys left it was 3 Toyotas... this is 12 people and their families. Regular middle class cubicle warriors, ranging from 28 to 59, Born-and-bred to Fresh-off-the-boat.

Thats a 20% share for the Big three... I think it will stay at that level...unless they produce some product that people want to buy.  The NA car owner above would like to buy a diesel in an Expedition, one of the Honda owners will probably buy a Matrix next.  

They have to have product, attractive, reliable, at a fair price and at least some of that product has to get people excited enough to recommend to their friends and co-workers.

Nowdays if someone asked " what small reliable car should I buy?" the shout goes up, Honda Civic! Toyota Corolla! Mazda 3!

You can see it on this forum every day...not helpful to the Big 3


Each of the Big 3 has a "halo car " or two  GM, the new Cadillacs, Ford, the Mustang, DC, the 300C
and they are all great BUT they are not backed up in the showrooms by good "starter cars" and that IMHO is a problem for them. they still seem to have this attitude that small\ cheap must be nasty and why would any right thinking person want to by a small car when they could have a big one.

my 2c

(Message edited by tpl on May 15, 2005)

[Snowman]

Yep…..no point in making Canada more competitive and attract capital investment…..that would be just silly.

North American labor unions will be the architects of their own demise as more and more Big 3 manufacturing heads overseas.

[saint_satan]

tpl:

You need to walk before you can run.  Some of the car nuts on this board like innovation but most people in the rest of the world would be content with stuff that works.  The Big Three have struggled with this.

Further, I can't tell what market the Big Three are after.  There are almost no credible small cars. Between Ford and Chysler they offer a total of 4 models of regular cars (Focus, SUX 2.0, Freestyle and Sebring).  Everything else (esp. DC) is a speciality product.  Honda probably sells 10 Civics for every SUX 2.0 + Focus that goes out the door.  

Although Trucks/SUV's are more popular than they have ever been not everone wants an Explorer of Jeep.  Small and Medium-size cars are still the bread and butter of the market.  It's tough to gain market share when you are missing most of the market (e.g., although Escapes and Liberty's are very popular in their segment, count how many Civics you see on the road before you see a Big Three SUV)

[sparky]

In Buzzy's defence, no union leader is going to enter negotiations with an announcement that he'll consider concessions and that all the hard-won benefits are on the table.

[tpl]

Saint_s, thats the point isn't it. Corollas and Civics work and keep working and whats more they now have a reputation for this which is years long.
The Big 3 argue that they cannot make a small car at an economical price. Examples being that Ford wont make the new Focus for NA as they would have to retool and they dont have the money, GM's small cars come from Korea as the Euro Astra is deemed too expensive.  DC  I dunno about them...its that attitude... small cars have to be cheap..unless they are German of course.  

Innovation would be to use GM's undoubted engineering expertise to make a better Honda at a Honda price and reliability....EVEN IF they had to initially rasie the prices of their other offerings to leave some price room.

[saint_satan]

They'd better learn how to build a small car that works fast.  The age of cheap gas will come to an end eventually.

It has to labour costs that prevents them making a comparable product, though.  There is nothing magical about the Civic- pretty basic stuff - it even has a timing belt for pete sakes!  Better component parts and a little bit more attention to detail could turn the Cobalt into something as good as the Civic or Corolla, IMO.  

I think those companies are so big and bloated the only way they can sustain themselves is by making $20K a unit on underengineered crap and overcharging for cheap parts and lousy service.

[A4_tom]

Domestic carmakers lack the reputation of building great econocars and family cars. Just look at how often they changed names in order to be competitive.

[gibsonguy]

No one has name power more than the big 3. Camaro, Mustang, Corvette... however I think they can get too big for themselves. Do you remember the Sunfire GTO? Which bean counter green lighted that blasphemy?

[A4_tom]

But all the current Impala, Malibu and GTO are not worthy wearing the nameplates.

[barrie1]

You will have to back up a statement like that as these newer products haven't really been out long enought to even earn a rating yet. Who here has done a long term drive on these vehicles from any of the Big 3. They may be better then you think. All Canadian Built Cars and trucks are better built and create a lot more profit for the Co.s then the US side. Why shouldn't the workers here share in the prosperity of their work. We all work for wages, they do as well. This type of relationship which needed a Union was Brought about by very poor wages and working conditions in the 30's. Plus the fact that Henry Fords Goons were machine-gunning  men in the streets. It changed the course of History by haveing Unions. They have to be paid.

[hondasalesguy]

but do they deserve to make $35 an hour, have a ridiculous amount of holidays, floaters, and also when they are laid off the Union tops up their wages to 80%!!! That has to make it tough on the profitablity of the company. I'm all for paying people what they're worth but the unions have created an inefficient business model, may as well be the government for the amount of people they pay to do the work of far fewer...

[barrie1]

During the course of your day you work probably around 8-10 hours at your dealership. Correct or close. On a average New Car Sale you make Commision of $250.00 to $300.00. Yes or close. On a Used Car Sale you make a Decent Percentage as well.  If you averaged it out at the weeks end you both will make about the same money. They will slave at hard labour and have to do the same boring thing every 58secs or so. These are everyday Canadians the same as you and Me. They have many more injuries that shorten their working years because of the nature of the work. You might get a papercut on occasion. If the average sale takes around 3 Hours then you are making at least a $100.00 an hour but they are not worth $35.00. Its so easy to say when its the others guys paycheck. How about $100. in Commision. You would be out of the trade in a Flash. You wouldn't make much money that way at all.

[hondasalesguy]

Ah but the thing is I may make $300 (actually more like $400) per sale, and it may only take me 3 hours, so yes this is $133/hour FOR THOSE HOURS ONLY. Unfortunately in the car business, those hours selling cars are surrounded by many more hours attempting to sell cars, on the phone, emailing customers, and of course the infamous "milling about the showroom looking for something to do and someone to talk to"... So it is not realistic to say I make over $100/hour when there can be 4 days go by when I don't make A DIME.. Of course it all averages out.  

But I stand by my observation that the current power of the labor unions makes for an extremely highly paid laborer who may not have even had to finish high school. I am not knocking the autoworker, I have a buddy at Toyota in Cambridge. He even feels he is overpaid and admits that sometimes 10 people are doing what maybe 3 could do. Guys get friends to punch in for them, if they have a drinking problem they get sent to rehab at full pay, if they PUNCH THEIR SUPERVISOR IN THE FACE they go to anger management. (His exact words) So when a lot of people are working for $10 an hour in the Maritimes, or maybe $15-$18 in Ontario, they may feel like the autoworker has it pretty damn good. And in todays factories they can work 25-35 years without the body breaking down, they don't usually stand in one place and do the same thing repetitively, at least not in a Japanese style auto plant. We all need the autoworker, (much as, although some may wish it wasn't this way, we all need the car dealer) but I personally believe in EARNING your money, and getting 10 paid weeks off per year ain't exactly slaving away...

[barrie1]

You must have at least a Grade 12 to get into any Auto Factory in Ont and they would prefer even more education as they like to promote from within. They do not start out with the hi wages as it takes years to get to top rate. The actual cost of living in every province also dictates the economy and the cost of housing and even your products. I feel sorry for your friend as he is undervalueing himself and dosen't even know it. His Company is charging at least $250. to $300.  an hour for his services and he says he's only worth $15.00 to $18.00 an hour. Wow have they got him Brainwashed. You are worth so much more tho as you  Sell the end product. HH'mm I find that really interesting as you are on the Mangement side of a Dealership and are so much better then the lowly Union Workers. They are the ones who buy your product so you should be happy they can afford to buy it. Take their good wages away and see how many you can sell. You wouldn't last a month in a auto plant with those views, they'd eat you alive.

[ovr50]

You two can agrue all night about what an auto-plant worker is worth; but the fact remains that one of very most serious reasons GM (and Ford) is in financial trouble is that the union contracts signed in prior years have rendered these two comapanies uncompetitive with the rest of the global automakers. Pension and legacy costs for GM are somewhere between $1500 and $2000 PER VEHICLE produced. These are facts and everyone in Detroit knows them well. Either the unions take some of their won gains out of the contracts or GM and Ford will be continually playing catch-up to the Japanese and Koreans. The Germans are not much better off in this sense than GM/Ford as their labor rates and benefits are sky high also. The unions are part of the problem with the domestics and that is a FACT. Not the only problem, but certainly a big part of it.

[barrie1]

Is that in American Dollars or in Canadian Dollars on the costs Ovr as The Canadian worker has a tremdous advantage in hourly costs and quality. Its well over a $1000. per car.

[ovr50]

That's the US situation, Barrie, not the Canadian side at all. I believe the Cdn operations are superior financially, unfortunately it's the US side that will figure in GMs being able to survive in the same form as they are today. I doubt that GM would cease to be - that's too drastic; but some further divisions of GM may have to be cut off and/or some form of financial restructuring. The US unions may well have to eat some of their gains.

[mr914]

It's strange to see bashing unions and the lack of credible compact cars in the same thread.  Since my Honda was stolen two months ago, I've driven two big 3 compacts.  Sunfire and Focus.

Pontiac's Sunfire is a total basket case, thank god it will be going out soon.  Where was it made?  By that UAW stronghold in Mexico.  If the wages aren't cheap enough down there, where are they?

I just bought a Ford Focus.  Unfortunately for Ford they canned too many of their engineers under Black Jacques Nasser.  The quality of the 00 and 01 Focus was poor, and it probably discouraged many potenital buyers (like myself).  Since I read better reviews of 02 and newer Focus, and I like the option of a 5 door, I decided to give one a spin and found it to be a superior vehicle to the Civic or Corolla in every way other than potential reliability and fuel economy (and that second one, it is not that far off).

Seeing as Ford owns Mazda which produced the top selling 3 here in QC, it stands to reason they could take that knowledge and build a killer Focus replacement in Mexico.  They have so far chosen not to.  Although, note that they have stuffed Mazda engines into the 05 Focus.

The main problems with the Big 3 are:

- Creative accounting in the late 90's early 00's.
- Lease vehicles coming back too devalued to make a profit.
- Poor long term manaagement.  This is on every level.  Product development, accounting, marketing...
- Yes, extravagant labour agreements.

The strong points for the big 3 are that they now own the technology to compete, if they wish to.  They also have the best dealer network in North America...but they need to give them the product in all categories.  Trust me when I say that in the US, making trucks was more than enough in the late 90's and probably still is.  This is changing and the big 3 need to evolve or die.