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OT - Big Three Analysis - Sort of

Discussion in 'Off Topic Threads' started by dmarbell, Dec 16, 2008.

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  1. dmarbell

    dmarbell Active Member

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    I searched google on "toyota vs gm" with various phrases added to the end. It appears there are bragging rights attached to Toyota overtaking GM in vehicle production in 2007, although there is some debate, including sales vs production, intercompany sales, etc.

    You often hear in the debate about the Big Three that "they are making cars that people don't want" or "they have to make cars people want."

    Based on the fact that GM has produced and sold about as many cars as any other carmaker on the planet, I'd have to say the above sayings are not true. They have sales a'plenty to go around.

    This means, to my meager reasoning abilities, that GM has completely miss-managed the company. Costs per car must be out of balance, either in total costs, materials costs, or labor costs.

    Hell, I'll quit pussy-footing around. It's the labor costs, dummy. GM is paying about twice per hour what Toyota pays in the US. I don't know the stats yet, but I'd bet that GM car builders are not twice as efficient on the job as their Toyota counterparts.

    GM needs to reorganize, even if it's in Chapter 11 Bankruptcy, to get its costs in line with its sales. It looks like it would be hard to build and sell 9+ million units and lose so much money you'd want to be nationalized!

    Danny
     
  2. crusha

    crusha TS Member

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    It's only their North American operations that are the problem. If they just walked away from N.A., they'd be profitable tomorrow morning. Any idiot can see they're not competitive here from an operations standpoint. They continue to do business "here," solely to generate cash flow to keep the promises they made "here."


    It ain't that hard to understand, folks. If you hate retirees, union people, and suppliers and want to put them all on the street, vote for B'ruptcy.


    But I'm guessing that from the looks of the unaccomplished pin-head that just became President, a crystal-clear Ayn Rand America isn't exactly what we live in.


    Every other industrialized nation protects their domestic producers tooth and nail. We just became another one of them, that's all.
     
  3. Delbert

    Delbert TS Member

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    PEBHO can run GM very well, given all his management experience.
     
  4. pendennis

    pendennis Well-Known Member

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    Pat - Not hard to figure. Canada has very high corporate taxes, and they have socialized medicine. Their CAW is far more militant than the UAW.

    Dennis
     
  5. BMC

    BMC Member

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    I believe the Texas Toyota plant has many of its supplier manufacturing facilities on site. That in itself would curb costs (increase profitability).
     
  6. Bob Schultz

    Bob Schultz Well-Known Member Supporting Vendor

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    Picture worth a thousand words..
     
  7. dmarbell

    dmarbell Active Member

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    I've tried, and I can't figure out how much labor cost vs. materials cost is in a GM car. I seem to recall 33 hours of labor per car for GM. At the reported total labor rate, including retirement and benefits, or $75 per hour, that's $2,475 labor per car.

    Toyota workers in the non-union South make about $40 per hour. At the same 33 hours, that's $1,155 less cost per car. With markup, GM cars of the same class should be $2,000 to $3,000 less than the Toyota models. At that price difference, we'd all be buying GM and Toyota would be back to marketing cheap crap like the Corollas of the late 1970s.

    I know bankruptcy is a dirty word. How about this "Contract with America?"

    GM: file for Chapter 11, break the union contracts, reduce labor rates to the non-union rates, cut management by 80%, and we'll all buy Big Three cars for the next five years.

    "You may say I'm a dreamer, but I'm not the only one. I hope some day you'll join us, and the [country] will live as one." -- John Lennon, Improved.

    Danny
     
  8. jbbor

    jbbor Active Member

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  9. R.Kipling

    R.Kipling Well-Known Member

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    Having been in business, project leadership and analysis for 30+ years, I have no doubts that there is much more to the current situation than just Labor Costs.

    There is certainly enough blame to go around. The real question is, is there enough character left to turn it around. Everyone benefited, even when they shouldn't have. Now, those same 'everyone's' should have to suffer to correct it. I'm still skeptical as to the ability of those involved to make the constructive sacrifices for a sound recovery.

    Fortunately for them, and just as unfortunately for everyone else, the beltway owes the unions for the last two elections. Detroit will get what they want, they paid for it, just like Wall St. I only wish that all our retirement accounts had such a great ROI.

    Kip
     
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