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Does America Even Need Its Own Automakers?

Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,271
NOTE: This is a *longterm* thought exercise.

Some people think the Big Three are all headed for bankruptcy--at least a Chapter 11.

Could we plan ahead rather than watch the whole thing collapse and have to patch it up with government subsidy, or the court system, or dismantling by corporate raiders?

Couldn't Americans just buy their cars from someone else who can do the job better? We seem to be doing that more and more each year anyway.

Foreign companies could build them here of course,(as they do now) so jobs and benefits might not be eliminated.

America doesn't have to build everything of its own. It seems not to need a domestic camera industry for instance.

So, do we plan ahead or do we let stubborn pride force us to watch the whole industry sink into decay (e.g., like it did in Great Britain in the motorcycle and car business).

Kurt Vonnegut thought that the US government needs a "Secretary of the Future".

Should we put him/her on this problem right away?

MrShiftright
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Comments

  • steverstever Viva Las CrucesPosts: 41,295
    So, who do we farm out the tank and HumVee production to?

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,271
    ???

    Same people who build them now. General Dynamics and AM General. They don't make cars.

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  • british_roverbritish_rover Posts: 8,476
    I need to think about this for a while but I can see this happening for sure.
  • fezofezo Posts: 9,387
    I don't know yet but anything that starts quoting Vonnegut is a discussion worth having!

    Let me think about this one....
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,271
    It's a BIG chunk to think about--another world really, or at least another kind of "America".

    Well maybe we can look at it this way as time marches on:

    inventor of the car: Germany (1880s)

    developer and perfector of the car: France (1890s--1910)

    producer of cars and trucks for the western world: United States (1910--1975)

    producer of cars for the global economy: Japan/Asia (1975--to the future)

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  • iluvmysephia1iluvmysephia1 Posts: 5,711
    that last sentence in your above post should make all of our stomachs turn and/or ache a little bit. Mine just did as I was a Ford man up until 1999.

    Gonna have to think on this one some more, as everyone else has said. ;)

    2011 Kia Soul Sport 5-speed

  • jeffyscottjeffyscott Posts: 3,855
    Foreign companies could build them here of course,(as they do now) so jobs and benefits might not be eliminated.

    So then what would it even mean to say that the US had no domestic automaker? Suppose Toyota were to buy GM and Honda were to buy Ford (and Daimler had not sold Chrysler). The foreign owners could still employ not only the factory workers, but also the corporate level Engineers, etc. The makes could even be maintained as divisions...eg, the Chevy division of Toyota. Would the US economy lose anything more than a few overepaid executives in this scenario?
  • british_roverbritish_rover Posts: 8,476
    My computer crashed and I lost my post grrrahasdjkfhlaskhdflaksdf
  • british_roverbritish_rover Posts: 8,476
    My junior year of college I took a World Politics and Economy Class taught by Edward Weisband easily one of the most intelligent people I have ever met.

    One of the themes from the class was that countries would become more and more specialized just like people and companies.

    As the global economy becomes more integrated countries will specialize in industries that they have natural advantages in. Also the more established industrial countries will specialize in industries with the highest level of value added profitability.

    We are in the transition phase right now in the US of coming from an industrial based economy to an information based economy. In the next dozen years or so the US could very well loose much of its lower tech industrial and assembly jobs.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,271
    Somehow relying totally on an economy that sells information gives me the willies. Information is so easily copied and/or stolen or rendered irrelevant, whereas if I sent you into the woods with an axe it would take quite a long time before you'd call me on a cell phone you made. :P

    America is still tops at making plenty of "hard" stuff---construction equipment, hi-tech weaponry, aerospace, etc.

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  • british_roverbritish_rover Posts: 8,476
    Exactly but much of the lower level stuff will be moved out of the US.

    Levels of value added profitability...

    1. Resource Based Mining, Lumber Oil/Gas Etc.

    The profit level here when measured as a percentage of investment is the lowest. These are already being moved out of the US for various reasons and this will just be accelerated as time moves on.

    2. Resource Processing.

    We have already seen this happen with the US steel industry as it has nearly completly collapsed. Most of the steel mills left are mini mills that are recyling steel instead of making virgin steel.

    3. Low Level Manufacturing.

    Small low tech devices like basic appliances, furniture construction materials and textiles. Again much of this industry has left the US.

    3. Automobile manufacturing.

    Some has left the US although plenty is still here. I don't see this ever complety leaving the US but I can see it changing drasticly.

    and so on and so forth.

    The top level currently is phramaceuticals. The Profit potiential is huge but it requrires huge investment and huge risk. You can make the drugs any where, India and Brazil make many low cost drugs, but the development is limited to a few areas.
  • steverstever Viva Las CrucesPosts: 41,295
    I was thinking General Motors and General Dynamics were still joint venturing but looks like they parted ways in '03. And I guess it is a bit hard to call the defunct Hummer H1 a car. :blush:

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  • jchan2jchan2 Posts: 4,956
    But perhaps it's possible. Honda and Toyota employ quite a few engineers and designers here in the U.S., and Detroit isn't getting any healthier economically.

    GM, however, seems to be getting back on track.

    I'll have to get back to everybody on this... In the meantime I'll bookmark it. ;)
  • lweisslweiss Posts: 342
    From where I sit (the high tech industry), the U.S. is clear and away the leader. The lower level stuff is done all over the world, but the big profits and creative things (like conceiving the software and designing the devices)- it's done in places like Silicon Valley and the Asians are relegated to being implementers and consumers- really, can you name one Asian software company that sells products outside of their home markets? To be honest, in many areas of creative intellectual property, the Asians are clueless. Also in entertainment, logistics, management consulting, food, and many other fields, we lead the way. I am not worried. The biggest problem is that many of the Asian currencies are way undervalued and manipulated. But even that will have its endgame at some point.
  • explorerx4explorerx4 Central CTPosts: 9,833
    edmunds outsource their hosts to india? :sick:
  • dino001dino001 Tampa, FLPosts: 3,510
    ... speed the process up, nor would I try to save any of the (not so) Big (anymore) Three. Let it play its course. If it so comes that we all buy cars designed in Torino/Paris (best esthetic design), engineered in Tokyo with input from Stuttgart or Munich, assembled in India or Russia, so be it. Any other scheme possible, too - I honestly don't care. Let the market and consumers decide if we need American brand. If guys in Delhi can do it better and cheaper, let them - I will get their product, hopefully for less - and they'll be rewarded. That's what the capitalism should be about - you do it better, you get the reward, you suck - you die (not saying domestics suck now - just making the point, whoever is better should win).

    On part of manufacturing - there is still plenty of that in America left. Some of them are kicking major foreign competition a!$#. It was inept and poor leadership both on management and labor levels that practically killed this industry in its present form. Oh, lets also give credit to those other guys' dedication and skills, shall we?

    Perhaps it will emerge - but if not somebody will pick up the slack - India, China, Eastern Europe. Who knows...

    2012 BMW 328i wagon, manual and sports package. No. sold in the US: 1. Probably.

  • iluvmysephia1iluvmysephia1 Posts: 5,711
    Maybe Edmunds should outsource it's hosts to India!! What provoked you to say that little incindiary tidbit?

    Are you saying the hosts here are...umm...overpaid...in some way? :surprise:

    I still would love to know why the Big 3 avoided making a decent small car for the last 40-odd years. Yikes. Talk about a long dry spell there.

    And in many respects, where's the relief? Could it be the Dodge Hornet? Made by an SAIC or Chery or who knows who lately? Does Dodge know who's gonna build their little Mini-Cooper stinger?

    2011 Kia Soul Sport 5-speed

  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,271
    We do this for LOVE! :blush:

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  • msindallasmsindallas Posts: 190
    Wow, I like deep philosophical discussions! Here's my $0.02:

    Whenever a consumable object becomes a commodity, it is bound to go where there is cheaper labor to manufacture it. It has happened with many industries (toys, steel, furniture, camera), could happen with many more (electronics, automobiles, pharmacy, aviation). The brilliance of the American system lies in inventions, enterpreneurship, and the thinking ability to come up with new products and market them while the window of opportunity exists.

    Autos are now a commodity, since they are mass manufactured and follow very similar designs (wheels at 4 corners, the same IC engine burning a mixture of gasoline and air, front wheels to steer and propelled by friction between rubber and tar/concrete). I wouldn't mind if the entire auto industry gets outsourced. What really bothers me though, is the institutes of higher learnings getting shipped overseas, to Singapore, UK, India or South Korea. Collective thinking in a socity produces the goodies, and if a nation damages the thinking process, it will be doomed.

    America saw great days with automobiles in the 40's thru the 70's and electronics from the 60's thru the 90's. I believe the next wave will be nano technology and bio-medical engineering, for the next 3 or so decades. Then those would get outsourced, too. Perhaps we will get into the modes of space travel, then.

    As our lives stand today in the global economy, the nation that comes up with a propulsion technology free of gasoline will win the race of having a higher standard of living for its citizens compared to the rest of the world.

    OK, I'll step off the podium now. Best wishes, - MS.
  • douglasrdouglasr Posts: 191
    ...for those who think the Auto industry is passe, and going the way of the buggy whip take heed: How else do we get around? Haul plywood? Kids to school, practice, groceries, etc. Until a better organisation of technology and society is evolved, the auto is still king.

    ...Sure it's nice to be the engineer, designer, production chief, but someone has to build what we buy. Being a Washing Machine assembly man (or women) is not glamorous, but autos still draw strings from the emotions of people, that sets an autoworker apart from people making TV's, although many would argue what's the difference?

    ...Even if you equate those workers the same standard in society, the Auto industry still accounts for one in six/seven jobs in Europe, one in seven/eight in America. The mulltiplier affect for one auto assembly worker is usually a factor of nine, and often three times that number. Slightly more than 3,000 people assemble Rolls-Royce at Goodwood, but nearly 85,000 people in supplier industries work providing parts that go into one car. The same holds true in America, for example at the impending Lincoln Mark S assembly line in Chicago---with more than 100,000 people working in supplier industries to make one car come off the line.

    ...Efficiencies in technology of manufacture will necessarily further reduce the numbers of auto workers over time, but at some point there remains a minimum required to manufacture cars, usually 3,100 per assembly plant. That's $108Mn is salaries at a mid level of $35k per year. So the average plant easily creates $150Mn is wages to the local econonmy. Ask any Governor of any state whether they would like to entice that kind of business within their cities, and you can bet what the answer might be.

    ...whether they build tried and true American brands, or whether transplants as Honda and Toyota, the people who hold those jobs certainly need them. Sure, they'd like to be engineers, etc., but not everyone gets the chance or makes it that far...and often many factory workers find their niche (as my Grandfather did working for Lincoln Motor Company in 1921) within manufacturing.

    ...OK, labour is cheaper in China, where average salaries are 35% less than America in the big cities, ($18,000 purchasing power parity in Shanghai), and the emerging nations as India. "Sure" let's off shore all of our auto manufacturing to the lower paying wage nations...for a time the cars will be cheaper to produce, but eventually the wage rates will rise, making the game less of a bargain. We can't all have jobs in service industries...someone has to build things, that is the march of civilisation.

    ...until a leaner, more convenient, or nimble evolution of individual transportation comes round, or environmental disaster strikes through increased global warming, or political upheaval strikes and fascist regimes in the Middle East cut off the oil, the automobile is the mode of choice. Evenso, it will be for some time.

    ...does America and Americans really want to cast aside an industry that provides so much? What would replace it in our society, what industries would take their place and still provide the incomes necessary for home and hearth?

    'Till then, keep the wheels rolling. Because Autos are the 'Real Deal'.

    DouglasR

    (Sources: CIA World Fact Book 2007; Automotive News, Wards Automotive, Edmunds Online)
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,271
    Whether America wants to cast aside an industry or not isn't the point, is it? The market forces will tend to dictate. I'm sure the dinosaurs didn't want to go extinct either.

    I do agree though that a country needs to actually MAKE stuff...it can't just sit there and "think" all day while the world slaves away for it...we know from history where that goes. It needs that creative energy and that muscle.

    But it doesn't have to be about cars, any more than our national identity had to revolve around cameras or VCRs or all the other commodities we have allocated to others to make.

    My main concern is that America "follow the new model"...if it just sits there and waits for its auto industry to collapse without adapting beforehand, it's all going to be worse.

    Great Britain did nothing about its motorcycle and auto industry and they both fell crashing into a smoldering heap of rubbish, with lots of hardship all around. Now the UK is fairly prosperous again, as a financial capital and also maker of other things. But it could have all been far less painful with the right planning. Triumph, BSA, Enfield, Norton---they could have all looked at the 1970 Honda Four and said "look, we're screwed. This is twice the bike at half the price. Let's get into the office furniture business".

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  • smalltownsmalltown Posts: 72
    I am not a gearhead like a lot of you. From my perspective as a consumer, companies with a complete line and manufacture all or most their own parts are history. They will need to narrow their focus. If you look at bicycles, one of the major players is Trek based in Waterloo, Wisconsin. But they use a lot of Japanese parts. American companies are in there, usually starting with high-ends parts, not the mass-produced parts for cheaper bikes. For automotives, take a look at the Indy 500 field, all 33 cars are using Honda engines (http://www.indycar.com/grid/index-indy.php). All of them are also using Firestone tires. I would not be surprised, if in 20 years, I see a Ford or Chevy with a Honda engine, advertised that way.
  • nwngnwng Posts: 664
    I think we already missed the boat on leading in developing alternative energy and products that are self-sustainable. All we can do now is play catch up in that area, which is huge.

    Nanotech is going to be huge as well, but I hope we will also be the one who implement this technology in different products. Nanotech and biomed engineering is going to shore up my local economy (boston) for the next 10-20 yrs. There are tons of small companies who are doing R&D work just in these two areas.

    okay, back to cars. Are there nanobots that can change the chemical make up of the sludge that are founded in many yota engines so they can be flushed out?
  • iluvmysephia1iluvmysephia1 Posts: 5,711
    nanobots have green heads?

    Do they even have heads at all? This is getting pretty deep.

    2011 Kia Soul Sport 5-speed

  • fezofezo Posts: 9,387
    I guess I am ready to start diving in....

    I think I come down on the side of not needing our own auto makers. We'll need some assembly plants like we have now but in the long run if GM, Ford and Chrysler fold the others will just fill in the gap.

    That said, I would rather that not happen. There is something about our self-image as a nation that would take a beating from taht even as most of us don't buy American cars.

    I would mourn the loss of GM, but the company that I think of as GM has been gone for a long time. If they can reinvent themselves and remain relevant in the new direction they seem to be taking more power to them. I'd like that.

    One thing I haven't seen yet and won't for several years barring one of my cars getting totaled is how I would behave with a few competitive American vehicles in the market that I'd be shopping in. Saturn now has the Aura which I would indeed look at. I'd look at a Fusion though giving it only token "American car" points since it isn't built here.

    I think the next round models coming out will tell the tale.
  • gagricegagrice San DiegoPosts: 29,052
    Well our basic mode of transportation is all made in China, our shoes. The last major shoe company I know of Dexter is now made in China. I am keeping my Made in USA Dexters in good condition. With a little TLC they should last the rest of my life. I don't think I am ready for a made in China SUV or PU truck. I may have no choice.
  • british_roverbritish_rover Posts: 8,476
    Errr aren't new balance shoes made in the US?

    Plenty of more high end shoes are made in Europe. I had some great driving shoes made in Italy but they finaly wore out a while ago.
  • gagricegagrice San DiegoPosts: 29,052
    Not sure, I know Clarke's are made mostly in China. They were my favorite sandals. It looks like you are right about New Balance. On their website NB claims 25% of their shoes are made in Maine and Mass. They also claim to have added jobs since 1995. If I need athletic shoes that will be my choice.
  • louisweilouiswei Posts: 3,717
    If I am buying a LCD HDTV, I want the one that offers most crystal clear image, regardless where is it made - right now that'll be Sony.

    If I am buying a pair of tennis shoes, I want the one that fits my feet best and most comfortable, regardless where is it made - after many years of experiment, I am sticking with Nike for now.

    If I am buying a daily driver, I want the one that has great style, best in class interior material, fit-n'-finish, class-leading horsepower with a modern engine and a touch of luxury without breaking the bank, regardless where is it made - right now that'll be Lexus and Acura.

    If I am buying a weekend fun car, I want the one that has great style, great handling and the best bang for the buck, regardless where is it made - right now that'll be the Corvette.

    If I am in the market for small size business jet, it'll be a Learjet, regardless where is it made.

    If I am in the market for a medium size business jet, it'll be a Gulfstream, regardless where is it made.

    If I am in the market for a Large size business, it'll be a BBJ-737, regardless where is it made.

    If I am a foreign country in the market to upgrade my air force and looking for a multi-role fighter that can do it all without resorting to raise tax, it'll be a Lockheed Martin F-16, regardless where is it made.

    Consider I want my F-16s to achieve their highest potential and be most effective, I'll get some Raytheon AIM-120, regardless where is it made.

    All right, my points are...

    (1) Regardless where is a product made, as long as it has great quality at a reasonable price, people will buy it.

    (2) US should be the leader in advanced technology industry (like right now for example in aerospace) and continue to be. Being a leader in automobile manufacturing would not keep US as number one but having something other countries don't would.
  • fezofezo Posts: 9,387
    Next time I need an F-16.....

    Heck we had a doozy of a fire down here because of an errant F-16 flare. But I digress.

    Your point is valid. If there is to be an American car industry in the future it will have to be the best in their area (be it small cars, large cars or light trucks).

    New Balance makes as many shoes in the US as they can afford to make and still turn a profit. Most of their American product is high end stuff -professional running shoes and such. I still but New Balance all the time bot because they are trying to do the right thing and they make good shoes.

    I still have some Dexters made in USA but my middle age spread has moved to my feet s it's difficult to stay in them.
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