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Does America Even Need Its Own Automakers?
Mr_Shiftright
Member Posts: 64,481
in General
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
Visiting Host
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
Visiting Host
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This discussion has been closed.
Comments
Same people who build them now. General Dynamics and AM General. They don't make cars.
MrShiftright
Visiting Host
Let me think about this one....
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)
Gonna have to think on this one some more, as everyone else has said.
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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?
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.
America is still tops at making plenty of "hard" stuff---construction equipment, hi-tech weaponry, aerospace, etc.
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.
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.
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...
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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?
2021 Kia Soul LX 6-speed stick
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.
...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)
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".
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?
Do they even have heads at all? This is getting pretty deep.
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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.
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.
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.
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.
Why is this the "right thing"? Would it also be "the right thing" for me to buy Chinese made shoes for $35 and then send a check for, say, $20 to a randomly selected New Balance employee, or a maybe to a former shoe factory worker who has lost his/her job?
There is nothing particularly wrong with producing products in other countries unless you start following the old "Gee, I can make it even CHEAPER over here because they haven't outlawed sweat shops and let 8 year olds put in 40 hour weeks."
New Balance workers in The United States make a decent living. Turnover is very low.
I respect New Balance. I don not respect Nike.
Agree, but there is nothing wrong with making it there if workers are not being abused in any way and are happy to have the job for $2 per hour rather than the $20 that might be required here.
I do not see it as my responsibility to ensure good jobs for U.S. New Balance workers, just as I do not see it as my responsibility to ensure good jobs for U.S. employees of Ford or GM. Instead it is their responsibility to make a product that people freely choose to buy.
Well you CAN, and we DO this all the time, but it's a dirty little secret...
Where it not for US government intervention, the Big Three would probably be dead and buried by now, having been destroyed in the 1980s by foreign automakers. We demanded all kinds of "domestic content", put embargoes on trucks, and (rightfully) attacked the "dumping" violations. Basically we threatened the Japanese and they responded by easing off on Detroit.
I firmly believe that left unmolested, in a totally free market, Japan would have annihilated American automakers just like they did British motorycycle makers.
MrShiftright
Visiting Host
These days, buying GM or Ford funds jobs in Canada and Mexico...that's where they're investing in factories that create jobs. I want to know that the money is going to American COMMUNITIES, not American CEOs...big difference there.
Fact is, America DOES need a strong automotive and heavy equipment industry. Without it, we don't build the M1 Abrams, or the Humvee.
MrShiftright
Visiting Host
I guess my thing is that if I see someone making an effort to maintain our American factory base and the product and price are competitive I'll likely buy from them. My first pair of New Balances were more a statement of support. After that it was all on the merits of the shoe.
Likewise, if we are looking to replace our Accord and the Aura is competitive I'll look at it. Ir I reached a point where all that separated them was country of origin I;d likely buy the Saturn.
Trade needs to be fair, not free. Trade needs to be reciprocal, and so do barriers. That means that if South Korea doesn't allow the US to export cars to them (and they don't) we reciprocate by restricting or eliminating their export of cars to us.
I would hope we never need to convert that much of our civilian production capacity over to war time production every again.
I don't think we even could do that. Modern automotive plants are so specialized that building tanks out of them would require a huge investment in time and money.
Long wars will only be small wars.
I WISH there was global competition to design a new Humvee--it's really proven to be not worth very much in modern warfare.
MrShiftright
Visiting Host
Anyone subscribe to Janes?
Year after year your money goes into keeping teh machine of that complex rolling. Sadly, it does not necessarily correlate to the needs or even the best interests of our military and our country.
But nonetheless....sure...whoever makes heavy trucks, payloaders, tractors, forklifts, busses...surely they can make whatever we need for defense.
Needing Humvees would be a poor excuse for keeping The Big Three corpses alive, should they further deteroriate I mean.
MrShiftright
visiting host
The military is eventually going to need a replacement for the Hummer, probably something smaller and more survivable. And GM and Ford are going to end up trying to make it...they'll have to.
What would be REALLY useful is a lightweight, WRX-type vehicle. Too bad no American manufacturers make anything like that, except for the rally version of the Focus.
Well, I actually tend to do the same in some cases...last time I bought tennis balls, I bought the made in US ones rather than the made in China ones. They were the same price and I assumed there was no quality difference between Penn and Wilson. I like New Balance shoes too, though I think mine were probably not made in the US ($35 on sale at Kohl's, IIRC). I'll have to take a look. I previously had no idea they made shoes in the US.
My Mazda6 was assembled by UAW labor in the US, but that was not a factor in buying it at all.
My wife's Jetta was assembled in Mexico, but that also was a non-factor. We are not opposed to those folks having some decent jobs, too.
You'd be right there. The stuff that's US made is high end stuff. You and I are working the other end... Just checked the shoes I'm wearing now - China. Of course I also managed to buy the one Chinese import that is expensive - (well, not actually bought but it sure cost) my five year old daughter. I do worry that someday she'll be asking me why I took her from this major economic powerhouse instead of just moving there....
I'm with you on the cars. Were I buying now a Mazda 6 would definitely get a look.
How's the Jetta? VW always makes me nervous. I once owned a Rabbit....
I did point out to my wife that my 6 cost us $3000 less than her Jetta