(Of course, the cars themselves are pretty bland, but that's the fault of management, not the union or the line workers.) Of course, as another indicator of GM management genius at work, these very same plants are slated for closure! (I suppose that shutting your best plants is expected to help product quality???)
What you are forgetting is that, at GM, which line gets to produce what new model is not entirely the management's decsion to make. UAW has to approve production changes. The CAW plant is getting shafted due to union politics; UAW included R&D resources and product update provisions in the union contract for its own facilities, with no money left for CAW plants. The same reason why Saturn was starved to near-death for lack of new models when it was on a separate contract. UAW can not allow any experiment to succeed that might undermine UAW power.
You simply do not know that Toyota has numerous business adventures.
As usual, you mix apples and oranges. Toyota has tended to buy suppliers and make JV investments, a seperate issue from buying bad automakers with the purpose of trying to gain synergies from them
Toyota is fastidious in its efforts to control parts quality, a key driver of its success. In contrast, GM buys losing automakers, and then wonders why they don't turnaround. Being that GM can't even turn itself around, how can it be expected to make other broken companies become successful?
The union had nothing to do with GM's refusal to automation.
That's where you are very wrong. The union dragged their feet as long as they could. Even the union eventually saw the writing on the wall, and put a poison-pill provision in the automation agreement: job banks! That's where the job banks came from: union concenssion on automation for exchange to be paid full wage while watching TV! Of course, that dramaticly increased the cost of automation and delayed/inhibitted its wide adoption at GM.
Not sure how to respond to the rest of your article. What does foxhole have to do with cars? If anything, cutting yourself out of global collaboration only makes you weaker and less prepared for the day of reckoning, while others pull ahead helping each other. Nationalistic self-sufficiency simply does not work; check out the North Koreans.
What a joke, coming from someone who compares rental fleet sale average to retail sale average with a straight face.
Toyota has tended to buy suppliers and make JV investments, a seperate issue from buying bad automakers with the purpose of trying to gain synergies from them
So what exactly did Hino, Daihatsu and Subaru supply Toyota? How is that any different from GM's purchase of Saab?
Toyota is fastidious in its efforts to control parts quality, a key driver of its success.
And the quality of work force helps a lot.
In contrast, GM buys losing automakers
There's nothing to contrast. Hino and Daihatsu were in dire straights when Toyota bought them. In fact, even to this day, Daihatsu is somewhat of a joke brand; the equivalent of either Daewoo or Yugo in our market in brand perception. Even Subaru is not doing well. The smart buys are always made when the acquisition target is down. I suppose, if you were in charge, you'd be paying top dollars for hype instead ?! Like I said, many of us here could have done far worse than the actual GM management has done.
That issue was already settled in the early 90's discussion. The Japanese government decided not to allow the consolidation of their big-three: Toyota, Nissan and Honda.
There are two main reasons why GM products usually can not command as much of a price premium as Toyota products (except for Caddy, Saab, Hummer and Corvette):
(1) Reputation. GM products were atrocious in the 70's and 80's. Contrary to Rocky's point about outsourcing, there were no outsourcing back then, so UAW workers were/are quite capable of ruining the brand without outside help. Consumer perception takes time to turn around. Case in point, MB product quality is probably below that of GM nowadays, but MB is living off its reputation from the 80's, whereas GM has to live down the reputation from the same era . . . rather ironic.
I'm pretty sure Socala, already pointed this out to you in a previous post. I will say it again brightness. GM had no competition besides Ford and the nearly bankrupt American Motors/Chrysler. :confuse: I agree competition has driven quality improvements, but blaming R&D funds on the union is atrocious :mad:
GM's management teams back in the 70's and 80's had no vision of the future. They were greedy and invested in failing company's which they thought they could turn around to get a healthy return on. Yes some worked out, but many failed. :sick:
(2) Simple supply and demand. When a Toyota model doesn't sell well (yes, even Toyota has those models, contrary to union supporters belief that a good management only turn out desirable products), Toyota simply cuts back on production to maintain price point. Case in point, the last generation Lexus IS started sale in the 2k/mo range, and eventually wound down to a trickle of about 400 units per month. If Toyota kept cranking them out at 2k/mo, there's no way they could maintain price close to $30k. Timely production reduction to maintain price point is usually not a realistic option for GM management. They have to pay union workers at full wage regardless whether they are making cars or watching TV. The loss in revenue and profit from driving price down with over production is far less than the loss that would take place if no cars were made yet the workers had to be paid the same regardless. Also, temporarily line idling and product mix change on the production line all have to get approval from the union. Yes, GM management does not get to really manage.
You are obviously referring to the Jobs bank again. Funny how you can use a program that was a pimple in size, to some how offer GM's past management a free past on the simple fact that they build crap cars in those two decades. :confuse: CEO's and other upper mangement were either making million dollar pay days back then. A bottom level floor supervisor was making in the 80's over $80-100,000 a yr. way back then. How much was a Middle and upper level white collar workers making at the most "Top Heavy" company in the world ???? At one point GM had 50 White Collar workers for every 1 union worker. Granted this included foreign white collar workers, but it should give you a idea of how many paper pushers were at the company during the "hay days"
IMHO, new production lines often experience glitches at the very beginning of production. Even Toyota's early US output was subpar in quality compared to cars shipped from Japan. That problem is usually overcome rather quickly; meanwhile, the company has to count on its reputation during the transition. Toyota made the transition just fine. BMW also made the transition okay with its South Carolina, Finland and Hungary productions (Z3, X5, X3 and Z4); in fact, BMW's facility in South Africa has one of the lowest defect rate in the BMW empire despite its rather dubious beginnings.
I agree robots are less likely to make mistakes, and GM in the 90's had the technology to move to automation on a small scale. Why isn't GM/Delphi moving to automation at it's foreign plants ????? They wouldn't have to even pay as many Mexican workers $2 an hour. :P
BTW- FYI- At Delphi Coopersville, back in 99'-2000' Delphi hired a very well decorated engineering/buisness graduate from Kettering, and they paid him $676,000 for one year before he was wisked away by another company. This guy made more than twice as much as the plant manager, and he still wasn't happy that delphi gave him his first real shot. From what dad told me he played hours of solitare because Delphi management didn't have any large assignments for him. This guy finally got frusterated and was looking for a challege, thus leaving. Perhaps he felt bad that he had a "jobs bank" style of job ? :P Or perhaps he felt his education was worth more than the $676,000 salary he was being paid ? It's examples like this that gives a full picture of the short sightedness by many that constantly want to blame GM and Delphi for the failures of managements leadership.
The union has no control of R&D and holding Rick Wagoners feet to the fire if he doesn't allocate suficient funds to make better product. However we all agree that GM either has to cut the number of brands, or atleast give each of the brands a distiguish presence. hopefully one of the two will happen so that R&D just doesn't get wasted and badge engineering doesn't comeback. Toyota's buisness model is superior, thus resulting in record profits. Honda also has a great buisness model, and they are going to be #3 within the next 5-10 years.
I do feel Ford and Chrysler, will fall further since either haven't offered the products that americans want on a large scale. GM is getting all the Press Coverage currently, but they atleast have a good 2007 line-up which should keep them alive along with these new cost cutting measures in my opinion.
It's going to get very interesting next year. :shades:
"Sure, I'm lumping everything together, because the R&D budget for each company is one single aggregate number on its financial statements."
All I'm trying to say is that GM doesn't necessarily NEED to have 2x the R&D budget of Toyota SIMPLY because it has 2x the number of nameplates. Dragging the old 'extraneous nameplates' issue back up is simply (IMO) unrelated to the R&D budgets issue.
Yes, badge engineering isn't "free"; I never tried to insinuate it was. Yes, having such a large number of nameplates may be more of a liability than an asset. But I don't think that the QUANTITY of R&D dollars spent by GM (or Toyota for that matter) is necessarily a smoking gun.
"In any case, you can survey the marketplace and gather where each company puts its R&D investments."
I put a lot more stock in this. It isn't necessarily HOW MUCH money the respective companies spent on R&D, it's WHERE the money was invested.
"The culture and vision of the Japanese, is domination. They are indeed very intellegent people, but I as american still feel cautious about them, the same way I do torwards the Russians. Until we fight side by side in a foxhole that feeling of doubt will most definetly be there."
You can now sleep at night and not worry about "Japanese Culture of Domination" since they do have troops in Iraq.
As for the culture of domination..I wouldn't call that a Japanese culture but more of Global Corporation culture shared by many big companies. (Micrsoft, GE, Mac, Vivandi, Dutsch Telecom, Shell....they all play for the total market dominence..)
What a joke, coming from someone who compares rental fleet sale average to retail sale average with a straight face.
I did no such thing. You obviously didn't understand the Bloomberg article or the data from the guy at DB. The comparison was the average wholesale sales price of a GM product to the average wholesale sales price of a Toyota product.
There isn't a single wholesale price for cars. The fleet buyers get lower prices that are effectively subsidized by the automakers. A dealer that sells a car to a retail customer will effectively pay more for that car than would Hertz or Avis.
Above, I provided the fleet data, and we can see how dependent GM has become on that low-margin, brand-killing line of business. In contrast, instead of focusing on amortizing fixed costs to the point of obsession, Toyota has spent its efforts on brand building and quality, even if it results in somewhat reduced throughput whenever the line needs to be stopped to fix a defect. Unfortunately, quality reduces margins (or at least it appears to on the surface), which is a primary reason why Detroit has been so adverse for so long to prioritizing it across the board.
Keep bashing strategies that are actually working out well on the ground. 9-7X helped Saab to achieve the best January sales in its half a century history in the US.
Let me guess, instead of strategies that proved to be big money makers: such as deriving luxury branded versions from common platforms (isn't that what Toyota and Honda do, too?? 3/4 of Lexus and Acura unit sales are based on Toyota and Honda model platforms), and M&A that made windfalls . . . you would spend all money on developing domestic production of small cars?? What a joke. You would not even have the money to spend to begin with if not for the M&A + spin-off windfalls.
I did no such thing. You obviously didn't understand the Bloomberg article or the data from the guy at DB. The comparison was the average wholesale sales price of a GM product to the average wholesale sales price of a Toyota product.
You obviously did not read what you quoted yourself. Here's what you quoted in post#1301:
"The average fleet transaction price is about $15,000, Rod Lache, an analyst with Deutsche Bank Securities Inc. said in an interview in November. That compares with an average price of $18,861 that GM charged for all wholesale transactions, including fleet sales and sales to dealerships, in the first nine months of 2005, he said."
What kind of nonsense study is that?! Rental fleet and retail have different product mix. Nowonder Lache is an analyst not an executive.
The fleet buyers get lower prices that are effectively subsidized by the automakers.
Why the subsidy? Perhaps the rental company is owned by the carmaker? Therefore "subsidy" is just passing money from one pocket to another? How does that constitute a loss?? If on the other hand there is no subsidy but simply having to sell at lower price to clear the inventory . . . don't you think the same cars if had to be fed through the retail channels would depress the overall price for those models?? Didn't you learn supply-and-demand and price elasticity in B-school?
Go back to the depreciation and lease business model I illustrated earlier. The shunting of part of the output to rental fleet is simply a way of reducing losses.
we can see how dependent GM has become on that low-margin, brand-killing line of business.
Why does GM have to crank out cars sell for losses?? Because the losses would be even bigger if the production line were stopped and the union workers still have to be paid full wage. Go back and study the model I provided earlier. I don't see you refute any of the math involved.
Toyota has spent its efforts on brand building and quality, even if it results in somewhat reduced throughput whenever the line needs to be stopped to fix a defect.
You are making things up as you go. Toyota slow down production or switch production in order to support price points; e.g. IS300 was slowed down from 2000/mo to 400/mo for the US market. There was nothing defective about the IS300. It was a deliberate production reduction in order to maintain the price point around $30k. Remember price elasticity and supply/demand curves from your B-school years? GM management does not have that option working under UAW contract. If Lexus had to crank out 2000/mo even if the market can only take 400/mo at $30k, what do you think would happen to IS300 price?? Exactly what's been happening to GM products: drastic incentives to move the other 1600 "undesirable" cars! If Toyota is smart, they will move some of that 1600 to the rental fleets for now, despite all the nonsense grief from backseat drivers.
9-7X helped Saab to achieve the best January sales in its half a century history in the US.
First, I advised you to avoid these superlatives such as "best", and give us hard data instead, as your references are generally suspect.
-Looking at Automotive News, I can see that GM sold a whopping 817 9-7X vehicles in the United States for the first two months of 2006. Compare that to the BMW X3, which itself has been a disappointment, yet still managed to sell almost 3,000 units during the same period.
-As of March 1st, it had 94 days of inventory, compared to the industry preferred average of 60 days.
-GM has already resorted to using incentives to move them off of their lots.
By all indications, this car is already a failure. At its current sales pace, it would seem that it will probably hit about 5,000 units for CY 2006, which would make it one of the worst selling vehicles in its class and in the GM lineup. I wonder how much R&D money was invested to create this mistake?
You should type less and read more -- you still don't understand the cite from the DB analyst in the Bloomberg article.
It's pretty simple, GM commands lower wholesale prices on average than does Toyota, because automakers earn less on their cars sold to fleets than they do on cars that are ultimately sold at retail. Perhaps KDHSpyder, who is in the auto sales business, can explain this basic concept to you more easily.
GM dumps cars into the fleet market, and earns lower margins as a result. An obviously bad strategy -- it's so bad, even they agree that it's a problem (even if they don't seem so serious about fixing it.)
All they did was slap a grill on it, moved the key to the center console area, add some wood, and changed the interior a little, and also tuned the chassis a bit. Good question, how much did this R&D cost them ? :surprise:
The funny thing is that even a low-volume specialty car such as the Corvette has sold over 30,000 units each year, which will probably prove to be about 600% more units than the 9-7X will muster. Yet some on this thread would like to point to this slowmoving SUV as some sort of success story!
It's a failure because why would you buy one over a Envoy, which it's specs are basically the same. For the extra chnge you save you can easily buy a GM factory warranty up to 100,000 miles and still have $$$$ in your pocket. The 9-7x would of been better if it wasn't a badge engineered, carbon copy, of the trailblazer/envoy.
GM had no competition besides Ford and the nearly bankrupt American Motors/Chrysler.
You are wrong again. The drastic brand images of domestics vs. Japanese imports (especially Toyota and Honda) was formed in the 80's. There was no outsourcing back then.
it should give you a idea of how many paper pushers were at the company during the "hay days"
Nobody cares about how generously the employees get paid during the haydays. If the company is doing extremely well, workers can feast on lobster every lunch and every dinner all paid for by the company, for all I care. It's when the company falls on hard competitive times, that inflexible union contracts become a problem. CEO bonuses and the upper-echelon hanger-on's all get shaken off in crunch times, it's the inflexible union contracts that bleed companies into bankruptcy and oblivion; a la US Steel, Pan AM, Eastern and United.
The union has no control of R&D and holding Rick Wagoners feet to the fire if he doesn't allocate suficient funds to make better product.
Not true at all. When Wagoner tried to improve quality and efficiency at one particular production line, it led to a company-wide work stoppage by the union, resulting in $4 billion in a few weeks. Wagoner had to back off. Let's face it, for all it's talks about interest in improving product quality, the union is not the slightest interested in any measures that may actually make the workers work harder.
(1) It takes far more money to develop the Corvette than to develop the 9-7X from Envoy
(2) Corvette is hardly a low-volume car in this context, with its 30k/yr sales. BMW X5, X3 and MB ML all sell for less than 30k units a year.
Selling an Envoy in Caddy or Saab skin is probably the easiest and lowest risk money maker there is. Even the top seller in this segment, Lexus RX is based on Toyota Highlander. It's funny how you berate GM management for not making hybrid and bash it again for dressing up the Envoy, when in fact RX makes far more money than Highlander Hybrid.
Put them on a boat and sell them in China. You'll take a loss anyway, but you won't be crippling your future home market sales in the process.
That was considered, too. The problem back then was that China was not WTO member, so it had ridiculous tariff on car imports. That's why the GM facility was set up in China, initially as a way to import cars as parts. Now that China is WTO member, Caddy is exporting American made cars to China. The problem with the $12k Malibu is that they already make better cars there for less.
Not true at all. When Wagoner tried to improve quality and efficiency at one particular production line, it led to a company-wide work stoppage by the union, resulting in $4 billion in a few weeks. Wagoner had to back off. Let's face it, for all it's talks about interest in improving product quality, the union is not the slightest interested in any measures that may actually make the workers work harder.
That is absolutely B.S. and if you did a little research for yourself you would know that the UAW workers exceed the rates set by the company. Perhaps this is an area where the UAW should back off on. They work so damn efficient they work themselves out of work.
You can go ahead brightness, and give Rick and the other CEO's a free pass and continue to blame the union. Like you said they were eating lobster in the 50's, 60's, 70's, and even in the early 80's. The mid-late 80's they had some tough times. The 90's they went back to just eating shrimp for the most part. In 1998-99 They ate Filet Mignon which were huge years. CEO's don't desrve to make the money they do. They make so much damn money, if they fail they still will beable to walk away very wealthy. They don't have to suffer like the union workers, who depend on years of success and longevity to beable to retire. It's not fair, but reality.
This unfortunate reality is why we needs a change from Capatalism to Socialism, or some other form of government, so good folks won't lose everything if their company goes belly up because of wrong doers that run it. My father and relatives work there butts off each day for the company, so they can hopefully one day beable to retire. It's a dream for most working folks to retire with a modest income until the big man upstairs take them.
It amazes me how many average Joe-Six-Packs, "get caught up" with the wealthy, that they will defend them when those same wealthy people, would squash them like a stink bug. :confuse: I guess so many americans figure if they vote, drive, buy, the McMansions of life, they can feel above the rest. The difference between them is the debt.
You should type less and read more. The same two points I have to retype for your benefit:
(1) GM and Toyota sell different cars. GM fleet sale and retail sale have different product mix. So it's quite pointless to compare the averages of either pair.
(2) GM dumps cars into the fleet market for a very simple reason: it makes more cars than the market can absorb. Toyota scales back production to maintain a price point; e.g. IS300 was scaled back from 2000/mo to 400/mo to meet the $30k price point. That is not an option for GM because scaling back production would cost more money than making the cars and selling the cars for losses.
Please go back and reread my post before the urge to type something anything in response.
Burlington Northern Sante Fe Railroad, Union Pacific, CSX, Spartan Stores, Meijer, Rowe International, Kellogs, General Mills, Rapistan, Johnson Controls, General Electric, Siemens, Westinghouse, Consumers Energy, Westinghouse, Bell-Textron, John Deere, Harley Davidson, Bechtel, Whirlpool, Honeywell, Southwest Airlines, Do you want me to go on........... :P
The difference is "Management" working with the union to achieve goals for success. However the Success of these company's will depend on how well the goverment protects them. What's next a illegal alien flying our airplanes ?
Thanks Socala, I thought that $4 Billion was a little inflated. I thought I read somewhere in one of the many articles of the Detroit News that the number began with a "2" instead of a "4" but I was to lazy to investigate it.
GM and Toyota sell different cars. GM fleet sale and retail sale have different product mix. So it's quite pointless to compare the averages of either pair.
The comparison is coming from Wall Street analysts, not just myself. Obviously, it points to a problem when two mass-market operators have grossly different wholesale prices.
GM dumps cars into the fleet market for a very simple reason: it makes more cars than the market can absorb.
Well, at last you've conceded the obvious -- GM's production methods and inventory management skills aren't exactly stellar.
Here's the funny thing -- look at the Automotive News inventory report of March 1, and you see these resounding GM success stories:
-The Korean-built Chevy Aveo, safe from the meddling of the UAW, had 131 days of inventory
-The Aussie-built Pontiac GTO: 142 days of inventory.
-Saab 9-5, built in Sweden by non-UAW workers, had 232 days of inventory
-And now for the crown jewel: the non-UAW Japanese-built Saab 9-2 had 825 days
Compare that to the UAW-built domestic Chrysler cars (52 days), Dodges (42 days) or Ford (55 days).
It's getting to pretty obvious that the real problem lies with GM management, for it seems uniquely blessed in its ability to fail with both imported and domestic lines with equal skill. Makes it easier to see why they can lose $16 billion on bad deals, without losing any sleep over it.
That is absolutely B.S. You obviously know nothing about the work stoppage in 1998. How does a company-wide work stoppage exceed the rates set by any company? Oh, wait, I see, what you were trying to say was that the UAW exceeded the old standards but refused to go along with a higher standards set by Wagoner, therefore they striked. Goes to show what a lie that union wanting higher standards really is.
They don't have to suffer like the union workers, who depend on years of success and longevity to beable to retire. It's not fair, but reality.
That's where you are wrong again. The longer workers are staying with a failing company under a failing set of work relationship, the more dire the workers' prospect become. If the UAW workers were gradually let go in the 90's, they'd still be able to find some manufacturing jobs in this country, unlike now getting harder and harder. It's like holders of losing stocks unwilling to sell the stocks under water; the longer the wait, the worse it gets when everything has to either let go or marked down to zero.
This unfortunate reality is why we needs a change from Capatalism to Socialism, or some other form of government
Let me just tell you outright, that would lead to things far worse. Fundamentally, many people don't realize is that it does not matter how much money you are paid but what you can buy with what you are paid. That means, someone has to be incentivized to make all the things that you want to buy. Fixed employment like union contracts is terrible at keeping up with what consumers want. Free market is where all the signals of demand and supply are transmitted and received. Without it, the ultimate result is the Russian Lada, the same model that were manufactured for half a century, eventually worth less as cars to the consumer than the component metal and leather. . . yet it was kept making so soviet workers were guaranteed a job. . . sound familiar?
Not to trivialize the cost of the 1998 strike, but you obviously made up that data point out of thin air. Please provide a source for it (and I mean a news source, not Lew Rockwell's site.)
The comparison is coming from Wall Street analysts, not just myself.
Is Wall Street analysis gospel now? Shall I dig up some anti-union pieces, and will you buy that? Talk about agenda-driven selective sourcing and lacking objectivity.
Translation: I still don't have a source to backup the bogus $4 billion figure that I made up about the 1998 strike. Let me create a distraction while I figure out a new line of argument...
Yet another lie. I already gave you the link in my previous post (#1352).
What you say is true, but let's not forget the millions of GM workers who got a good life, retirement , and medical benefits from their employer. The fault of the current situation lies both with the UAW and GM, and no matter what, the downfall of GM will be a tragedy for real people and another blow to our economy. GM is producing many more good vehicles with far better reliability, but I don't believe even a GM Accord can save them.
If you don't like the data, then provide an alternative source.
It's not hard to do -- take the revenues from vehicle sales, and divide by the number of units sold.
Given the fleet data I provided above, are you surprised that GM ends up making less money? It's well understood in the industry that fleet sale prices are lower than normal wholesale prices, it's a simple matter of doing the math and following the (lack of) money.
We're falling back into "prove it" mode here. In case you hadn't noticed, there aren't a lot of times when the other side comes to see things your way, no matter what is presented.
So let's not let this escalate and turn personal please.
Like I said before, in real life, the choices are seldomly presented as good vs. bad; it's often better vs. worse. Nobody, management or otherwise, set out to become the fleet/discount seller. When you have a bad reputation from past shoddy products, and you have to keep cranking out zillions cars to pay fixed union wage and thereby pushing down unit price along the demand curve, you have no choice but selling to the fleets. All other choices, ranging from stopping production to dumping on the retail market to paying another $1500 to have them all shipped to China and still not selling them without even deeper discount, all are even worse . . . therefore selling to the fleet becomes a better (or even the best option) among a see of undesirable options. How is that undesirable circumstances of overproduction created?? Fixed union labor cost and other labor inflexibilities.
Many years ago my professor made a statement that has stuck with me over the years. I know it may sound crude but it does make sense,especially in the analysis of statistics.
'Correct analysis of statistical data is as much of an acquired "art' as it is a mathematical science. You know you are really good when after sifting thru the cats sand box (read financial data) you look at the cleaned sand and can easily tell the remaining "fly crap" from the 'pepper" .
How is that undesirable circumstances of overproduction created?? Fixed union labor cost and other labor inflexibilities.
As usual, the same one-dimensional analysis.
GM isn't using UAW labor to build Aveos, GTO's or Saab 9-5's or 9-2's, yet those are also well overstocked. GM is simply addicted to poor inventory management, regardless of the source. (Of course, having excessive numbers of nameplates obviously has a lot to do with this, too, but this is another problem of which you are in denial.)
I need to quit lurking over in the minivan forum with all the fur that's been flying in here....
I'd like to point out that no animals were harmed in the production of this thread. Not all of us may swallow GM orthodoxy, but we strictly adhere to Humane Association guidelines...
"Of course, having excessive numbers of nameplates obviously has a lot to do with this, too..."
Well, this would only be the case if there were mulitple versions of the cars you've listed sitting around on the various GM dealer's lots.
Would it really have helped GM if they whacked Pontiac (for example) and tried to sell the Holden Monaro as a Chevelle rather than a GTO?
How would reducing the number of nameplates help sales of the Aveo? Is there another version of this car sold under the GM umbrella?
Same with the Saab 9-5. If has problems due to it's updated competition offering a better automobile at that price point, not because there are too many nameplates under the GM banner.
The only one I'll give you (grudgingly) is the Saab 9-2 since it's essentially a rebadged (and much pricier) Suburu WRX
I do disagree with you on the amount of nameplates. I think GM has to many nameplates if it's not going to constantly invest R&D in all of those nameplates and keep them updated with the competition. Since it has twice the nameplates as Toyota, it needs twice the R&D funds as Toyota.
Just some Americans who have a diverse opinion on the way the country, and company, should be run and who should take responsibility and ownership.
That's the point Rocky... we're NOT here do discuss how the country should be run, or systems of government around the world, or any other tangent that happens to come up. I KNOW that one thing tends to lead to another and it's easy to get sidetracked, so a course correction is needed now and then.
This discussion is supposed to be about the current situation with the UAW and the domestic manufacturers. That's quite enogh to chew on here without bringing in all the non-automotive stuff.
Comments
What you are forgetting is that, at GM, which line gets to produce what new model is not entirely the management's decsion to make. UAW has to approve production changes. The CAW plant is getting shafted due to union politics; UAW included R&D resources and product update provisions in the union contract for its own facilities, with no money left for CAW plants. The same reason why Saturn was starved to near-death for lack of new models when it was on a separate contract. UAW can not allow any experiment to succeed that might undermine UAW power.
As usual, you mix apples and oranges. Toyota has tended to buy suppliers and make JV investments, a seperate issue from buying bad automakers with the purpose of trying to gain synergies from them
Toyota is fastidious in its efforts to control parts quality, a key driver of its success. In contrast, GM buys losing automakers, and then wonders why they don't turnaround. Being that GM can't even turn itself around, how can it be expected to make other broken companies become successful?
That's where you are very wrong. The union dragged their feet as long as they could. Even the union eventually saw the writing on the wall, and put a poison-pill provision in the automation agreement: job banks! That's where the job banks came from: union concenssion on automation for exchange to be paid full wage while watching TV! Of course, that dramaticly increased the cost of automation and delayed/inhibitted its wide adoption at GM.
Not sure how to respond to the rest of your article. What does foxhole have to do with cars? If anything, cutting yourself out of global collaboration only makes you weaker and less prepared for the day of reckoning, while others pull ahead helping each other. Nationalistic self-sufficiency simply does not work; check out the North Koreans.
What a joke, coming from someone who compares rental fleet sale average to retail sale average with a straight face.
Toyota has tended to buy suppliers and make JV investments, a seperate issue from buying bad automakers with the purpose of trying to gain synergies from them
So what exactly did Hino, Daihatsu and Subaru supply Toyota? How is that any different from GM's purchase of Saab?
Toyota is fastidious in its efforts to control parts quality, a key driver of its success.
And the quality of work force helps a lot.
In contrast, GM buys losing automakers
There's nothing to contrast. Hino and Daihatsu were in dire straights when Toyota bought them. In fact, even to this day, Daihatsu is somewhat of a joke brand; the equivalent of either Daewoo or Yugo in our market in brand perception. Even Subaru is not doing well. The smart buys are always made when the acquisition target is down. I suppose, if you were in charge, you'd be paying top dollars for hype instead ?! Like I said, many of us here could have done far worse than the actual GM management has done.
(1) Reputation. GM products were atrocious in the 70's and 80's. Contrary to Rocky's point about outsourcing, there were no outsourcing back then, so UAW workers were/are quite capable of ruining the brand without outside help. Consumer perception takes time to turn around. Case in point, MB product quality is probably below that of GM nowadays, but MB is living off its reputation from the 80's, whereas GM has to live down the reputation from the same era . . . rather ironic.
I'm pretty sure Socala, already pointed this out to you in a previous post. I will say it again brightness.
GM had no competition besides Ford and the nearly bankrupt American Motors/Chrysler. :confuse: I agree competition has driven quality improvements, but blaming R&D funds on the union is atrocious :mad:
GM's management teams back in the 70's and 80's had no vision of the future. They were greedy and invested in failing company's which they thought they could turn around to get a healthy return on. Yes some worked out, but many failed. :sick:
(2) Simple supply and demand. When a Toyota model doesn't sell well (yes, even Toyota has those models, contrary to union supporters belief that a good management only turn out desirable products), Toyota simply cuts back on production to maintain price point. Case in point, the last generation Lexus IS started sale in the 2k/mo range, and eventually wound down to a trickle of about 400 units per month. If Toyota kept cranking them out at 2k/mo, there's no way they could maintain price close to $30k. Timely production reduction to maintain price point is usually not a realistic option for GM management. They have to pay union workers at full wage regardless whether they are making cars or watching TV. The loss in revenue and profit from driving price down with over production is far less than the loss that would take place if no cars were made yet the workers had to be paid the same regardless. Also, temporarily line idling and product mix change on the production line all have to get approval from the union. Yes, GM management does not get to really manage.
You are obviously referring to the Jobs bank again. Funny how you can use a program that was a pimple in size, to some how offer GM's past management a free past on the simple fact that they build crap cars in those two decades. :confuse: CEO's and other upper mangement were either making million dollar pay days back then. A bottom level floor supervisor was making in the 80's over $80-100,000 a yr. way back then. How much was a Middle and upper level white collar workers making at the most
"Top Heavy" company in the world ???? At one point GM had 50 White Collar workers for every 1 union worker. Granted this included foreign white collar workers, but it should give you a idea of how many paper pushers were at the company during the "hay days"
IMHO, new production lines often experience glitches at the very beginning of production. Even Toyota's early US output was subpar in quality compared to cars shipped from Japan. That problem is usually overcome rather quickly; meanwhile, the company has to count on its reputation during the transition. Toyota made the transition just fine. BMW also made the transition okay with its South Carolina, Finland and Hungary productions (Z3, X5, X3 and Z4); in fact, BMW's facility in South Africa has one of the lowest defect rate in the BMW empire despite its rather dubious beginnings.
I agree robots are less likely to make mistakes, and GM in the 90's had the technology to move to automation on a small scale. Why isn't GM/Delphi moving to automation at it's foreign plants ????? They wouldn't have to even pay as many Mexican workers $2 an hour. :P
BTW- FYI- At Delphi Coopersville, back in 99'-2000' Delphi hired a very well decorated engineering/buisness graduate from Kettering, and they paid him $676,000 for one year before he was wisked away by another company. This guy made more than twice as much as the plant manager, and he still wasn't happy that delphi gave him his first real shot. From what dad told me he played hours of solitare because Delphi management didn't have any large assignments for him. This guy finally got frusterated and was looking for a challege, thus leaving. Perhaps he felt bad that he had a "jobs bank" style of job ? :P Or perhaps he felt his education was worth more than the $676,000 salary he was being paid ? It's examples like this that gives a full picture of the short sightedness by many that constantly want to blame GM and Delphi for the failures of managements leadership.
The union has no control of R&D and holding Rick Wagoners feet to the fire if he doesn't allocate suficient funds to make better product. However we all agree that GM either has to cut the number of brands, or atleast give each of the brands a distiguish presence. hopefully one of the two will happen so that R&D just doesn't get wasted and badge engineering doesn't comeback. Toyota's buisness model is superior, thus resulting in record profits. Honda also has a great buisness model, and they are going to be #3 within the next 5-10 years.
I do feel Ford and Chrysler, will fall further since either haven't offered the products that americans want on a large scale. GM is getting all the Press Coverage currently, but they atleast have a good 2007 line-up which should keep them alive along with these new cost cutting measures in my opinion.
It's going to get very interesting next year. :shades:
Rocky
All I'm trying to say is that GM doesn't necessarily NEED to have 2x the R&D budget of Toyota SIMPLY because it has 2x the number of nameplates. Dragging the old 'extraneous nameplates' issue back up is simply (IMO) unrelated to the R&D budgets issue.
Yes, badge engineering isn't "free"; I never tried to insinuate it was. Yes, having such a large number of nameplates may be more of a liability than an asset. But I don't think that the QUANTITY of R&D dollars spent by GM (or Toyota for that matter) is necessarily a smoking gun.
"In any case, you can survey the marketplace and gather where each company puts its R&D investments."
I put a lot more stock in this. It isn't necessarily HOW MUCH money the respective companies spent on R&D, it's WHERE the money was invested.
You can now sleep at night and not worry about "Japanese Culture of Domination" since they do have troops in Iraq.
As for the culture of domination..I wouldn't call that a Japanese culture but more of Global Corporation culture shared by many big companies. (Micrsoft, GE, Mac, Vivandi, Dutsch Telecom, Shell....they all play for the total market dominence..)
What a joke, coming from someone who compares rental fleet sale average to retail sale average with a straight face.
I did no such thing. You obviously didn't understand the Bloomberg article or the data from the guy at DB. The comparison was the average wholesale sales price of a GM product to the average wholesale sales price of a Toyota product.
There isn't a single wholesale price for cars. The fleet buyers get lower prices that are effectively subsidized by the automakers. A dealer that sells a car to a retail customer will effectively pay more for that car than would Hertz or Avis.
Above, I provided the fleet data, and we can see how dependent GM has become on that low-margin, brand-killing line of business. In contrast, instead of focusing on amortizing fixed costs to the point of obsession, Toyota has spent its efforts on brand building and quality, even if it results in somewhat reduced throughput whenever the line needs to be stopped to fix a defect. Unfortunately, quality reduces margins (or at least it appears to on the surface), which is a primary reason why Detroit has been so adverse for so long to prioritizing it across the board.
Let me guess, instead of strategies that proved to be big money makers: such as deriving luxury branded versions from common platforms (isn't that what Toyota and Honda do, too?? 3/4 of Lexus and Acura unit sales are based on Toyota and Honda model platforms), and M&A that made windfalls . . . you would spend all money on developing domestic production of small cars?? What a joke. You would not even have the money to spend to begin with if not for the M&A + spin-off windfalls.
How many shots did the Japanese fire during the
"Iraq Freedom" campaign :P
Rocky
Put them on a boat and sell them in China. You'll take a loss anyway, but you won't be crippling your future home market sales in the process.
You obviously did not read what you quoted yourself. Here's what you quoted in post#1301:
"The average fleet transaction price is about $15,000, Rod Lache, an analyst with Deutsche Bank Securities Inc. said in an interview in November. That compares with an average price of $18,861 that GM charged for all wholesale transactions, including fleet sales and sales to dealerships, in the first nine months of 2005, he said."
What kind of nonsense study is that?! Rental fleet and retail have different product mix. Nowonder Lache is an analyst not an executive.
The fleet buyers get lower prices that are effectively subsidized by the automakers.
Why the subsidy? Perhaps the rental company is owned by the carmaker? Therefore "subsidy" is just passing money from one pocket to another? How does that constitute a loss?? If on the other hand there is no subsidy but simply having to sell at lower price to clear the inventory . . . don't you think the same cars if had to be fed through the retail channels would depress the overall price for those models?? Didn't you learn supply-and-demand and price elasticity in B-school?
Go back to the depreciation and lease business model I illustrated earlier. The shunting of part of the output to rental fleet is simply a way of reducing losses.
we can see how dependent GM has become on that low-margin, brand-killing line of business.
Why does GM have to crank out cars sell for losses?? Because the losses would be even bigger if the production line were stopped and the union workers still have to be paid full wage. Go back and study the model I provided earlier. I don't see you refute any of the math involved.
Toyota has spent its efforts on brand building and quality, even if it results in somewhat reduced throughput whenever the line needs to be stopped to fix a defect.
You are making things up as you go. Toyota slow down production or switch production in order to support price points; e.g. IS300 was slowed down from 2000/mo to 400/mo for the US market. There was nothing defective about the IS300. It was a deliberate production reduction in order to maintain the price point around $30k. Remember price elasticity and supply/demand curves from your B-school years? GM management does not have that option working under UAW contract. If Lexus had to crank out 2000/mo even if the market can only take 400/mo at $30k, what do you think would happen to IS300 price?? Exactly what's been happening to GM products: drastic incentives to move the other 1600 "undesirable" cars! If Toyota is smart, they will move some of that 1600 to the rental fleets for now, despite all the nonsense grief from backseat drivers.
Rocky
First, I advised you to avoid these superlatives such as "best", and give us hard data instead, as your references are generally suspect.
-Looking at Automotive News, I can see that GM sold a whopping 817 9-7X vehicles in the United States for the first two months of 2006. Compare that to the BMW X3, which itself has been a disappointment, yet still managed to sell almost 3,000 units during the same period.
-As of March 1st, it had 94 days of inventory, compared to the industry preferred average of 60 days.
-GM has already resorted to using incentives to move them off of their lots.
By all indications, this car is already a failure. At its current sales pace, it would seem that it will probably hit about 5,000 units for CY 2006, which would make it one of the worst selling vehicles in its class and in the GM lineup. I wonder how much R&D money was invested to create this mistake?
It's pretty simple, GM commands lower wholesale prices on average than does Toyota, because automakers earn less on their cars sold to fleets than they do on cars that are ultimately sold at retail. Perhaps KDHSpyder, who is in the auto sales business, can explain this basic concept to you more easily.
GM dumps cars into the fleet market, and earns lower margins as a result. An obviously bad strategy -- it's so bad, even they agree that it's a problem (even if they don't seem so serious about fixing it.)
Rocky
The 9-7x would of been better if it wasn't a badge engineered, carbon copy, of the trailblazer/envoy.
Rocky
You are wrong again. The drastic brand images of domestics vs. Japanese imports (especially Toyota and Honda) was formed in the 80's. There was no outsourcing back then.
it should give you a idea of how many paper pushers were at the company during the "hay days"
Nobody cares about how generously the employees get paid during the haydays. If the company is doing extremely well, workers can feast on lobster every lunch and every dinner all paid for by the company, for all I care. It's when the company falls on hard competitive times, that inflexible union contracts become a problem. CEO bonuses and the upper-echelon hanger-on's all get shaken off in crunch times, it's the inflexible union contracts that bleed companies into bankruptcy and oblivion; a la US Steel, Pan AM, Eastern and United.
The union has no control of R&D and holding Rick Wagoners feet to the fire if he doesn't allocate suficient funds to make better product.
Not true at all. When Wagoner tried to improve quality and efficiency at one particular production line, it led to a company-wide work stoppage by the union, resulting in $4 billion in a few weeks. Wagoner had to back off. Let's face it, for all it's talks about interest in improving product quality, the union is not the slightest interested in any measures that may actually make the workers work harder.
(1) It takes far more money to develop the Corvette than to develop the 9-7X from Envoy
(2) Corvette is hardly a low-volume car in this context, with its 30k/yr sales. BMW X5, X3 and MB ML all sell for less than 30k units a year.
Selling an Envoy in Caddy or Saab skin is probably the easiest and lowest risk money maker there is. Even the top seller in this segment, Lexus RX is based on Toyota Highlander. It's funny how you berate GM management for not making hybrid and bash it again for dressing up the Envoy, when in fact RX makes far more money than Highlander Hybrid.
That was considered, too. The problem back then was that China was not WTO member, so it had ridiculous tariff on car imports. That's why the GM facility was set up in China, initially as a way to import cars as parts. Now that China is WTO member, Caddy is exporting American made cars to China. The problem with the $12k Malibu is that they already make better cars there for less.
That is absolutely B.S. and if you did a little research for yourself you would know that the UAW workers exceed the rates set by the company. Perhaps this is an area where the UAW should back off on. They work so damn efficient they work themselves out of work.
You can go ahead brightness, and give Rick and the other CEO's a free pass and continue to blame the union. Like you said they were eating lobster in the 50's, 60's, 70's, and even in the early 80's. The mid-late 80's they had some tough times. The 90's they went back to just eating shrimp for the most part. In 1998-99 They ate Filet Mignon which were huge years. CEO's don't desrve to make the money they do. They make so much damn money, if they fail they still will beable to walk away very wealthy. They don't have to suffer like the union workers, who depend on years of success and longevity to beable to retire. It's not fair, but reality.
This unfortunate reality is why we needs a change from Capatalism to Socialism, or some other form of government, so good folks won't lose everything if their company goes belly up because of wrong doers that run it. My father and relatives work there butts off each day for the company, so they can hopefully one day beable to retire. It's a dream for most working folks to retire with a modest income until the big man upstairs take them.
It amazes me how many average Joe-Six-Packs,
"get caught up" with the wealthy, that they will defend them when those same wealthy people, would squash them like a stink bug. :confuse: I guess so many americans figure if they vote, drive, buy, the McMansions of life, they can feel above the rest. The difference between them is the debt.
Rocky
(1) GM and Toyota sell different cars. GM fleet sale and retail sale have different product mix. So it's quite pointless to compare the averages of either pair.
(2) GM dumps cars into the fleet market for a very simple reason: it makes more cars than the market can absorb. Toyota scales back production to maintain a price point; e.g. IS300 was scaled back from 2000/mo to 400/mo to meet the $30k price point. That is not an option for GM because scaling back production would cost more money than making the cars and selling the cars for losses.
Please go back and reread my post before the urge to type something anything in response.
Not to trivialize the cost of the 1998 strike, but you obviously made up that data point out of thin air.
Please provide a source for it (and I mean a news source, not Lew Rockwell's site.) According to CNN, the amount was $2.2 billion.
Spartan Stores, Meijer, Rowe International, Kellogs, General Mills, Rapistan, Johnson Controls, General Electric, Siemens, Westinghouse, Consumers Energy, Westinghouse, Bell-Textron, John Deere, Harley Davidson,
Bechtel, Whirlpool, Honeywell, Southwest Airlines, Do you want me to go on........... :P
The difference is "Management" working with the union to achieve goals for success. However the Success of these company's will depend on how well the goverment protects them. What's next a illegal alien flying our airplanes ?
Rocky
Rocky
The comparison is coming from Wall Street analysts, not just myself. Obviously, it points to a problem when two mass-market operators have grossly different wholesale prices.
GM dumps cars into the fleet market for a very simple reason: it makes more cars than the market can absorb.
Well, at last you've conceded the obvious -- GM's production methods and inventory management skills aren't exactly stellar.
Here's the funny thing -- look at the Automotive News inventory report of March 1, and you see these resounding GM success stories:
-The Korean-built Chevy Aveo, safe from the meddling of the UAW, had 131 days of inventory
-The Aussie-built Pontiac GTO: 142 days of inventory.
-Saab 9-5, built in Sweden by non-UAW workers, had 232 days of inventory
-And now for the crown jewel: the non-UAW Japanese-built Saab 9-2 had 825 days
Compare that to the UAW-built domestic Chrysler cars (52 days), Dodges (42 days) or Ford (55 days).
It's getting to pretty obvious that the real problem lies with GM management, for it seems uniquely blessed in its ability to fail with both imported and domestic lines with equal skill. Makes it easier to see why they can lose $16 billion on bad deals, without losing any sleep over it.
That is absolutely B.S. You obviously know nothing about the work stoppage in 1998. How does a company-wide work stoppage exceed the rates set by any company? Oh, wait, I see, what you were trying to say was that the UAW exceeded the old standards but refused to go along with a higher standards set by Wagoner, therefore they striked. Goes to show what a lie that union wanting higher standards really is.
They don't have to suffer like the union workers, who depend on years of success and longevity to beable to retire. It's not fair, but reality.
That's where you are wrong again. The longer workers are staying with a failing company under a failing set of work relationship, the more dire the workers' prospect become. If the UAW workers were gradually let go in the 90's, they'd still be able to find some manufacturing jobs in this country, unlike now getting harder and harder. It's like holders of losing stocks unwilling to sell the stocks under water; the longer the wait, the worse it gets when everything has to either let go or marked down to zero.
This unfortunate reality is why we needs a change from Capatalism to Socialism, or some other form of government
Let me just tell you outright, that would lead to things far worse. Fundamentally, many people don't realize is that it does not matter how much money you are paid but what you can buy with what you are paid. That means, someone has to be incentivized to make all the things that you want to buy. Fixed employment like union contracts is terrible at keeping up with what consumers want. Free market is where all the signals of demand and supply are transmitted and received. Without it, the ultimate result is the Russian Lada, the same model that were manufactured for half a century, eventually worth less as cars to the consumer than the component metal and leather. . . yet it was kept making so soviet workers were guaranteed a job. . . sound familiar?
Rocky
Makes it easier to see why they can lose $16 billion on bad deals, without losing any sleep over it.
Because they made over $30 billions on good deals. Another example of your lies thorough selective statistics.
http://www.referenceforbusiness.com/biography/S-Z/Wagoner-Rick-1953.html
OK, so now I have to give you credit for the $4 billion comment. I'd like to see the original cite, though.
Is Wall Street analysis gospel now? Shall I dig up some anti-union pieces, and will you buy that? Talk about agenda-driven selective sourcing and lacking objectivity.
Yet another lie. I already gave you the link in my previous post (#1352).
It's not hard to do -- take the revenues from vehicle sales, and divide by the number of units sold.
Given the fleet data I provided above, are you surprised that GM ends up making less money? It's well understood in the industry that fleet sale prices are lower than normal wholesale prices, it's a simple matter of doing the math and following the (lack of) money.
So let's not let this escalate and turn personal please.
We've been down this road before
Let's try to avoid these spinoffs.
'Correct analysis of statistical data is as much of an acquired "art' as it is a mathematical science. You know you are really good when after sifting thru the cats sand box (read financial data) you look at the cleaned sand and can easily tell the remaining "fly crap" from the 'pepper" .
Rocky
As usual, the same one-dimensional analysis.
GM isn't using UAW labor to build Aveos, GTO's or Saab 9-5's or 9-2's, yet those are also well overstocked. GM is simply addicted to poor inventory management, regardless of the source. (Of course, having excessive numbers of nameplates obviously has a lot to do with this, too, but this is another problem of which you are in denial.)
I need to quit lurking over in the minivan forum with all the fur that's been flying in here..... :surprise:
I'd like to point out that no animals were harmed in the production of this thread. Not all of us may swallow GM orthodoxy, but we strictly adhere to Humane Association guidelines...
Just some Americans who have a diverse opinion on the way the country, and company, should be run and who should take responsibility and ownership.
Rocky
P.S. minivan forum :surprise: Don't by a true minivan. I reccommend a Enclave. It's kinda like a CUV
Well, this would only be the case if there were mulitple versions of the cars you've listed sitting around on the various GM dealer's lots.
Would it really have helped GM if they whacked Pontiac (for example) and tried to sell the Holden Monaro as a Chevelle rather than a GTO?
How would reducing the number of nameplates help sales of the Aveo? Is there another version of this car sold under the GM umbrella?
Same with the Saab 9-5. If has problems due to it's updated competition offering a better automobile at that price point, not because there are too many nameplates under the GM banner.
The only one I'll give you (grudgingly) is the Saab 9-2 since it's essentially a rebadged (and much pricier) Suburu WRX
Rocky
That's the point Rocky... we're NOT here do discuss how the country should be run, or systems of government around the world, or any other tangent that happens to come up. I KNOW that one thing tends to lead to another and it's easy to get sidetracked, so a course correction is needed now and then.
This discussion is supposed to be about the current situation with the UAW and the domestic manufacturers. That's quite enogh to chew on here without bringing in all the non-automotive stuff.