NPR's The Story

[blueskies]

Anyone catch The Story on NPR about Joseph Pfiefer's Chrysler Dealership?

Worth a listen...

And a read...

Joseph Pfiefer, 92, is closing his dealership after 66 years in business.

Pete

[greg g]

A locally family owned Lincoln Mercury dealership closed its doors Friday after about 60 years. Always a small dealership, they just couldn't make Overhead costs on thier volume, I believe they also fell to Fords dealership consolidation program. In addition to this one, we have lost a Saturn,(or should I say Opel) Dodge, and 3 Ford dealerships in the last 6 months. The Dodge dealership I drive dealer trades for hasn't called me in three weeks. Not a good business these days. Even the service area is slow. My brother works service management at a local Honda dealership and he says volume is way down as people defer repairs for as long as possible.

[PatS....]

One analyst said GM could be bankrupt before the end of the year. What a disaster.

Are Japanese cars that much better than domestic that we are destroying our own auto industy? What a shame.

Who will our grandkids work for? Will they have to move to China to get work?

[greg g]

It not that the cars are that much worse, they are just wrong for the times. Domestic car makers smallest cost is the actual production of the car. Sunk costs for retirees (GM's cost to pay retired workers exceeds thier active payroll and Ford and Chrysler aren't far behind) costs for money and costs for advertising and marketing as well as their infrastructure costs are the killers) Which is why they don't rush new products to market.

Those companies together have billions in assets, what they are running out of is cash generated by sales and financing.

GM just anounced they are giving up their bid for Chrysler, I can't see how that bid was serious in the first place. Next suitor will likely be Nissan/Renault.

Nissan have recently gone from Zero to hero going from 7th or 8th place to I think currently 3rd or 4th.

I used to spend some time in the cashiers office at the dealership I worked for It was pretty routine to see 800 to 1200 repair bills being generated on cars that were less that 4 years old. Non waranty issues like brakes and shocks and "reqired services".

[blueskies]

One analyst said GM could be bankrupt before the end of the year. What a disaster.

I suppose GM should not have killed their electric car, the EV-1... They chose to embrace the Hummer instead...

I highly recommend the documentary "Who Killed the Electric Car", if you have not already seen it. Maybe they should ammend the title, to "Who killed the American auto industry".

And now GM touts their Hybrid cars as the smart choice, yet they get dismal milage... The new Malibu Hybrid gets 34mpg highway, while the new Malibu non-Hybrid gets 33mpg highway. Why in the world would anyone spend the additional $4,000 to get the hybrid version for ONE mpg??? What are they thinking?

Meanwhile the Honda Civic Hybrid gets over 50mpg on the highway...

Pete

[Don Coatney]

Bottom line is the American workers with union assistance priced there jobs beyond the market. Goes way beyond the automobile manufacturing business. What happened to the steel producing plants in this country?

[JoelOkie]

Don Coatney has hit the nail on the head. It has been suggested for a while that the Detroit auto industry needs to make a move...preferably south. This timely article is from three years ago today. http://www.popularmechanics.com/blogs/automotive_news/1855046.html

[old woolie]

Bottom line is the American workers with union assistance priced there jobs beyond the market. Goes way beyond the automobile manufacturing business. What happened to the steel producing plants in this country?

Sundown on the union

made in the USA

sure was a good idea

till greed got in the way.

Bob Dylan

[Mr. Belvedere]

Looks like were all gonna be buying foriegn cars now. Even if the big three get some "loans" from uncle sam, it will most likely only put off the inevitable. Still it will be a blow to the American phsyche to lose them not to mention devastating to the economy. I could really use some good news seems like bad news is everywhere and on every front.

[B-Watson]

Bottom line is the American workers with union assistance priced there jobs beyond the market. Goes way beyond the automobile manufacturing business. What happened to the steel producing plants in this country?

No, the union workers did not price their jobs beyond the market. Management gave them the wages the have now. If you look at any union contract, there are TWO sets of signatures on it - one for the union and one for the company. Company management approved the wages the workers receive. Unions cannot force a company to accept their wants and desires, but weak management can accept it.

If wages, benefits, etc. are too high, the fault lies with the company

management. They agreed to the contracts and they signed them. Refusing to agree to union demands is nothing new and, yes, refusing to agree does result in strikes at times. But, that is what labour contract bargaining is all about.

At the end of WW II many car companies (actually, all but Kaiser-Frazer and

Studebaker) felt the union demands were not acceptable and the unions walked. Back then management held firm and the result was some control over wages and benefits. K-F and Studebaker literally just signed on the line to prevent a strike. When the buyers' market ended in late 1950 (1949 for K-F) both K-F and Studebaker saw their sales drop, as did the rest of the industry, but K-F and Studebaker no longer had the volume to cover the higher costs of production.

K-F solved the problem by buying Willys-Overland, selling off their Detroit

plants, and moving production to the Willys plant in Toledo.

Studebaker took a different tact in 1956 and basically told the unions either they accept wages and benefits in line with the Big Three, or Studebaker would be forced to close their doors. The cuts were needed to price their cars in line with the opposition and still make money. Studebaker took a few strikes, but in the end the unions agreed and Studebaker survived to see the introduction of the compact Lark. What happened after that was another story involving other management errors.

So, if the Big Three feels the money they are paying out for labour is too

high, again the fault lies in their hands. And I really question the right of management getting salaries and bonuses worth tens of millions of dollars a year. The head of Ford Motor received salary and bonuses of $30 MILLION dollars! The company is losing billions, he gets bonuses? The head of a company on the verge of banruptcy gets $30 MILLION a year?

Ten years ago a study was made comparing salaries and wages of company management vs. the firms' workers. They found North American company heads hauled in an average of 25 times the average workers' wages. In Europe and Japan the company heads averaged 10 times the average workers' wages.

No, the problems are not with the unions, the problems are with management. They grossly overate themselves and show it with the criminal salaries and bonuses they pay themselves.

The biggest problem with the Big Three is that they literally gave the car market in North America to the Asians. They pumped all their money into trucks and SUVs and little in cars. As with all niche marketing, the public's interest soon wanes. From the late 1950's to the mid 1960's American Motors made a bundle with compacts. You know, the market the Big Three said was not profitable. AMC began losing money when the fickle public decided Mustangs, Barracudas, GTOs, Satellites and Chargers were more fun.

And that is what happened with the Big Three today. They put billions into new and larger trucks and SUVs and nothing at the other end. The public's desire for big came to an end with high gas prices (shades of 1974 and 1978). Yes, car sales are down but about half the rate of the big gas guzzlers.

And the decision to abandon the car market in North America was the decision of management. Not the unions.

In the case of the steel companies, the unions took the blame. But it was the refusal of the steel companies to keep their plants up to date. They decided to keep their plants dating back to the early 1900's. Meanwhile, steel producers in countries outside the Western Hemisphere chose the opposite. No need to wonder who won and why.

Bill

Vancouver, BC

[kevinanderson]

I heard a fellow on NPR tonight suggesting(he more that suggested) that a lot of lending institutes will only lend towards foriegn built cars. Anyone else hear this also?

[Norm's Coupe]

Guys,

It's not just the American cars and economy taking a hit. Just saw a report tonight that the 30 leading countries in the world are getting hit also. Even China is now slowing down.

In that same report it said Germany is now officially in a recession also. Went on to say the leading German auto maker VW was also in financial trouble. It also mentioned that England's economy was also sliding down the tubes too. In addition even the Russian stock market is in the dumps.

So this thing is global, we're not in it alone. Doesn't make anything better to know that, but does say something has to be done, and done fast so we can all pull out of this thing.

The report said the general public is holding back on spending, and that just makes it worse. They are going to have to get something going to make people feel like they can afford to spend to pull this thing out.

[JoelOkie]

The car companies doing business in the south are making money, or at least getting by. They may well have better management than Detroit, but it is in part certainly due the fact that they are able to obtain a less expensive, and far less demanding workforce. The UAW contracts that Detroit automakers were forced to accept to be able to maintain a workforce and continue to try and build cars have helped now put the workforce's own jobs in jepordy, just as Don Coatney said. That is between them and their Union leaders. I know that I, for one, absolutely do not want , or feel obligated , to pitch in and pay more taxes to see that they are able to retain all their high priced pensions and benifits.

We have Right To Work law here in Oklahoma, and since we voted it in business has literally boomed, just as we who favored it believed it would. We have the best economy of any state right now, and the lowest unemployment. I am not anti-union, but as the owner/operator of a small business I do know for certain that to stay in business my work force must produce more revenue than it consumes in wages and benifits, in short make me money, aka profit, (or as I have had to remind them more than once), I will be forced to shut the business down, and we will all be looking for other jobs. The union automakers need to realize that their jobs are directly linked to their company making a profit, and face the fact that if they want to keep working they may have to take less, so their company can stay in business.

[blueskies]

I heard a fellow on NPR tonight suggesting(he more that suggested) that a lot of lending institutes will only lend towards foriegn built cars. Anyone else hear this also?

I heard this too. They said the reason lenders are leary of giving loans on domestic cars is that they aren't sure the big three will be in business for long, and the cars may not be worth the loan amount if they go under...

Pete