slider
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Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 9:13 pm

http://online.wsj.com/article/SB122584326266699163.html

What an intriguing article....thoughts about this as a means of fixing Detroit?
 
747srule
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 10:35 pm

The only way to fix it is to get rid of ALL imports. Look back to the 50's,60's and early 70's. Americans had no choice but to buy GM,Ford or Chrysler,unless you were filthy rich and could buy a BMW,Mercedes or Jag. Want to fix the US economy? Get the Big 3 back on top!!!
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Pyrex
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 10:53 pm



Quoting 747srule (Reply 1):
The only way to fix it is to get rid of ALL imports. Look back to the 50's,60's and early 70's. Americans had no choice but to buy GM,Ford or Chrysler,unless you were filthy rich and could buy a BMW,Mercedes or Jag. Want to fix the US economy? Get the Big 3 back on top!!!

Yes, that will work wonders, screw the american consumer to benefit Detroit. By the way, other countries would probably ban sales of GM and Ford cars in their markets, what would you think would happen to those companies then?
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A332
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 10:56 pm



Quoting 747srule (Reply 1):
The only way to fix it is to get rid of ALL imports. Look back to the 50's,60's and early 70's. Americans had no choice but to buy GM,Ford or Chrysler,unless you were filthy rich and could buy a BMW,Mercedes or Jag. Want to fix the US economy? Get the Big 3 back on top!!!

Wow... for someone who is all about keeping America free from the scourges of the earth, you sure do advocate dictating what the American public can and cannot purchase with their own money...

If Ford, GM & Chrysler didn't build garbage cars back in the day, there wouldn't be such a presence of imports in the US market today.
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Aaron747
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 10:59 pm



Quoting 747srule (Reply 1):
The only way to fix it is to get rid of ALL imports. Look back to the 50's,60's and early 70's. Americans had no choice but to buy GM,Ford or Chrysler,unless you were filthy rich and could buy a BMW,Mercedes or Jag. Want to fix the US economy? Get the Big 3 back on top!!!

Um, you do realize that most imports are not actually imports but are assembled in the US by foreign companies? Do you have any concept as to how many hundreds of thousands of Americans are employed by Japanese and German firms and their suppliers nationwide?  Yeah sure

Quoting Slider (Thread starter):
What an intriguing article....thoughts about this as a means of fixing Detroit?

Practical and doable - very intriguing to say the least. It just might be enough to knock some sense back into UAW - though unfortunately they'd still too large to be completely delegitimized.
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WunalaYann
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 11:03 pm



Quoting Pyrex (Reply 2):
By the way, other countries would probably ban sales of GM and Ford cars in their markets, what would you think would happen to those companies then?

In all fairness, probably not much would happen to Detroit if it could not sell some of its shitty cars elsewhere. No one is buying them today, no reason why they would in the future...  Wink

Countdown to Superfly hijacking the thread - 10, 9, 8, 7...  Smile
 
Pyrex
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 11:08 pm



Quoting WunalaYann (Reply 5):
In all fairness, probably not much would happen to Detroit if it could not sell some of its shitty cars elsewhere. No one is buying them today, no reason why they would in the future...

True for Fords and Chevrolets but not true for Opels, Volvos, Holdens, ...
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TristarAtLCA
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 11:15 pm

Quoting 747srule (Reply 1):
The only way to fix it is to get rid of ALL imports. Look back to the 50's,60's and early 70's. Americans had no choice but to buy GM,Ford or Chrysler,unless you were filthy rich and could buy a BMW,Mercedes or Jag. Want to fix the US economy? Get the Big 3 back on top!!!

In addition to the sound and valid points raised above this nonsense would lead to even less R&D dollars spent by the 'Big 3' to produce even worse cars than they do now. What would be the incentive to develop new models or technologies?

[Edited 2008-11-05 15:17:31]
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WunalaYann
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 11:19 pm

Quoting Pyrex (Reply 6):
True for Fords and Chevrolets but not true for Opels, Volvos, Holdens, ...

All designed and built outside the US. Better yet, used as platform for US GM's only driveable car - Omega platform.  

[Edited 2008-11-05 15:19:59]
 
Charles79
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 11:28 pm

I'm not so sure that would help at all. The government can try it, but there's way too much poor management in these car companies to make a real difference. For far too long they flooded the market with cars that were poorly designed, poorly engineered, poorly built, and sold through unfriendly dealers. This "two fleet" rule might have had a hand in their problems but its insignificant when compared to the short sightedness of the automakers' management.

Count me on the side that favors a visit to the BK judge.
 
fr8mech
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 11:31 pm



Quoting 747srule (Reply 1):
The only way to fix it is to get rid of ALL imports. Look back to the 50's,60's and early 70's. Americans had no choice but to buy GM,Ford or Chrysler,unless you were filthy rich and could buy a BMW,Mercedes or Jag. Want to fix the US economy? Get the Big 3 back on top!!!

Wow, way to be a short-sighted protectionist moron. The way for Detroit to get back on top is to produce a better product, more efficiently. And, probably most important, a product that the consumer wants and needs, not what the Big 3 want to produce.
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Aaron747
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 11:32 pm



Quoting Charles79 (Reply 9):
This "two fleet" rule might have had a hand in their problems but its insignificant when compared to the short sightedness of the automakers' management.

Pretty difficult to manage well with all the resources at one's disposal when your operating environment is night and day different from the competition thanks to labor costs. Certainly the R&D and QA side of the equation has been missing for years, but in terms of vision, it's easy to understand why they couldn't keep up with that kind of budget pressure.
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WunalaYann
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Wed Nov 05, 2008 11:51 pm



Quoting Aaron747 (Reply 11):
Certainly the R&D and QA side of the equation has been missing for years, but in terms of vision, it's easy to understand why they couldn't keep up with that kind of budget pressure.

Labour costs in Germany and Japan are very similar, if not substantially higher than in the US. Yet their automakers seem to be doing generally fine in terms of margin across the range. Yes, luxury cars tend to bring much higher margins than lower-range vehicles, but it does not seem to hurt Toyota's or Mazda's bottom line too much.

US automakers have been selling a fair chunk of their cars at a loss. That's what has been slowly killing them.
 
Charles79
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 12:14 am



Quoting Aaron747 (Reply 11):
Pretty difficult to manage well with all the resources at one's disposal when your operating environment is night and day different from the competition thanks to labor costs.

That might be true when compared to some nations but definitely not across the board. According to the US Labor statistics (ftp://ftp.bls.gov/pub/special.requests/ForeignLabor/aeindustrynaics.txt) the hourly cost for car manufacturing in 2006 was $34.88 in the US, $19.55 in Korea, and a whopping $53.11 in Germany. Now the Germans are producing some of the most advanced and desirable cars in the world, including Porsche which has long been the industry's darling in terms of profit margin per vehicle. Yet, their labor costs are a good 40% higher than in the US, and we all know that German law is very pro-labor.

Fact is that the US automakers got caught with their pants down by the need for smaller cars, and it's not the first time it happens, and that really bugs me. When they were raking in obscene profits from the SUVs you would have thought that someone would have thought about the business prospect if demand for smaller cars were to rise, but they didn't. Then take a look at their dated business model: in 1986 both Honda and Ford introduced new family saloons (Accord and Taurus). Honda went on to heavily redesign the Accord in 1990, 1994, 1998, 2003, and again in 2008. Each new version brought new innovations, better design, and incorporated feedback from the consumers. Ford let the Taurus languish until 1996 (with nothing more than a mild face-lift in 1992) for a new model, which then died a painful death being replaced by the ill-conceived 500 in 2004, a model that was so uncompetitive that Ford's new CEO (fresh from Boeing) ordered major surgery and in 2006 we got a "new" car in the form of a face-lift and a return to the Taurus nameplate. See a pattern here? I do agree that the two fleet requirement is a good candidate to be dropped and that the UAW is a huge burden on the companies' balance sheet but the kind of management mistakes that they have made over the past three decades are the stuff you read as examples in MBA courses.
 
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 12:15 am



Quoting WunalaYann (Reply 12):

Labour costs in Germany and Japan are very similar, if not substantially higher than in the US.

Including insurance and health care costs?

I don't claim to be pro or anti-union, but I suspect the UAW has, for a long time, been making it more and more difficult for the auto manufacturers to compensate a US manufacturing workforce. That's the only explanation I can think of to explain how so many "US-built" cars are being manufactured in Mexico and Canada, and how so many "foreign" cars are being manufactured in the US.

2H4
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haggis79
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 12:20 am



Quoting 2H4 (Reply 14):
Quoting WunalaYann (Reply 12):

Labour costs in Germany and Japan are very similar, if not substantially higher than in the US.

Including insurance and health care costs?

especially when including insurance and health care costs.... in Germany on avarage, the cost on those items for the employer is about as high as the actual wage for the employee...
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Aaron747
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 12:24 am



Quoting WunalaYann (Reply 12):
Labour costs in Germany and Japan are very similar, if not substantially higher than in the US.

If benefits, bonuses, and workers comp claims are included in labor costs, then there is no across the board comparison that comes out with the US looking favorably compared to the other countries. Especially in Japan's case, nearly 25% of worker income is derived from bonuses, not salary, and in lean years those bonuses are forgone, as they have been this year. A further 12-15% of income is strictly from overtime pay, and in lean years, again, this is done away with. There has been a moratorium on overtime throughout the Toyota group since the end of Q1 this year - Japanese unions don't like it but there's nothing they can realistically do about it.

The benefits picture is completely different in that Japan has a nationalized pension, healthcare, and workers' compensation structure.
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stasisLAX
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 12:32 am



Quoting 747srule (Reply 1):
The only way to fix it is to get rid of ALL imports. Look back to the 50's,60's and early 70's. Americans had no choice but to buy GM,Ford or Chrysler,unless you were filthy rich and could buy a BMW,Mercedes or Jag. Want to fix the US economy? Get the Big 3 back on top!!!

This is absolutely the wrong approach. Let the free market decided whether GM, Chrysler, and Ford survive. No taxpayer bail-outs should be given to these companies. The domestic automakers have been dying a slow death since the late 1970's. Poor management, overwhelmingly poor product offerings, and a dependence on light truck and SUV models for financial profitability.

Let market forces decide. The public let AMC melt into Renault, we let Studebacker and Packard died off... the Big Three should either thrive or die on their own. No more government bail-outs of U.S. corporations because the nation simply cannot afford it!
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WunalaYann
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 12:39 am



Quoting Aaron747 (Reply 16):
If benefits, bonuses, and workers comp claims are included in labor costs, then there is no across the board comparison that comes out with the US looking favorably compared to the other countries.

Hence my part about labour costs being similar in Germany and Japan. I realise that social security/tax systems/healthcare covers vary very much in structures and amounts from country to country, within the OECD.

But still, could these differences make labour costs (plural) so different that they would result in Detroit being near bankruptcy while most of its European and Asian competitors are still reasonably healthy (while some of them are swimming in cash)?

 Smile
 
radarbeam
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 12:54 am

Quoting 747srule (Reply 1):


The only way to fix it is to get rid of ALL imports. Look back to the 50's,60's and early 70's. Americans had no choice but to buy GM,Ford or Chrysler,unless you were filthy rich and could buy a BMW,Mercedes or Jag. Want to fix the US economy? Get the Big 3 back on top!!!

For your information, before speaking nonsense check your facts. Toyota employs +34600 persons across 10 plants in the US alone. Honda has 3. Nissan has 2 plants in Tennessee and 1 in Mississippi, BMW has 1 in SC, Mercedes Benz 1 in AL and VW announced earlier this year that they will be building their first plant in the US. The only way to get the "big 3" back on top would be for them to stop making rather shitty cars when it comes to reliability and fuel consumption.


Proud owner of a US made Toyota Corolla 

[Edited 2008-11-05 16:56:36]
 
sv7887
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 12:59 am



Quoting WunalaYann (Reply 5):
Quoting Pyrex (Reply 2):
By the way, other countries would probably ban sales of GM and Ford cars in their markets, what would you think would happen to those companies then?

In all fairness, probably not much would happen to Detroit if it could not sell some of its shitty cars elsewhere. No one is buying them today, no reason why they would in the future... Wink

As someone who worked in the industry until early today I can tell you they are getting better, but it's their bureaucracy that's doing them in along with poor product planning. Our firm got hit hard with the impending doom at GM and Chrysler so the newest hires including myself were laid off.

It's tough, but that's the name of the game in the Auto industry. I should have not bought into "Do what you love" but that's life...

Big changes at GM on Friday..Chrysler already is firing 25% of their workforce.
 
Charles79
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 1:11 am



Quoting Sv7887 (Reply 20):
the newest hires including myself were laid off.

I'm sorry to hear that, wish you the best of luck mate.

Quoting Sv7887 (Reply 20):
they are getting better, but it's their bureaucracy that's doing them in along with poor product planning.

That's their Achilles' heel. I know they are getting better, and I like some of their newer cars like the Cobalt and the Aveo, the European offerings like the new Opel Insignia and the current Astra, etc. (in the case of GM), and Ford has a winner in the new Fiesta (and the new Ka looks really good too). But they need to update their decision making process and change their company culture. To be honest I would love to be in a position where I'm considering an American car against a foreign-designed one for a purchase, but they're going to have to make some radical changes to get there. I'm afraid that the UAW and the dealers' associations will stand in their way and not realize it until they visit the BK judge.
 
sv7887
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 1:41 am



Quoting Charles79 (Reply 21):
To be honest I would love to be in a position where I'm considering an American car against a foreign-designed one for a purchase, but they're going to have to make some radical changes to get there. I'm afraid that the UAW and the dealers' associations will stand in their way and not realize it until they visit the BK judge.

Thanks for your best wishes..I loved working in the industry, but it was my fault. I should have been more practical.

The dealer groups cause absolute hell and are part of the reason GM makes 5 of every model they have to suit all their brands. Closing Oldsmobile was a huge mistake for them as all of the Olds owners went to the imports. It also cost them $ 2billion to buy off all the dealers.

This proposed Merger of GM and Chrysler is all bad news. GM can't manage the brands it's has, how it is going to deal with the dysfunctional Chrysler and it's dealers? This is some MBA's at work again..If it happens it might take GM down with it...It is like the proposed Eastern TWA mergers in the 80's. I think Borman termed it merging the two weak sisters to create a stronger airline.
 
WunalaYann
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 3:48 am



Quoting Sv7887 (Reply 20):
the newest hires including myself were laid off.

Sorry to hear that. I hope things rebound soon for you and your hard-hit colleagues.  Sad
 
ltbewr
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 12:21 pm

The key issue for the US based automakers is the obscenly huge 'legacy' costs of too many retirees pension and health care costs. This reduces the monies available to spend on research and profits and to be able to price cars vs. the Japan based companies who don't have or will ever have such long term costs. Until that massive cost factor is dealt with, incluing national health care program is put into place or they break the unions (as the article suggests) or bankruptcy, they will never be able to be profitable.
 
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casinterest
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 2:55 pm



Quoting Charles79 (Reply 13):
When they were raking in obscene profits from the SUVs you would have thought that someone would have thought about the business prospect if demand for smaller cars were to rise, but they didn't.

Yeah Detroit does a lot of pissing and moaning about their dire straights, but they are every bit responsible, by their gross margins on the SUV/Light Truck Market. Honda, Toyota, Hundai, Mazda, Nissan and others moved in on the small market, conquered it, and then attacked Detroit's Bread and Butter SUV line. Detroit got whiplashed into reality this year when Oil went sky high, and they found out that their neglected product lines weren't bulked up enough to compete and hold up sales.

All Auto companies are suffering from the credit crisis currently, but Detrot's facination with gas guzzeling SUV's and Muscle cars for image and sales does not go far when people are trying to save money. Detroit Brass needs to learn balance and diversification in their portfolios of sales and marketing.

it is a shame that so many hard,dedicated workers get caught in the malestrom of shortsightedness, but that is the Invisible hand of Captalism at work.
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slider
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 3:53 pm



Quoting 747srule (Reply 1):
The only way to fix it is to get rid of ALL imports.

You’ve already been nuked enough on this. What a ridiculous comment, no offense.

Quoting Aaron747 (Reply 4):
Practical and doable - very intriguing to say the least. It just might be enough to knock some sense back into UAW - though unfortunately they'd still too large to be completely delegitimized.

That’s what I was thinking. And such a contrast to the above statement…it is PRACTICAL and feasible and that’s the key operand. I read the piece and thought it was a very intriguing prospect of reforming things. Yet it’s nowhere on the radar screen, which is odd!

Quoting Charles79 (Reply 13):
When they were raking in obscene profits from the SUVs you would have thought that someone would have thought about the business prospect if demand for smaller cars were to rise, but they didn't.

Great post…and I totally agree. The management blunders by the US auto industry are so huge and so frequent that you have to wonder how they can get caught with their pants down so much and so embarrassingly.

Quoting Radarbeam (Reply 19):
Proud owner of a US made Toyota Corolla



And my Dad has a Dodge Ram that’s made in Mexico…go figure. As a counter to 747srule’s asinine comment, there are so many jobs here because of foreign nameplates that it would be disastrous to ever try to inhibit that.
 
Superfly
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 6:29 pm

National health care and eliminating CAFE standards would help Detroit a LOT.
There really is no need for a government imposed CAFE standard when the standard is already in people's wallets.
Those who can't afford or don't want to spend a lot of money on gas (which is most people BTW) won't buy gas-guzzling vehicles. This is an area where the market should purely decide.
Detroit is doing the right thing by building quality vehicles that last at an affordable price. They provide excellent benefits to their employees as well as provide health-care (which should be provided by the government) and compete in an unfair, unbalanced market that is biased in favor of imports, just because they are imports.
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PHLBOS
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 6:53 pm



Quoting Superfly (Reply 27):
National health care

Could occur given the recent election results. Although it was this issue that cost the Democrats control of the House & Senate in 1994. Should this happen, the 2010 mid-terms could be a repeat of '94.

Quoting Superfly (Reply 27):
eliminating CAFE standards

As we all know the CAFE standards were recently beefed up. The results of last Tuesday's election will more likely keep CAFE in its Sacred Cow status.

The only ones in Congress presently opposed to CAFE are by and large true conservative Republicans.
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Superfly
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Thu Nov 06, 2008 6:57 pm



Quoting PHLBOS (Reply 28):
Could occur given the recent election results. Although it was this issue that cost the Democrats control of the House & Senate in 1994. Should this happen, the 2010 mid-terms could be a repeat of '94.

True. Never under-estimate the power of big-Pharma's ability to bankroll an election scaring people about the issue.

Quoting PHLBOS (Reply 28):
The only ones in Congress presently opposed to CAFE are by and large true conservative Republicans.

Are there any of those left?
Bring back the Concorde
 
Kiwirob
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Fri Nov 07, 2008 8:18 am



Quoting Radarbeam (Reply 19):
Toyota employs +34600 persons across 10 plants in the US alone. Honda has 3. Nissan has 2 plants in Tennessee and 1 in Mississippi, BMW has 1 in SC, Mercedes Benz 1 in AL and VW announced earlier this year that they will be building their first plant in the US.

I believe very few if any of these plants have unionised workers, which must make a huge difference.

The only way for Ford and GM to save themselves is to cut out the cancer, that cancer is the US business, I have a relative who is in the management team at Ford Australia, he had said that with out Ford US Ford everywhere else would be a much stronger company, cut off Ford US and everyone would be happy.

Chrysler is probably dead, if they get taken over by GM only I think Jeep will survive, what would have been best for them would be a takeover by Renault, Carlos Ghosn is the best CEO in the auto industry, he's probably the only person with the talent to fix Chrysler.
 
JJJ
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RE: Would This Be A Way To Fix Detroit's Auto Ind?

Fri Nov 07, 2008 9:22 am



Quoting KiwiRob (Reply 30):
The only way for Ford and GM to save themselves is to cut out the cancer, that cancer is the US business, I have a relative who is in the management team at Ford Australia, he had said that with out Ford US Ford everywhere else would be a much stronger company, cut off Ford US and everyone would be happy

Indeed, both Ford Europe and Opel post profits. Shut down all US plants and make Ford an import in the US Big grin

The problem with legacy cost are not the unions, but rather the system. A system that penalises big manufacturers in such a way does very little to stop the wave of outsourcing.

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