Auto industry....15 years later

[ChicosBailBonds]

My first two years out of college I spent in the auto motive industry for a small company in Cleveland, OH.  Travelling to Michigan every week to visit places like Warren, Deerborn, Southfield, Muskegon, Traverse City, Battle Creek, Grand Haven, etc was quite an eye opener for me.  We were in the engine oil testing sector and working with the OEMS (Ford, GM, Mack, Caterpillar, Detroit Diesel, etc) and the oil companies to get the proper engine oil specs approved.  Essentially, before an oil went on the shelf (Castrol, Mobil One, Pennzoil, etc) they had to pass certain API, ATSM, etc criteria.

Working with GM and Ford was something I'll never forget.  To many stories to tell here.  Many extremely frustrating with both management and the unions.  The inefficiencies were incredible.  Painful.  I recall my boss, a veteran of the auto industry for decades, saying that GM and FORD should do a nation wide campaign apologizing to the American people, owning up for the fact they they cut corners, etc, etc.  Come clean and try to regain the confidence lost before it's too late and Toyota, Honda, entrench themselves into the landscape.  He said they would never do it unless they were on their last leg.

Sure enough, 15 years later that ad campaign started today.  15 years later.....


http://www.reuters.com/article/domesticNews/idUSTRE4B738W20081208?feedType=RSS&feedName=domesticNews&rpc=22&sp=true

[MUEng92]

A couple of weeks back, a coworker told me about his neighbor who works for GM in Janesville, WI.

I had heard stories of ridiculously high paying union jobs, but this was a whole new realm of absurd.  Along the lines of $45/hr to install tail lights (around 3-4 screws per light) in cars that come down the line once every 10-15 minutes.

I shouldn't quote the numbers, because my memory is terrible, but these are in the ballpark of the numbers he told me.  After hearing that I am extremely hard pressed to not wish bankruptcy on them for agreeing to contract terms like these.  I know there are thousands of workers outside of GM that would be negatively impacted if/when GM files for bankruptcy, but come on. 

[Blackhat]

no more bailouts.  we aren't socialists.  you f up you pay the price.

[muwarrior87]

no more bailouts.  we aren't socialists.  you f up you pay the price.

not yet anyway...

[Blackhat]

when obemesiah turns us into a socialist country is the day I get my one way ticket to Australia.

[mviale]

no more bailouts.  we aren't socialists.  you f up you pay the price.

pick your bailout - rebuild the auto industry or pay unemployment benefits?

[muarmy81]

pick your bailout - rebuild the auto industry or pay unemployment benefits?

So the Auto Union wouldn't be covering their member's unemployment costs? 

In the AUW's contract they have an agreement that pays any employee who is laid off up to 95% of their salary, even if they aren't working.  They're put in a "holding" status and collect their check...and the US Auto industry wonders why they aren't competitive...labor costs got them by the b@!!s

[tower912]

Just like in the banking industry, there have been excesses and abuses.    Is it really worse to have workers making money or bankers inventing ways to package debt and sell it that nobody actually understood and had the net effect of freezing the banks.   Anyway, as to overpaid auto workers, please check out # 7 here......

http://www.freep.com/apps/pbcs.dll/article?AID=2008812050400

[muarmy81]

A couple of weeks back, a coworker told me about his neighbor who works for GM in Janesville, WI.

I had heard stories of ridiculously high paying union jobs, but this was a whole new realm of absurd.  Along the lines of $45/hr to install tail lights (around 3-4 screws per light) in cars that come down the line once every 10-15 minutes.

I shouldn't quote the numbers, because my memory is terrible, but these are in the ballpark of the numbers he told me.  After hearing that I am extremely hard pressed to not wish bankruptcy on them for agreeing to contract terms like these.  I know there are thousands of workers outside of GM that would be negatively impacted if/when GM files for bankruptcy, but come on. 

Compare that to the non-union laborers working in the Toyota and Mercedes Benz plants down here in the South and you see nearly a 40% discrepancy in labor costs vs the big 3 union auto worker.

[chapman]

So the Auto Union wouldn't be covering their member's unemployment costs? 

In the AUW's contract they have an agreement that pays any employee who is laid off up to 95% of their salary, even if they aren't working.  They're put in a "holding" status and collect their check...and the US Auto industry wonders why they aren't competitive...labor costs got them by the b@!!s

The problem that scares me, that nobody seems to consider here, is that the automakers are not isolated companies.  I have known and worked with dozens of people, and have friends and family, who work at non-union companies that supply various parts and materials to the Big Three.  A lot of them are lucky to be making half of what the GM workers make, but the sad thing is that their jobs are less safe, they are pretty dependent on the success of the US automakers, and they are now/will be relying on government unemployment if the automakers continue to be awful.  That's the sad thing; you have overpaid union workers with three companies, but there's a thing called a supply chain, and it affects people who make reasonable wages at companies that are actually well run.

[Coach Norman Dale]

The problem that scares me, that nobody seems to consider here, is that the automakers are not isolated companies.  I have known and worked with dozens of people, and have friends and family, who work at non-union companies that supply various parts and materials to the Big Three.  A lot of them are lucky to be making half of what the GM workers make, but the sad thing is that their jobs are less safe, they are pretty dependent on the success of the US automakers, and they are now/will be relying on government unemployment if the automakers continue to be awful.  That's the sad thing; you have overpaid union workers with three companies, but there's a thing called a supply chain, and it affects people who make reasonable wages at companies that are actually well run.

I had a client, now defunct, which was a supplier to several auto manufacturers, at one time primarily Ford, but at other times Chrysler, VW, Pontiac, and they had a saying in regard to the impact problems at Ford had on them -- When Ford gets a cold, we get pneumonia.

This company was owned -- and abandoned after I helped it raise 2-3 million from state and local gov't -- by Cerberus, which now owns Chrysler.  Coincidence?  Maybe.  But when your company is named after the three-headed dog which guards the gates of Hell -- maybe not.

[NYWarrior]

when obemesiah turns us into a socialist country is the day I get my one way ticket to Australia.

U should already be down under, Stone Cold.  The Bush administration nationalized the world's largest insurer, Freddie, Fannie, and Citigroup.

BTW, Australia has its own issues with protectionist and socialist policies (historically much more acute than the US, just look at their banking, telco and insurance systems). But since they were started by rejects and parolees while we were started by a cult, life there has other benefits 

[MUEng92]

The problem that scares me, that nobody seems to consider here, is that the automakers are not isolated companies.  I have known and worked with dozens of people, and have friends and family, who work at non-union companies that supply various parts and materials to the Big Three.  A lot of them are lucky to be making half of what the GM workers make, but the sad thing is that their jobs are less safe, they are pretty dependent on the success of the US automakers, and they are now/will be relying on government unemployment if the automakers continue to be awful.  That's the sad thing; you have overpaid union workers with three companies, but there's a thing called a supply chain, and it affects people who make reasonable wages at companies that are actually well run.

That is basically what I was getting at when I said that I know there are thousands of workers outside of GM that would be negatively impacted.  That is about the only thing that keeps me from saying screw them all (automakers).

[rocky_warrior]

Got my career started in the automotive industry too.  Sad too see them go down, but they have made some terrible decisions the past 10+ years.

On a lighter note, have you seen the attached spoof ad.  Pretty d@mn funny 

[77ncaachamps]

Sure, I have a problem with these "high-paying" union jobs. But I don't see people banging down the doors for them (i.e., graduating from MU with the intent of getting one of these "cushy" jobs).

I blame the U.S. companies who lacked (lack?) the foresight of seeing changes in fuel economy and adjusting their technology accordingly. I guess the assembly line workers had a lot to do with that. 

[MUFan71]

The problem that scares me, that nobody seems to consider here, is that the automakers are not isolated companies.  I have known and worked with dozens of people, and have friends and family, who work at non-union companies that supply various parts and materials to the Big Three.  A lot of them are lucky to be making half of what the GM workers make, but the sad thing is that their jobs are less safe, they are pretty dependent on the success of the US automakers, and they are now/will be relying on government unemployment if the automakers continue to be awful.  That's the sad thing; you have overpaid union workers with three companies, but there's a thing called a supply chain, and it affects people who make reasonable wages at companies that are actually well run.

+1 Some of them may even be MU fans like me. I have been a Tool and Die Maker for almost 20 years. I don't work for the big 3 but the company I work for does a lot of work for the auto industry. We make all kinds of parts for many different cars, trucks and heavy equipment. The fall of the big three will put many of us out on the street looking for jobs that are not there.......

[Hards Alumni]

Sure, I have a problem with these "high-paying" union jobs. But I don't see people banging down the doors for them (i.e., graduating from MU with the intent of getting one of these "cushy" jobs).

I blame the U.S. companies who lacked (lack?) the foresight of seeing changes in fuel economy and adjusting their technology accordingly. I guess the assembly line workers had a lot to do with that. 

+1

but actually the US manufacturers have caught up in fuel efficiency and quality, but it took so long that a lot of people still have the perception that the big 3 still make gas guzzling pieces of crap... and that will be hard to break.

[tower912]

4 years ago, when I bought my last car, I really liked the Malibu Maxx.   I went to the dealership and was sitting in one.   In the middle of the dash, between the vents, was a Malibu decal that I assumed was the emergency blinker button.  I pushed it....and it broke off and fell down inside the dashboard assembly.    I drove one anyway and liked it, but could not get past the Malibu decal and ended up buying a Mazda 6.     That decal is not the union's fault, either.     Is an autoworker making $28 an hour and perhaps not being the most dynamic worker on the planet somehow more offensive to you than an AIG rep, having taken more money from the gov't than the auto industry is even asking for, still going off to an exclusive spa for an executive retreat or still getting his $3 million bonus this year?    Look to where the real responsibility lies and quit blaming the guys trying to make an adequate living.

[NYWarrior]

heheheh (oops, didnt see rocky's post on this above)!

[ChicosBailBonds]

Compare that to the non-union laborers working in the Toyota and Mercedes Benz plants down here in the South and you see nearly a 40% discrepancy in labor costs vs the big 3 union auto worker.

And a better product as well.  Go figure.  Less wage and benefits costs and a better product.   At the end of the day, 3 auto companies in the United States is TOO MANY when you consider the wage constraints here.  We have one airplane manufacturer, we can survive with 2 auto manufacturers.  Either that, or blow up labor contracts (which is why I would say make them go into Chapter 11) and start over.  The pensions, the wages, the benefits, are destroying them and have for decades. 

With Kia, Hyundai, Mazda, Honda, Nissan, Toyota, BMW, Volvo, Mercedes, Isuzu, Volkswagen, Porsche, etc all selling in the US, the competition is brutal.  If the wage \ benefit costs are out of line to the degree with which they are in comparison to the competition, something has to give.  So far it's been cheaper (crap) cars in order to compete on price.

It's not working.

[ChicosBailBonds]

U should already be down under, Stone Cold.  The Bush administration nationalized the world's largest insurer, Freddie, Fannie, and Citigroup.

BTW, Australia has its own issues with protectionist and socialist policies (historically much more acute than the US, just look at their banking, telco and insurance systems). But since they were started by rejects and parolees while we were started by a cult, life there has other benefits 

No disagreements there.  We've been running under Socialist doctrine with these bailouts for the last year.  Of course, that doesn't mean any of them work (I'll wager they don't). 

[ChicosBailBonds]

Sure, I have a problem with these "high-paying" union jobs. But I don't see people banging down the doors for them (i.e., graduating from MU with the intent of getting one of these "cushy" jobs).

I blame the U.S. companies who lacked (lack?) the foresight of seeing changes in fuel economy and adjusting their technology accordingly. I guess the assembly line workers had a lot to do with that. 

Fuel economy cars are all over the place in the Big Three fleet.  That's not the issue.  The perception of absolute crap for decades has ruined their brands.  Yes, there are more pickups and SUVs in their portfolio, but those also were the only cars the Big 3 could sell.  Plenty of fuel efficient ones.  Plenty of mistakes by Labor and Management.  Labor has had management by the short hairs for a long long time and as a result management gave into crazy pensions, crazy wages.  Did management have a choice?  Maybe.  But it would have meant long strikes and further damage to the Big Three.

I still come back to foreign auto makers here in the states.  Reasonable wages, right to work states, quality products.  Right here in the old USA.  Tennessee.  Lousiana.  Alabama.  Carolinas.   It can work in the states, but both sides have to be willing to make MAJOR concessions.

[ChicosBailBonds]

4 years ago, when I bought my last car, I really liked the Malibu Maxx.   I went to the dealership and was sitting in one.   In the middle of the dash, between the vents, was a Malibu decal that I assumed was the emergency blinker button.  I pushed it....and it broke off and fell down inside the dashboard assembly.    I drove one anyway and liked it, but could not get past the Malibu decal and ended up buying a Mazda 6.     That decal is not the union's fault, either.     Is an autoworker making $28 an hour and perhaps not being the most dynamic worker on the planet somehow more offensive to you than an AIG rep, having taken more money from the gov't than the auto industry is even asking for, still going off to an exclusive spa for an executive retreat or still getting his $3 million bonus this year?    Look to where the real responsibility lies and quit blaming the guys trying to make an adequate living.

Excellent points, only I would say your $28 is wrong.  The average wages / benefits of a UAW worker is $73 for the Big 3 (Chrysler pay $75.86 per hour).  Only $48 for Toyota.  The $28 figure is not for automotive workers as the graph below indicates.  (Source:  AP, USA Today, and US Dept of Labor.)

 



On the AIG comparison, those are always blown out of proportion.  AIG has hundreds of thousands of employees of which 99.9% of them are not making that kind of money or receiving that kind of treatment.  That being said, really stupid on their part just as it's stupid for the autoexecs to be flying on private jets to meet before Congress.  Perception is everything.  Right now, the perception that labor costs are too high, management is incompetent are the reality, not just the perception.

[tower912]

 That $73 dollar figure has been tossed around everywhere, but requires context.   That includes pension and health care costs for retirees, divided by current employees.  For current employees,  UAW starts at $14, goes to $28, plus $14 per hour for bennies, plus overtime opportunities.  New hires get no pension.    $73 is the number when accounting for all of the retiree money.   When taken current dollar to current dollar, line workers for the big 3 are getting paid roughly equal to what Toyota, Honda, et al are getting.    The residual costs are what is killing the B3.    UAW offered to take over the administering of retiree benefits, but needed a big pile of money to do it, per the last contract.     I just read an article that called GM the world's largest pension and retiree health care provider, that just happens to make cars.

[Canned Goods n Ammo]

Fuel economy cars are all over the place in the Big Three fleet.  That's not the issue.  The perception of absolute crap for decades has ruined their brands.  Yes, there are more pickups and SUVs in their portfolio, but those also were the only cars the Big 3 could sell.  Plenty of fuel efficient ones.  Plenty of mistakes by Labor and Management.  Labor has had management by the short hairs for a long long time and as a result management gave into crazy pensions, crazy wages.  Did management have a choice?  Maybe.  But it would have meant long strikes and further damage to the Big Three.

I still come back to foreign auto makers here in the states.  Reasonable wages, right to work states, quality products.  Right here in the old USA.  Tennessee.  Lousiana.  Alabama.  Carolinas.   It can work in the states, but both sides have to be willing to make MAJOR concessions.

Is it ironic that foreign autos are using more of a US style business-structure/culture than the US auto-makers are?

The good old "american way" is an honest days work for an honest days pay. Hard work pays off. Take pride in what you do. If you can do it better/cheaper/faster, then do it. etc. etc.

We invented the steam engine, the assembly line, we went to the moon first. We were masters of ingenuity and advancements.

Now we've gotten "fat and happy" and other countries have rapidly gained.

The auto industry might just be the start of it all.

The next 10-15 years is going to be a VERY interesting time in history.