What caused Detroit to go bankrupt? - Page 2 - PeachParts Mercedes-Benz Forum

vstech · #16 03-10-2014, 07:32 PM

Moved.

Botnst · #17 03-10-2014, 09:19 PM

Nooooo, please take it back!!!

t walgamuth · #18 03-10-2014, 09:46 PM

Quote:

Originally Posted by jcyuhn

Tom -

I don't disagree with your point #1, but I think the story is a bit more complex as well. The so-called transplant automakers (Honda in Ohio, Toyota in Kentucky, Mitsubishi and Subaru in Indiana, etc.) were all non-union and did not have any of the legacy costs of the Big 3 automakers. Legacy costs consist of the pension and medical benefits supplied to autoworkers and their dependents. My recall is that GM had legacy costs of $1500 per vehicle in the early 2000s. These costs restricted the ability of the Detroit automakers to invest in product development, and they meant that small cars (with correspondingly small margins) could not be produced profitably. Given these constraints, Detroit did the rational thing - it went after the SUV market. It didn't work out, but every other decision would have been worse.

Being unionized, the Big3 did not have the labor flexibility of the imports. The UAW contract did not give the Detroit automakers the ability to adopt higher quality and more efficient manufacturing processes; they were stuck doing business the old way. There were also some remarkable expenses - recall the jobs bank?

Unions cannot dictate what is built. Workers cannot decide what level of quality control there will be. Legacy costs? It only became a problem when they lost market share.

whunter · #19 03-10-2014, 10:04 PM

aieeegrunt · #20 03-11-2014, 08:21 AM

Living in Windsor from 1970~2000 I literally had a front row seat for the death of a great city

aklim · #21 03-11-2014, 09:45 AM

Quote:

Originally Posted by t walgamuth

Unions cannot dictate what is built. Workers cannot decide what level of quality control there will be.

Legacy costs? It only became a problem when they lost market share.

Not directly, no. But when the cost of building a vehicle rise, you got to cut something somewhere and there are only so many places to cut. Unlike the government, they cannot simply print the money out so you might have to scale back what you want to build. If the vehicle sells for 20K and costs 22K to build, something has to give either in features or quality.

Kinda like saying my blowing $20K a month on the ponies is only a problem when I am not earning $400K a year, isn't it?

t walgamuth · #22 03-11-2014, 09:57 AM

Quote:

Originally Posted by aklim

Not directly, no. But when the cost of building a vehicle rise, you got to cut something somewhere and there are only so many places to cut. Unlike the government, they cannot simply print the money out so you might have to scale back what you want to build. If the vehicle sells for 20K and costs 22K to build, something has to give either in features or quality.

Kinda like saying my blowing $20K a month on the ponies is only a problem when I am not earning $400K a year, isn't it?

Not at all.

Making all decisions based on short term gain at the bottom line is always a formula for long term failure. All too common in our MBA driven business world.

aklim · #23 03-11-2014, 10:06 AM

Quote:

Originally Posted by t walgamuth

Not at all.

Making all decisions based on short term gain at the bottom line is always a formula for long term failure. All too common in our MBA driven business world.

You don't think labor costs have anything to do when you design a vehicle? Do explain.

Yes, you are right on that. The execs promised something today that they knew wouldn't bite them today or tomorrow but maybe in the future. Kinda like what government is doing. Borrowing today to spend today. When it comes due, that is the next guy's problem. As to whether it is MBA driven, I have my doubts. Unlike a small business, they answer to the shareholders. In my business, I can simply not have profit for the next 5 years or even draw a salary for the company's future well being. Shareholders are different. Those people want a profit today or you get canned tomorrow. Also, we have a very mobile society that moves a lot. I can get my bonus today, make everyone happy and springboard to the next place before this collapses and I'm golden. I think the instant gratification is basically here to stay because of the nature of the society. Gone are the days where I worked my way up from Janitor, stay with the company till I retire and get a golden watch.

t walgamuth · #24 03-11-2014, 11:33 AM

I didn't say that.

aklim · #25 03-11-2014, 12:56 PM

Quote:

Originally Posted by t walgamuth

I didn't say that.

Feel free to explain. Your replies are cryptic, I suspect, for a reason.

t walgamuth · #26 03-11-2014, 03:53 PM

I did not say what you said I said and asked me to explain. I don't see that as cryptic. I don't engage you in arguments because I won't convince you of anything and you will write ten pages.

aklim · #27 03-11-2014, 04:06 PM

Quote:

Originally Posted by t walgamuth

I don't engage you in arguments because I won't convince you of anything

and you will write ten pages.

If you have a fact, I will accept it. If you have an opinion, that is going to be a harder sell.

My earliest recollection of math was "no working, no points"

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