| Author | Message | ||
     Old_man |
The problem with the automobile industry is not the price of the cars. The problem lies with the economy of the country. The average working man is in no position now to buy a new car. I would bet that the high dollar cars, that sell to the rich are doing just fine. Do you think that Ferrari is having a problem? It is easy to make a target of the auto workers, but even if they cut wages the cars would still not sell in this economy. | ||
| Ft_bstrd |
The average working man is in no position now to buy a new car. You keep making that point, but the answer ISN'T the unions. If wages are artificially elevated, that wage increase is reflected in the price of the product. If you double the wages and increase the price of the product to reflect the increased labor cost, at best the net benefit is zero in the buying power of the employee. The way to increase wages is to increase demand for labor. When firms compete for labor, the price of the labor rises. Demand for goods drives the demand for labor. The Big 3 have been supporting labor in excess of demand for decades. That dead money cost is born by the profitability of the product. Had the Big 3 been able to structure labor, manufacturing, and supply chain for maximum efficiency, their products would have been higher quality at a lower price. Unions can do nothing to increase buying power for union members. Think of the function of a union like the activity of the government in the way of creating pricing subsidies. Labor is a "good" or a "product". When the price of that good or product is artificially subsidized, there is an excess of that good or product. At $75/hr, a company is only able to hire 100 employees, whereas at the natural market rate of $35/hr the company would be able to hire 250. When the population was unable to relocate, corporations didn't have to compete for labor. Unions DID play a role in increasing the buying power of employees. You would be hard pressed now to find a place where any company is able to secure labor without having to compete in the open market for it. The worst thing that could happen to American labor is to have a national "living wage". There would be no place to go to escape the subsidized labor cost and the resultant excess between labor supply and demand (quantity between A and C).  Without an employer, the Government must purchase the excess supply at the given minimum price to provide FULL employment. In the case of the UAW the government does this by taxing the population. By artificially inflating the labor price above market equilibrium and then paying for that labor out of tax revenues, the government is decreasing the buying power of the rest of the population. | ||
| Old_man |
The fact remains that these cars are competitively priced with all the other cars. Price is NOT the problem. | ||
| Buellgrrrl |
FB, there's one little problem with your economic model... There are a lot of costs in building a car besides labor! | ||
| Ft_bstrd |
It doesn't matter WHAT the costs are to make a car. ALL those costs are reflected in the price. If there is $1500-2000 excess labor costs per car, that is cost NOT devoted to R&R, materials, styling, etc. Labor is one of the most significant costs because it isn't reflected in end product value. The cars are priced below market with incentives because the costs are not reflected in the quality and durability of the car. This means that the company is at or below cost for most of the line because the majority are sold significantly below MSRP. The artificially inflated, above market, labor cost results in vapor value that must be discounted at the point of sale compared to competitive brands. It's the worst of all worlds. The consumer historically has expected that they are going to get a lower quality product that doesn't last as long and has worse resale value compared to competitive brands. They EXPECT to receive the adjustment at purchase. | ||
| Court |
>>>Do you think that Ferrari is having a problem? Three neighbors have bought Ferrari's this spring. My wife is going to get a new car tomorrow morning and I confess part of the lure is about 20% off MSRP . . . prices have never been better. | ||
| Loki |
Yes, the Class 1 RRs are an entity unto themselves. They get to play by their own set of rules. Also get to ignore rules that others are bound by. IMHO, the UAW shot themselves in the foot. Then put a round in the other foot. All the while caring about the immediate versus the long haul. | ||
| Ft_bstrd |
I think the last round was between their own eyes. It won't take long for subsequent administrations to undo the benefits funding. The UAW hasn't dealt with government funding. They've been used to contract law. What recourse will the UAW have when the government says "sorry, your funding isn't going to be continued"? | ||
| Buellgrrrl |
FB, How come you're so jealous of the UAW workers? | ||
| Ft_bstrd |
Jealous? | ||
| Imonabuss |
Troll alert, troll alert!!! She's baaaaacckkk... | ||
| Old_man |
The problem is NOT price and it wasn't price before the trouble. The trouble is that they, along with most other manufacturers, are not selling the cars that they make. They WERE making money when they sold cars. | ||
| Ft_bstrd |
Huh? You speak in riddles Kemo Sabe. | ||
| Court |
Frankly. . . . I'd happily pay twice the price of a GM or Chrysler just to steer clear of the entire thing. Obama shot $34,000,000,000 to GM to get them through July and they made it 38 days. They he appointed the "Car Czar and Committee" of political donors rather than anyone who had an iota of knowledge about the business. Let's face it . . . they are just not that bright. Thanks but I'l stick with high quality German cars until the American car companies are in the hands or American business folks rather than politicians. You couldn't give away a GM or Chrysler right now. On the bright side Smith and Wesson sales (I'm a huge fan of the "L" Frame 6868) sales are up 27% in the 1st quarter of 2009. Let's hope the feds don't decide to "help" them. I confess I am jealous of the UAW workers . . . . there are days I long to be sitting on my ass. . . .drawing 80% of my salary and remember the days when I actually did something, had some self esteem and contributed to the economy . . before the union and the government "helped" me. | ||
| Ft_bstrd |
I confess I am jealous of the UAW workers . . . . there are days I long to be sitting on my ass. . . .drawing 80% of my salary and remember the days when I actually did something, had some self esteem and contributed to the economy . . before the union and the government "helped" me. Oh snap!  Wait, I'M paying them 80% of their income to NOT produce cars!  | ||
| Buellgrrrl |
FB, thanks for reminding me to file my weekly unemployment claim before I go riding! | ||
| Old_man |
Do you think American cars are overpriced compared to the European or Japanese cars? | ||
| Old_man |
I know that I paid a premium price for my Buell when comparing it to other bikes. | ||
| Jstfrfun |
Old and Buellgrr...do you understand delusional? | ||
| Old_man |
Jstfrfun Do you understand anything? Will you answer my question? Or is the answer in disagreement with your hate the unions thesis. | ||
| Old_man |
Isn't Buell a non-union shop? Why the prices higher than the Japanese? | ||
| Ft_bstrd |
OM, Price to perceived value is probably about right. Given the price the public is willing to pay for the cars, the revenue is insufficient to cover the expense of production. | ||
| Bill0351 |
"Thanks but I'l stick with high quality German cars" That's funny because with the exception of Porsche, German car companies have struggled badly with QC for the last decade. All of the "Big 3" have better overall dependability than Mercedes, but in this case perception of quality trumps the reality of the situation. Image is even more important than the machinery when it comes to selling cars, and right now, American car manufacturer's image is in the toilet. That isn't going to be easy to change. | ||
| Old_man |
So true, I have a Mercedes Benz and a Buick. Many problems with the Benz. All Fixed, under warranty. Not one problem with the Buick. | ||
| Old_man |
FB, They made money on the cars they sold before the market downturn. The problem now is that car sales are drastically down. Down for ALL new cars. | ||
| Old_man |
Down for ALL new cars. Maybe not for Ferrari and that ilk. | ||
| Ferris_von_bueller |
I was dating a woman that owned an 06 Mercedes SLK 300. She had it in the shop numerous times ( 3 for the computer) and finally got rid of it despite the fact she loved it on a purely emotional level. Btw, the Toyota Corolla and the Tacoma pickup are both made with union labor. | ||
| Old_man |
I was glad I paid for extra warranty time for the Benz. I needed it. Although the Buick is a year older that the Benz, it has NEVER been back to the dealer for any warranty work. | ||
| Old_man |
Talking to my nephew today, his daughter was laid off from her job. She worked for a store here in PA, transferred to one of their stores in FLA when she moved there. Been working there for several years as an asst. manager. After laying off most of the workers who had benefits they hired people to replace them, without any benefits. This is what happens when there is no union to protect the individual worker. I know that some here would think. "So what!" Well, I think it is very wrong. | ||
| Ft_bstrd |
I'd pick a Buick over Mercedes. |
