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Thread: President Obama: auto jobs are gone, and they're never coming back

  1. #16
    Elite Member Fluffy's Avatar
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    Quote Originally Posted by MohandasKGanja View Post
    Retiree healthcare isn't part of the labor cost of the vehicle.

    Japanese auto companies don't have any retiree healthcare costs, which is why it's not misleading to mention that also. It has been a huge burden for American auto companies.
    You realize that you're talking about American plants of Japanese cars, not what I said earlier "they don't include retiree costs of workers in Japan." Two different things. American plants of Japanese cars are relatively new and don't have many US retirees.

    Quote Originally Posted by MohandasKGanja View Post
    Moreover, the concessions cited in your article to make the hourly wage rate in U.S. auto plants at parity with foreign companies (and only for foreign companies that make cars on U.S. soil) were arrived at only this year. So, after 10 years of exploding healthcare rates absorbed by U.S. auto companies in comparison with foreign companies, the U.S. auto industry has been ground down to the point where only now are U.S. companies on an equal costing playing field with foreign companies. And it's too late.

    And labor is only 10% of the cost of the car in the U.S. It's 7% of the cost in Canada. And a much lower percentage (e.g. - $1.25 an hour wage rate in China) in other countries.
    Your original statement was:
    Think how much less expensive those cars would have been if that issue had been fixed 10 years ago....
    That's what I was disputing. Considering that the difference in labor costs between Canada, which has a nationalized health care system, and the US, which doesn't, is only 3 percent, cars wouldn't have been "much less expensive." The Toyotas coming from Japan aren't "much less expensive" either even though Japan has a nationalized health care system and heavily subsidizes its car industry.

  2. #17
    Gold Member mamaste's Avatar
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    Quote Originally Posted by greysfang View Post
    We've got some of the new green jobs starting up in Colorado already.
    That's cool, but I hope they're greener than those hypocrites at Gaiam.

  3. #18
    Elite Member MohandasKGanja's Avatar
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    Quote Originally Posted by Fluffy View Post
    You realize that you're talking about American plants of Japanese cars, not what I said earlier "they don't include retiree costs of workers in Japan." Two different things. American plants of Japanese cars are relatively new and don't have many US retirees.

    Your original statement was: That's what I was disputing. Considering that the difference in labor costs between Canada, which has a nationalized health care system, and the US, which doesn't, is only 3 percent, cars wouldn't have been "much less expensive." The Toyotas coming from Japan aren't "much less expensive" either even though Japan has a nationalized health care system and heavily subsidizes its car industry.
    Here is what I'm saying:

    1. American companies that manufacture American cars in America have born a very high, and sharply escalating cost (healthcare for current and retired workers) that foreign manufacturers didn't have to absorb. That made it more difficult for American companies to be cost competitive, or to derive a profit that kept them from tanking. And that as the healthcare costs skyrocketed, it became an even more difficult cost for the American companies to absorb. The differential cost was $1,400 a car.

    2. Foreign companies that manufacture cars here do not have the same collective bargaining agreement as American companies that manufacture cars here, so they have had a substantially less labor rate until the recent UAW concessions.

    3. Your article on the 10% vs. the 7% does not note when this supposed percentage was derived (for example, after which collective bargaining aagreement) and only reflects the costs for cars made by UAW and CAW, respectively. Where is the % cost of labor for foreign companies that make cars here and/or abroad? Moreover, even accepting this guys numbers, a 3% difference in cost between two different products (that may retail around $30,000) amounts to $900, which is something that would sway a consumer from one car to another given similar features.

  4. #19
    Elite Member Fluffy's Avatar
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    Quote Originally Posted by MohandasKGanja View Post
    Here is what I'm saying:

    1. American companies that manufacture American cars in America have born a very high, and sharply escalating cost (healthcare for current and retired workers) that foreign manufacturers didn't have to absorb. That made it more difficult for American companies to be cost competitive, or to derive a profit that kept them from tanking. And that as the healthcare costs skyrocketed, it became an even more difficult cost for the American companies to absorb. The differential cost was $1,400 a car.

    2. Foreign companies that manufacture cars here do not have the same collective bargaining agreement as American companies that manufacture cars here, so they have had a substantially less labor rate until the recent UAW concessions.

    3. Your article on the 10% vs. the 7% does not note when this supposed percentage was derived (for example, after which collective bargaining aagreement) and only reflects the costs for cars made by UAW and CAW, respectively. Where is the % cost of labor for foreign companies that make cars here and/or abroad? Moreover, even accepting this guys numbers, a 3% difference in cost between two different products (that may retail around $30,000) amounts to $900, which is something that would sway a consumer from one car to another given similar features.
    Sorry but I don't consider $900 to be "much less substantial," which is what you said in your original statement.

  5. #20
    Elite Member MohandasKGanja's Avatar
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    Quote Originally Posted by Fluffy View Post
    Sorry but I don't consider $900 to be "much less substantial," which is what you said in your original statement.
    That $900 is working with your number, though, not mine. My original statement was based on other reports I read.

  6. #21
    Elite Member Fluffy's Avatar
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    Reports that overestimate the cost of labor per car anyway.

  7. #22
    Elite Member MohandasKGanja's Avatar
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    Quote Originally Posted by Fluffy View Post
    Reports that overestimate the cost of labor per car anyway.
    From a 2007 CNN article:

    Why U.S. automakers like GM and Ford are losing money - Jan. 26, 2007

    According to the latest calculations, the gap between Japanese and American carmakers' profits average out to about $2900 per vehicle, and the home team does not have the advantage.

    Cost issues


    A big reason is the cost of labor. As analyzed by Harbour-Felax, labor costs the Detroit Three substantially more per vehicle than it does the Japanese.
    Health care is the biggest chunk. GM (Charts), for instance spends $1,635 per vehicle on health care for active and retired workers in the U.S. ToyotaCharts) pays nothing for retired workers - it has very few - and only $215 for active ones. (
    Other labor costs add to the bill. Contract issues like work rules, line relief and holiday pay amount to $630 per vehicle - costs that the Japanese don't have. And paying UAW members for not working when plants are shut costs another $350 per vehicle.

  8. #23
    Elite Member Fluffy's Avatar
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    Quote Originally Posted by MohandasKGanja View Post
    From a 2007 CNN article:

    Why U.S. automakers like GM and Ford are losing money - Jan. 26, 2007

    According to the latest calculations, the gap between Japanese and American carmakers' profits average out to about $2900 per vehicle, and the home team does not have the advantage.

    Cost issues


    A big reason is the cost of labor. As analyzed by Harbour-Felax, labor costs the Detroit Three substantially more per vehicle than it does the Japanese.
    Health care is the biggest chunk. GM (Charts), for instance spends $1,635 per vehicle on health care for active and retired workers in the U.S. ToyotaCharts) pays nothing for retired workers - it has very few - and only $215 for active ones. (
    Other labor costs add to the bill. Contract issues like work rules, line relief and holiday pay amount to $630 per vehicle - costs that the Japanese don't have. And paying UAW members for not working when plants are shut costs another $350 per vehicle.
    Oh, please that is such a canard.

    Have you looked at the basic prices of US cars like Ford vs Japanese ones like Toyota?
    For example:
    Toyota Corollas start at $15,350
    Ford Focus start at $15,520

    Yes, the American one is SOOooo much more expensive due to health care compared to the cheaper Japanese version, which doesn't have legacy costs.

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    Actually it used to be that the Japanese cars were more expensive (to the consumer) than comparable American cars, so these arguments aren't making sense anyway. We have bought 3 Hondas over 15 years and they were always priced higher than American but we bought because of quality. We tend to keep our vehicles for 10 years, so we need something that will hold up. American cars just feel cheaper. I had a Chevrolet before I bought an Acura Integra and the Chevy was just falling apart after 7 years.

  10. #25
    Elite Member MohandasKGanja's Avatar
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    Quote Originally Posted by Fluffy View Post
    Oh, please that is such a canard.

    Have you looked at the basic prices of US cars like Ford vs Japanese ones like Toyota?
    For example:
    Toyota Corollas start at $15,350
    Ford Focus start at $15,520

    Yes, the American one is SOOooo much more expensive due to health care compared to the cheaper Japanese version, which doesn't have legacy costs.
    Yes, as the report says, the American car is more expensive due to the embedded health care costs that the Japanese maker does not have to pay.

    Even at $15,350, the Ford Focus is selling at a loss to be cost competitive with the Corolla. With an equalized playing field on health insurance, the American company would at least be realizing the same profit as the Japanese company.

    Continuing with the Focus as an example:

    Ford sold about 5 million of them so far, but according to Wall Street Journal, lost about $1 billion a year making them.

    Even though it got recognition for quality:

    By 2005, the Focus received a Consumers Digest Best Buy Rating, (taking numerous factors into consideration, including reliability and recall history) as well as the Strategic Vision 2005 Total Quality Award. In 2006 the Focus received AutoPacificís first Ideal Vehicle Award as top-rated compact car for 2006. The Focus placed on Car and Driver magazine's Ten Best list for five consecutive years between 2000 and 2004.
    Last edited by Tati; July 17th, 2009 at 03:14 PM.

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