Posted on 01/29/2007 11:22:19 AM PST by .cnI redruM
The Big Three are hemorrhaging money, and struggling to stay competitive with foreign rivals. Fortune's Alex Taylor crunches the numbers.
NEW YORK (Fortune) -- An enormous gap still separates the performance of Detroit automakers from their foreign competitors - and it isn't all their fault.
The stupefying $12.7 billion loss that Ford Motor Co. reported Thursday for 2006 comes one year after General Motors' equally horrendous $10.6 billion loss for 2005.
But for all the bad decisions these companies have made by not listening to their customers, they aren't entirely to blame. Structural inequities between the U.S. and Japan - notably in labor costs and currency - account for a big chunk of Detroit's problems.
The evidence can be seen in a report prepared by the Detroit consulting firm Harbour-Felax, first released back in October and updated for Fortune. For anyone who makes a living from the domestic auto industry, it is depressing reading. An enormous and persistent gap separates the home team from the import companies - large enough to question the continued survival of the U.S. companies.
(Excerpt) Read more at money.cnn.com ...
Lol, name a company big labor hasn't killed...
I was reading what some of the denizens of Fark were saying about this. Many of them see it as a complete failure of management to "make cars Americans want". Some people will reach for the kool-aide no matter what the facts are.
Let them fold. Let a new auto industry emerge in this country, without all the baggage associated with the Big Three.
Won't get that far, for better or for worse.
Bailout will be the term of the day.
The power that be will get to try and salvage the mess with taxpayer money.
It's the American peoples fault for buying higher quality foreign cars. Damn them! Don't they know it's unpatriotic to buy the best product for their money?
At one time the Unions understood that to survive, they had to unionize entire industries, not individual companies, or else they would just run their companies out of business.
But when globalization hit, they couldn't unionize the world. They tried to push an anti-free-trade agenda, but failed, and now we are seeing the result.
We now see that we in America were paying too much for cars for years, because of the unions.
Currency valuations are a part, but that doesn't make a 12 billion dollar loss. To say so reeks of spin.
The UAW will blame it on "greedy management" but the truth is that unions are killing the domestic auto industry.
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. Toyota (Charts) 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..."
The UAW will be the death of the Auto industry in the US. They screwed their own dinner for too long.
Agree entirely. I worked in the American auto industry for a decade, 1986-1996 and can't comprehend how they've made it this long. No bail-out's, no guberment low-interest loans; let them wither away and allow a new market to emerge. Time for the house-of-cards to fall. Thank you UAW.
"but the truth is that unions are killing the domestic auto industry."
Really?? Who ratified their contract? The union doesn't write their own ticket, the company agrees to every contract clause and wage increase.
Just wait till people start buying the crap China's going to start sending here.
This is going to be very interesting... and I can't wait to see how Americans plan to sue the Chinese companies making the cheesy little cars WalMart plans to sell.
Man the Press pics and chooses, FORD took some serious charge offs this year, to help unencumber itself from stranglehold obligations.. yes that creates a huge loss on paper, but those chargeoffs are more paper pushing that true losses.
Ford does need to get its act together, its basically bet the farm on its current strategy, it doesn't have much left to leverage if it fails.. but I wouldn't bet against them.
F & E series are great vehicles, the 500 a bit of a dud, but the Mustang still selling like hotcakes and the new fusion is pretty damned slick. Crown Vic still owns the police car market...
I wouldn't bet against the blue oval personally.
The Ford "F" Series pickups have been the biggest selling vehicle in the US for years.
You think the Chevy Metro is bad... put your wife and kid in a Chinese car......No thanks.
it's bad enough that the incompetent management and the greedy unions have caused these problems, but when our own government adds to the problems with high tax rates, unreasonable regulations, and rediculous CAFE requirements, one has to wonder who's side the government is on? It sure in hell is not the average working stiff.......
I bought a used 04 Chevy Colorado to replace a Kia and A Mazda Pickup. The wife just bought a 02 Saturn to replace a Ford. Nice to have GM autos in the driveway...and both perform very good.
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