[Rhodes22-list] Math Error
Ben Cittadino
bcittadino at dcs-law.com
Thu Dec 18 16:49:18 EST 2008
Bill, Herb & Hank;
I don't know the answer to Herb's question but I remembered the 10% labor
costs figure from a news report because I was very surprised at the low
number. If someone had asked me to guess I would have said the labor costs
would have been more than half the cost of building a car. The lifetime
accumulation of benefits ought, I would think, to be money already put away,
but that's a whole other kettle of fish as I have heard many companies have
"borrowed" from their pension funds.
I agree that the unions and management need to agree on concessions in order
to make the companies competitive, but nobody will be reasonable. The bosses
want their seven figure salaries (or more) and the line workers feel they
have earned every bit of their progress in wages, hours, and working
conditions over years of tough negotiating and it's hard to go backward.
You're right Bill about us not having lived through a depression, but I
think we're about to find out what it's like.
I've also heard it said that we are the first generation of Americans whose
children will not do better economically than their parents. I'm beginning
to believe that too.
And to top it off, Caroline Kennedy had lunch with "Rev Al " Sharpton today.
Jeez Louise.......
Ben C.
Bill Effros wrote:
>
> Ben,
>
> If I thought I had a solution, I would have spoken up long ago.
>
> I've never seen a depression before. Neither have you. Our parents
> were children if they were alive during the "Great Depression" -- they
> had no more idea of what was happening to their parents than our
> children understand what is happening to us.
>
> I honestly believe the underlying principles of capitalism work, and
> that the "invisible hand" is a better mechanism than any other mechanism
> I have seen. I don't think it can operate totally unregulated.
>
> I know of no mechanism other than massive war to jolt failed economic
> systems back into growth.
>
> I do not advocate war. Ever.
>
> I'm sure it is a mistake to use our scarce capital to maintain failing
> businesses. We will need that capital to build new businesses.
>
> "Public Works Projects" is just "Pork Barrel Spending" with a PC name.
> It won't work, and it will prolong the depression.
>
> As you know, I was appalled by the amount of money spent by failing
> enterprises to insure the political candidate of their choice would
> reward their failures by attempting to prolong the status quo.
>
> I wonder if Berkshire-Hathaway will also turn out to be a pyramid
> marketing scheme. No one benefited more from the unprecedented AIG
> bailout than Warren Buffet.
>
> I don't know, Ben, but I suspect we will all be much better off if we
> make this depression sharp and short than if we all slowly, slowly,
> twist in the wind, building sand castles on the beach, to stop the tide.
>
> Bill Effros
>
>
>
>
>
>
>
> Ben Cittadino wrote:
>> Bill;
>>
>> I follow you, and you may have already covered this in earlier posts, but
>> your solution then is what?
>>
>>
>> Ben C.
>>
>>
>>
>>
>> Bill Effros wrote:
>>
>>> The average cost per car in the US today is $20,000.
>>>
>>> The average benefits package per car for US auto companies is $1,500.
>>>
>>> The average additional profit per car of foreign based car companies is
>>> $2,400.
>>>
>>> 10% is widely used as the labor cost per vehicle. (This number is said
>>> to include health and retiree costs.)
>>>
>>> $45 an hour is widely used as the average actual salary of all auto
>>> workers whether they work on foreign or domestic based car companies.
>>>
>>> Here's where the tap dancing starts:
>>>
>>> If the average car is $20,000, and $2,000 (10%) is labor costs, and the
>>> average benefits package for US based companies is $1,500, you are
>>> saying that the average direct labor cost per car is $500 divided by $45
>>> or just over 11. You are saying that the total amount of time it takes
>>> to build the average car is slightly over 11 hours...seems unlikely to
>>> me, even with the best robots in the world.
>>>
>>> When you start trying to interpret these numbers differently, it just
>>> gets worse.
>>>
>>> This situation won't improve until people start to face the real
>>> problems here.
>>>
>>> Bill Effros
>>>
>>>
>>>
>>> Ben Cittadino wrote:
>>>
>>>> Robert;
>>>>
>>>> If by "shake the unions" you mean void their contracts with the unions
>>>> the
>>>> aswer is yes. This is the reason many people think bankruptcy is the
>>>> answer.
>>>> The Trustee in bankruptcy can, with the approval of the Court void any
>>>> contract the company would otherwise be required to honor; unions,
>>>> suppliers, dealers, etc.
>>>>
>>>> If you think the unions are the problem (labor casts are about 10% of
>>>> the
>>>> cost of a car) then bankruptcy is your answer. I tend to think
>>>> incompetent
>>>> management is the problem, emphasizing short term quarterly profit
>>>> reports
>>>> for big bonus' over long term infrastructure planing and modernization
>>>> of
>>>> plants with imaginative designs instead of more gas guzzling SUV's. The
>>>> unions didn't plan that garbage.
>>>>
>>>> Ben C.
>>>>
>>>>
>>>>
>>>> Robert Skinner wrote:
>>>>
>>>>
>>>>> Two questions:
>>>>>
>>>>> If they went into chapter 11, would the auto companies be able to
>>>>> "shake
>>>>> the
>>>>> unions"?
>>>>>
>>>>> Can the auto companies function without the unions -- or have the
>>>>> managers
>>>>> forgotten how to make a vehicle?
>>>>>
>>>>> /Robert O'Maine
>>>>>
>>>>> Brad Haslett wrote:
>>>>>
>>>>>
>>>>>> David,
>>>>>>
>>>>>> It isn't fun watching the personal side of these events. My oldest
>>>>>> son's roommate in Little Rock works at the family Jeep dealership
>>>>>> (Chrysler) that's been in the family for three generations. I doubt
>>>>>> they'll make it. On the other side of the equation, people in San
>>>>>> Antonio, Tupelo, Montgomery, Jackson, etc. are ready to hustle at $40
>>>>>> an hour. If we didn't allow for failure we'd still be driving Hudsons
>>>>>> and Packards.
>>>>>>
>>>>>> Brad
>>>>>>
>>>>>> On Wed, Dec 17, 2008 at 6:47 PM, David Bradley <dwbrad at gmail.com>
>>>>>> wrote:
>>>>>>
>>>>>>
>>>>>>> And too many dealerships holding too much finished inventory. Now
>>>>>>> that the shock has worn off from the meltdown I'm remembering how
>>>>>>> perfectly awful the prospect of not being a leader in the steel
>>>>>>> industry seemed in the 70s. Let 'em declare chapter 11 - no loan wi
>>>>>>> thout stiff terms.
>>>>>>>
>>>>>>> Bill Ford was being interviewed yesterday and still pandering to the
>>>>>>> UAW. If Chrysler could shake the union and close a third of their
>>>>>>> dealerships they'd be well along the way.
>>>>>>>
>>>>>>>
>>>>>>> On Wed, Dec 17, 2008 at 4:34 PM, Brad Haslett <flybrad at gmail.com>
>>>>>>> wrote:
>>>>>>>
>>>>>>>
>>>>>>>> David,
>>>>>>>>
>>>>>>>> Saw that earlier. I flew the San Antonio trip all of October and
>>>>>>>> talked to the locals about the new Toyota Tundra truck factory
>>>>>>>> there.
>>>>>>>> They've been doing mostly training and waiting for better times.
>>>>>>>> The
>>>>>>>> new Toyota factory in Tupelo, MS is slowing down opening. Chrysler
>>>>>>>> usually shuts down for two weeks at Christmas for maintenance
>>>>>>>> anyway
>>>>>>>> so this is only two more weeks of shutdown, but, the UAW workers
>>>>>>>> draw
>>>>>>>> 95% pay during the shutdown. GM has some divisions that would do
>>>>>>>> very
>>>>>>>> well on their own. The Corvette would be fine in its niche.
>>>>>>>> Shanghai
>>>>>>>> Buick is doing well. Their trucks sell well. I don't see how
>>>>>>>> loaning
>>>>>>>> them money will do anything but prolong the inevitable. They have
>>>>>>>> the
>>>>>>>> same problem as the passenger airlines - too many seats chasing too
>>>>>>>> few asses.
>>>>>>>>
>>>>>>>> Brad
>>>>>>>>
>>>>>>>> On Wed, Dec 17, 2008 at 6:18 PM, David Bradley <dwbrad at gmail.com>
>>>>>>>> wrote:
>>>>>>>>
>>>>>>>>
>>>>>>>>> And so it begins.
>>>>>>>>>
>>>>>>>>> Time for Toyota and Ford to steal market share...
>>>>>>>>>
>>>>>>>>> Time for GM to fold up the rest and become Chevrolet
>>>>>>>>> Corporation...
>>>>>>>>>
>>>>>>>>>
>>>>>>>>>
>>>>>>>>>
>>>>>>>>> NEWS ALERT
>>>>>>>>> from The Wall Street Journal
>>>>>>>>>
>>>>>>>>> Dec. 17, 2008
>>>>>>>>>
>>>>>>>>> Chrysler said it will idle all manufacturing operations at the end
>>>>>>>>> of
>>>>>>>>> the day Friday for at least a month in an effort to align
>>>>>>>>> production
>>>>>>>>> and inventory with U.S. market demand.
>>>>>>>>>
>>>>>>>>> For more information, see:
>>>>>>>>> http://wsj.com?mod=djemalertNEWS
>>>>>>>>>
>>>>>>>>> For complete coverage of Detroit in Crisis, see:
>>>>>>>>> http://online.wsj.com/public/page/auto-industry.html?mod=djemalertNEWS
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>>>>>>>>>
>>>>>>>>>
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>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>> --
>>>>>>> David Bradley
>>>>>>> +1.206.234.3977
>>>>>>> dwbrad at gmail.com
>>>>>>> __________________________________________________
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>>>>>>>
>>>>>>>
>>>>>>>
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>>>>>>
>>>>>>
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>>>>>
>>>>>
>>>>
>>>>
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