[Rhodes22-list] Math Error

Thu Dec 18 16:51:50 EST 2008

Even if it were only 10%, being 1.5-2x non-competitive in 10% of cost
structure is a death sentence in a commodity business, which, like it
or not, is what the US Big 3 are.

On Thu, Dec 18, 2008 at 12:09 PM, Bill Effros <bill at effros.com> 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
>>>>> __________________________________________________
>>>>> To subscribe/unsubscribe or for help with using the mailing list go to
>>>>> http://www.rhodes22.org/list
>>>>> __________________________________________________
>>>>>
>>>>>
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>>>>
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>>>
>>
>>
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-- 
David Bradley
+1.206.234.3977
dwbrad at gmail.com