Thats not totally fair, GM has Opel/Vauxhal in Europe, Holden in Aus/NZ and the middle east.. etc

They probably could push into those markets but it would be detrimental to the other brands and vice versa.... Also alot of countries have high tarrifs on imports...

 

I don't think that the quality of imported goods was an issue in this discussion. From a consumer standpoint, I've got little reason to assume that a foreign-sourced product will be any less reliable than a domestic problem. From a commercial standpoint, my issue is less with production quality, and more with design/development support, logistical issues, etc.

Either you didn't read my comments carefully, you're being inflammatory, or I wasn't clear - so I'll clarify myself now. My comment refered to those that buy products with an "American" brand name, without doing their research to see where the product is built, where its components are sourced from, etc. When I buy car that's built in a nearby state, using over 85% domestic content (including some from my employeer), I rest easy.

First of all, we'll see how successful Wal-Mart is when their suppliers start going belly-up as WM kills off the competition and therefore takes said suppliers further away from profitability. It's an interesting business model, and not one that looks sustainable in the long term so I'd recommend not bringing it up again.

You sound just like the OEMs that believe that their suppliers shouldn't possibly be more profitable than themselves. Yes, beat up the supplier and take away his profit, or else he'll just continue to rip you off and threaten the livelihood of your precious car company Now, what happens if you force your supplier to provide you parts at 1-2% margins, and someone comes along that offers to dramatically improve your production efficiency, that pays a healthy amount of money up-front for effective tooling and even a bit of capital improvement, and then gives you a chance to make parts at a 5-8% margin? Who do you think is going to get better service? Funny how the Big 3 are the ones that always push for big cost-downs and then speak of poor supplier support in the same breath.

You can't crush your suppliers under your boot while begging for continuing innovation, capital investment, and so on - it doesn't work that way.

I wouldn't say that their designs are all that bad - they just make some different compromises than Honda does. As an engineer, I prefer some of the intricate design work that I see on Hondas, like the fancy tubular suspension members. Toyota cars might substitute a plain steel stamping for the same part, but not necessarily in a way that affects the function of the part.

Where Toyota stands to lose their *** is in pursuing certain low-cost sourcing opportunities that have already bitten Detroit in the ***, and by treating their US workforce poorly. Considering Toyota's ability to polish turds when it comes to improving mediocre or downright poor suppliers, they stand a better chance than anyone of building a successful third-world supply chain. But, they're starting to play the same sourcing game that GM played a while back, where you deliberately try to trick a supplier into submittting an unreasonably low bid just to win the sourcing competition; a strategy that virtually always blows up in your face as soon as minor engineering change orders start to take place. It remains to be seen if they can be more successful at this than their competition.

And then there's their labor issue. In an attempt to reduce labor costs, they're pushing their workforce hard (such as forcing overtime without any increased compensation). It's the sort of stuff that makes the UAW pamphlets in the break room look awfully attractive. They had best watch their back.

 

Well, I DO. Whatever we need, it should be made here in the US to provide jobs and economic might for US.
Meet Billy-Bob, the high-school drop-out who just turned 35 and decided the GED is all he needs. IMO, he doesn't need to make $50k/year watching an automated wiring harness machine click-off product. If he wanted $50k/year, he should have stayed in school, gone to college, and been educated in how to run a business, design things, program stuff, etc., or made a shot of it with his own business, i.e. MAKE VALUE OF HIMSELF.

Just last year, I designed a 3-piece assembly that costs $112 to make, that cut the process time on each machine (we have @740 machines in one plant alone, with 9 plants globally) as well as reducing scrap. We trialed it on 120 machines for a cost of $13,440. That one plant that volunteered for the trial estimated it's saving for 1 fiscal year at $1.3-million in reduced scrap, improved cycle time, and worker-related lost-time payments (it was a huge improvement in an ergonomic stressor process - we have numerous tendonitis and carpal-tunnel claims from severe arm/wrist stressing). Corp Admin has mandated the program is to be implemented now in all our operations globally, for who knows how much savings. And the project wasn't even a formal project with funding - it was done "skunk-works" style and surprised everyone. I got recognized for it last fall, I got a nice cash award, and I got a nice glass trophy acknowledging the acheivement.
MY POINT in all this self-patronization is that I bring VALUE to my job. I'm giving more than I'm taking home - financially and spiritually. So I have no reservations about claiming my "high engineer's salary". I not only reduced scrap, but I made the OPERATOR'S jobs easier to do.
Billy-Bob on the other hand wants to watch his machine run for 8 hours (less 2 breaks and lunch) and go home - period. And though he complains about how hard he works, he is not really bringing much to the party insofar as getting the job done - certainly not $50k-worth.

The reason parts/products are being made offshore is ONE-DIMENSIONAL... it's the cost of the LABOR! Too many people in this country - most with the best of intentions mind you - have found ways to bring home more than they are really worth in the workplace. It is so bad, that a company can afford to buy containers, package a material, ship it 6000 miles or more, THEN HAVE THE WORK DONE, package it again, ship it 6000 miles or more back, and re-package for final sale - ALL THAT for LESS MONEY than they could pay a worker to do it right in the same factory it originated in!

Think about that, hard. For the labor price of the guy in that factory (whose job just got shipped to China), the same company paid for all of the following...
1)The labor to create the additional packaging/shipping containers
2)The material costs of the containers
3)The labor to pack the containers
4)The shipping/handling of the containers to China
5)The profit margin of the shipping company
6)The actual labor to do the same job as the guy laid off back home
7)The re-packaging of the completed product
8)The shipping/handling of the containers from China
9)The repackaging of the product after it has been inspected and labelled here in the US.
... and they STILL came out ahead!
I could easily see dozens of people employed in this shipping/exporting exercise, between packagers, forklift operators, dock workers, ship captain/crew, customs inspectors, container fabricators, etc. And all of this futility because ACME Product Company can't afford to pay Billy-Bob $50k/year with benefits, 401K match, and retirement program, all just to sit on his keester and watch a machine run in front of him...

Yes, Virginia, the system is broken darling.

The difference between GM and Toyota in my eyes, Toyota WON'T pay Billy-Bob $50k because he "wants" it, or the union forces them to, like they do with GM. They'll offer $16/hour and you can take it or leave it - there's another guy outside right now needing a job too...

Good One! I agree, which is unfortunate because Eric does make some valid points about foreign companies employing Americans. Eric - you are correct about the worker-level monies staying local, and them employing both American workers in their plants as well as employing local suppliers. But don't you forget 1 MAJOR issue - the profits from the car sale - which are far greater than your take-home pay per unit sold - are going OFF SHORE. That means "out of our country, dude." In that sense, it's no different than having the car completely built in the same building that the headquarters is in. And beleive me, there are some VERY wealthy CEOs and investors at Honda, living in Japan, that appreciate your hard-earned dollars paying for their palaces and royal lifestyles. They'd write you a letter of thanks, but they are a little short on time, what with the company to run, golf to play, and trips to take, I'm sure you understand.

Again - I agree. There is nothing wrong with getting a FAIR price for what is provided. Now Wal-Mart is known for one-sided negotiation - they'll offer you a price for your product - regardless of what you are asking for it, and if you agree, you'll sell a ton of it. If you don't agree, they won't have you on their shelves - it's that simple with them. But overall, the concept is a good one, and I agree with redzed to a point. Suppliers should be kept "in-check", not allowed to charge absurd prices just because they want to maintain some 25-50 margin points - that's crazy. And if they do have crazy prices - their customers should go elsewhere and stop buying from them! Now a price that allows 10-15 margin points - I'll gladly pay you that for a quality product.

 

Maybe I'm short-sighted, maybe I'm missing something, but I see a lot more money coming into my wallet when an OEM (any OEM) actually buys a part from my employeer, than when a domestically-based OEM earns money from the sale of a car that doesn't include my parts.

Now, don't get me wrong - my ideal situation would be to design and build parts in the US, sell them to an American-owned OEM for a reasonable amount of money, and then have that OEM turn around and sell those cars all over the world while turning a healthy profit. That'd delight me to no end, and I'm sure it'd help my fellow hard-working Americans.

But all too often nowadays, buying an "American" car means that you get a vehicle with components sourced from S. American, the Far East, or Eastern Europe, assembled in Canada or Mexico, and sold in the US for some amount of profit. This profit then goes to executives and investors, who more likely than not take that money and buy expensive imported goods with names like BMW, Sony, and Prada. I don't see much of the money in that particular scenario, and that's why the so-called pseudo-patriotism of buying a "domestic" car irritates me so, especially when someone's trying to make me feel like crap for buying a "foreign" product.

As I said when I started this post - maybe I'm short-sighted. If so, educate me. All I know right now is that the transplants are a growing part of our business, and as such they're not only keeping food in my mouth, but also in the mouths of our assembly workers, tool shops, industrial automation houses, etc.

 

So do you feel, Eric, that buying an import does as much good for the US economy as does if you buy a domestic? It doesn't. When I go around the lots here at my GM dealership, you would be hard pressed to find many vehicles under 80% for US/Canadian parts content. Try finding that on the majority of imports. True there are exceptions for both, but GM is the one domestic manufacture that keeps a very healthy majority of parts content within the US. There is no dispute on that.
My goal for this thread was not to jump on those for buying imports, hey, it's a free country. But rather, I wanted to see how people "justify" more or less, for lack of a better word, the purchasing of them. Anyway you look at it, the profits of an import sale, whether of not it is assembled here in the US or in a foreign country, go to that country. Pure and simple. Apparently Asians are the only ones that fully understand this concept. Personally, I would rather see my money go to an American business.

 

So how do you feel about "domestics" that are built in Mexico or Canada? Just curious. I get the feeling that buying a Civic or an Accord is more "evil" than buying, say, a Focus, or a Neon, or an Impala. Ya gotta love NAFTA (come on, folks, twenty posts and this is the first mention of it? ).

And in case you haven't noticed, the "domestics" sure have built a lot of plants outside of the US in the last 10 years or so, despite closing down US plants or running them at less than 100% capacity.

I think you'll also be surprised at the amount of content sourced overseas not directly by the domestic OEMs, but rather by their Tier 1 suppliers. There's some shameful behind-the-scenes moves being made, but on the surface everything sure looks good because strong, US-based suppliers are being sourced

 

No Eric, I don't think you are short-sighted. In fact, I think your description of the current economy is fairly accurate, unfortunately for us all. And it is sad that it has come to this too.

I would, however, like to offer that you might not be seeing the forrest for the tree. The tree in your case, is the Honda in your driveway that helped support your job and provided you with quality transporation for a fair price - a beautiful tree for sure. But the forrest is the Gross Domestic Product and our national financial security. They have been "clear-cut" just a bit to make room for your beautiful tree.

Your ideal situation - "my ideal situation would be to design and build parts in the US, sell them to an American-owned OEM for a reasonable amount of money, and then have that OEM turn around and sell those cars all over the world while turning a healthy profit. That'd delight me to no end, and I'm sure it'd help my fellow hard-working Americans."
is just that - IDEAL. And that is what we should all be working towards collectively - as Americans - regardless of whether you are a janitor or CEO of a conglomerate. Your nation provides you a place to live, governed by laws, and gives you specific rights that no place else on earth does - that's worth more than a couple bucks in the pocket IMO. But our sanctity and security have been taken for granted for so long now, they seem God-given and irrevocable to us, so we have come to concentrate now not on the basics and fundamentals of American life, but on living the good life with handfuls of money to burn on a whim. The result is many of us "Americans" no longer have any pride in our work, pride in our country, or interest in it's collective position - they think it's a given. They simply want the most money or power they can get for themselves as individuals - to heck with everything else, it'll take care of itself. And remember, there is a difference between showing pride for your country and actually doing something to benefit it.

Let me explain... I'd be more than willing to lose 5-cents a share on my Ford stock dividends to help fund a new engine manufacturing facility here in the states. Now many (most) shareholders might gripe because their precious dividend was reduced, but I wouldn't. Likewise, GM could drop their earnings 5-cents a share to finance a new assembly plant in the states. That is "Investing in America" at it's purest level. And it is 180 degrees opposite of what most investors and large stock-holders want to see. They want as much bottom line for their invested dollar as possible - regardless of where it comes from. This is where my big beef lies.

So no, Eric you are not way off IMO. Survival comes first in everybody's eyes, and it's hard not to take the best value. But look at the bigger picture too. I would liken it to taking change from Grandpa's jar - you can take a quarter or two at a time, and he won't notice until the jar's almost empty. But take it all at once, and he's on you like bark on a tree. These big companies are getting it from our jar a little at a time, and someday it will be too late - we'll be a common nation without any kind of supremacy whatsover - financial, capital, or technical. Is it so far-fetched...

Read this article about The High Price of Memory . It details how the earthquakes in Taiwan back in '99 affected the entire PC market, crippling Dell, HP, Gateway, Packard, and numerous others. Taiwan had the lion's share of memory-producing equipment back then, and when the supply chain was crippled it had huge financial repercussions on our domestic market and economy.
"A piece of 128MB OEM memory was advertised and sold for as low as $86 in July 1999.¹ Today's (10/02/99) advertised price for the same 128MB piece of memory is $239." dated Oct 2, 1999.

I guess if I had a wish to share, it would be for us to start showing our pride in America as well as the American way of life - we should be investing in our nations (and children's) future, at least more than that of other nations and their way of life. Buying a foreign car may be the right thing for YOU, short-term, but it really will have bad effects on us as a nation in the long haul. Just look at where we are now compared to the 60's in automobile production for a great example. We've gone from #1 in the world in auto production to where Toyota could now BUY GM and Ford with it's cash flow from US sales alone... Guys, that's sad.

So everybody go buy another Toyota or Honda or Mitsu... they are offering great deals. They are quietly taking us over with 15% margins while our domestics are trying to win back market share and please the shareholders by charging 50% margins... makes sense to me. I'm joking again, babbling, right...
U.S. Automakers See Drop in April Sales "Detroit's Big Three automakers saw declines in car and light truck sales last month compared with a robust April a year ago, while several foreign carmakers continued their assault on the domestic market and notched their best April ever. "

Consider this my "writing on the wall".

Proud

 

yea, I was shocked when I read how well Toyota is doing... but much later, won't they get dragged down by pension and healthcare too? Hopefully GM and Ford would still be around.


Trouble with BillyBob going to school is the big corps are looking to move all their R&D, manufacturing, programming, and support overseas.. especially when China, Russia, and south Asia markets are blowing up.. and since the future market is going to be there, they want to hire managers, marketing, HR, etc over there too.. it doesn't help that compariably trained/educated workers over seas only demand 1/5th to 1/2 of what they pay here in the US.



I'm kinda worried about this trend, cause what else is going to be left here?

 

Well, I keep coming back to what transplants are doing in the US.

They continue to design more and more product here. They continue to manufacture more and more product here. They continue to source more and more product here, and when they need cost reductions (like the significant cost-save that we gave them when redesigning a component for a particular new '03 model), they get smart and make significant investments in engineering and automation instead of asking us to move our production south of the border or source components overseas.

The part that I mentioned need a huge cost reduction to stay competitive, but the transplant OEM worked together with my employeer to make a significant investment in automation. Sure, that automation required fewer line workers, but it also required a significant effort by local industrial automation suppliers and toolmakers, which puts food on the table for a few more folks in West Michigan. In my mind, it's better to migrate work from a lower-skilled position to a higher-skilled position than it is to move it out of the country. I think that it's OK to continuely increase the amount of skill required to get a job in the US. I don't think it's OK to ship jobs out of the country.

With regards to Proud's comments, maybe I am looking at just the trees. But what else am I to do? By supporting certain OEMs, I support their practice of moving jobs out of the country, even if the profits come back over here. I hope that, by buying a car that's actually made in the US, with a sigificant amount of real US content, that I will encourage companies to invest in the US.

Regardless, I'll go back to something that I touched on in my previous post, and say that the likelihood of "buying American" decreases every day due to the huge "Tier 0.5s" moving their jobs out of the country, and that this maybe poses a bigger risk to our economy. Of course, that's not nearly as interesting as verbally abusing someone for buying a US-built Tundra instead of a Mexican-built Ram, but when a US-based Tier 1 moves a bunch of work to Mexico and forces their Tier 2 electronics supplier to move a ton of highly-automated work from the US down to Mexico or to an ex-Soviet-bloc country, it hurts us. This is the sort of economic activity that's relatively easy to hide in a "U.S." product if you know the game.

 

Well, I have no choice than to agree with your every word.
Well said.

Which PROVES it can be done here with willing workers and in our own market of prices. Reason enough for the big 3 to revamp their operations and get their perverbial noses to the grindstone before it's too late.

 

You said it! There's a lot of suppliers, including my employeer, that are competitive on a worldwide level. Given that, there's no reason that the Big 3 can't be, either. There's a lot of obstacles in the way that need to be overcome, but I think that the value provided by the average American worker is high enough to be worth the effort. And, well, frankly, I just don't want to think about the alternative.

I think that's about it for me in this thread - time to go apply a little American labor towards getting my car back on the road

 

the detnews article mentions that GM and Ford are tied up in pensions and healthcare for its workers.. while Toyota doesn't have these problems cause they are relatively young? Can anyone shed some light on this subject for me?

 

Quote:
Originally posted by Eric Bryant

I think that's about it for me in this thread - time to go apply a little American labor towards getting my car back on the road.



On the Honda?