Mazda and Ford Break Up, Remain Friends

[sblake01]

In a perfect world...............

[Sailor Bob]

I just saw on the news - the average wage of autoworkers of north american vehicles is $73 an hour and $45 for the asian cars built in NA.

I leased a f150 four years ago - the sticker price was $55,000. It was not a fancy truck. Not competitive - no surprise to me.

I think these wages are obscene.

[JonnyRock]

$55,000 sticker for an F-150? That was what the dealer decided he could get out of you, it most definitely wasn't the MSRP

Even for a brand new '04 (that was when the 11th gen came out), check every box, top of the line F-150; you got hosed. That dealer took you to the cleaners!

EDIT: I notice now that you're from the great white north. And being on that cold isle way over there changes things. I don't know enough about pricing in your region to comment, other than assuming you get hosed on a lot of stuff financially.

Edited November 19, 2008 by JonnyRock

[Sailor Bob]

It had some stuff, but like I said nothing fancy - tow package, 5.4 litre engine, 4x4, full cab - six seater.

[Walter Moore]

Yes, G.M., Ford, and Chrysler are bloated, but...

For some parts of the country this is a real problem. In Indianapolis alone G.M. employees bring home some $50 million dollars in wages. Nation wide it is more than $150 billion dollars in wages, and that is just from G.M. It doesn't count all of the parts or equipment suppliers.

Don't get me wrong, I do not want to defend the company, or the unbelievably short sighted business practices that got them into this mess. At the same time there are huge financial implications for a wide segment of the U.S. economy.

Ironically, the people who are going to be lobbying Congress the hardest for this "bail-out" will be the UAW. They are only too well aware that G.M. and Ford have been laying off their non-union employees in droves. (Managers, engineers, etc.) The only real bloat left is the union contracts, which incidentally are worthless the instant that the company files chapter 11. They know that they could easily find themselves working for $13/hour like the employees of the new Honda plant being built here locally.

Just my opinion, from a little closer to the disaster...

Disclaimer, G.M. is one, but only one, of my customers (along with Nissan :classic: and many others). And we do have equipment for them currently in production, so I have a vested interest in the subject.

[Carl Beck]

Hi David:

Sorry for the delayed response - I've been away from the keyboard... also I may cover some ground that has already been mentioned, as I started this response earlier ...

One thing I find interesting about the whole Ford/GM/Chrysler fiasco is that it seems that they are the only automakers that are having serious problems.

It may seem that way because our media spends more time on the subject. The other major manufactures are also having a hard time and it will get worse as the world recession progresses throughout the coming year at least. However our big three have been living in the past for far too long and it looks like it may finally catchup with them.

All the other automakers seem to be doing well, and I feel it is because the others have been listening to what consumers want (or accurately predicting what they will want) for years.

While the Big Three have continuously manufactured big gas guzzling vehicles (and relied on them for their bread and butter), others have been producing smaller, more efficient vehicles.

I believe that GM and Fords customers wanted and therefore bought larger cars, trucks and SUV's. In that regard they were listening to their customers.

Customers that wanted smaller cars, started buying them from Toyota, Datsun, Madza, Honda back in the 70's and 80's and they have been brand loyal ever since. On top of that Toyota has had exceptionally good management, and they have constantly grown their market share here by delivering the quality customers want.

Nonetheless, if you look at total sales numbers in the US - you find that both Ford and GM sell more cars here than any of the imports.

Ford and GM's main problems have to do with past union demands, and promises of benefits to be paid in the future. In effect management that just wanted to get though one more year and make their incentive pay. For decades management, and in truth the union bosses, just kept rolling unfunded liabilities forward.... Now the time has come to pay and they don't have the revenue nor profit to do so.

Sure, Honda, Toyota, and Nissan (and most of the others) all have larger gas hogs, but they are produced in smaller quantities. Cars like the Civic, Celica, and Sentra have been paying the bills for the "outsiders" and have set the benchmark for reliability, fair styling, and reasonable comfort.

Honda, Toyota and Nissan all have "company unions in their home market. They all locate in non-union States here. On average their labor costs are half of that paid in union shops. I don't know if it was better management, or just cultural differences - but in the end the Japanese auto industry had a better financial model. That too may fall when ever more production is moved to China, India and the other countries in South East Asia.

You also have to keep in mind that Ford bought stock in Madza because Madza was about to belly up several years ago. Much the same as the Renault/Nissan deal - only Ford didn't try to run Madza, just invested cash and joined in joint development projects etc.

If the Big Three had simply done a better job of paying attention to changing markets and customer wants/needs, I feel they would not be in such a precarious position (though I may very well be completely wrong).

There is a lot of truth in that, and your not completely wrong. The problem is that the top management of the big three have for decades been paid to generate glowing quarterly numbers - not paid to protect and grow the company. If they had been paid strictly on percentage of the American market that they could control - we might have a completely different situation. But who to blame? The stockholders that put short term return on investment at the top of their list of priorities I guess.

I think they paid attention to their customers, and they really didn't want the small cars with small profits anyway. So they gave up market share, to improve Return On Assets and Return On Investment. That's a main rating factor for the gang on Wall Street - Quarterly Profit, ROI and ROA. Management was rewarded for that, with higher common stock prices - on which top management became quite wealthy.

To tell the truth, if you paid me $20 Million or $30 Million a year - I'd run that company right into the ground if I had too - just to say another quarter.

Here again - Washington Politicians and the media talking heads would have you believe that they are going broke because they didn't offer small green cars - and that somehow they forced us to buy trucks and SUV's. That's bunk!! Both Toyota and Nissan were dying to get into the full size car, truck and SUV market here - they got started too late. I suppose Toyota and Nissan weren't listening to customers either...

Another thing: Brand manufacturing.

Does the world really need three versions of the Chevy Silverado (Chevy, GMC, Cadillac)?

Three versions of the Ford Explorer (Ford, Lincoln, Mercury)?

Sure, the same can be said for a couple Nissan/Infiniti SUVs, but again, Nissan isn't counting on their SUV sales to carry the payroll.

It wasn't the world - it was the Authorized Dealers that demanded vehicles that their customers wanted to buy. To a very large extend, satisfied customers are brand loyal. Chevy people are Chevy people. I've never bought a Nissan, they didn't listen to me... Although I was considering a Titan... but now I'll have to reconsider that....

Nonetheless - your point is right on the money in one regard. GM and Ford both say they have way too many Dealerships in most market area's. That has strapped their Dealers, and Customer Service has suffered. When that happens you lose satisfied customers to the competition... Chrysler has been hurt the most by poor dealer service. Also consider that within GM - they are their own competition in a sense. The Pontiac Dealers via for Chevy's customers, and the Buick Dealers try to attract both Chevy people and Pontiac people.. While all of them compete with a very unified Toyota

As everyone has mentioned - it's a very sticky problem - a lot of people are going to feel the pain - but in the end - it's time to pay the piper. I believe their best bet is Chapter 11.

On the other hand - the entire sub-prime meltdown and auto industries troubles should be a wake up call to Americans - our future is not going to be as great as our past unless serious changes are made in our National physic and our individual actions.

FWIW,

Carl B.