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Futurecity
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Username: Futurecity

Post Number: 192
Registered: 05-2005
Posted From: 69.212.215.224
Posted on Sunday, December 18, 2005 - 2:03 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

As the domestic Big Two and Stuttgart Chrysler continue their free fall towards irrelevance, $10k Chinese cars and Suv's are soon to land here.

http://freep.com/apps/pbcs.dll /article?AID=2005512170304
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Lowell
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Username: Lowell

Post Number: 2060
Registered: 10-2003
Posted From: 66.167.59.58
Posted on Sunday, December 18, 2005 - 2:12 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Saw that too, the Geely. Distant thunder on the horizon or the return of the Yugo?
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Gravitymachine
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Username: Gravitymachine

Post Number: 699
Registered: 05-2005
Posted From: 70.236.147.161
Posted on Sunday, December 18, 2005 - 2:12 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

i've seen many pictures of these chinese cars and frankly the level of execution in these things, specifically the interiors, is no where near the established companies in this market...i don't think they are cause for worry in the short term, especially as domestic product gets better and up to the level of the japanese and germans every model year...
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Lowell
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Username: Lowell

Post Number: 2061
Registered: 10-2003
Posted From: 66.167.59.58
Posted on Sunday, December 18, 2005 - 2:25 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Don't underestimate adaption. Chinese manufacturers produce excellent laptops, just about all of them including the one from which this post orginates.
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Futurecity
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Username: Futurecity

Post Number: 193
Registered: 05-2005
Posted From: 69.212.215.224
Posted on Sunday, December 18, 2005 - 2:31 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Not the Yugo (sorry, but the balkan area is just not an engineering and industrial powerhouse), more like the Honda or the Toyota in a few years.
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Everyman
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Username: Everyman

Post Number: 15
Registered: 11-2005
Posted From: 24.136.14.239
Posted on Sunday, December 18, 2005 - 2:31 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Lowell is correct. A good example: For the longest, IBM's laptops have just been rebadged Lenovo (Chinese firm) products, but have been considered the industry standard.
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Futurecity
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Username: Futurecity

Post Number: 194
Registered: 05-2005
Posted From: 69.212.215.224
Posted on Sunday, December 18, 2005 - 2:41 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

GM -

Maybe no cause for worry at an equal price footing, but the Chinese cars will be half the price of its competitors.

We are annoyingly addicted to inexpensive Chinese-made goods - think of almost every product in a Walmart/Kmart/Target store.

I see the first GMart (Geely Motors) landing somewhere out in sprawlville soon and see Americans flocking there for their next car or suv.
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Futurecity
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Username: Futurecity

Post Number: 195
Registered: 05-2005
Posted From: 69.212.215.224
Posted on Sunday, December 18, 2005 - 2:45 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I am not sure that there is even a way to compete under the current economic arrangement. A shocking fact from the above article:

"Geely's labor cost to build cars in China is only $3.50 an hour, said John Harmer, vice president and chief operating officer of Geely U.S.A. Compare that with General Motors Corp., which has hourly labor costs of $73.73 per worker, including health care costs for active workers and retirees, pensions and other expenses."
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Jfwaterburry
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Username: Jfwaterburry

Post Number: 26
Registered: 04-2005
Posted From: 68.20.88.38
Posted on Sunday, December 18, 2005 - 2:54 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

What do you all think about purchasing GM stock at its depressed value? I'm betting that another automaker will takeover before GM goes under. Thoughts?
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Citylover
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Username: Citylover

Post Number: 1442
Registered: 07-2004
Posted From: 4.229.132.113
Posted on Sunday, December 18, 2005 - 12:43 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Legacy costs and the intractable culture of G.M. and Ford to a degree as well are two huge problems.
An example being Ford and G.M. have literally hundreds of catylytic(sp) converters........Toyota has about 5....same for Honda......where do we think the Chinese will take there cues?
The legacy costs are well known.Huge medical and pension payouts for retirees that the Japanese co's don't do.
I am not advocating these things should be stopped only saying they are definitely a huge problem.
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Livernoisyard
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Username: Livernoisyard

Post Number: 15
Registered: 10-2004
Posted From: 69.242.223.42
Posted on Sunday, December 18, 2005 - 3:30 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

The US-built vehicles will go the way of the US-built stereos and TVs of the 1970s within this decade (or early teens). You might as well cede all low-cost models to the Pacific Rim. Only relatively expensive specialty US vehicles or those that are extremely popular, and, hopefully, profitable will remain. Figure on all of the Detroit Three to downsize to less than 1/2 its current size. Possibly, DC will be #3 or #4, following Toyota and Hyundai or Honda, in the US market. Ford and GM will go bankrupt and reorganize into smaller entities.
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My2cents
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Username: My2cents

Post Number: 108
Registered: 10-2003
Posted From: 24.253.67.62
Posted on Sunday, December 18, 2005 - 3:55 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

An acquaintance sent this link to me this past October:

http://www.tompaine.com/articl es/20050929/the_global_labor_t hreat.php
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Dove7
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Username: Dove7

Post Number: 1850
Registered: 11-2003
Posted From: 24.5.195.127
Posted on Sunday, December 18, 2005 - 3:56 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Jfwaterburry wrote:What do you all think about purchasing GM stock at its depressed value? I'm betting that another automaker will takeover before GM goes under. Thoughts?

To answer your question. Yes. I was talking to my brother two days ago about this and made the exact same statement. My reason is because of the artical in Newsweek magazine. Quote:China has the largest, steel, concrete and I think it was coal of any country out there. Japan doesn't have many of these resources and have to by from others. China doesn't have to do this. This makes so much easier to make cars with cheaper labor making them more competitve. I'm predicting that it will e a European company or Chinese that will take G.M. before it falls.
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Livernoisyard
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Username: Livernoisyard

Post Number: 16
Registered: 10-2004
Posted From: 69.242.223.42
Posted on Sunday, December 18, 2005 - 4:38 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

About 80+% of GM's current worth is tied to GMAC's mortgages. GM is selling off about 60% of GMAC. It previously sold off Hughes (DirecTV) and other components which were profitable in order to pay its past current liabilities. Today, all, outside of vehicle production, that is left of the Ruins of GM is GMAC.

Take the case of Rouge Industries when it went bankrupt two years ago. Today, it's Severstal, NA - a Russian company. Severstal bought its assets, but not the liabilities. Therefore, it did *not* buy the company, proper.

If GM goes into liquidation, only the assets will be sold, and probably removed to a safer working environment (from a financial POV), most likely not in the US.
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Ndavies
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Username: Ndavies

Post Number: 1448
Registered: 10-2003
Posted From: 69.212.45.34
Posted on Sunday, December 18, 2005 - 11:57 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Sorry, I see this as being a bigger problem for the Japanese. The big three already can't compete against the Japanese vehicles in this market. The Big three don't build any really good b/c size vehicles. The Japanese own this piece of the market. The Camry and Prelude are this segment of the market. Now what happens to the Japanese when you cut $5K profit out of the equation.
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Lilpup
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Username: Lilpup

Post Number: 764
Registered: 06-2004
Posted From: 205.188.116.201
Posted on Monday, December 19, 2005 - 12:35 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

they move their manufacturing to China, just like they're doing with the Prius
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Alexei289
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Username: Alexei289

Post Number: 916
Registered: 11-2004
Posted From: 68.61.183.223
Posted on Monday, December 19, 2005 - 12:41 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

either way... the chineese are going to have a hard time beating the us in the SUV and luxury vehical segment. The US dominates it. Everyone that goes into work for GM rides them to and from that place in their cars... and knows what they need.

So i agree that this isnt a threat to the US companies but the japaneese that feed off this. What may really suck though is this may move the Japaneese out of that segment of the market and into ours...competing even more than they already are for it...

then we will have a problem.....
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Citylover
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Username: Citylover

Post Number: 1446
Registered: 07-2004
Posted From: 4.229.123.88
Posted on Monday, December 19, 2005 - 12:57 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Luxury mkt? The Lexus by far is the highest quality luxury car out there......and I am fairly sure that Infiniti,Bmw,et,al foreign makers are of a much better quality than the U.S mfrs
Btw there are (someone told me)over 120 cities in China with more population than Detroit.......and over 100 car co's........much like Detroit circa 1930.....
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Alexei289
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Username: Alexei289

Post Number: 918
Registered: 11-2004
Posted From: 68.61.183.223
Posted on Monday, December 19, 2005 - 1:05 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

American full size sedans and SUVs sell pretty well...
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Ray
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Username: Ray

Post Number: 609
Registered: 06-2004
Posted From: 69.208.36.242
Posted on Monday, December 19, 2005 - 2:08 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

I'm back, and meaner than ever.

Sounds like free trade is a horrible idea. I just have a few questions for the experts, since I don't know much about this stuff:

Why is US industrial output including manufactured exports comprable if not higher today than it was a decade ago?

How come unemployment in the US is at a historically very good rate of 5%?

How come we've had low inflation and solid growth in the economy from 1983-2005 (TWENTY PLUS YEARS!) except for two brief (less than 12 months) recessions in 1991 and 2001.

How come we're still one of the leading
destinations for foriegn investment and how come the dollar is still the reserve currency of choice?

How come I see help wanted signs all over northern california?

How come it's so horrible if families in China and India have a crack at decent jobs? Don't their lives count too?

Don't all these Asian workers also buy stuff? Is it possible that elevating hundreds of millions of people from poverty to Western standards of living might expand prosperity, peace and freedom and open vast new markets for American products and services?
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Digitaldom
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Username: Digitaldom

Post Number: 373
Registered: 08-2004
Posted From: 67.149.110.53
Posted on Monday, December 19, 2005 - 3:09 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Wow.. A car people can afford? What a concept? Gee I wonder if people will buy? Lol... Hey you give it a great warranty and people WILL buy it.. It's about time auto companies created a car that low income folks can afford (to some extent)
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My2cents
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Username: My2cents

Post Number: 109
Registered: 10-2003
Posted From: 24.253.67.62
Posted on Monday, December 19, 2005 - 2:26 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

The Global Labor Threat
Thomas Palley
September 29, 2005
Dr. Thomas Palley was chief economist of the US–China Economic and Security Review Commission. Prior to joining the Commission, he was director of the Open Society Institute’s Globalization Reform Project. He has written for The Atlantic Monthly, American Prospect and The Nation magazines. He can be reached at www.thomaspalley.com.

If the United States were to add two billion low-wage workers, you'd expect that wages would fall across the board, right? Well, there is a famous theorem in international economics—the Stolper-Samuelson theorem—that says when a rich capital-abundant country (such as the United States) trades with a poor labor-abundant country (such as China), wages in the rich country fall and profits go up. The theorem’s economic logic is simple. Free trade is tantamount to a massive increase in the rich country’s labor supply, since the products made by poor country workers can now be imported.

Additionally, demand for workers in the rich country falls as rich country firms abandon labor-intensive production to the poor country. The net result is an effective increase in labor supply and a decrease in labor demand in the rich country, and wages fall.

The relevance of the Stolper-Samuelson theorem is clear. For the last two decades, U.S. policy makers, from both major political parties, have worked assiduously to create a global market place in which goods and capital are free to move. Over the same period, two and a half billion people in China, India, Eastern Europe and the former Soviet Union have discarded economic isolationism and joined the global economy. Now, these two tectonic shifts are coming together in the form of a “super-sized” Stolper-Samuelson effect, and they stand to have depressing consequences for American workers.

Much attention has been devoted to the adverse impacts of the U.S. trade deficit, particularly with China. And the U.S. government has been rightly criticized for failing to apply adequate pressure to get China to remedy its unfair and illegal trading practices. However, no one in Washington is talking about the deeper question of what happens to wages when two billion people from low-wage countries join the global labor market.

Such an event is unprecedented in history. In the past, countries joined the international economy through a slow evolutionary process. Initially, they would export a few goods in which they specialized and had natural competitive advantage. Thereafter, countries would gradually deepen their involvement in international trade. The process was one of gradual integration, and production was largely immobile across countries.

Globalization has changed this by accelerating the process of international integration. It has also made capital, technology and methods of production mobile, marking a watershed with the past. The new order is exemplified by China’s recent experiences. In fewer than two decades, China has become a global manufacturing powerhouse through massive foreign direct investment and technology transfer. The impact of this transformation on the U.S. economy is seen in the trade deficit, the loss of manufacturing jobs and downward pressure on wages.

Whereas classical free trade connected goods markets across countries, globalization creates a global labor market and moves jobs. Previously trade arbitraged goods prices, now it also arbitrages wages through job shifting.

With the emergence of China, India and Eastern Europe, the dam of Socialism that held back two billion workers has been removed. If two swimming pools are joined, the water level will eventually equalize. That is what is happening with globalization. Manufacturing has already been placed in competition across countries, with dire consequences for manufacturing workers. The internet promises to do the same for previously un-tradable services, and higher-paid knowledge workers will start feeling similar effects.

Not since the industrial revolution has there been a transformation of this magnitude, and that revolution took one hundred and fifty years to complete.

By comparison the new revolution is a mere 25 years old. These developments have a significance that goes far beyond the currency manipulation and WTO rules violations that have been the focus of trade deficit policy discussions. There is no reason to think the end is in sight, and American workers can look forward to the international economy exerting downward pressure on wages and work conditions for the next several decades.

As is so often the case, workers have understood the new reality long before economists and policymakers. Workers realize that trade is no longer a matter of exchanging exotic commodities for manufactured products, and that the new system involves trading their jobs and arbitraging wages. Especially bitter is the fact that the process of globalization is being driven by large American multinational corporations that American workers helped build. U.S. policymakers have also abandoned American workers by promoting free trade agreements that have de facto created a global labor market that threatens workers’ livelihoods and economic security.

Globalization demands that we begin anew the task of establishing fair and just rules that make the economy work for all. This challenge is the same as that faced by American workers at the beginning of the 20th century. Unions, minimum wages, and fair labor practices were essential to meeting that challenge, and they are essential again. But such tools are no longer sufficient when applied nationally. They must be applied globally. That means China, India and other industrializing developing countries must agree to, and enforce, core labor standards and worker rights. Trade cannot be free without worker freedom and the right to share in the wealth created.

Successive administrations have pushed free trade without worker protections and they have given the green light to a global system without core labor standards. Through poor diplomacy and lax enforcement we have given away access to U.S. markets and valuable negotiating leverage without getting commitments on labor standards in recent free trade agreements. The consequences of these trade policies and the reality of the new global system must be exposed so that our approach can be changed. This is a task that will not be easy given Washington’s captive economic policy elite and big business’ interest in concealing the new reality.
http://www.tompaine.com/articl es/20050929/the_global_labor_t hreat.php
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Hornwrecker
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Username: Hornwrecker

Post Number: 567
Registered: 04-2005
Posted From: 63.157.236.136
Posted on Monday, December 19, 2005 - 2:36 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Have any of the Chinese cars passed a US crash test yet? From what I remember, none produced so far could, same for those high mpg euro cars that we'll never see here.
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Spartacus
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Username: Spartacus

Post Number: 62
Registered: 07-2005
Posted From: 209.114.251.65
Posted on Monday, December 19, 2005 - 3:35 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

my2cents: Congrats on finding an article by the only economist who is not in support of Free Trade. Truly, a needle in a haystack.
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Lilpup
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Username: Lilpup

Post Number: 765
Registered: 06-2004
Posted From: 66.89.12.30
Posted on Monday, December 19, 2005 - 3:55 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)


quote:

Since the end of 2003, average real wages have fallen by 3.2%, while productivity is up by 5.1%. Even managers -- supposedly the best-off sector of the workforce -- have seen a 4% decline in real wages since the end of 2003, despite the fact that the unemployment rate for managers is a meager 2.2%.

What's worse, Americans are working harder and harder, even as they're getting paid less and less. The November employment report, released Dec. 2, showed that 18.3% of the workforce puts in 49 hours or more per week. That's up from 17.8% a year ago.

http://www.businessweek.com/in vestor/content/dec2005/pi20051 26_8936.htm?campaign_id=search


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My2cents
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Username: My2cents

Post Number: 111
Registered: 10-2003
Posted From: 24.253.67.62
Posted on Monday, December 19, 2005 - 4:59 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Thanks Spartacus. Needle in a haystack, indeed.
Too bad ol' Carl Levin did not have this foresight all those years ago when he was on the NAFTA bandwagon and participating in the destruction of my beloved hometown and state. Then again mayhaps he did. No discusion on the big two is complete with out this foundation in economic history, IMHO.
With that said, I am not that smart nor well educated. An esteemed friend who is, pointed this piece of history out to me in response as well, elsewhere, and I would like to share it here:

It goes a lot further back than that. Adam Smith, a British economist who has been quoted by American statesmen, and Justices of the Supreme Court of the United States, wrote, in his book Wealth of Nations, published in 1776, "If the free importation of foreign manufactures were permitted, several of the home manufactures would probably suffer, and some of them, perhaps, go to ruin altogether...". He noted that "two great engines for enriching the country, therefore, were restraints upon importation, and encouragements to exportation." Mr. Smith had studied under Professor Francis Hutcheson, who had written, in his book System of Moral Philosophy, in the chapter Of the Nature of Civil Laws and their Execution: "Foreign materials should be imported and even premiums given, when necessary, that all our own hands may be employed; and that, by exporting them again manufactured, we may obtain from abroad the price of our labours. Foreign manufactures and products ready for consumption should be made dear to the consumer by high duties, if we cannot altogether prohibit the consumption;..."
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Ndavies
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Username: Ndavies

Post Number: 1449
Registered: 10-2003
Posted From: 129.9.163.234
Posted on Monday, December 19, 2005 - 5:08 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

No Chinese designed vehicles have passed the crash tests yet. They haven't passed the EPA's mandates either. Most of the chinese vehicle pass older Euro enviromental specs but are not up to the current European requirements. That's why they are talking about importation not starting until at least 2008.
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My2cents
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Username: My2cents

Post Number: 112
Registered: 10-2003
Posted From: 24.253.67.62
Posted on Monday, December 19, 2005 - 5:12 pm:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Thanks Lilpup for the link.

Another good source for further reading on this subject is:

Dilemmas of Domination : The Unmaking of the American Empire [The American Empire Project] (American Empire Project)
by Walden Bello
Published March 2005
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Jerome81
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Username: Jerome81

Post Number: 865
Registered: 11-2003
Posted From: 64.142.86.133
Posted on Wednesday, December 21, 2005 - 4:51 am:   Edit PostDelete Post   Move Post (Moderator/Admin Only)

Ever stop to think that GM Ford and Chrysler could just make their North American cars in China and export them?

Ah, there you go. Problem solved.

It is already happening. The build them there for the Chinese market. Why not for export? The Chevy Equinox V6 is already shipped from China.

Toyota, Nissan, and Honda are in the same boat. Their north american plants cost just about as much per hour as GM and Ford. Those plants will need to change too.

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