(9 am. – promoted by ek hornbeck)
A global economic meltdown has sent auto sales tumbling 32 percent in October alone, which could shake the entire auto industry to its core.
Everyone knows General Motors, Ford and Chrysler are in deep, deep trouble. Cratering sales, credit downgrades and cash reserves that are dwindling faster than a keg at a frat party have some analysts saying we may see one or two of the Big Three go down for good. Critics like to say Detroit’s getting what it deserves because the Japanese build better cars, but guess what — Toyota isn’t looking so great these days, either.
Toyota’s stock nosedived 17 percent last week — its greatest decline in 18 years — after the company announced it will see an operating profit of just $6.9 billion, a 73.6 percent decline over last year. That’s far worse than expected, and it underscores not only the dismal state of the domestic auto market but some strategic mistakes Toyota made on its way to becoming the biggest automaker in the world. Wired
Comparisons from the New York Times:
*G.M. has well over $200 billion of debt. Most of this is on the books of its financing arm and is matched by money that buyers of G.M. cars owe the company. But as any banker knows, not all of that money will be paid back.
* G.M. also has huge pension liabilities while Toyota has much smaller pension obligations because it hasn’t been around long enough in the United States to generate a large population of retirees, who consume medical services in greater quantity than younger, healthier workers. Toyota’s U.S. manufacturing operations have fewer than 100 retirees. GM, by contrast, has 422,000 retirees and surviving spouses, compared with 170,000 active employees.
* Toyota’s medical plans in the United States cover 15,000 manufacturing workers and their dependents. GM’s medical plans in the United States cover 1.1 million workers, retirees and dependents at a cost of $5.2 billion last year.
Last week GM predicted that costs would rise to $5.6 billion this year, almost an 8 percent increase. GM said that amount added about $1,400 to the cost of each vehicle sold in the United States.
“I wouldn’t be surprised if it cost GM $3,000 more to produce a car than Toyota, and it’s probably almost all health care and pension costs,” said David Healy, an analyst at Burnham Securities.
Auto executives in Detroit are not crying wolf over the dangers of rising health care costs. GM, Ford and Chrysler are not posting nearly the profits they need even amid healthy sales, in order to renew their models and retool factories.
The North American Free Trade Agreement(NAFTA) was signed in December 1993 but did not come into effect until January 1, 1994. As of 2007 the trade bloc was the largest in the world and one of the most powerful, wide-reaching treaties in the world.
From 1994 to 2007, net manufacturing employment has declined by 3,654,000, and during this period several other free trade agreements have been concluded or expanded.
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at DailyKos because I’m a glutton for punishment.
I see this statistic a lot. What I haven’t seen is any explanation which shows exactly how that decline in manufacturing employment is caused by NAFTA. Serious question: does anyone have a link to anything which shows how and how much of those job losses are directly attributable to NAFTA?
then lower the prices.
Why not just LOWER THE PRICES?
The economy is deflating. You want to at least break even and get the stuff off the lot, LOWER THE PRICES!
Do it with houses, do it with cars, do it with big ticket items. If the dollar’s not worth as much anymore, MAKE it worth something.
Stuff is only worth what people agree it is worth. So if what people have to do to survive is simply change their thinking about what stuff is worth, FRIGGING DO IT already then! Why the hell is a loaf of bread or a gallon of milk $3.49 these days? Because some fat cat executive somewhere says it is? Well screw him, flour is 50 cents a pound, I’ll MAKE my own bread rather than pay that price, and I know where the dairy co-op is where I can get milk for a dollar less!
I went out and picked berries this summer. I ended up with 7 quarts of black raspberries and a gallon of red ones. For free – well, ok, for the time and effort of picking them, but I did it in no small part because it was fun. Then I went back to the store less than a mile away from where I found the things growing and saw the same stuff on sale for $4.99 for 4 ounces.
WHAT the HELL is wrong with America when you can see this sort of wacktastic economic disparity just by getting up off t3h 1nt4rdn3tz, locking the front door and walking in any direction for 10 minutes? We already have EVERYTHING WE NEED, all we have to do is stop being so fucking GREEDY AND LAZY!
My father bought his house in East Williston in 1967 for $59,000. He sold it for $469,000 in 1999. The inflation factor in real estate alone is INSANE.
Self-determined realistic pricing. Stop the gouging, stop the greed, because nobody’s going to buy what you have if they can’t afford it, even if you DO have a monopoly on the stuff.
This is not the long term fix, of course, but it’s A fix. A tourniquet until the paramedics get the economy to the ER. Even the worst offending greedheads have got to see the sense of this. They’ve been cutting their own throats with all the price gouging that’s been going on over the last eight years, because as prices universally rise in response to the gouging they do, they end up paying through the nose for what THEY THEMSELVES consume.
And I don’t pretend to know much about economics, so if there’s anything wrong with what I’m saying by all means point it out. It just seems to be common sense.
NAFTA, CAFTA, etc. all need to go BIG TIME.
It’s been a double indemnity, say, for the Mexicans, for example. In their country, they are paid pathetic, slave-labor salaries to produce products, and they can’t make it in their own country because of NAFTA, so many of them try to come here to work and save money, and now they’re being treated as criminals and being deported — all for the ills we created for them in the first place.
BTW, stores are closing:
Be sure to see all stores!
Thanks, Bush MF!!!!!!
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A paradigm looks to come full circle; products not “built to last” as claimed may kill the industry.
Quality, longevity, and innovation are symbiotic pivot points, ideas long missing from American automotive culture that, given their due, could literally turn Detroit’s destiny on a dime.
Should the leaders of Ford, GM, and Chrysler step up to embrace radical change away from a dead business model towards one based on long-term sustainability and success, I’d be glad to pay more taxes to help them shift as rapidly as possible.
If.
Our business leaders would be wise to renounce greed and short-term gains in favor of maintaining a sustainable economy. Since the financiers and bankers violently reject such change, let it begin with the automakers. Let it signal a manufacturing renaissance in this nation built upon long-term and sustainable success rather than rapid yet ultimately implosive growth.