Lemme tell you some things you don’t know about the auto industry.
First of all, nobody make a whole car anymore. This is because of a couple fairly important factors:
1: THe complexity of the modern motor vehicle. As I described previously, the modern car is intensely complex, in a way incredibly few people understand.
2:As the UAW encroached deeper and deeper into the manufacturing end of the business, Ford, GM and Chrysler started making more and more parts outside- these places are called “tier” vendors. Tier vendors often make parts for several manufacturers, and they are capable of producing only a narrow band of components, be they injection molded dashboard parts, or water pumps, or seat covers.
These vendors are predominantly non union, and the people who work there often make minimum wage or less. They run shops like this because that’s the only way they can stay competetive and sell to the auto industry.
Large things, like cylinder heads and engine blocks still come from the Big 3, are still made predominantly in Big 3 plants, because the cash required to cast large quantities of iron etc. are still outside the scope of tier manufacturers. Same with stamping sheet metal, and frame and axle work. But those ‘Major” components only make up a small fraction (less than 25%) of the vehicle. The lions share of a new Ford is made by tier vendors, and assembled in Ford assembly plants.
Why is this important? Because without this process Ford would not be able to sell an Escort for less than $200,000. If only union labor made cars, they would be insanely expensive. The cars are made,, for the most part, by relatively unskilled labor running automatic machinery- they put in a blank part, push the button, and a finished part comes out. And then they do so again. Ad infinitum.
Why do they need to be bailed out? because the burden of overpaid shitheads stamping fenders in Chrysler plants and retirees have drained the company of funds, despite the best cost cutting measures. The restrictions imposed from without by Cafe standards, Osha, and the EPA have all but crippled their ability to manufacture. They want to be helped out of their mess by the people that put them there, understandably.
What will happen if they don’t get bailed out? The union workers will bitch, but the employees of the Tier suppliers will starve.
What SHOULD happen? The companies should file for bankruptcy protection which would give them some bargaining power with the unions and other regulatory agencies.
What is the plan? Brak and his crones are working- right now- on a plan to save the UNION jobs. They will make it harder for the companies to recover, not easier. There will be more regulation, more gummint intervention, and more bullshit. The union will be protected, and the companies will be forced to operate in a gummint decreed ‘feelgood” manner where they will be forced to make “greener” cars rather than making cars people want to buy.
What will be the outcome? Small tier manufacturers will be forced out of busines or will go offshore, taking their business with them. Cars will turn to abject shit. And Japan will rule the marketplace once and for all, and then the gumint will go after them the same way they’re going after WalMart, because they have succeeded in avoiding unionization.
Don’t believe me? Well, if you don’t work in the industry, you don’t understand, and you probably won’t, and you’re probably wrong. But there it is. Don’t listen to what I say, just open your eyes and watch it all come true. You don’t have to look hard, it’s happening right now.
12 comments Og | Uncategorized
Thank you for that explanation! Makes sense. Sucks, but it makes sense!
And then there were none. Damn, maybe if I wasn’t old enough to remember a time when *Made In America* meant something … and there was a certain amount of pride attached to said items manufacturers. And soon we will lose yet one more part of our manufacturing base.
Apparently I have no choice but to buy German. I love an American truck, but not that much.
I think you’re wrong, though. If there is no bailout both the UAW workers and the tier workers will starve. Or find new jobs. That’s life. By propping up the Big 3 we deny the union workers the incentive to be employed in profitable jobs. I hate to sound casual about all the peripheral jobs that will be lost, but at least the tier players can retool for the profitables in SC, KY, AL, etc.
Destroy, not just set back, but destroy the unions and their followers. They’re nothing but a cancer upon this nation.
Fuck you, Union employees.
Not only will the Democrats save these union jobs, they will force the smaller companies to unionize also. They will pass the Employee Free Choice Act. Sounds harmless right? What it does is eliminate the secret ballot when voting for or against a union. This is how it will work. A union representative will come to your house and ask you to sign a card saying you want to join the union. If you say no,your car catches fire the next day or your wife is beaten as she leaves the grocery store. Sooner or later you sign the card. If they eliminate the secret ballot from union votes, how long before they eliminate the secret ballot from national elections?
I read with interest the appeal for the bail out. Personally? I think they don’t deserve anything at all based on their greedy grasping GRUBBY little hands…. they had a good run, now it’s over.
I’m with Vman. No, I’m not in the industry, and perhaps I don’t really understand. I do understand this: I’m damned sick and tired of my tax dollars being used to maintain life support for failed business models.
Based on my cursory analysis, the proposed bailouts will only keep these brain-dead patients on life support for a few more months. Unless something fundamental changes, we’ll be back in the same boat in a year or so, the only real difference being the fleecing of the taxpayers.
With regard to the second-tier suppliers: Even if new production shuts down, there are still many millions of cars on the road which need replacement parts. Are these suppliers not also in the replacement parts business? Granted, there are some parts that rarely need replacing but I’d much rather pay for decent American made parts than cheap Chinese white-box crap that fails twice or three times as often.
the problem, ham, is that the tier suppliers sell 99+ percent of their product to mfrs. the replacement market is less than a percent except for things like tires spark plugs and belts. nobody would stand for a failure rate higher than that. things like water pumps and alternators are rebuilt, rarely replaced with new.
Years ago, Dad and I installed a 3-phase converter in a garage for a guy who had a little machine shop and had just bought a new lathe or something (mists of time are interfering here). Anyway, I remember that one of the main things he did for a living was machine thousands of some little part for GM right there in his little garage behind his house.
And he probably did it cheaper than GM could have done it themselves.
Nate, that’s exactly what I’m talking about.
“What SHOULD happen? The companies should file for bankruptcy protection which would give them some bargaining power with the unions and other regulatory agencies.”
Damned straight. This kind of situation is EXACTLY what the bankruptcy laws were passed to fix. Everyone invested with the Big 3 and their failed business model will, to some extent or another, have to take it in the neck. That means stockholders, bondholders, banks, suppliers, dealers, employees, etc., etc. The thing is completely fucked up – no one can tell me that $73.00/hour for semi-skilled labor is justifiable in ANY system, and must be fixed. As with ANY problem, putting one’s head in the sand (or throwing other people’s money at it) does NOT make the problem go away, it makes it WORSE.
If I were the 3 guys that got themselves grilled for riding on the corporate jets (which, BTW, they deserved, the dumbshits), I’d give Congress and Mr. Obama a big FUCK YOU and declare bankruptcy. The bankruptcy trustee will run things for a while until loans, other kinds of credit and various contracts – ESPECIALLY union contracts – can be renegotiated. Fuck the unions, they sucked at the tit of this industry for the last 60 years, acting as if it was an unending source of money. Guess what, assholes, you screwed yourselves! I
‘m a taxpayer, and I’m not at all happy about subsidizing these lazy jackasses any more. Enough is enough – learn to live on $50/hour – shit, that’s $100K/year. Fuck y’all if you can’t live on that!
What I’m afraid of is that Batrack and the UAW will try to cripple the Japanese assembly plants here in the US.
Also our insane corporate and state business taxes have crippled the purchase of new industrial equipment. Which is another reason manufacturing is done in non tax and lawyer friendly countries.