American waking up - Ford losing out

American manufacturing industry is in trouble - and not only in car assembly.

Specifically, the day of the SUV is over.
Oil will be at $60.00 a barrel minimum for the forseeable future.

The problem for Ford and every other manufacturer in the States is that they cannot compete with the international workforce.
Wage costs alone, make manufacturing in the USA uneconomical.
American companies paid their workers well when things were going well.
That was fair enough.

But with globalisation, wages are not determined by how much the average US worker needs to be able get by on, wages are determined by how much the Polish guy in Warsaw is prepared to do the same job as he does.

And if the average American thinks that Mr Ford or Mr GM will retain them out of loyalty, then they're mistaken.
Capital is international - capital moves to where the best return is.
Cost and quality are the drivers of the what makes up the best return for capital.

The other issue that the US seems to be unable to compete on is quality.

I do some work with three US multinational companies.
Invariably local management tell me that not only do the Irish operations outperform their US counterparts in terms of performance, they outperform them with regard to the quality levels of their work and their finished product.
And when you consider that the lowest paid job in these companies is at $22
per hour, it really does drive home the seriousness of what faces the USA.

nice summing up there Lim,

things in America have to change whether the average joes wants it or not. Big changes are afoot and the SUV will no longer be in production in 10 years time. By SUV i mean 6 litre V8, 8mpg, 85mph max and 250bhp.

Mitsubishi and Honda are working on one that is 80mpg and out performs most American SUVs on build quality, design, reliability, technology, features (entertainment), comfort, ride handling, performance, fuel economy, price, internal and external aesthietics, engine efficiency, customer service, insurance, warranty, emmissions and manufacturing costs.

its a dire day to be an SUV owner...

limerickman said:

American manufacturing industry is in trouble - and not only in car assembly.

Specifically, the day of the SUV is over.
Oil will be at $60.00 a barrel minimum for the forseeable future.

The problem for Ford and every other manufacturer in the States is that they cannot compete with the international workforce.
Wage costs alone, make manufacturing in the USA uneconomical.
American companies paid their workers well when things were going well.
That was fair enough.

But with globalisation, wages are not determined by how much the average US worker needs to be able get by on, wages are determined by how much the Polish guy in Warsaw is prepared to do the same job as he does.

And if the average American thinks that Mr Ford or Mr GM will retain them out of loyalty, then they're mistaken.
Capital is international - capital moves to where the best return is.
Cost and quality are the drivers of the what makes up the best return for capital.

The other issue that the US seems to be unable to compete on is quality.

I do some work with three US multinational companies.
Invariably local management tell me that not only do the Irish operations outperform their US counterparts in terms of performance, they outperform them with regard to the quality levels of their work and their finished product.
And when you consider that the lowest paid job in these companies is at $22
per hour, it really does drive home the seriousness of what faces the USA.

MountainPro said:

nice summing up there Lim,

things in America have to change whether the average joes wants it or not. Big changes are afoot and the SUV will no longer be in production in 10 years time. By SUV i mean 6 litre V8, 8mpg, 85mph max and 250bhp.

Mitsubishi and Honda are working on one that is 80mpg and out performs most American SUVs on build quality, design, reliability, technology, features (entertainment), comfort, ride handling, performance, fuel economy, price, internal and external aesthietics, engine efficiency, customer service, insurance, warranty, emmissions and manufacturing costs.

its a dire day to be an SUV owner...

I drive an A4 out of choice not necessity.There again I like to think I am an independent thinker and not heavily influenced by outside pressure in making choices.
With the exception of wife who exerts considerable influence in my thinking.

I agree that the end of the big car and SUV mentality must end, but Ford's problems and other US automakers as well, have more to do with really dumb contracts they have with their unionized workers.

Yep, the hunt for an alternative to oil should have started in earnest.

I have read some studies and they agree that 2010-2015 will see the plateau
in world oil production after which existing known sources will start to dwindle.
But oil demand will continue to increase (look at China and India demand increase).
Supply will fall and then the @@@@ will hit the fan.

DiabloScott said:

I agree that the end of the big car and SUV mentality must end, but Ford's problems and other US automakers as well, have more to do with really dumb contracts they have with their unionized workers.

You mean the situation whereby unskilled individuals that know how to do one maneuver make as much as a college professor with even better benefits,and once the plant closes down they are stuck with a big mortgage no way to pay it , no education and no employment prospects beyond $6.00 per hour.

Remember what happened to Rover at Longbridge. The workers were retrained in non engineering disciplines and offered jobs in other companies. I cant remember if that was a govt initiative or if Rover themselves did that. At least it kept the wolf from the door till they found thier feet again.

But Fords problems are all of its own doing. They failed to adapt to changing market forces, new competition and thier inflexibility was thier downfall. They know how to build em big and build em strong but that era is over. They have been doing alright in Europe where 4x4s are usually used in agriculture and utilities OR sports cars such as Audi and Porsche. Mixing sports and utiliy was always going to cause identitly problems.

In rural areas of the States these trucks have a genuine place and purpose but when you see the tricked-out street versions with big chrome rims, lowered suspension and slick tyres, you gotta wonder what mental midgets drive these things....>>> rap stars mostly.

jhuskey said:

You mean the situation whereby unskilled individuals that know how to do one maneuver make as much as a college professor with even better benefits,and once the plant closes down they are stuck with a big mortgage no way to pay it , no education and no employment prospects beyond $6.00 per hour.

I read an article about the CEO of Ford (Mr Ford) introducing plans to create a recycled car. Hold on, I'll have a look for it -I can't remember the details, but it seemed to suggest he was at least attempting to be a bit more forward thinking........

Yep, here it is.....

http://www.time.com/time/magazine/printout/0,8816,1151755,00.html

Maybe we're beginning to the see the back of SUVs. (God knows enough cyclists have seen the front!) :eek:

I'm no fan of SUVs personally either, and do not own one, but this notion that it is some sort of American sin to own one is silly. It is all based on economics. SUVs are not popular in Europe for several reasons, one of which is the drastically more expensive gas to the consumer over there. Also, ask yourself who is more "nasty" to the environment: the German driving an Audi A4 at 120mph on the autobahn or the American driving the Ford Explorer at 70mph on the interstate.

As an illustration: my wagon gets about 25mpg driving about 75 here in the states. That exact car, when I lived in Germany, reported about 6-7mpg at 120mph.

No, Americans are no more "bad" than any other people on this issue. It's all economics. We will soon be rid of the ugly SUV because of economic reasons, nothing else.

roadhog said:

I'm no fan of SUVs personally either, and do not own one, but this notion that it is some sort of American sin to own one is silly. It is all based on economics. SUVs are not popular in Europe for several reasons, one of which is the drastically more expensive gas to the consumer over there. Also, ask yourself who is more "nasty" to the environment: the German driving an Audi A4 at 120mph on the autobahn or the American driving the Ford Explorer at 70mph on the interstate.

As an illustration: my wagon gets about 25mpg driving about 75 here in the states. That exact car, when I lived in Germany, reported about 6-7mpg at 120mph.

No, Americans are no more "bad" than any other people on this issue. It's all economics. We will soon be rid of the ugly SUV because of economic reasons, nothing else.

Quite true. I know of no country that has more than 10% hybrid cars. Everyone knew, decades ago, that we were going to run out of gas and run into environmental problems. Just ask the hollywood types, as they get out of their limos, about the environment.
Washington, London, Paris, Moscow, Beijing...there is enough lack of responsibilty to go around.
But, all that being said, can anyone explain the Ford Excursion to me? 😕

jhuskey said:

You mean the situation whereby unskilled individuals that know how to do one maneuver make as much as a college professor with even better benefits,and once the plant closes down they are stuck with a big mortgage no way to pay it , no education and no employment prospects beyond $6.00 per hour.

Do people really get $us6.00 per hour?The least skilled and lowest paid employee in oz would be paid almost double that!

jhuskey said:

You mean the situation whereby unskilled individuals that know how to do one maneuver make as much as a college professor with even better benefits,and once the plant closes down they are stuck with a big mortgage no way to pay it , no education and no employment prospects beyond $6.00 per hour.

Supply and demand?
😄

jhuskey said:

You mean the situation whereby unskilled individuals that know how to do one maneuver make as much as a college professor with even better benefits,and once the plant closes down they are stuck with a big mortgage no way to pay it , no education and no employment prospects beyond $6.00 per hour.

Yup, but you forgot to mention medical benefits for life... can't think of ANYONE else who gets that - not even military.

DiabloScott said:

Yup, but you forgot to mention medical benefits for life... can't think of ANYONE else who gets that - not even military.

I also forgot to mention that the uniontake their cut and moves on to the next victims...I mean members.

SB: A lot of fast food workers and others get in the range in the range of $6.00 per hour.
These are entry level position and are staffed a lot of times by teenagers.
Out of curiosity,how much would a person flipping burgers or similar position make where you are?

jhuskey said:

I also forgot to mention that the uniontake their cut and moves on to the next victims...I mean members.

SB: A lot of fast food workers and others get in the range in the range of $6.00 per hour.
These are entry level position and are staffed a lot of times by teenagers.
Out of curiosity,how much would a person flipping burgers or similar position make where you are?

For an adult,about $us11-12 p.hour.Free health care for life? Everyone in oz gets that.
teenagers get adult wages at 18.
And all year round cycling for everyone!

stevebaby said:

For an adult,about $us11-12 p.hour.Free health care for life? Everyone in oz gets that.
teenagers get adult wages at 18.
And all year round cycling for everyone!

Sounds very equitable ,but makes me curious as to how much a professional makes,such as a doctor.
I guess I am trying to establish if there is a wide gap in wages,as there is here, or if there is more of less varied scale.

jhuskey said:

I also forgot to mention that the uniontake their cut and moves on to the next victims...I mean members.

If it weren't for the labor movement in this country your 10 year old kids would still be slaving in sweatshops 18 hours a day/6 days a week.

Next.

Wurm said:

If it weren't for the labor movement in this country your 10 year old kids would still be slaving in sweatshops 18 hours a day/6 days a week.

Next.

Just like a lot of other good ideas that went too far and went corrupt. Surely you are not going to try to defend present day unions.
Come on!

jhuskey said:

Just like a lot of other good ideas that went too far and went corrupt. Surely you are not going to try to defend present day unions.
Come on!

The "corruption" that may or may not exist administratively does not negate the neccesity and positive results of labor unions in general.