11/16/2008 02:29:37 PM EST

Why MegaFord Will Never Compete With Toyota

posted by chrisandyasemin

The "Mega 3" will never succeed as they are in their current forms.  I am from Indiana.  I knew who Lee Iacocca was when I was like 8.  My dad had worked for Ford since he was like 15, and had been laid off during the first "bail out" of ford.  These cycles are repeating for a reason, and I am about to explain why.

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You will hear a lot of blame trying to be put on the Union workers, because the auto industry has been bleeding money for years.  But the Unions are the tiniest part of the problem, and aren't really a problem in themselves.  The problem is that the "Big 3" make all their parts.  That is not what Toyota does.  Toyota is about 220 companies that function under 1 name as a producer, and the main company picks and chooses who they buy parts from, so the 220 companies are not necessarily static.  What this means is that when consumption is down, Toyota as a whole does not suffer as much because they are not relying on production of car parts for making a profit.  Their costs are completely based on their orders, so they don't waste money in low production years.  Now in the Big 3, we produce ALL the time.  It's because our companies make most/ALL of the parts, so you can't have times where you're not producing drive shafts, because you need drive shafts some of the time, so it's in their best interests to keep the drive shaft construction workers working all the time.  What happened was eventually, the drive shaft factories got cut in half.  The reason that the big 3 don't want to switch over their technology is because they will absorb too much of the cost and won't be able to turn a profit for a few quarters, or maybe a year or two.  If the cost was spread around 220 companies, it wouldn't be that big a deal.  Spreading the cost works in the same way as spreading the wealth...

By the way, the Union workers who are being blamed for the problems have mostly lost their pensions and 401ks.  They are not to blame for this.
Chris

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Why MegaFord Will Never Compete With Toyota | 31 comments (31 topical, 0 hidden)
Thank you Chris (none / 0)

I was going to write a blog this morning on this subject, but without the substance you've provided regarding the structure of the auto industry. You just reinforced what I'm beginning to think about this whole boondoggle. So I'll dump my gripes here.

I've been watching this auto-industry bailout debate for the last couple weeks and totally unimpressed with the democrats (and some republicans--let's be fair). Maybe I need a talking down, but it seems like the GOP naysayers are basically right (apart from their scapegoating of the unions).

I remember watching incredulous in the first half of this decade as these autoexecs would laugh off questions in interviews about why they weren't producing more fuel efficient cars. "Consumers don't want them" they would say. Say what you want about the pious, but they had 2 year waiting lists even before the price of oil went up. And these same execs have the gall to say they don't think they should be fired as part of a bailout deal.

Senator Sheldon was on MTP this morning saying that's the first thing that should happen. Newt Gingrich got on fact the nation saying this is throwing good money after bad. If the industry takes the money and comes back for more (as we know they certainly will), the democratic party and Barack Obama will own it.

They're both right.

by hazmat on 11/16/2008 03:22:00 PM EST

How to bail out the auto industry. (none / 0)

Buy 'em up.

Split 'em up.

Sell 'em off.

That is the classic method for dealing with broken companies.  While it's a purely market-driven approach and -- as is typical of all purely market-driven processes -- fails to account for many of the actual costs incurred, in this case it will allow smaller and more innovative competitors room to grow.  The main problem will be to do it as fast as possible; government is likely to be a very poor manager of the industry.

by EveningStarNM on 11/16/2008 03:53:43 PM EST

nostalgia factor (none / 0)
for some reason America wants to keep these dead industries alive like Dr. Frankenstein to the monster.  I don't think people have realized the stupidity of the American auto industry.  It was the first use of assembly lines, and the assembly lines have not changed much since their creation, sake the robots that do some human work now(and even some of those are operated by humans).  I think these CEO's are idiots and do not deserve their posts by rational standards, let alone to keep their jobs if the companies get bailed out.  I for one second your purchasing plan.  It's simple and to the point, and really all that needs to happen to streamline the losses.

Chris  

by chrisandyasemin on 11/16/2008 04:49:30 PM EST

[ Parent ]
I like it. (none / 0)

by hazmat on 11/16/2008 04:29:12 PM EST

response to eveningstar (none / 0)
I can't tell you how many times I've punched the "post a comment" button thinking I'm replying to the last post. I know its my own fault, but I bet I'm not the only one to think its not a strategic location for that button. Rant over.

by hazmat on 11/16/2008 04:32:10 PM EST

[ Parent ]
just for kicks (none / 0)

Here is Wes Clark Sr.'s take on the issue, in today's New York Times.

I don't know how to feel about this issue myself. I drive a Toyota truck with 200,000 miles on it and will probably keep it another 5-10 years, or until gasoline is obsolete.

by desertpear on 11/16/2008 05:45:24 PM EST

that's fine (none / 0)
he's a persuasive guy, but I remain skeptical. If the taxpayer is being hit up for cash we should see a return on our investment. Look what they've done with the banks. Bush and friends seem to think, "let's give them the cash, and then let the free market do its thing". Its unclear to me at this point that democrats disagree with him in any way. That situation is unacceptable. It makes me see red.

by hazmat on 11/16/2008 06:15:04 PM EST

[ Parent ]
well (none / 0)
As someone else said--this policy certainly doesn't seem to apply to small businesses.  I guess lining the pockets of politicians does have its benefits.  I do think the motivation for the dems might be different though. A lot of Americans would lose their jobs at a pretty bad time. But I am more than pissed that these companies were willing to pour out the SUVs and big trucks for years and years because they made better profits on them. I'd like a piece of their bonuses in exchange for my tax dollars, as well as an AFFORDABLE hybrid.

by desertpear on 11/16/2008 11:09:41 PM EST

[ Parent ]
seeing Barack interviewed on 60 min (none / 0)
was comforting. He seems to have a clear notion about getting something in return for the nation's treasure.

by hazmat on 11/16/2008 11:27:28 PM EST

[ Parent ]
I am just about to watch that (none / 0)

Isn't it nice to have a president that seems to be telling the truth and it isn't scary?

I thought Arnold had some interesting comments this morning too--I always knew he was a lib at heart.

by desertpear on 11/16/2008 11:43:03 PM EST

[ Parent ]
I'm still getting over (none / 0)
the complete sentences deal. Baby steps.

by hazmat on 11/16/2008 11:46:42 PM EST

[ Parent ]
The one problem with this (none / 0)
is that why should we support jobs that are a dead end?  If the companies don't want to retool, they will be producing cars that no one wants to buy, so they will go out of business anyway.  It's the same type of situation as the housing/banking crisis.  The bailouts will just keep them open long enough to fail even harder if they don't change their ways.  Ultimately, if we bail out the businesses, and they keep the same habits, they will just need another bail-out in another 6 months, and everything that goes on the market will be purchased on credit, so we're setting ourselves up for an even bigger failure than they want to admit.

Chris

by chrisandyasemin on 11/16/2008 11:34:38 PM EST

[ Parent ]
that seems to be the logical outcome (none / 0)
which is why they will probably loan billions to these dinosaur companies, right?

by desertpear on 11/16/2008 11:44:36 PM EST

[ Parent ]
I guarantee one thing (none / 0)
Ford will never die.  It was the first auto company to produce using the assembly line, and dearborn michigan would officially become a shantytown.  I don't think any president would want that under their reputation.

Chris

by chrisandyasemin on 11/17/2008 12:16:13 AM EST

[ Parent ]
Let me get this straight (none / 0)
Although Republican senators are saying they are against bailing out Ford, is this what their constituents really want? Seems to me those Republicans looove their Ford trucks. I can't imagine them being willing to give up their testosterone-fueled Ford trucks any more than their semi-automatic weapons.

by desertpear on 11/17/2008 03:02:40 PM EST

[ Parent ]
For a Capitalist Country (none / 0)

We sure fight Capitalism tooth and nail.

That natural cycle of a company in the free market is that they startup, mature, then get old and die, to be replaced by new startups.

These auto manufacturers in the US and Japan are old.  They will die soon no matter what we do.

Unlike humans, where we need to be compassionate, these companies have no feelings, no conscience.  So there is a real question about whether we should keep them on life support or just let them die.

The workers at the companies would be better off if we let the companies die and use our resources toward nurturing new startup companies.

Only the owners and top level management of the companies benefit from us pouring money into life support for these old companies.

Maybe it is time to let them go.  They lived a good life.  It is better for us to remember them for what they were, and not let them leave a legacy as decrepit companies in a dying industry.

by rbruck on 11/16/2008 05:55:36 PM EST

the japanese will be fine (none / 0)
it's just the american car companies that will/should go under.  The japanese have been doing it right, that's why they've managed to take over american markets even with tariffs.  You are right though, it has been a resistance to the capitalist cycle.

Chris

by chrisandyasemin on 11/16/2008 10:26:23 PM EST

[ Parent ]
hey (none / 0)
What if we let them die a painful death and use the money to help new startup companies and to provide for the worker retraining at the new places. or something like that.  If the workers are the issue, it would be cheaper to pay their salaries while they are unemployed.

by desertpear on 11/16/2008 11:12:20 PM EST

[ Parent ]
too logical (none / 0)
we've come to find out that big companies like to do the most illogical solutions possible, and obviously your solution makes too much sense to actually be employed.

Chris

by chrisandyasemin on 11/16/2008 11:32:07 PM EST

[ Parent ]
A solution (none / 0)
would be to go ahead and make batteries standardized now.  If we are about to retool, why not make the batteries in all the vehicles use the same interface, so every company will make the advances together, and the focus of the battery developments will all go in the same direction.  It doesn't mean every company has to unite, it just means they all have to agree to use the same interface.  I think this is where republicans think it destroys capitalism.  It really is telling the companies,"Your job is to find the most efficient way to use this interface".  If we waste too much time going in different directions with battery interfaces, there will be energy wasted that could be spent making battery units more efficient.  I think this would actually make MORE new companies, as small companies could develop more efficient batteries, or maybe the companies like Dell and microsoft that have been making batteries could have some of their people split off and start developing car batteries.  I think honestly we will get better solutions out of this board than we will hear from congress.  Wesley Clark made some great points, but he still did not offer any solutions.  I think the American people need to be able to throw solutions at Congress, so they know that we are not stupid, and when they hold their public hearings, normal citizens will be able to be heard with these solutions.

CHris.

by chrisandyasemin on 11/17/2008 12:26:20 AM EST

yes (none / 0)
its the opensource solution! Its actually ideal to foster true competetive capitalism. Which means...you'll never get this idea past the goalie.

by hazmat on 11/17/2008 12:47:28 AM EST

[ Parent ]
send this one to (none / 0)
www.change.gov using that "share your vision" button at the bottom.  I'm not sure if it helps, but it can't hurt.

by desertpear on 11/17/2008 01:55:28 AM EST

[ Parent ]
Work to live, not vice-versa (none / 0)
I feel a little like a broken record on this subject, but don't pour too much love on Toyota.  That company is responsible for the coining of the Japanese noun karoushi.  That literally means, "Death as a result of working."  Toyota is productive, in part, due to its willingness to squeeze every last drop of blood out of its employees.

by OneHitKill on 11/17/2008 03:27:54 AM EST

don't discount that too quickly (none / 0)
because you have the european polar opposite where they get whole months off at a time.  We are on a locus of work, and toyota is one extreme, and europe is one extreme, and America is the stupid lazy middle ground that doesn't seem to drift either way.  Their culture is a lot more revolved around the community than ours, and if they fail the community, then they take it a lot more personally than we do, so there are other factors besides toyota in that equation.  Have you heard of people committing suicide here because they didn't get into college?  Not that frequently right?  That's a common occurence there, so I could see how many people work themselves to death trying to support themselves/families, and then a corporation like toyota takes advantage of that ethic.  It's capitalist in the purest form, so as much as i think capitalism is for the greedy, it's a working model.

CHris

by chrisandyasemin on 11/17/2008 10:46:03 AM EST

[ Parent ]
Maybe (none / 0)
Not getting into college is cited as a reason for suicide once in a while, but the most common reason is fatigue.  Combine that with opportunity, which is crucial in the suicide equation; dentists in all countries have a relatively high suicide rate because they have access to nitrous oxide, a painless method of offing oneself.  And Japanese people have access to high-speed trains, a reliable (and punctual) method.

by OneHitKill on 11/17/2008 08:29:49 PM EST

[ Parent ]
a side effect (none / 0)
of working into old age is a better neural network.  The japanese also have the least alzheimers/brain debilitation because they work into older age. I am not trying to argue that Japanese don't work their people to death, but I was simply pointing out that the way that they have their construction costs dispersed, it allows the top down part of the company to survive tough economic times, while the bottom up part reshapes.  There is also the aspect of the Japanese working their people to death, but these are two different issues.

Chris

by chrisandyasemin on 11/17/2008 08:44:09 PM EST

[ Parent ]
List of cars and % of American made parts in them (none / 0)
From what I read on these lists

Only a few American cars have 90% of their parts even made in America. The average seems to be around 75%.

And the Japanese cars  have about the same average American/Canadian made parts as American cars do.


by Chinese Democracy on 11/17/2008 03:04:23 PM EST

more proof (none / 0)
that the bailout won't work unless they retool...this is the SECOND auto bailout, maybe even third:  I'm only 25, so I've only seen one before this one.

Chris

by chrisandyasemin on 11/17/2008 03:59:59 PM EST

[ Parent ]
Make the oil companies bail them out! (none / 0)
Someone suggested this and I personally think its a brilliant idea!  Tell the oil companies we'll let them die if they don't help them out.  In many ways its their fault the auto companies are dying and in many ways they owe them for making cars like the hummer and expedition that have helped to line their pockets.  The combined industries would act as a natural hedge against eachother...when oil prices are high car business is bad and vice versa. 

by alphasigmookie on 11/19/2008 12:25:43 AM EST

sounds great (none / 0)
once again, if it makes too much sense, it probably won't happen.  Where'd that $350 billion go?  Is it some sort of insider trading?  Like Olberman says tomorrow we'll call this "why daddy went to jail".  I think Obama will at least go for a windfall tax on big oil, because they haven't gone green enough.

Chris

by chrisandyasemin on 11/19/2008 02:02:56 AM EST

[ Parent ]
another concession (none / 0)
we should make the oil companies buy fleets of hybrid cars for their employees. It's a guaranteed sale of thousands of vehicles, and it will ease some pressure off the speculation of sales.  We say:if you operate here, for the next 2 years you have to use x number of vehicles that you purchase from x companies, or else we're taking our land back because we fucking can.  That's how it should go down, but we'll see if the democrats' collective testicles have atrophied into extinction.  Republicans have balls, I have to give that to them, they're just batshit insane, so we have to keep them on a leash.

Chris

by chrisandyasemin on 11/19/2008 02:09:37 AM EST

[ Parent ]
Why MegaFord Will Never Compete With Toyota | 31 comments (31 topical, 0 hidden)
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