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The myth that unions destroyed the auto industry, it was all poor products and loss..

JP Hochbaum

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(continued from topic title) in market share....

The myth that unions destroyed the auto industry:

"Autoworker wages didn’t make the Big Three uncompetitive by driving prices up; poor value drove prices down. As prices and quality fell together, consumers fled. The UAW’s contracts were almost irrelevant. One way to show this is to compare the pricing of the competitors’ vehicles with the size of the labor cost differential bargained by the UAW. Labor costs make up only 10 percent of the cost of a typical automobile. Before the auto rescue, the Big Three paid $55 an hour in compensation per auto worker while the Japanese paid only $46 an hour. (Company lobbyists and publicists inflated the total Big Three labor cost to $71 by attributing the unfunded pension and health benefit costs for decades of retired workers to the much smaller currently employed workforce2; the legacy costs for Japanese transplants were only $3 an hour.)3 But even if, for the sake of argument, we accept the unfairly inflated $71 figure, the difference in the cost of a vehicle attributable to the UAW (the UAW premium) would be 30 percent of the average 10 percent labor cost, or 3 percent of total cost."

"In 2008, according to Edmunds, GM sold its average large car for $21,518. Assuming GM sold its cars at cost, the UAW premium would have been only $645 (3 percent of $21,518). Did the UAW premium raise the selling price so high as to make GM cars uncompetitive with Toyotas? Not exactly. Toyota sold its comparably equipped average large car for $31,753—$10,000 more than GM.4 It wasn’t price that made GM cars uncompetitive, it was the quality of the product and the customers’ perception of quality."

"“… the U.S. automakers’ loss in market share during the past decade can be explained almost entirely by the difference in the basic attributes that measure the quality and value of their vehicles. Recent efforts by U.S. firms to offset this disadvantage by offering much larger incentives than foreign automakers offer have not met with much success. In contrast to the numerous hypotheses that have been proffered to explain the industry’s problems, our findings lead to the conclusion that the only way for the U.S. industry to stop its decline is to improve the basic attributes of their vehicles as rapidly as foreign competitors have been able to improve the basic attributes of theirs.”

- See more at: Management
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

The EPI is fully funded by the unions, they are a union rah-rah org. You're not going to hear anything but distortion from them on the subject.
 

JP Hochbaum

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

The EPI is fully funded by the unions, they are a union rah-rah org. You're not going to hear anything but distortion from them on the subject.
Ad hominems for the win!

Can you dispute the empirical data?
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

(continued from topic title) in market share....

The myth that unions destroyed the auto industry:

"Autoworker wages didn’t make the Big Three uncompetitive by driving prices up; poor value drove prices down. As prices and quality fell together, consumers fled. The UAW’s contracts were almost irrelevant. One way to show this is to compare the pricing of the competitors’ vehicles with the size of the labor cost differential bargained by the UAW. Labor costs make up only 10 percent of the cost of a typical automobile. Before the auto rescue, the Big Three paid $55 an hour in compensation per auto worker while the Japanese paid only $46 an hour. (Company lobbyists and publicists inflated the total Big Three labor cost to $71 by attributing the unfunded pension and health benefit costs for decades of retired workers to the much smaller currently employed workforce2; the legacy costs for Japanese transplants were only $3 an hour.)3 But even if, for the sake of argument, we accept the unfairly inflated $71 figure, the difference in the cost of a vehicle attributable to the UAW (the UAW premium) would be 30 percent of the average 10 percent labor cost, or 3 percent of total cost."

"In 2008, according to Edmunds, GM sold its average large car for $21,518. Assuming GM sold its cars at cost, the UAW premium would have been only $645 (3 percent of $21,518). Did the UAW premium raise the selling price so high as to make GM cars uncompetitive with Toyotas? Not exactly. Toyota sold its comparably equipped average large car for $31,753—$10,000 more than GM.4 It wasn’t price that made GM cars uncompetitive, it was the quality of the product and the customers’ perception of quality."

"“… the U.S. automakers’ loss in market share during the past decade can be explained almost entirely by the difference in the basic attributes that measure the quality and value of their vehicles. Recent efforts by U.S. firms to offset this disadvantage by offering much larger incentives than foreign automakers offer have not met with much success. In contrast to the numerous hypotheses that have been proffered to explain the industry’s problems, our findings lead to the conclusion that the only way for the U.S. industry to stop its decline is to improve the basic attributes of their vehicles as rapidly as foreign competitors have been able to improve the basic attributes of theirs.”

- See more at: Management
American's auto industry failed because not enough people were buying their cars. Period.

Why weren't they? Price-to-value would be my guess. Crappy plastic interiors on their mid-range cars...concentrating on SUVs instead of normal cars...upcharges for normal options instead of inclusive pricing...the list is endless since the business model was a failure.

But the end result is not enough Americans bought their cars.
 

Paschendale

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

If our system can only function when workers have to take the short end of the stick and it falls apart when they require decent pay, then our system sucks and ought to be discarded. If our auto industry can be destroyed by workers fighting for better wages and benefits to secure a middle class lifestyle, then our auto industry is broken at its core. The same is true of any other industry. If it can only survive by exploiting people, then it needs a redesign from top to bottom.
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

If our system can only function when workers have to take the short end of the stick and it falls apart when they require decent pay, then our system sucks and ought to be discarded. If our auto industry can be destroyed by workers fighting for better wages and benefits to secure a middle class lifestyle, then our auto industry is broken at its core. The same is true of any other industry. If it can only survive by exploiting people, then it needs a redesign from top to bottom.
$55 an hour for unskilled labor is hardly a middle-class lifestyle.
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

For another take on this issue, I provide the attached, more reasoned, unbiased view of GM's problems and the failure of the government bailouts to address them.

GM and the Truth About One of America's Biggest Bankruptcies
 

JP Hochbaum

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

American's auto industry failed because not enough people were buying their cars. Period.

Why weren't they? Price-to-value would be my guess. Crappy plastic interiors on their mid-range cars...concentrating on SUVs instead of normal cars...upcharges for normal options instead of inclusive pricing...the list is endless since the business model was a failure.

But the end result is not enough Americans bought their cars.
77% of market share to about 40% in less than a decade, spot on.
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

Ad hominems for the win!

Can you dispute the empirical data?
Wasn't an ad hom, it was an attack the source. And in this case the source is fully funded by the unions it's defending. Of course this is what their story is going to be. And no empirical data either, it was an editorial blog post sponsored by the folks it's trying to clear.
 

JP Hochbaum

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

Wasn't an ad hom, it was an attack the source. And in this case the source is fully funded by the unions it's defending. Of course this is what their story is going to be. And no empirical data either, it was an editorial blog post sponsored by the folks it's trying to clear.
ummm.... attacking the source is an ad hom. Learn your fallacies.

Also the blog post was filled with references to dozens of studies, dozens!

this is total derp territory:

Daily Kos: Krugman Explains "Urp v. Derp" and the Perils of Moral Derpitude

"By urp I mean just getting something wrong — and then conceding, as evidence rolls in, that you did indeed get it wrong: “Urp! That was a bad call!” Obviously if someone urps all the time, his credibility is diminished; but everyone is going to do it now and then. To urp is human.

Derp, on the other hand, means being proved wrong but continuing to loudly assert the same thing again and again regardless."
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

ummm.... attacking the source is an ad hom. Learn your fallacies.

Also the blog post was filled with references to dozens of studies, dozens!

this is total derp territory:

Daily Kos: Krugman Explains "Urp v. Derp" and the Perils of Moral Derpitude

"By urp I mean just getting something wrong — and then conceding, as evidence rolls in, that you did indeed get it wrong: “Urp! That was a bad call!” Obviously if someone urps all the time, his credibility is diminished; but everyone is going to do it now and then. To urp is human.

Derp, on the other hand, means being proved wrong but continuing to loudly assert the same thing again and again regardless."
Love it, you defend one propaganda site by using another. Hilarious. Go ahead use Democratic Underground to prove your point next, you know you want to.
 

JP Hochbaum

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

Love it, you defend one propaganda site by using another. Hilarious. Go ahead use Democratic Underground to prove your point next, you know you want to.
Empirical data isn't propaganda unless you can offer proof that the numbers are wrong? I will be waiting...
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

American's auto industry failed because not enough people were buying their cars. Period.

Why weren't they? Price-to-value would be my guess. Crappy plastic interiors on their mid-range cars...concentrating on SUVs instead of normal cars...upcharges for normal options instead of inclusive pricing...the list is endless since the business model was a failure.

But the end result is not enough Americans bought their cars.
I am so glad that you are recognizing that it was the design, not those that assembled the cars, that was the primary cause of the problem.
 

Gimmesometruth

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

$55 an hour for unskilled labor is hardly a middle-class lifestyle.
Except when that was not the take home pay.
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

$55 an hour for unskilled labor is hardly a middle-class lifestyle.
I keep hearing that... "unskilled". What exactly does that mean? A friend of mine works at UPS loading boxes on a truck. That seems pretty unskilled. But someone who has to operate machinery? That's skilled. If you walk out with skills you didn't have when you walked in, that's skilled labor.
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

I keep hearing that... "unskilled". What exactly does that mean? A friend of mine works at UPS loading boxes on a truck. That seems pretty unskilled. But someone who has to operate machinery? That's skilled. If you walk out with skills you didn't have when you walked in, that's skilled labor.
It's an unskilled job until the company invests in you and trains you. No special degrees or training needed out of the box.
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

Faulty business model, union-forced overpaid wages, and a benefits system that simply could not support itself.

Anybody with a lick of economic sense could've predicted in the 70s that it was going to topple.

Growing up in Michigan, I've seen and felt firsthand what destruction unions can do.
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

It's an unskilled job until the company invests in you and trains you. No special degrees or training needed out of the box.
But that is the point, you don't get on the line until you go through a training process, your learning of the skills required for assembly work is substantial.

Learning to stack boxes in the back of a truck....mmm....not so much.
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

Faulty business model, union-forced overpaid wages, and a benefits system that simply could not support itself.

Anybody with a lick of economic sense could've predicted in the 70s that it was going to topple.

Growing up in Michigan, I've seen and felt firsthand what destruction unions can do.
Yes but, if enough people bought their cars they could have afforded any amount of ruinous pensions or unwarranted demands! :roll:
 

JP Hochbaum

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

Faulty business model, union-forced overpaid wages, and a benefits system that simply could not support itself.

Anybody with a lick of economic sense could've predicted in the 70s that it was going to topple.

Growing up in Michigan, I've seen and felt firsthand what destruction unions can do.
Did you read the OP? Unions had nothing to do with it. Unions didn't cause a massive drop in market share, poor products did.
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

Yes but, if enough people bought their cars they could have afforded any amount of ruinous pensions or unwarranted demands! :roll:
Haha...well yeah, even Henry Ford himself admitted that.
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

It's quite an undertaking to explain the complexities of why American auto needed bailing out.

Quality. Perceived quality. Planned obsolescence. For half a century, American auto had a monopoly. That ended. Competition came onto the scene, but I think the folks running the big three thought little of it, didn't strive to improve design. However...some aspects of this can be laid at high operating costs. Look at the compromises the corvette has had over the years, due in no small part to trying to maintain profit margins. On one hand, yes, brass wanted to keep rolling in the million dollar checks...but profit margins were hurt by 50 dollar an hour help, too. So brass chose to make cuts in product quality, since cuts in payroll require an act of congress.

Another thing hurting them is crappy PR, poor marketing. GM commercials are majorly lame. They appeal to the typical blue collar fella. Well, blue collars are dying out. They need to appeal to po folks, and upper middle. Look at the transformation caddy made.
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

Did you read the OP? Unions had nothing to do with it. Unions didn't cause a massive drop in market share, poor products did.
Sure they didn't. Feel free to think that if you want, and keep quoting biased sources to defend your bias.

Unfortunately, I have an economics background, and I know the score. I don't need some left-wing joke sources to tell me how it isn't.
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

But that is the point, you don't get on the line until you go through a training process, your learning of the skills required for assembly work is substantial.

Learning to stack boxes in the back of a truck....mmm....not so much.
I agree with you here. Once GM (example) has invested in an employee's training? They want to keep him. They want him happy and well paid.

You might agree with me, though, that an employee going in probably possesses no special skills in order to be hired? (Other than the ability and willingness to learn?)
 

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Re: The myth that unions destroyed the auto industry, it was all poor products and lo

But that is the point, you don't get on the line until you go through a training process, your learning of the skills required for assembly work is substantial.

Learning to stack boxes in the back of a truck....mmm....not so much.
Then hand a hundred bucks to the grocery store manager every time you shop, to help boost the income of the skilled laborers at the check out lines.
 
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