Actually, I like the new Taurus. Ford did the right thing with the Five Hundred – used a solid Volvo platform to produce a car with excellent room, good safety ratings, and a very good combination of ride-and-handling.

Now, it is addressing the car’s faults while keeping the good points with a thorough mid-model-cycle makeover…just like Honda and Toyota would do.

And with the new drivetrain and other improvements, the Taurus X (formerly Freestyle) offers an excellent combination of safety, room, ride, handling and economy, especially for those of us who need room but don’t want the “handling” and “economy” of a lumbering SUV.

Mikey
yep we’re both insiders, i know not everyone can be tarred with the same brush but its about time we all started paddling the same way out of s#!t creek, we lost one paddle, we’ve found some more lets get the crew working together for once, i can see the shore.

This gives me hope that Ford may be in the best position for a recovery. But then I look across the lot at the Five Hundred Taurus (the zodiac sign for the rental car industry) and assume that my hopes were unfounded.

That, and Fusion sales are hitting the skids. If it is going to succeed, it needs to be substantially better than an Accord, not just sorta kinda similar to one, but not really…

The problem is how they are using the labor cost advantage (which GM’s Korean operations surely enjoy compared to Honda’s Japanese operations).

Which is why I wouldn’t bother volunteering for pay cuts if I worked for GM. They aren’t worth it.

It’s a company with a long history of pinching nickels and dimes, and using the savings to lose quarters and half-dollars. Pennywise and pound foolish defined.

The problem is how they are using the labor cost advantage (which GM’s Korean operations surely enjoy compared to Honda’s Japanese operations).

They use it to become Walmart, instead of using the cost differential to provide Macy’s quality at Walmart (or at least Target) prices.

At least Ford didn’t make the Mexican-built Fusion into a crappy bargain-basement alternative to the Accord. It used the Mazda6 platform to provide a decent product at a competitive price point, while still being able to turn a profit on it.

This is **exactly the problem.** This is not a viable business strategy, but a path to failure. Being the low price leader is a brand killer, not a valuable differentiator.

The Big 2.5 have become the K-Marts of the auto industry — cheap, low rent, and undesirable for most of the buying public. They do not compete on quality, and apparently don’t even know how to compete on quality.

Let’s learn a bit from Yugo and Hyundai’s early US efforts — when it comes to car shopping, American consumers generally want quality over price, and will pay extra for something that they perceive to be better, when they can afford it (and often when they can barely afford the financing.)

The Big 2.5 have low margins because they do not create products that are worth a premium. Even with cheap labor, they are uncompetitive. It’s a revenue problem, not a cost problem.

The Aveo has a lower sticker price than the Fit (even before the rebates).

The Aveo’s sticker price ranges from $9,995-13,765.

The Fit starts at $13,950, and goes up to $15,970.

GM isn’t building the Aveo with lower labor costs, and then selling it at the same price as the Fit, but with a higher content level or superior build quality. The Aveo is considerably cheaper than the Fit, even before the rebates. GM is using the lower labor costs to sell the car at a lower price point.

We can argue ’til the cows come home about whether GM’s strategy is the correct one – the Aveo isn’t exactly flying off the dealer lots, as you’ve noted.

Pch101: The Big 2.5 have no history of plowing their profits into building better cars. Reducing costs will do absolutely nothing to help the business if the products and branding are not improved.

This is true, and others have noted this. But this is entirely different than saying labor costs don’t matter, or higher labor costs don’t put a company at a competitive disadvantage.

If (and that’s a pretty big “if”) the Big 2.5 use concessions to improve the product, they will reap the benefits. If they use it to buy up more companies, line executives’ pockets or increase the dividend…they shouldn’t have bothered.

As you noted, past performance isn’t too encouraging. Merely saying “we need a 30 percent cut in labor costs” is not enough.

Of all the companies, I hold out the most hope for Ford, because Mullaly is an outsider who is at least asking the right questions, and demanding answers when they aren’t immediately forthcoming. Plus, Ford has historically had a better relationship with the UAW than GM or Chrysler.

I’m a little late to the party today.

Way back we were in the Ford studio reviewing headlamp mockups for the 2000 Taurus with a VP – can’t remember the name. Anyway, some jackass in the studio was using a Sawzall to cut up a fender or something right next to the buck. You can imagine the noise level.

We absolutely couldn’t hold a conversation. There was probably $5,000/hour worth of management there screaming trying to hear each other. The VP asked the guy to stop sawing, and though I couldn’t hear the response I’m sure it was “Pound salt.” Some lackey had to actually chase down the direct supervisor of the Sawzall guy to get him to come over and tell the guy to stop.

The guy could have put the saw down anytime without re-percussion. He was just being an unbearable prick. I’ve spent 20 years in the business. I wish the proportion of guys like Mikey to the “other” was higher.

As far as management egos, etc. A totally different VP at Ford walked into the studio and tore up my latest project waaaay after the freeze date, violating all of Ford’s own procedures/processes. Of course timing is shot. So one of the lackeys says “Looks like we’re going to prototype tooling.” So Mullaly’s going to have to sell something else to find the $1 million+ this arrogant prick VP just cost the company. Unbelieveable though not a new thing. See the comments above about the best way to add cost and trash quality.

At any rate, tomorrow is my last day in the industry. GM, Ford, Chrylser and the UAW can all burn. There’s plenty of blame on both sides. I’ll watch from a distance. All future comments will come from an offical outsider.

If this was true, the Chevy Aveo, built in South Korea at lower wage rates, would be a superior car to the Japanese-built Honda Fit. But it isn’t.

The consumer is willing to pay thousands of dollars more for a Fit, which generally retails at MSRP and is in short supply. Meanwhile, the Aveo is currently being dumped with a $500 rebate, even though it is already the cheapest new car being sold in the US today.

The Big 2.5 have no history of plowing their profits into building better cars. Reducing costs will do absolutely nothing to help the business if the products and branding are not improved.

When they were generating record profits from SUV sales, they put the money into higher earnings and dividend payments, while neglecting their core products. There is absolutely no reason to believe that lower costs will result in better products, when their past actions indicate that they just don’t care.

No, not at all. It would be great if the UAW were to get into the Deming philosophy as well. They didn’t, and as far as I know, didn’t even try. But let’s be fair, it’s management’s place to invite Deming in, which they did, and management’s place to stick with the program (and it appears they did not)

I agree with you about the strike threat. It’s just as much a part of the problem. I may appear to be completely pro-union, but that isn’t the case. There are many legitimate criticisms of the union. But, imo, the union is only 10% of the problem, at most.

As for driving out fear, I would like to add, “give us our due or we’ll strike” to your list of quotes.

How does their high cost of healthcare influence their making some crappy products that not many purchasers want?

Only possibility seems to be that it limits spending on new decelopment. I think that is a stretch at best.

As always, TTAC’s posting policy prohibits flaming the site, its authors or fellow commentators.

You may disagree with the opinions on this site, but you may not launch ANY personal attacks.

The truth is the wages and benefits were negotiated, and if the UAW are better poker players, so be it.

The other reason for the arument is that some focus on short term profitability (mixed with a great deal of envy and schadenfreude ) while others focus on the long term, which primarily means increasing (or at least stemming the loss of) market share.

The big 3 all had Deming in to show them how the Japanese do it, but they don’t seem to have stuck with the program – at least not to the same extent. Deming was practically a Diety to Toyota.

Management might force some real concessions, and eventually they might even get labor costs in line with the transplants, but that won’t change declining market share because, as has been pointed out on several threads, Camcords cost more than Malibus and Fusions (and Fusion is made in mexico so the profit for unit must be healthy) yet people ante up for them.

One of Deming’s 14 points is “Drive out fear”. It’s clear from the “We’re going to close the plants and eliminate your jobs” talk (even if it’s mostly just talk- or maybe not) that American management just doesn’t get it. Quality won’t improve by offshoring, especially to a country like China where the concept of quality seems compeltely unknown.

Watch for the big 3 to continue loosing share, no matter their costs.

Whose standard of living? The auto workers or the union bosses? Forcing the compnay you work for into bankruptcy, generally doesn’t help your financial situation.

This is about as true as the outcome will be Sherman.Also look for 2 tier wage agreements to take place at G.M.Anyone hired after the ratifaction of this contract will top out at a certain amount.Regading a retirement plan for new hires would rest squarly on their shoulders.PSP-401k,ect.

The days of paying yard laborers,janitors & general sanitation (machine cleaners) are out the door.At least the rank and file holding these positions.

One last thing,one of the main reasons why all domestics are ailing in N.A.is health care costs.We could all argue over the contracts that hold these companies responsible for this section of benefits,damn the uaw or damn the companies.Whats really important is that each side(union & company)find a way to rationalize and implement a cure,one beneficial to the companies while still giving decent coverage.

Most people I know are not covered by a non-payment deduction regarding health care.Annual increases are passed to the person and often they explore coverage outside of that offered by their place of employement.With that said,I’d be willing to give up more of my hourly wage toward healthcare concrning the new contract provided they keep coverage as is for all retirees.

What we really need to look at is the situation of health care cost.I’m not convinced universal health care is the be all end all,but its probally better than what we have.Its important to remember that the domestics cover more people in the U.S. with health care than anyone else minus Medicare/cade.Is it to much for our industry to receive help from the govt.?

The reasons that the comments always spiral into a “who’s to blame” debate is really very simple.

1. If you read a newspaper report about how the US economy is in bad shape, which is more productive? Saying “Oh look, the US economy is shrinking. Right, who won last night’s football match?” or “Oh look, the US economy is shrinking, I blame the outsourcing of jobs etc”. One is trying to isolate and solve the problem, the other is being apathetic.

2: Everyone here feels passionately about cars and don’t want to see GM/Ford/Chrysler go to the wall. Nobody reads these sites because myspace.com is down for a while! You read this site because you’re crazy about cars….or just plain crazy! ;O)

3: In this case of the UAW Vs the big 2.8, it’s gone into a who’s to blame situation very logically. One side (like me) says “Why should the UAW make concessions when management have done more to damage the company than the UAW?” and on the other side people are saying “The UAW are going to kill the big 2.8 through their greediness”.

In reality, all of these editorals of this nature are about who’s the blame. What other reason is there? Now had this been a review about a car and it sparked this kind of debate, that would have been illogical.

P.S. Have I taken Daro’s comment a little too seriously…….? :O)

@ Captain Tungsten, It was a rhetorical question…

Since everyone is only mentioning the high level management salary vs company performance issues, I thought I'd rant a little about their other shortcomings.

How about how they are completely incapable of making a plan and sticking to it? You want to add cost and quality issues to a vehicle, try making a major change to the towing capacity, shock damping, tire/wheel combo, fuel economy target, etc, etc a couple of months before launch.

They take a laissez fair attitude to management, hoping their reviews of various 1 pagers on critical issues, seeing tracking matrixes full of green boxes, and instituting 10 layers of paperwork and lower level managment to get through to get anything done means everything is on track, then when they finally evaluate the vehicle and find it not to their liking they expect to be able to change anything and everything at the last minute withouth compromising timing.

Meanwhile, the change control process runs with wreckless abandon, programs are staffed lightly and hardly paid attention to until crunch time, engineers spend more time taking out the excess cost added due to late decisions and rushed design changes and firefighting than preventing the same cycle from repeating, minor issues are beaten to death while elephants raom free, compromise after compromise is made to achieve some set in stone goal that suddenly changes, suppliers are squeezed so hard they simply crumble, and Mark Fields lives in Miami.

If these guys were more involved in the day to day, and I'm not saying they have to be in tune with every issue, they would realize the reality of their decisions or indecisions.

If they were car guys, understood the market, and had some vision they could lay out a plan for a vehicle, ie. platform, content, specs, budget, timing, supply chain, where to share parts with other vehicles, etc. and flush out most of the design issues virtually or with component and system level testing, build prototypes reasonably close to final design level and test them, and then freeze the design and actually have a high quality product in showrooms in 2-3 years rather than 5-7.

It is just easier to ignore the sweeper. If he (Boston) were to even say something to him, he could be written up and that is a HUGE hassle with the only real consequences being for Boston. The UAW are just not accountable.

I have had conversations with people in union relations positions and I do not envy what they do; if you have the opportunity,talk to them, it is serioulsy depressing. And your views on the UAW will never be the same again.

Come on people, that is what they are in business to do. Now if long-term gain is sacrificed for short-term returns isn’t that really their problem…

Yes, some the blame SHOULD be aimed at the international traders that don’t adjust demand for the wood to decrease the depletion of the resource they depend on for profit (management), but the wood cutters (union and their members) are no less to blame for going into increasingly bare forests to chop down the few remaining trees without planting new ones or rotating cutting areas to allow fields to mature…sustainability is as important to the UAW as it is to the manufacturers..but I doesn’t seem that way.

If the UAW’s goal is to protect their members for the long term, they should be communicating the magnitude of the coming disaster to their people and let them know…when the trees are gone, there is no more wood to sell.

Toyota et al are not gonna pick up the slack and allow these folks to maintain the levels they’ve become accustomed to..and I imagine that even the scaled down rates they can negotiate with the domestics will still be much better than they can expect in a world where the big 2.8 are spoken about in the past tense.