Oops

by Robert Farago

December 21st, 2008 6:32 PM

Island Chevrolet’s general sales manager doesn’t like transplanted products. (Yes, I know: any car on The Big Island is an import. But you know what I mean.) So James Severtson commissioned a Chevrolet Suburban-bodied monster truck to kill, crush and destroy a Honda Accord. On the first attempt, the Hawaiian Rebel blew a hydraulic hose and leaked vital fluid. The Honda was non-plussed. After several hours, take two. Wheelman Ryan Kepiki attempted to surmount a Hyundai Excel. The AP reports that “Kepiki drove over the cars’ hoods, destroying the windshields to the seeming delight of the rush-hour crowd. Severtson said the dealership had been planning the crush-fest for a while.” Appreantly, the Bush bailoutfest was a “happy coincidence.” “We’d like to send the message that the best way to support your country is to buy an American vehicle today,” Severtson said.

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Pch101 on Dec 22, 2008
When you buy a vehicle, the money doesn’t go to the point of final assembly, it goes to the company HQ, which then allocates money to each plant. This is incorrect. Pull an annual report, and it's very obvious that the money goes largely to the suppliers that provide the parts and assemblies, with another chunk going to the workers who do the assembly. Those locations with the factories get the lion share of the benefit. Automakers are low margin businesses, even when profitable. Most of the money that comes in the door gets spent on building the product. R&D is a relatively minor part of every automaker's spending, usually something less than 5% of revenues. It's a drop in the bucket compared to the parts and labor that go into building the vehicle.

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Bienville on Dec 22, 2008
Your implication is that vehicle costs don’t really matter, and don’t go back to the communities in and around a plant. That’s very, very wrong. Say the Chevy Impala stopped selling, the immediate impact would be people in Oshawa not getting paid because GM would stop employing them. Hence, it’s in the best interests of people in that area to buy as many Impalas as they can. If any of that were truly the case, then every plant that's making an unwanted vehicle would have been shut down already instead of making them for the sole purpose of collecting dust on dealer lots. Also, somehow buying a vehicle because it's made locally is somehow in one's best interests, but buying one due to patriotism (however misguided) is not? Should we prop up an Impala plant at the expense of a plant that actually makes a car people want and can help GM remain viable? Also wrong. There’s no queue of payment at a company that says certain people get paid first: it’s all dumped out of the HRIS in one big, nasty batch. Sorry, but several years in manufacturing suggests otherwise. Please tell us how product development and future engineering and design efforts get funded for new cars and updates of existing cars if those groups don't get paid first. How does the money get properly allocated if it's all dumped out in one big batch? If you think that by buying locally you’re supporting domestic engineering and other high-paying white-collar employment, you’re kidding yourself. White collar jobs pay less than union-shop blue-collar everywhere, with the exception of upper- & middle-management and certain very skilled positions, the bulk in engineering. White-collar administrativia is not where GM’s money goes. Well then please tell us where GM gets the money to pay the 200,000+ white collar employees on the payroll. I guess you believe that all of the money goes directly to the plants and the UAW, and the white collar employees are just paper pushers. Either that or you seriously underestimate the number of product managers, project managers, designers, engineers, marketing managers, analysts, accountants, etc. that it takes to run a high-volume manufacturing operation. Excepting production engineering, Ford and GM’s car engineering is offshore (GM-DAT, Opel, Mazda, Volvo, Ford of Europe, etc). Chrysler has more domestic engineers by percentage, but that’s not saying much, is it, given Chrysler’s line-up. Now you're being disingenuous. GM-DAT sells all of one low-volume vehicle in the US, and Opel has one rebadged vehicle here. Ford sells more Mustangs than Volvo sells cars, yet you're trying to convince me that Ford gets the bulk of their engineering from Volvo and Mazda? Please. Last I checked, Ford was the parent company for Volvo, and had a controlling stake in Mazda, not the other way around. Do you seriously think GM et al aren’t getting incredible tax breaks from the government? People in Ontario were screaming blue murder when GM. who just that year negotiated tax breaks, R&D grants and union concessions, published their plans to shutter Oshawa Truck. Ford got the same for Oakville Assembly, Toyota for Woodbridge, etc, etc. You have conveniently ignored the actual argument, and provided the 'well, they do it too' defense. The domestics generally don't get big tax breaks, because the breaks generally go to the production of new plants (which is what the foreign automakers are more likely to do), not the redesign of existing plants (which is what domestic automakers are more likely to do). Either way, let's take a look at the actual numbers: Ford/Oakville: $164m (while agreeing to spend $818 million of their own money) Mercedes-Benz/Alabama: $253m directly, $60m for training, and promises by the state to purchase 2,500 Mercedes SUV's. VW/Tennessee: $578 million KIA/Georgia: $324 million Sources: http://www.siteselection.com/ssinsider/bbdeal/bd041108.htm http://www.msnbc.msn.com/id/28239206/ Not to mention that foreign automakers use foreign workers and banks while stealing tax money to give to their home countries. The Toyota plant in Kentucky was built by a Japanese steel company using Japanese steel, and the financing was done by Mitsui Bank of Japan. All to make 'American' cars. I’m also in IT. But quite frankly I don’t care about some other poor bastard doing my job in Detroit. I care about the hundreds (thousands? tens of thousands?) of people who are directly or indirectly employed by local manufacturers. If I buy a vehicle not made in my local economy, I’m effectively choosing not to support it, and putting their, and my, livelihoods at stake. I can't think of a better example of the tail wagging the dog. Dell, AMD, and Apple are but very few of the examples of companies who have outsourced their manufacturing, call center, and other low-level functions so they can remain a viable entity by still designing and marketing products while having them manufactured and supported at the lowest possible price points. (You can argue that this is suboptimal, but it is beside the point.) You would rather pretend that the money go directly to your economy (which it doesn't) to save one plant instead of supporting the white collar people who can help ensure the company itself remains viable? GM can survive with engineering and design with zero North American manufacturing well before it could survive with manufacturing plants only.

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Michael Ayoub on Dec 22, 2008
"On the first attempt, the Hawaiian Rebel blew a hydraulic hose and leaked vital fluid." Wow. What an idiot. I hope his dealership fails.

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Dilbert on Dec 23, 2008

In communist China, back in their communist days, they made you buy shit you didn't want, couldn't use, and wanted to fold up and shit on. They made you buy it because it was made in China and they didn't let any imports in. Now if there is an American car that you want and fits your needs (Vetts come to mind, among others), and that's what you buy, good for you. You are getting the best car for your money while upholding capitalist principles. If you are buying something that is not serving your best interests, but you buy it anyways just because it's made in America; then you are doing yourself, your country, and the founding fathers a great disservice.

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