from . . autoextremist.com

Makes A LOT of sense to me . . . .


Rick Wagoner, GM. In an Op/Ed commentary piece entitled, "A Portrait of My Industry," which first appeared in The Wall Street Journal yesterday, GM Chairman and CEO Rick Wagoner gave a blunt assessment of where GM is with its recent cutbacks, what it needs to do going forward and more important, how Detroit's role in the nation's economy cannot be underestimated. There were many important points made in the piece, but we offer a select few worth noting. On global competition and manufacturing: "But competition and marketplace performance are not the whole story. To fully understand why GM and the U.S. auto industry are struggling right now, we have to understand some of the fundamental challenges facing American manufacturing in general -- challenges well beyond the control of any single company. There are those who ask if manufacturing is still relevant for America. My view: You bet it is! Manufacturing generates two-thirds of America's R&D investment, accounts for three-fourths of our exports, and creates about 15 million American jobs. And the auto industry is a big part of that, accounting for 11 percent of American manufacturing, and nearly 4 percent of U.S. GDP. Together, GM, Ford and DaimlerChrysler invest more than $16 billion in research and development every year -- more than any other U.S. industry. And GM, alone, supports more than one million American jobs." On health care: "So what are the fundamental challenges facing American manufacturing? One is the spiraling cost of health care in the United States. Last year, GM spent $5.2 billion on health care for its U.S. employees, retirees and dependents Â* a staggering $1,525 for every car and truck we produced. And the figure is going up again this year. Foreign auto makers have just a fraction of these costs, because they have few, if any, U.S. retirees, and in their home countries their governments fund a much greater portion of employee and retiree health-care costs." On legacy costs: "Some argue that we have no one but ourselves to blame for our disproportionately high health-care "legacy costs." That kind of observation reminds me of the saying that no good deed going unpunished. That argument, while appealing to some, ignores the fact that American auto makers and other traditional manufacturing companies created a social contract with government and labor that raised America's standard of living and provided much of the economic growth of the 20th century. American manufacturers were once held up as good corporate citizens for providing these benefits. Today, we are maligned for our poor judgment in "giving away" such benefits 40 years ago." On the abuse of the American legal system: "Litigation now costs the U.S. economy more than $245 billion a year, or more than $845 per person. That's more than 2 percent of our GDP. No other country has costs anywhere near this level. And the perverse thing is that, in many cases, the majority of courtroom settlements go to the lawyers and other litigation costs, not to the injured parties." On unfair trade: "Another major concern is unfair trading practices, especially Japan's long-term initiatives to artificially weaken the yen. A leading Japanese auto maker reports that for each movement of one yen against the dollar, it gains 20 billion yen in additional profitability -- or nearly $170 million at today's exchange rate. No wonder Japanese auto makers have noted their recent record profits were aided by exchange rates. And no wonder the U.S. trade-balance deficit continues to grow by leaps and bounds." And his conclusion: "Some say we're looking for a bailout. Baloney -- we at GM do not want a bailout. What we want -- after we take the actions we are taking, in product, technology, cost and every area we're working in our business today -- is the chance to compete on a level playing field. It's critical that government leaders, supported by business, unions and all our citizens, forge policy solutions to the issues undercutting American manufacturing competitiveness. We can do this. And we need to do it now." We have said repeatedly in the last few months that these same issues delineated by Rick Wagoner would become the focal point of the national political discussion in this country in 2006 - just in time for the mid-term elections. Anyone who thinks the issues facing Detroit are isolated and "won't affect me" is simply refusing to acknowledge reality. This country's lawmakers have been cruising along ignoring these fundamental issues for far too long now - and time is running out. As to be expected, Washington politicos are slow on the uptake and are just now realizing that the dire straits facing Detroit are inexorably linked to the overall well-being of the country and its manufacturing base. Yes, Detroit has contributed mightily to its problems in the last 20 years, but there's no denying that the playing field is far from level. As a matter of fact, it continues to be luridly skewed in favor of the import competition at almost every turn. You can expect Rick Wagoner and Bill Ford to speak out forcefully and repeatedly about these issues over the next 18 months, and you can expect this to become the dominant domestic policy discussion in this country. It's no longer just the future of the U.S. auto industry that's at stake here, folks - it's about how this country wants to configure itself for the future. The U.S. will either continue to be a vital producer of goods and services and a manufacturing force to be reckoned with in the world, or we'll be relegated to becoming one giant consumer nation with little or no control over the vagaries of the global economy - or our economic destiny.

 

I agree with some of the points, but you can't keep doing what you were doing 40 years ago. Also, I'd be more concerned with the chinese going forward, they are playing the same game with their currency. Face it, american manufacturing is in some pretty dire straits right now, and I don't see it getting any better. If the japanese or chinese do something to favor themselves, its nationalism, and needs to be respected, but if americans do it, its protectionism, and unfair. Bull. Other counties are taking advatage of us, and we need to take a long hard look at what is being done to reverse this ballooning trade deficit, otherwise we will be nation of consumers with service jobs.

:rant off:

 

Good read! He makes some very interesting and compelling points.

 

Those points are pretty solid. A very good read indeed. I for one agree that the playing field is very skewed.

 

Excellent article and offers some clear insight into the issues GM and Ford are facing.

Rob, what you stated isn't a rant but the truth. We have to stop viewing it as protectionism because all the other countries are going to take advantage of the skewed playing field to our own detriment.

 

Rick makes some good points... I do believe that trade practices in the US favour countries that set up shop overseas. Basically the shareholders make money, but the manufacturing industry is slowly eroding in north america.

 

Some good point are made there, particularly the fact that what's happening to the US auto industry is endemic of a larger problem characterized by outsourcing of jobs, manufacturing and technology, and a $600 billion (yep, billion) trade deficit. Yet there is an apparent unwillingness on the part of the US government to do much about it as they continue to spend money on things like an unnecessary war that's costing $1 billion per day and further crippling the U.S. economy; with no proof that it's done ANYTHING to stop terrorism...terrorism that kills less people in America per year than traffic accidents or smoking.

Meanwhile, the REAL threat - Communist China - continues to gain an economic foothold on the US...fixes its currency against WTO rules...and rapidly builds its military with technology stolen from the United States.

The Chinese (and to a lesser extent Japan) already own an enormous chunk of America, their investment held in government bonds.

So many of this guy's points are valid, though this public plea really does reek of "please help poor us" desperation. It tells me they are in T-R-O-U-B-L-E...

And I'M troubled by their continued unwillingness to accept the fact that for the past 30 years they've been building cars that people don't want to buy - with subpar quality and reliability. Where was this guy's statement on THAT?

Or the big $4 million fat-cat payout that what's-his-face just got?

What GM needs is a strong Leadership Strategy of the kind Carlos Gosen brought to Nissan a few years ago; it worked wonders. Unless they adopt that IMMEDIATELY, all the cuts in the world won't help, and GM truly will be filing for bankruptcy in two years.

They've GOT to weed out the inefficiency. Read below from BusinessEdge.ca: