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"German Auto Industry Facing the Abyss"


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http://www.businessweek.com/globalbiz/cont...1125_139397.htm

 

There is reason for this massive, general uncertainty: The auto industry is being assaulted on several fronts.

 

Sales are declining rapidly worldwide. If there is one thing anxious consumers can postpone, it is the purchase of a car. Economic crises normally affect one major market, which allows large car companies to make up for the difference in other countries. But this time the financial crisis is shaking North America, Asia and Europe at the same time.

 

Suppliers are likewise threatened. Banks have cut off funding for necessary investments. Some suppliers are already on the verge of bankruptcy. If the biggest manufacturer of rear-view mirrors or door locks fails, carmakers will be forced to stop production, and it will be difficult to quickly find replacements.

 

Tens of Thousands of Jobs at Risk

 

Providing consumers with financing is also becoming more difficult. Part of the reason VW, Audi, Mercedes-Benz, BMW and Porsche have enjoyed such phenomenal sales growth in recent years is that they have offered customers attractive leasing and financing packages. Now the carmakers' lending divisions must pay high interest rates to obtain the necessary funds on the capital markets, if they can borrow at all.

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Interesting point about the suppliers of auto parts. I hadn't thought about that until I read this.

The key here, I belive, is the same basic strategy that all businesses have to engage in right now: How to survive until the economy take the eventual upswing. Targets have to be reassessed and belts have to be tightened. There is revenue out there, albeit less. In running my business, I have to look forward enough to see where the revenue potential exists. Now that we are going to have a Democrat based government, my target may shift (to some degree) away from the business sector and towards government. That remains to be seen. My job is to be pereceptive enough to see it and flexible enough to effectively change targets when called for.

There are 3 basic paths of revenue: Low volume high price ticket sales (typically high profit), high volume low price ticket sales (typically low profit), and combination of the two. Auto companies (along with everyone else) need to reassess their revenue stream and adjust so that when one stream starts to shrink, shift the load balance to the other stream.

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Another reason to give our industry a break to get it over this tough time. Its happening everywhere

 

Absolutely. As long as that 'break' comes with a substantial reworking of their outdated and wasteful practices; most notably the union contracts.

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On a related topic, there was an interesting article in today's Washington Times.

 

GM won the European car of the year award, first time in 22 years. It edged out Ford, while both finished well ahead of the nearest competitors Alpha Romeo and VW's Golf.

 

Unfortunately, neither entrants are available in the US market. Either management doesn't think we would want them, or if they were to be sold in the US they would have to be made in the US at US wages, adding a few thousand dollars to the price and erasing their edge.

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Absolutely. As long as that 'break' comes with a substantial reworking of their outdated and wasteful practices; most notably the union contracts.

More likely, the American auto industry will have to face the reality that it just doesn't command that large of a share of the market anymore and will have to slash a sizable chunk of its operations, period.

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With record-breaking profits, I would think that the oil industry could help in lending a hand to the automakers. They can collude on the next gen of technology - since the writing is on the wall about petroleum - to insure they set the standard for alternative methods of automobile fuel going forward. This would in essence be a barrier to entry to other automakers since the first to market often sets the bar for others. Not always of course - notable exceptions are everywhere but if these two industries put their heads together and focused they could accomplish again what they did in the 20th century.

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On a related topic, there was an interesting article in today's Washington Times.

 

GM won the European car of the year award, first time in 22 years. It edged out Ford, while both finished well ahead of the nearest competitors Alpha Romeo and VW's Golf.

 

Unfortunately, neither entrants are available in the US market. Either management doesn't think we would want them, or if they were to be sold in the US they would have to be made in the US at US wages, adding a few thousand dollars to the price and erasing their edge.

 

Now I am sure Europe has strict safety and emmisions... Are they stricter than the US or on par? In 2007 a lot of US federal regulations did change... Make things stricter.

 

??

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Absolutely. As long as that 'break' comes with a substantial reworking of their outdated and wasteful practices; most notably the union contracts.

 

 

I talked to my step brother in Hamburg over the holidays. He said Ford has offered him $50K and $3150 a month to retire. He has right near 30 years in. He's at $28 dollars an hour. He said that they want to bring in $14 dollar an hour workers after some of the older ones retire. His brother was offered $100K plus a substantial retirement also.

 

ROCK ON UNIONS!!!! :devil:

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I talked to my step brother in Hamburg over the holidays. He said Ford has offered him $50K and $3150 a month to retire. He has right near 30 years in. He's at $28 dollars an hour. He said that they want to bring in $14 dollar an hour workers after some of the older ones retire. His brother was offered $100K plus a substantial retirement also.

 

ROCK ON UNIONS!!!! :devil:

Hopefully we can kill these evil unions and force everyone to work for walmart wages. Filthy workers!

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Hopefully we can kill these evil unions and force everyone to work for walmart wages. Filthy workers!

 

 

Because of his seniority he generally gets to pick the jobs he does. One stretch of a couple years ago, his job was to straighten/clean the offices of some of the "suits". Empty waste paper baskets, dust, things like that. $28 dollars an hour. :devil:

 

Even he admits that the wages are ridiculous.

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Hopefully we can kill these evil unions and force everyone to work for walmart wages. Filthy workers!

 

Or else work for the wages that the non-union auto makers in this country make, which I've yet to hear anyone complain about.

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Why are people bregrudging the workers?

 

Somebody has to do it... What is wrong with supporting a family on a nice stable wage? Is it jealously that people have to deal with?

 

Keep on racing to the bottom... Nobody will be able to afford the products that they make and we will continue on the path to two distinct classes.

 

The union worker is not detroying us... It is our petty jealousy and begruding nature that is "eating" us from within... "Our "evil eye."

 

What is wrong with working (no matter what people think of the actual job duties)... Supporting a family on a nice income?

 

Isn't that what it is all all about? Living better and family?

 

Is it so hard for a guy like Eryn to be happy for his family? I guess not. It sounds like a nice package... Now those workers can take care of their family... Do more things... AND LIVE BETTER... Again, isn't that what life is about? More power to 'em!

 

The Parable of

The Workers in the Vineyard

Matt 20:1-16 "For the Kingdom of Heaven is like a man who was the master of a household, who went out early in the morning to hire laborers for his vineyard. When he had agreed with the laborers for a denarius a day, he sent them into his vineyard. He went out about the third hour, and saw others standing idle in the marketplace. To them he said, ‘You also go into the vineyard, and whatever is right I will give you.’ So they went their way. Again he went out about the sixth and the ninth hour, and did likewise. About the eleventh hour he went out, and found others standing idle. He said to them, ‘Why do you stand here all day idle?’ "They said to him, ‘Because no one has hired us.’ "He said to them, ‘You also go into the vineyard, and you will receive whatever is right.’ When evening had come, the lord of the vineyard said to his steward, ‘Call the laborers and pay them their wages, beginning from the last to the first.’ "When those who were hired at about the eleventh hour came, they each received a denarius. When the first came, they supposed that they would receive more; and they likewise each received a denarius. When they received it, they murmured against the master of the household, saying, ‘These last have spent one hour, and you have made them equal to us, who have borne the burden of the day and the scorching heat!’ "But he answered one of them, ‘Friend, I am doing you no wrong. Didn’t you agree with me for a denarius? Take that which is yours, and go your way. It is my desire to give to this last just as much as to you. Isn’t it lawful for me to do what I want to with what I own? Or is your eye evil, because I am good?’ So the last will be first, and the first last. For many are called, but few are chosen."

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Why are people bregrudging the workers?

 

Somebody has to do it... What is wrong with supporting a family on a nice stable wage? Is it jealously that people have to deal with?

 

Keep on racing to the bottom... Nobody will be able to afford the products that they make and we will continue on the path to two distinct classes.

 

The union worker is not detroying us... It is our petty jealousy and begruding nature that is "eating" us from within... "Our "evil eye."

 

What is wrong with working (no matter what people think of the actual job duties)... Supporting a family on a nice income?

 

Isn't that what it is all all about? Living better and family?

 

Is it so hard for a guy like Eryn to be happy for his family? I guess not. It sounds like a nice package... Now those workers can take care of their family... Do more things... AND LIVE BETTER... Again, isn't that what life is about? More power to 'em!

 

The Parable of

The Workers in the Vineyard

Matt 20:1-16 "For the Kingdom of Heaven is like a man who was the master of a household, who went out early in the morning to hire laborers for his vineyard. When he had agreed with the laborers for a denarius a day, he sent them into his vineyard. He went out about the third hour, and saw others standing idle in the marketplace. To them he said, ‘You also go into the vineyard, and whatever is right I will give you.’ So they went their way. Again he went out about the sixth and the ninth hour, and did likewise. About the eleventh hour he went out, and found others standing idle. He said to them, ‘Why do you stand here all day idle?’ "They said to him, ‘Because no one has hired us.’ "He said to them, ‘You also go into the vineyard, and you will receive whatever is right.’ When evening had come, the lord of the vineyard said to his steward, ‘Call the laborers and pay them their wages, beginning from the last to the first.’ "When those who were hired at about the eleventh hour came, they each received a denarius. When the first came, they supposed that they would receive more; and they likewise each received a denarius. When they received it, they murmured against the master of the household, saying, ‘These last have spent one hour, and you have made them equal to us, who have borne the burden of the day and the scorching heat!’ "But he answered one of them, ‘Friend, I am doing you no wrong. Didn’t you agree with me for a denarius? Take that which is yours, and go your way. It is my desire to give to this last just as much as to you. Isn’t it lawful for me to do what I want to with what I own? Or is your eye evil, because I am good?’ So the last will be first, and the first last. For many are called, but few are chosen."

Sleepy time Bro.

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