America and Manufacturing

Yes dropped a decimal point. Thanks for correction. I think 1.0 trillion is in Dollar face values instruments of their total 1.35 trillion reserves, but no one outside the CCP's inter circle really knows.

 

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74 thousand more US manufacturing jobs to go to go over seas ? (from only GM's actions):

" General Motors Corp. posted a fourth-quarter loss on a mounting deficit in North America and will offer buyouts to ALL of its 74,000 United Auto Workers employees in its latest effort to trim labor costs.
...
``It was a tough quarter in North America,'' Chief Financial Officer Fritz Henderson told reporters today in Detroit. "Volumes were down, and there was tougher pricing because we had a full incentive load for our pickups.''

The record $38.7 billion annual loss is the third consecutive ... Wagoner said overall automotive earnings are expected to improve this year as growth in Asia, Russia and Latin America as well as gains from the buyouts offset a U.S. slowdown.
....
GM {Global total} reported an adjusted profit of $64 million, or 8 cents a share. ... In North America, GM lost $1.1 billion, excluding some costs. ..."

From:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aUpkKaQkdS5o&refer=home

The US auto makers are in the process of closing their US plants (However, Toyot's still growing and sending more profits back to Japan, etc.) While building many new plants in Asia, especially in China and India's rapidly growing economies where buying potential of the populations is double digit growing every year (Chinese bought 18.8% more in 2007 than in 2006.) See the current issue (Jan/Feb08) of Foreign Affairs, free on line, for several good articles on China (plus Bill Richardson's wise comments on Iraq.).

P.S. As this is "good news" (for the Chinese, etc.) I would have posted this in Sandy's Thread "More Good News" but it is now locked.

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As ALL 74,000 are UAW union members, Sandy must think this is good news for both US and Asia. She has several times stated that the unions and "illegal immigrants" are the cause of US's economic problems - it does not have anything to do with "W" doubling the debt, starting needless wars, and giving big tax breaks to the wealthy who saved rather than spent them

 

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Poor design a few years ago - and still.

A large burden of retired workers still getting health care and pensions and the like.

High executive salaries.

 

In part because of the CEO's goals and first loyalities - as reflected in their much higher salary and "golden parachutes." Before a Japanese CEO would accept billion dollar severance compensation for destroying the companies profitability, he would commit "Harri Karri."

Attitude* and true goals / objectives makes all the difference. US CEOs are not dumber - just mainly looking out for "number 1" instead of the company. There are exceptions, of course. Steeve Jobs' salary from Apple is $1/ year (or was last time I saw it a few years ago.) He gets his real pay in stock.
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*Atitude stems for the culture. Unfortunately for the US, Sandy perfectly reflects much of the US mangement's atitude. I.e. "I got mine. If you can not get yours, then you must be stupid and lazy. It is your own fault you are poor."

 

True, but the corporate culture it reflects ("Get for number one as much as you can and customers et al. take the hind most.") is at least unconsciously understood by the assembly line worker too. E.g. So what if the weld he just made is sub par and will break in a few years - no one will then blame him. Thus, it would be stupid for him to mark it for repair - that would just be a mark against him too.

As I said before, US cars are losy because the management is not as interest in the company as in their salary and perks. This poor attitiude reflects all the way down to the janitor who only cleans the shop floor where he notices dirt. Why "bust his balls" if no one will notice? No one will notice that faulty weld. etc. All the way up from that janitor to the CEO's using the company plane to take his family (or perhaps his best looking secetary?) to Bermuda, for a "tax-deductible business meeting" of course. etc. The typical US company is rotten from top to bottom, compared to a Japanese one.

Once American was filled with craftsmen who took pride in their work - not any longer.

As more evidence that the problem comes down from the top, consider Apple. When Steeve Jobs was in charge it prospered, made good inovative products. When they let him go, Apple fell into a slump, lost ground, made nothing exciting etc. So Apple hired him back and now apple makes iPhone, iPods, sells music, etc. is exciting again. (Steeve set the style and attitiude of the company, he did not perssonally invent or design these new products. He is well worth his $1/year salary but unfortunately he is a rare exception in the US CEO club.)

 

This is a very subjective post that really has no means of being substantiated, especially as it attempts to blanket-judge American culture.

If this were true, then we'd being seeing absolute advantage by Japan, et al. in many other industries because of "greedy" US CEOs, but this is certainly not the case. Although i have not analyzed the specific market trends and government actions that have affected the automotive industry specifically, the reason that Japanese and other foreign imports are in higher demand is due to quality for one, which has nothing to do with "greedy CEOs" but simply a better business model, or better resources, or other factors. Yet it is mainly due to comparative advantage in japan for making cars that they are the better companies - they have a lower opportunity cost, and can better specialize in the automotive industry than can American companies. The other side of the story also relates to comparative advantage - the trend toward a more service oriented economy has run right along with the increasing trend in education, and it seems that the labor resource is better allocated toward those ends.

One reason not to be worried:

 

It's mostly unions. These auto workers earn an excellent living, retire by age fifty, and are supported for the rest of their lives by the company.

 

A better business model is exactly the point of having better CEOs. And Japan does not have better resources, and never has had them.

Most of the trouble from that was from health care (the pensions were investment funded).

And most of the trouble from health care came from the executives. The unions originally wanted union based health care ( expanding into a socialized system, in the theories of the union organizers). The steel and auto execs fought that, and kept health care for themselves - they actually wanted employer based health care, as a means of greater control, a tax deduction, and a profit center.

They got what they wanted - dependency on the employer for health care. Unfortunately, that's a very inefficient system - - - - -

They got burned.

 

Japan has a ton of resources, especially in the form of financial and physical capital. If you thought i meant natural resources, you are misinterpreting my intent, and failing to grasp the benefits of a modern economy. Japan has plenty of resources, mostly in the form of labor efficiency and in some cases yes, better business models, better CEOs does not mean CEOs who are less interested in profit. Some get paid better than others (saying they get paid better than they "should" is subjective) but they do their job. Besides, you are still blanketing an entire culture with your assertions, both American and Japanese culture simultaneously, without anything other than subjective analysis.

Health care is a huge cost for corporations, so yes, its inefficient - in many cases it costs more . But that is because the entire health care system itself is broken and is too dependant on insurance and indirect costs in the first place -theres alot more wrong with health care than just employer insurance.

Its not as if dependency on the government to provide insurance or even health care is an incredibly efficient system either, although perhaps its more "passionate".

 

Government provided health care (as in England, Germany, etc. for most of EU or Canada) is both cheaper and better than the US's IF ONE IS CONCERNED WITH THE GENERAL POPULATION.

If you are wealthy enought to go to the Mayo Clinic, etc for annual check up and care, then you have suprior services available in the US. (Or even in Brazil for that mater, as we have some very wealthy people too and a few very fine hospitals etc. serving them with the latest methods and equipment.)

There is one very important advantage that is often overlooked in discussion of private vs. a government system. That is the research capacity for noticing early the out break of some new disease, such as bird flew etc. The many separate and competing private care centers will have many dozens of cases before anyone notices, but the integrated single government system is quick to notice it.

For example, the out break of AIDs in SanFrancisco took years to be noticed and then only by officials of the Dept. of Health who pulled together the records of many different individual doctors about a normally rare form of cancer. If that out break had been in London due to "bathhouse activities" the British Public heath system would have automatically spotted it years earlier.

They routinely and periodically correlate diseases with behaviors in a very large integrated data base. - An interesting finding just emerged just last week, which I quickly told my wife about. ("Sexercise" helps your heart, you bones, EVEN GENERAL HEALTH, etc.)

One that emerged 40 years ago was that tea drinkers who add milk to their tea have significantly loweer rate of throat cancer. etc. The US system is totally incapable of noticing these smaller correlations. (I now drink my tea with milk.)