Are We on the Verge of a Massive New Vehicle Price Increase?

[rbattelle]

As I read about the horrible mess the North American supplier base is in, I can't help but ask "what's going on here?". Among the most highly-publicized doomed suppliers are Visteon (Ford), Delphi (GM), and Collins & Aikman (mixed). I would suggest the following reasons for the issues these companies are experiencing:



1. The cost of raw materials continues to increase, especially steel

2. Demands for cost cuts from OEMs



These put the suppliers literally "between a rock and a hard place". Of these, number 2 is the most sinister, as I think it most directly suggests a potential for quality cuts.



One other possible factor is the number of suppliers - are there too many? Certainly consolidation would give suppliers significantly more power in combating OEM demands for price cuts. But how would a massively consolidated industry reconcile with DaimlerChrysler's new supplier strategy (force them to openly compete for work)? What effect would such a system have on quality?



Of course, UAW demands for outrageous healthcare and pension benefits play a large part (the biggest?) in OEM demands for lower cost parts. The apparent lack of such massive supplier issues among import suppliers certainly suggests this factor is very significant.



As usual, I blame GM for most of the North American market's current woes. Specifically, I blame their rebate programs and their employee pricing scheme for creating the punishing demand for cost cuts at the supplier level.



Eventually, OEM demands for lower supplier costs will come to a head with raw materials costs. Actually, I think we're there now. Will the solution be a large jump in new vehicle prices over the next 3-5 years? Are we already seeing the beginnings of the jump (priced a MegaCab lately?)?



-Ryan

 

[Jeff H]

I think the next slow down in the economy will not be a recession. But flat out depression. The price we pay for moving jobs over seas. All we've done is create and support other countries economy.

Unions may be good in the short term. But eventually bussineses move to get away from the unions. There demands just makes me shake my head some times.

Then we have Iraq. Look at what we spent. Then look at what we got in return.

Then the disasters from the Hurricanes. To add the season is barrely half over.

I've been hearing this could be a tough winter. People are just begining to stock up on heating oil. Meaning diesel fuel prices will be going up and up till the cold goes away.

 

[rbattelle]

Unions may be good in the short term. But eventually bussineses move to get away from the unions. There demands just makes me shake my head some times.

General Motors has already announced plans to significantly increase Chinese manufacture of their components. I predict that we will see the majority of GM vehicles being manufactured in China within 15 years. Perhaps sooner, if the UAW continues their current track.



-Ryan

 

[SGrooms]

I have never in my life been a supporter of any union. My wife is in one only because we live in a state where they can force you be a part if you want the job.



Look back at history. I have a cousin that bought a top of the line Chevy pickup in 1975. Every option that GM offered at then for that truck including four wheel drive. His cost? $3500. 00



Move to today. That same pickup cost you 35,000. 00+. The main reason? Right or wrong, in my opinion, unions. A monkey doing a football can do some of the jobs that they are paying these people $35 per hour and up to do. You want to cut some major cost? Bust the union. Now and fast.

 

[HoleshotHolset]

Remember: Companies that have unions usually deserve them. Treat your employees like caged animals, and you get unions.



China is already becoming Westernized. There's over 30 Wal-Marts there and residents are starting to eat and behave like Americans now that they're earning more money as a result of all the chores we've handed to them.



Soon, they'll be fat and lazy just like us - their labor costs will increase... and then they'll be outsourcing to another newly exploited country. I'm thinking Africa will be next after China, but probably not in my lifetime.



I'd like to see each continent become self sufficient - there's no need to be sailing cargo ships all over the place and shipping jobs off here and there just because it allows for less expensive COGS (cost of goods sold). Greedy companies that are bottom-line driven are the root of all evil.



Matt

 

[cgoder]

Many of you guys are mislead about unions. In the constuction trades if your not running full steam ahead your out a job. Spend 5 years in school to receive a Journeymens card and produce quality work. Take away unions and we will all be making 6. 00 hr. The companies will still charge the customer big BUCKS.

 

[WadePatton]

Remember: Companies that have unions usually deserve them. Treat your employees like caged animals, and you get unions.



China is already becoming Westernized. There's over 30 Wal-Marts there and residents are starting to eat and behave like Americans now that they're earning more money as a result of all the chores we've handed to them.



Soon, they'll be fat and lazy just like us - their labor costs will increase... and then they'll be outsourcing to another newly exploited country. I'm thinking Africa will be next after China, but probably not in my lifetime.



I'd like to see each continent become self sufficient - there's no need to be sailing cargo ships all over the place and shipping jobs off here and there just because it allows for less expensive COGS (cost of goods sold). Greedy companies that are bottom-line driven are the root of all evil.



Matt

Well said!

 

[SGrooms]

Many of you guys are mislead about unions. In the constuction trades if your not running full steam ahead your out a job. Spend 5 years in school to receive a Journeymens card and produce quality work. Take away unions and we will all be making 6. 00 hr. The companies will still charge the customer big BUCKS.

I have a good friend of mine who is a heavy equipment operator in KC, MO. When he is not running a dozer on the job site, he is sitting in his machine. He was complaining one day because there was something he could not get done because of some manual labor that had to be done. I asked him why he didn't just get out of the machine and do it. His response? "That is labor's job. "



Even though it would have saved him time and the company money because he wouldn't have been sitting, he wasn't about to do it. You can't tell me that unions are the best thing to have in ANY trade. They are an organization as a whole that have outlived their usefulness.

 

[zstroken]

I have to speak up on the union issue, yes there are some issues, and they do seem overpaid. Mark my word the only reason you have the benefits you have today is because of the union. Unions make the non union shops give wage increases and offer health care. You honestly think that the big CEO would take care of you just cause he is a nice guy. Some of them might, but a guy that is dishonest enough to scam 140 million, lie to his investors, is the same guy that let you work for $3. 00 an hour in unsafe conditions. Or in the non union construction business, get a quote from a union supplier and a non union, I bet the quotes are nearly the same, but what you will see in the non union job, many times an unqualified person will be doing your foundation work, or framing work. I have been in union shops and non union shops it can be frustrating sometimes, but the union shops have the better skilled people, probably because of the training that the union forces management to do. The union shops have safer equipment, etc, etc. Like I said the only reason a non union shop offers a wage increase is because all of the help is leaving because they can get a better job at the union shop. The unions need to change and I hope they do. Keep a close eye on the Delphi situation, I think it's outcome will affect everyones pension(if you have one), retirement healthcare, etc, etc. I mean look at what the airlines have done, file bankruptcy and get out of billion dollar employee commitments and the top level brass still get the 100 million in bonuses and perks. We definately have a shaky economy on our hands and the exportation of jobs is a big reason. Everyone thinks healthcare is a safe industry. You lose company provided healthcare then who is gonna pay the huge medical bill that the hospital charges? Think about what you buy, if you can buy the american made label and there isn't a huge increase, pay the extra and get the american label.

 

[rbattelle]

You lose company provided healthcare then who is gonna pay the huge medical bill that the hospital charges?

By purchasing independent health insurance, just like you purchase auto or home or life insurance.



I didn't mean for this to turn into a union/non-union debate, but that's okay.



If the world would come to an end without unions, how is it that millions of people out there work non-union jobs and still manage to make lots of money and have great benefits? I am non-union. In fact, I work in a field that has never had any union of any kind that I know of. I'm well paid and I get excellent benefits. Why? Because my skill set is highly specialized.



Personally, I don't feel I'm entitled to health or retirement benefits of any kind. My employers' only mandates are to pay me a fair wage and provide me a safe working environment. Anything additional is just "bonus". Unions obviously have a different opinion.



Let's face it: Delphi's going under. They may drag GM with them, since GMs on-tap to do the bailout. GM will bail them out and the union will cry "victory!" as they blast another hole in their employer. Severely nearsighted. The old expression "don't bite the hand that feeds you" comes to mind.



The only place the money for the Delphi bailout can come from is our collective pocket (well, not US specifically, but GM car buyers). Our only hope is that someone buys up Visteon, Delphi, and Collins & Aikman and a few other big names and consolidates them into one massive company by leveraging the debts and strengths of each into a big healthy aggregate. Such a company would then have the power to stand up to suppliers. But the union makes such a scheme very difficult, and even if it succeeded at first there's a good chance the union would destroy it within a few years.



-Ryan

 

[bmoeller]

I have never in my life been a supporter of any union. My wife is in one only because we live in a state where they can force you be a part if you want the job.



Look back at history. I have a cousin that bought a top of the line Chevy pickup in 1975. Every option that GM offered at then for that truck including four wheel drive. His cost? $3500. 00



Move to today. That same pickup cost you 35,000. 00+. The main reason? Right or wrong, in my opinion, unions. A monkey doing a football can do some of the jobs that they are paying these people $35 per hour and up to do. You want to cut some major cost? Bust the union. Now and fast.

I don't like unions either. They had their place at one time, but not anymore.



The union is the main reason tha the Case-IH combine plant in East Moline, IL closed (my grandma worked there). They (the unions) were demanding more and more, and the plant was not not going to be able to be competative. They'd strike for seemingly any little thing. The plant was shut down.



My grandma was in the union for a little while but got out of it. She caught hell for it, from them, but she told them to FO.



What makes a union employee any more "special" than one that isn't, and doing the same work. What makes them worth any more than the other guy? One may have a little more training, but if they both are doing the same work equally well, what makes them "worth more"?



To me, they aren't. Illinois is a union state, and have met quite a few people who are part of one, or were before they retired. Some, but not all, are some of the laziest people I have met. They drag a job out, just because they can. We have a guy that is a family member of my boss. He helps us once in a while. He definantly has the union mentatility. If something is a little to much work, even if it isn't that big of a deal to do. (Like slipping a new belt on an auger, when all it takes is grabbing a pair of pliers and rolling it on. ) He'll just say F*** it, and go home.

 

[zstroken]

Well this will turn into a lengthy subject and I will not deny that there are lazy union people. Tell me why the non union caterpiller plant in lafayette pays better than the union plants. Because they want that plant non union, which is fine. I have no issues with that and I think that plant is probably more profitable as a non union plant, but they get their high wages because of a union plant set the precedent. Another example plant in greenfield indiana was having a union vote, they went across the board and gave every hourly person over a $1 an hour raise. Think that would have happened without a union present. I would like to know that field you are that is so highly specialized. Watch your independent healthcare premiums skyrocket and benefits decrease when companies start to pull away employee provided healthcare. Do you feel your skill is so highly specialized that noone else could do it? Not trying to insult, but my big message is if you can buy an american made product and it is just a few cents more on the dollar, then buy it. Look at the non union monger walmart, they want the government to pay the healthcare, think that isn't coming out of your pocket?

 

[Blue Ox1]

What I find funny is most people don't even realize most of their benefits because of unions ,you think most employers wanted a 8 hr work day or to pay overtime. I am union a union electrician and I will tell that the education I recieve that the non union person does not recieves is a big difference . I have seen the difference that contractors make charging union scale versus nonunion scale. Most nonunion contractors charge exactly what union ones do it's just that they can under bid the job by 3000 and get the job because they pay their men half of what I make and tell them that if that unions are to controlling. I will admit you do have your union dues and such but for the benefit of the additional pay increase far outweighs it.

Joe

 

[rbattelle]

Not trying to insult, but my big message is if you can buy an american made product and it is just a few cents more on the dollar, then buy it. Look at the non union monger walmart, they want the government to pay the healthcare, think that isn't coming out of your pocket?

Hey, we're on the same page here! I don't want socialized medicine at all! And I always buy American when it's possible.



I'm not clear on the idea that unions provide additional education. What's stopping non-union workers from taking additional training on their own time? And don't say "money" because education doesn't cost money... it makes money.



-Ryan

 

[Turbo Tim 1]

I have always worked non-union all of my life but have worked around the union labor at the power plants I have worked at while they were in construction. Last year I changed jobs, joined the union and life is good.



But to say the Union has better qualified labor / skills is BS, the plant I work at has twice as many people working there as any other I've worked at and has more unqualified people doing jobs they shouldn't. Probably 75% of the staff couldn't even get through the interview process at the non-union places I've worked in the past, and it's all because of seniority. There are guys there making $36 hour and if it closed tomorrow they'd be lucky to be changing oil at the Quick Lube for $9.



From what I've personally seen the crafts aren't much different either, now it's true unions have helped to keep wages and benifits up for non union shops but I think alot of times the unions think they are more important than they are and they end up costing people jobs. That's my 2 cents

 

[SGrooms]

Personally, I don't feel I'm entitled to health or retirement benefits of any kind. My employers' only mandates are to pay me a fair wage and provide me a safe working environment. Anything additional is just "bonus". Unions obviously have a different opinion.





-Ryan

BINGO!!!! Accountability... something the union has no clue about.



The unions that I have been around don't reward you for what you do. They reward you because of a contract. An example:



Our local phone company is union. The man that does the contract negotiations also happens to have a tie to my job. He has told us over and over there are people that he would like to reward with a bigger pay raise or bonus than what the others are getting, but he can't because of the union. On the flip side, there are people out there that don't deserve what they are getting and couldn't find another job anywhere else because of the work habits they have picked up under the union.



A dinosaur. Kill it and let it go by the wayside.

 

[DavidC]

Now that the union has been bashed pretty well, I think it is time to move on to management and CEO pay scales. Some of these takes a whole lot of vehicles/product/service to pay for.



Dave

 

[DHayden]

Price of healthcare is another big one. Hospitals charging $10 for a band aid. Is it the price we pay for "good" healthcare? I don't know about you but where I currently live it's like a 3rd world country for healthcare and this is a big retirement area with tons of clinics and a few hospitals. They file people in like cattle to get the bucks but don't "treat" worth a %$#$!



Any see where Starbucks is paying more for healthcare for it's employee's this year than they are paying for raw materials? I'm sure there are a few more cases like them out there and more to come.

 

[bmoeller]

SGrooms and DavidC-



Exactly.



As I said in my first post, the union prefered to strike and lose the jobs altogether, than work under their current contract and be heavy handed trying to get a "better" one. The union workers should be paid based on performance, not sinority.



I get paid by the hour. Have gotten a raise every year, and not because I asked for it. Health insurance has been offered, but I prefered to keep my own. I have been injured on the job once, that required going to the hospital for stictches, but my boss covered it. As soon as the doc was done sewing my hand up, I went back and kept right on running the combine the rest of the day, because I WANTED to, not because I was forced to. Sure, it hurt like a SOB after the local wore off, but didn't let that slow me down.



IIRC, GM already has a $1500 cost PER vehicle that is just benefits. Something is not right. I think if no employers paid for the insurance, and the emploees did (they wouldn't be running in for every little thing that really doesn't need to be looked at, saying "Hey, it doesn't cost me anything, lets go see the doctor. " Tes it does, you just don't see it. ), the healthcare costs would lower. Not to mention if the government would keep their fingers out of it (Medicare/Medicaid), that would help as well. WAY to much fraud.

 

[Blue Ox1]

I will agree there is laziness and poor work habits in every job ,union or not but I'll tell you what if I had to make a choice between Someone who served a apprenticeship for 5 years and worked in the same trade during that time to someone who just applied for the job and got hired because they are cheap,alot of times it goes back to you get what you pay for. I'm not saying all jobs are the same as far as UAW I'm sure their are some jobs you could train a monkey to do but I'm sure there are some that you can't . In my line of work they push craftmanship over quantity I can tell you from the botched install of eqipment that usually when it is done poorly and you look at who serviced the eqipment 9 outa 10 times it's a non union contractor . I'm not gonna say that all union are the same but the one I belong to they do take pride in their work and their are some pieces of crap that just float along and just get by but as a whole the union is a very hard working bunch and everyone is same ,no special treatment.

Joe