Let's assume the new 2008 GMC BlunderBus sells at 50K USD and costs perhaps 40K. If labor is 10-15%, that is about $4K to $6K. The loaded labor cost variance, Toyota v GM might be about 30% (or more), which is about $1200 to $1800 more per car. When you also include the millions of retired family members getting "free" health care, you might get up to $1000 additional costs, totaling 2000-2800 additional costs per BlunderBus.
Looking at my prior post from Mark Steyn, that cost just about equals the total difference between making a marginal profit and shipping money with each BlunderBus. While this is not a rigorous analysis, it is about correct in explaining why Toyota can make a marginal profit and GMC is losing on each car shipped at the moment.
Given the disaster in the entire market (euphemistically referred to as the "credit crunch"), the total unit costs are much higher at these very low volume levels. While the labor might be the same per unit, given that a shift is reduced, the plant overhead remains high, loading each BB with more "fixed" costs than planned. This is an absolute killer. No one can operate successfully in this market, only the strong and fleet of foot will survive.
A careful reading of these posts will evidence considerable angst against W for failing to allow markets to operate as they will, rather than federalizing the auto companies and their decisions. Hardly pro-W. Mostly pro-market.
People who wish to disrupt market-forces and make political decisions based on false or idealistic theories always claim these are "special times" that require "special actions". Like FDR's nationalizing of "make-work" government jobs, nothing got better until the war stimulated proper investments in production and services. We won the war and our investments were seen as wise and long-lasting. Germany lost the war and lost their investments of almost a generation.
Like it or not, the blessed Union Management and Corporate Management have both hitched their wagons to anti-market political forces which will fail and be seen to fail by any rational beings other than the in-the-tank media who are hell-bent upon "helping O'Bambi succeed" at any cost to their honor, honesty or OUR fortunes.
It has NOTHING to do with pro-W and much to do with anti-W. Like McCain, he had an opportunity to do the correct thing, but just couldn't live with the thought that the media would blame him for a while.
News flash!... the media will blame him for everything anyway, so go and do the right thing. But, too late. Gonna' be worse and harder to fix.
If there is not enough business in the USA for the big 3, why are the Japanese so successful? Have labor costs and frozen work rule buy-outs and automation conversion speed NOTHING to do with unit costs? Give me a break, Sonny.
GM, FORD and Chrysler have been playing nurse-maid to Detroit's and Michigan's dem party politics since WWII. Go play a round of golf at the UAW's country club for me. The automotive industry must change big-time. THe UAW isn't going to allow it and Pelosi isn't going to allow it, but would rather all their members starve to death first, right down to the last card-check.
i watched it happen at TWA & Eastern. i watched it happen at PATCO, except Reagan cut their "toes" off at the pass. He didn't mind being unpopular, either with the FAA, Congress or Gorbachov. He MADE things change. These wimpy poll-sycophants can't change squat, except down-hill and off-the-road.
If you think only we have tough financial times, take a look at Belgium:
http://uk.reuters.com/article/UKNews...4BJ0XL20081220
Hopey Changemas.
Costs, margins and Change.
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