If you would like to read a sobering, well thought out editorial on the state of the Auto Industry and this Nation, check out Autoextermist.com. Read it and see if he hits the nail on the head.

http://www.autoextremist.com/current/

DeLorenzo is always a must-read for me. He's rarely wrong.

PS: Wow, what an important read.

Thanks Bill,

For the link to Autoextremist.com; it will become a weekly must-read. I concur that nothing short of a Mahattan Project-type commitment and real sacrifice will get us through this current mess.

A curious note. I just got back from 10 days in Los Angeles on a mostly-business junket. Most astounding was the lack of the expected, awful traffic jams at all times on their huge highway system. Weekday or weekends, it was a true pleasure to drive the roads, 'cause of the lack of traffic.

I've noticed the same lack of congestion even in my smallish town in South Carolina, and can only attribute it to current fuel prices. I'd like to think that perhaps we're finally starting to: Eliminate unnecessary driving; consolidate errands using an actual plan rather than making wasteful "onesy & twosy" trips; regard driving as a privilege instead of some (your God here)-given right.

Think of it of Darwinism for the Driving Public. On the one hand, it was awesome to get around so easily in the madness that is L.A., but it hurts to know that so many are really feeling the crunch.

Am I going to trade my '80 CDV daily-driver for a Prius or Smart Car? No, nor will I sell the '57 Roadmistress or '55 Bookmobile or any others out of some imagined fear for the state of our (multi-multi-billion dollar business) "hobby."

Not yet, as I don't know what to replace this lifelong passion with; thankfully, it's never been an "investment" thing for me, so the money's not the issue. But in the back of my mind (and it should be in all our minds), what's this going to do to our old cars?

At 51, I'm too old to start collecting stamps!

Regards,
TG

Bill, as I stated in an earlier post, this is all a plot which is now coming true.................we can't stop it.

I liked the tone; it echoed what a lot of non-interference types like me already strongly believe.

In other words, when we controlled our economy, we made our own oil, made our own cars, and the middle income earned (were not handed out) a standard of living the envy of the world. People who used to make auto parts, TV sets, tractors, and countless other things bought houses, put their kids through college and bought the other things people were making in American factories.

Now they watch their factories close and watch their jobs go to Bangladesh or Timbuktu. Meanwhile, their city, county and state looses millions of dollars in property taxes that results in closed schools and lower services. But, hey, I can get a new color TV for $188 at Wal-Mart to watch Jerry Springer on, so who cares?

Meantime, the banks, Visa and Mastercard have totally trashed the old concept of "live on what you earn" so that now people are looking for a government handout every time things get rough. Why? Because 80% of their 'lifestyle' is financed on borrowed money at 24% interest! Thank God for people like Dave Ramsey who are waking up this country before we all go bankrupt--charged on a Visa card, of course!

We trash our economic base with imports made by people making 80 cents an hour and act surprised when it pulls so many of our fellow countrymen down with it. Hmmmmm.......

Meanwhile, what are we worried about in the good ol' U.S. of A.? Our 'carbon footprint' in a non-existend Global Warming hoax that has school kids scared of trashing the planet if they don't recycle an empty soda can.

Now, to bring this on home to the auto industry, here's where we are, like it or not. Those middle income (NOT middle class; some poor people are very HIGH class) worked, saved, and now are or soon will be retired. GM, Ford, Chrysler, IH, Peterbuild, Detroit Diesel, former AMC workers and many more are expecting retirement income at a time when the companies are having to compete with a company overseas that has NO retirement benefits, and pays their workers about $1.45 per hour (the hourly rate at a factory in Mexico). If GM, Ford and the others can survive the next 20-30 years, they will probably come out of this stronger than ever. Their cars are as good as or better than anything made anywhere in the world, but they still have a huge cost disadvantage.

If we can get a level global playing field where our dollar is valued fairly against other currencies, and what makes us strong isn't used against us as if it were a liability, the auto industry, like the rest of the country, will do fine. Keep in mind that we fed ourselves, then fed the world. We also made our own stuff then taught the world how to make their own goods. Now if we learn to survive against competitors that (sometimes illegally) subsidize everything from the cost of tires to gasoline to medical care, not only will we survive, once again the world will copy us.

Live long, GM, Ford and Chrysler. Bring those jobs back home while you still can!

BINGO! Joe, before this thread gets pulled for a rant, that's the Key statement. That's what's destroying us............

We are living in exciting and somewhat treacherous times. Folks the world over still emulate and strive for the American Dream, which is a good thing. Growing up in the Rust Belt and seeing what has become of former great auto manufacturing centers (Flint, Lansing, even Detroit), I can't help thinking of how cyclical and cynical the world economy is.

There's little I can do to pump up GM, Ford or Chrysler (other than not buying a foreign car), so let's use our "hobby" as a bellweather. When NOS parts for Mustangs, Camaros and 'Cudas dried up, suppliers turned to overseas suppliers for NORS stuff. Companies like Year One and others would not be around but for those suppliers. Heck, the door handles, window cranks and more for my '55 Bookmobile all came from China.

If the number of vendors selling NORS (foreign-made) bits at Charlotte AutoFair (or Carlisle, Iola, Pomona, etc.) are any indication, those companies are flourishing even in these tough times. That's one area where we simply can't be beat...the old car hobby/business.

In Thailand last October on a business trip, we attended a CCAT* old car show where half the iron on display (out of 100+) was American; a huge '77 Continental Mark V, an early '60's Ford Econoline pickup, Corvettes, Camaros and a Shelby Mustang (all impeccably restored), greeted us. They love our cars the world over; just look at the state of the hobby in Europe.

Sure, there's lots to be done to level the global playing field, but as others have stated we have to take the lead and that means sacrifice along the way. I call it the "I Remember Mama" Syndrome; we can all look wistfully back to a time (pick your own) when America was king of all things, but nostalgic longing won't bring them back. We've gotten fat (literally) when the world is lean and hungry (and wants to grow up just like us), but competition has always been our forte.

C'mon, when people want to describe the ne plus ultra, the ultimate of anything, what do they say?
"It's a Minerva?" Or, "that's an Hispano-Suiza?" Nope, ever since the Thirties,
to a man or woman they say, "It's a Doozie!"

TG

(* Classic Car Association of Thailand)

He may be right but that train left the station generations ago. He is ranting about the results of decisions made in the 50s and 60s. It's way too late to change them.

There isn't much there that will stand up to critical examination. For example the guff about Detroit's pension obligations.

When those pension funds were set up around 1950 they were supposed to be fully funded. The workers paid half thru payroll deductions and the companies contributed the other half as a fringe benefit.The companies were entrusted with billions of dollars to invest, and the income was supposed to pay the pensions.

The workers who first contributed to those pensions in the 50s retired in the 70s and 80s and are practically all dead now. But the pension fund still has the capital and is now collecting the interest too.

Some of it was invested in the stock market when IBM was $2 a share. It's possible some of it bought Walmart at the IPO.

Where has all that money gone? What did they do with it during the great bull market from 1954 to 1969, and the even bigger bull market from 1982 to 1999?

How many auto workers are there left alive to qualify for those pensions? If the money was invested properly the pension fund should be so swollen with money they can pay those pensions with billions left over.

So where did all that money go? How can their pension obligations not be funded?

One more thing. American auto companies all have subsidiaries overseas. The work is done by foreigners, the pollution and other disagreeable aspects borne by foreigners, but the profits pour into the US in a golden stream.

The high paying, white collar managerial jobs are in the US and the grunt work is done overseas.

So while the foreigner gets to slave in a dirty factory for pennies the US gets the cars, the profits and the clean high paying jobs.

Talk about having your cake and eating it too.

It's nice to see this thread back. High pensions arn't only killing the auto industry, ask any Rhode Island taxpayer. Our state is in a financial disaster right now with close to a $500 million dollar deficit caused by high state pensions and handouts. Think about that!! This state is only 37 by 48 miles in size. How did this happen? Probably the same way GM, Ford & Chrysler were managed back in the day. Unions took care of the worker. Do you think anyone back then thought this would all catch up? The auto industry was selling big cars making big profits. They couldn't build small cars like their competitors were and make any money to pay all the perks. They had to sell Luxury cars and big trucks to compete. Now it's just anybody's guess what's instore for them. A friend once told me years ago, when America gets put into a corner, they'll come back kicking.............We'll see.

Who buys NEW cars? I bought a 1970 Pontiac Le Mans, a 1976 Ford F-150 and a 1986 Ford Station Wagon all NEW at the time. At 57 I can't see any NEW vehicle for the rest of my lifetime.

QUOTE
The workers who first contributed to those pensions in the 50s retired in the 70s and 80s and are practically all dead now. But the pension fund still has the capital and is now collecting the interest too.
UNQUOTE

# of GM retirees being supported by GM: 500,000 (as of March, don't know how many have 'died off' since then)

$ amount of GM's liability to medical costs: $46 billion

GM isn't exactly having their cake and eating it too; they are having to fund retiree benefits while they close factories, which cuts down on the money being paid in by the employees AND the profits that would have come from the cars and trucks they were making.

When those funds were set up, no one in the 1950s could have imagined prescriptions that can cost thousands of dollars, or a trip to a hospital emergecy room for a relatively minor injury that results in a $100,000 medical bill.

And of course, this is after Jimmy Hoffa used the pension funds for party favors......

The young who are not thinking about the future.

Good question Bob!

In the last 2 years, I have bought a 42,000 mile 1986 Chevy wagon for $4500.00, and a 38,000 mile 1981 Oldsmobile coupe (Thanks Earl) for around $6000.00. While neither or these cars would be considered fuel squeezers by the majority on this board (17-21mpg), I consider them very good buys. Anyone can work on them. Parts are readily available. In Virginia, property taxes are non-existent, and hey, because I'm a little older, there will be no payment book to deal with. Win, Win!

Someone mentioned yesterday, or the day before, about working closer to home to save commuting costs. Great idea. Better yet, start TODAY, stressing to your company owners how much more efficient their business would be if some of the better employees could work out of their OWN HOME. (My wife and I do this. We're lucky I know, but a tank of gas will last us near a month, because we commute NOWHERE!) Have you noticed how much daily work activities are almost all computer driven. Why are these people even driving everyday to work, when they can provide the same services from their own home?

As Bob said, buy used! You can name your own price on some models and save a bundle in the meantime.

Wayne

I don't think the answer to solving the current state of the auto industry is for everyone to stop buying new cars.
Also, sitting back allaying blame around like some farmer with a manure spreader does no one any good,
and creates a gloom & doom atmosphere.

How about some solutions, rather than endless carping; we all have opinions based on our own life experiences and eagerly share them. Wayne's situation is one of the bright spots noted here, and he's not alone by any means.

The brand new factory I visited in a Free-Enterprise Zone (filled with shiny new factories) north of Bangkok was no
Kathy Lee Gifford sweatshop, and to suggest that all foreign operations are filthy, pestilence-ridden deathtraps is beyond comprehension.

Hope is a four-letter word, too, but I'm not quite ready to pack it all in and head for the hills...
Should the time ever come, I wonder if Ted Kaczinski's cabin in Montana is still for rent?

TG

Bob, TG and others,

You have stumbled upon one of the secrets of many wealthy people; the financially secure don't buy assets that depreciate 35-55% in the first 12-18 months.

Read the book "The Millionaire Next Door" and ALL of Dave Ramsey's books to read about this in detail. And ALWAYS pay cash!

They buy good 2-3 year old used cars, often still with warranty, that have been well cared for but have also taken the majority of their depreciation!

Joe

When I bought my wife's Buick Century 4 years ago I took advantage of the poor resale value and paid cash. It's been a great car..........

On new vs. used I think it depends on the situation. We have bought both used and new; now I tend to prefer new with vehicles like SUVs or pick ups and used with cars. I agree with the math on depreciation and that is fine, but am leary of vehicles that may have been used to tow, plow or otherwise had heavy duty use. To me it pays here to pay the premium of new. We have also had imports and domestics, and think the US auto industry product is totally on par with the imports now. In fact, the technology, safety and low maintenance built into almost any new car now is taken for granted. Quality is not the issue, a sudden spike in fuel cost is of course, most of it. The industry is a popular target but it is only building what people want.

In terms of solutions, I think manufacturers can do a couple of things:

First, avoid the knee jerk reaction to downsize everything overnight. This will mean taking a longer term approach and standing up to pressure from pols or groups that want to do away with SUVs or discourage people from commuting certain distances, etc. Manufacturers build SUVs, pick ups, sports cars and higher end cars because people want them. Until very recently the Asian products have been steadilly growing in size to meet demand. Personally I love the ability to toss our people, stuff & large dogs into the Explorers and just go. Whoever creates efficiency with all vehicle choices without a substantial loss of performance or convenience will win the market. This is starting to happen with vehicles like the new Explorer Hybrid. Also, by keeping a full line up they will not have to scramble again, when a solution is found for larger vehicles and buyers rush back to them. The Big Three, especially GM were in this situation in the 80s, costly in the long run.

Second, US automakers should embrace American design and style, and don't try to emulate Euro or Asian design. Some of the more popular American makes have their own style. Who can mistake a Chrysler 300 or Cadillac for anything else? These cars sell well in part because they have an identiy just like those of the past. Taking chances like this on an identity beats trying to steal one with many buyers. This is also happening, examples include the GM Solstice/Sky or the new Dodge. The return of image cars that help the entire division is not a bad thing either, for enthusiasts or the manufacturers. They need to continue to build excitement and interest in their products. This is a little tougher for the domestics as the automotive media continue to seem biased against these companies (IMO), but building cars that cannot be ignored seems like a good strategy. Today, there are so many media outlets the "foreign must be better" drumbeat may be getting less important.

I hate to disagree, but I thought that column was very weak. The author seems to believe that the automotive industry is as important to the US economy today as it was 50 years ago. But it's not: it's an order of magnitude less important. Today our economic health is more about about computers and the services sector, not manufacturing. It's a new economy: We are richer as a nation than ever before, and the fact that our auto companies are in bad shape doesn't even really make a dent in that. That's how it seems to me, at least.

As for new vs. used: Isn't that all just supply and demand? Cars depreciate because people value new stuff more than used stuff. If more people value used cars more highly, the prices of used cars will go up and the difference in price between new and used will shrink. I've been looking at a car that drops in value only about 30% over the first three years of ownership: It's a pretty tough choice to decide between new and used given the warranty.

Without industry this country will cripple itself......it's already started. Sure you can set up a few import shops in this country and pay $15.00 per hour without any benifits, but you can also make that at a Wendys. I think once GM,Ford & Chrysler are finished, so is America..............

There's always the food industry, Bob. Our last chance at saving this country. Regardless of what some say, there's still a lot more capacity to produce more food in this country. There are many thousands of acres idled by government programs that can kick in at any time and take up the slack.

We have some of the prettiest corn crops I've ever seen in this part of Virginia this year, a good thing, since the ethanol lobby is planning on using a lot of it.

Like the tobacco industry that bought up food companies after their law suits, the auto companies will have to reinvest in other industries to keep afloat.

Wayne

We can take over again! In regards to the auto industry. Here are some problems, I have noticed:

1: Cost of new vehicles is very high- In years past people were able to buy a car and not have to wait 6 years to pay it off

2: There are no radical new designs- Look at a parking lot, everything looks the same

3: Comfort- Alot of cars lack comfort in general

4: Cost of living has gone up- People now have to work 2 jobs or husband and wife have to work just to make ends meet and barely pay the bills- In years past just the man worked and they had enough money for everything

5: Advertising slogans- Lack of a good advertising slogan or spokesperson (remember Chevy's Heartbeat of America?)

6: Lack of getting MPG news out- Everyone has been brainwashed to think that Honda and Toyota have the MPG yet, alot of their cars are no better than the big 3! Chevy needs to get the news out there that most of their cars get as good or better than the rice burners.


But the U.S. auto industry is screwed right now. My Uncle was let go the other day for financial reasons from his chevy/buick dealership after working there for 15 years and working for Chevy for over 50. And he was the top salesman at that dealership, he was also a fleet salesman. So, it shows me how bad the industry is, when a dealership cans most of it's staff and then their top salesman and fleet manager because of finances. Alot of the problem that Chevy has for an example is that alot of the dealerships were built from the 1920's-1950's before the advent of fwys. Alot of the dealerships are in bad locations because the fwys were built after they were built, so, the dealers are stuck in a spot that was a main road 70 years ago. Wheras the Toyota and Honda dealers are newer (1970's) After fwys came in.

I disagree. From an economic perspective, the real issue is what can we in the United States do better than what other countries can do given our labor costs and productivity. Over the long run, the manufacturing is going to go where the labor costs are low and the quality is high: that leads to lower cost products for everyone to enjoy. (I'm oversimplifying a bit, bit that's the basic idea.)

Our auto industry became the standard of the world because we used to make the best cars at the best price. If you no longer make the best cars for the best price, you're no longer going to be the standard of the world. But the auto industry is only one industry among many: it no longer is as important as it was decades ago. That's my take, at least.

Wayne, who's going to pick the crops, Americans, I don't think so.

Am I the only one who thinks that it is ironic to see American flag antennae and ribbons plastered all over cars built elsewhere? Are the owners missing something when they put the magnetic US flags on the backs of their Toyotas and BMWs???


Jim Eccleston
1961 Coupe de Ville
BATILAC
Standard of the World (at the time)