If this keeps up I might have to buy back into GM stock !





If this keeps up I might have to buy back into GM stock !
Still quite the gamble. If it goes better than the broker fee's - I would take the profit right there.
After the price of gas going up "because it is the summer driving season" it will go up "because oil is being diverted to the heating season."
All GM has are giant gas guzzling monstrousities.
(Some people STILL don't find them big enough: - and yes, I realize they are Fords.)





^^^ not true actually ... but admittedly not very well publicized ...
My personal speculation is that this direction taken by GM to pony up cash and assist Delphi in resolving their bankruptcy is being done for the express purpose of eliminating future GM obligations to Delphi if (or more likely, when) they go bankrupt for a second (and probably final) time. GM has been investing big time in Chinese partnerships and, besides doing very well at building entire cars in China for sale in the Asian market, GM is also undoubtedly making valuable connections with dirt cheap auto parts suppliers. GM has already announced (if you read between the lines) that it is firing 500+ US based engineers and designers, with future design and engineering work being done via Chinese operations at a much lower cost, tipping it's hand in regard to its future plans to basically convert expensive US operations to primarily assembly work of imported components a la the US operations of Toyota.
This if GM can get clear of direct future obligations to Delphi in exchange for their 'helping hand' during the current bankruptcy, and if GM also has all of the necessary connections in place to produce and import equivalent auto parts from Chinese subdivisions/subcontractors for American made GM cars in the near future at say 1/3rd the cost of Delphi parts (i.e. throw Delphi to the wolves), then GM's production cost picture for American made GM cars would improve significantly. While this cost advantage might not directly correlate to Honda and Toyota, it would certainly be a leg-up relative to Ford and Chrysler. Then, should the US dollar go into the dumpster versus the Japanese Yen based on incessant Fed money printing (thus automatically increasing the US$ price of every car with Japanese components), GM could actually find itself in a pretty good position.
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Last edited by Melonie; 06-18-2006 at 08:12 AM.
Wow, looks like there's a "foreign" company or two that's actually more home-grown in design, supplies, and manufacturing than an "American" company.
^^^ Aint that the truth.





more stuff on GM fresh from the 'closet'
"We Heard ...
THAT General Motors has four plants in Mexico, but has secretly been building a fifth plant there. The global auto giant - facing enormous health and retirement costs in the U.S. - has been diversifying its manufacturing globally for years. Why the stealth plant? GM execs don't want to upset the UAW which recently cooperated with GM in a buyout plan for employees. Some 25,000 are said to have taken GM's early retirement plan. Meanwhile, Ford announced it is significantly upgrading its operations in its three Mexican plants."
You sort of lost me on that one, at least if you're referring to Toyota. Design and engineering are Japanese. High-tech or close tolerance parts are imported ftrom Asia. Easy to make but expensive to ship parts are produced in the USA, as are enough other parts for the entire vehicle to fall under the 50% American content tariff limit. Ironically, this also explains to some degree why GM and Ford are so apparently interested in Mexican plants ... because NAFTA parts count as American content. It would be a PR disaster to see future GM vehicles for sale in the USA taxed as 'imports' for lack of 50% American content, like the 'upscale' Japanese brands (Infiniti, Acura etc.)!Wow, looks like there's a "foreign" company or two that's actually more home-grown in design, supplies, and manufacturing than an "American" company.
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Last edited by Melonie; 06-18-2006 at 01:55 PM.
From Motor Trend:
"Japan's Honda Motor Co. builds its Accord car and its engine in Ohio. The U.S. government lists the car's domestic parts content at 70 percent. The equivalent car from General Motors Corp., the Chevrolet Malibu, is built in Fairfax, Kan. Its domestic content is 80 percent. Ford Motor Co.'s Fusion car is built in Mexico, using a transmission from Japan and an engine from Ohio. The government lists the Fusion's domestic content at 30 percent."
I read that Saturn's Vue uses Ohio-made Honda engines. I don't know how true that is. If it's true, it's amusing.
From Auto World, although it looks more like a Honda press release:
"More than 80 percent of the [Honda] vehicles sold in North America are produced in the U.S. and Canada, using more than 400 local suppliers. Domestic content of those vehicles exceeds 90 percent."





^^^ true, but Honda and Toyota's contracts allow them to use non-union North American subsuppliers ... GM, Ford and Chrysler's contracts not only don't allow non-union subsuppliers but they also force the choice of Delphi, Visteon etc. for a certain portion of parts purchases.
Mel, I just made a statement in response to a "GM goes to China" thought by you, got challenged on it, and so I backed it up in face of the challenge. That's all. I didn't really know that....
Wow, looks like there's a "foreign" company or two that's actually more home-grown in design, supplies, and manufacturing than an "American" company.
... would be interwoven by issues concerning union/nonunion, exisiting contracts/new contracts, legacy suppliers/competitive suppliers. I was just making a humorous off-the-cuff statement that, in light of what you said before and the article I mentioned, still seems accurate, at least to me.





sorry Jay, but this whole 'apples and oranges' argument which attempts to directly compare US operations of Honda, Toyota etc. versus US operations of the (not so) 'big three' is so far from being a level playing field that they might as well be in different stadiums so to speak. I didn't mean to blow off your humorous comment, but to some the subject is no laughing matter
In regard to Saturn's Ohio engines, it is my understanding that engine blocks are actually being cast and bored in America. However, the 'high value added' engine parts like crankshafts and camshafts are shipped in from overseas for assembly. Thus there is a major disparity depending on whether the Ohio engine's American content is officially measured by the pound, by overall parts count, or by the dollar of value added of the respective component parts. This is a typical 'game' played by foreign automakers towards the US tariff structure. In the case of the engine blocks, casting and boring them here adds to the American content, is cost effective versus shipping a big block of aluminum from Asia, yet doesn't involve a whole lot of very expensive very high precision machining equipment and very highly skilled labor as producing camshafts, crankshafts etc. would. Same principle applies to the use of American made oil pans and valve covers, nuts, bolts, hoses, clamps, belts, pulleys, manifolds. Ultimately, the majority of the 'value' (and cost) of an engine boils down to a few high precision components like crankshafts, camshafts, valves, pistons, and these are generally imported rather than produced in America.
Mel, sigh. I wasn't trying to compare much of anything, except to make a humorous point.
I read this:
"GM has been investing big time in Chinese partnerships and, besides doing very well at building entire cars in China for sale in the Asian market, GM is also undoubtedly making valuable connections with dirt cheap auto parts suppliers."
And responded to that, making a comment that would pass with my family, friends, casual acquaintances, and total strangers in idle conversation as mild and inconsequential humor:
"Wow, looks like there's a "foreign" company or two that's actually more home-grown in design, supplies, and manufacturing than an "American" company."
And look at what it hath wrought. It's like saying, "George W. isn't exactly the sharpest tool," or, "Isn't Bill Clinton quite the philanderer," and then getting a lecture on the value of one's President of choice.
I was specifically referring to Honda because they have a corporate philosophy - not a Japanese philosophy (they had to buck the Japanese system, in fact) and not an American philosophy, but a corporate philosophy - that I like. Same way that I liked the H-P philosophy before Carly took over and left a path of corporate destruction.
Thanks for the information, but since it's such a serious issue, I would note that your rebuttal is "Japanese companies do this or that" without specific linking to Honda's processes, thereby including them in the "cheating" by inference only.
I mean, if you do know for a fact that Honda buys its castings here and gets precision parts from abroad to take advantage of some per-pound formula (and don't just assume that because you know that it's done by someone somewhere) I'm all ears. But I'll also keep open the possibility that they're just better run and have smarter corporate processes.





well I do know for a 'hearsay' fact that the engine blocks are cast, bored and honed in the USA. I also know from the same 'hearsay' source that stamped metal parts like oil pans and valve comvers are made in the USA, And I also know from the same 'hearsay' source that crates with Japanese markings arrive twice a week containing crankshafts, camshafts, and other precision machined parts.
I assume the hearsay is rumors about Honda, since it's Honda we're talking about, and not Toyota, Nissan, or Mitsubishi, all of whom have U.S. plants.
A quick search, which is all I have time for now. From the :
"On the production side, the second line of the Alabama Plant, which manufactures the Odyssey and Pilot, is scheduled to begin operating at full capacity by the end of 2005. This increased capacity will help meet growing demand for light trucks. We are currently building a new transmission assembly plant in Georgia, which is scheduled to begin operations in fall of 2006. In addition, in spring of 2005 we began expansion of two facilities—the Alabama Plant for local production of new engine parts, and the Ohio transmission plant to accommodate local production of high-precision gears. In these ways, Honda is increasing the ratio of locally procured parts to further strengthen its flexible and highly efficient local manufacturing operation."
Based upon what I'm reading, not hearsay, GM is closing U.S. plants and shopping for more foreign content. Honda is opening new U.S. plants and upping its production of domestic content. It seems to me that if GM wants to outsource more of its production, we ought to be glad other companies are coming in to provide some domestic manufacturing and employment. But I'm admittedly unsophisticated about such things.





^^^ that depends on whether you happen to be a unionized worker or not ... if you are i.e. Delphi or Visteon or countless other subsuppliers to the 'big three', then GM outsourcing is going to take work away from your company. However, since Honda, Toyota etc are not 'locked into' using union made components, you're not going to be getting any work from Honda and Toyota who are undoubtedly using non-union lower cost American subsuppliers.
No, I don't didn't really factor in union versus nonunion jobs. My point regards American jobs.
Bureau of Labor Statistics:
"In 2005, 12.5 percent of wage and salary workers were union members, un-changed from 2004, the U.S. Department of Labor's Bureau of Labor Statistics reported today. The union membership rate has declined from a high of 20.1 percent in 1983, the first year for which comparable union data are available."
I should think that if your company lays you off because GM took away your contract but the company across the street just landed the big Honda contract, you're going to go where the money is.





^^^ I totally agree that this is exactly what is likely to happen. From the auto company's cost standpoint, Honda can probably purchase their US made components for 1/2 the cost that GM would have to pay ... with much of the differential stemming from non-union pay rates and benefit packages at Honda's US subsuppliers which are 1/2 the cost of GM's unionized subsuppliers. Of course from the auto workers standpoint, making a transition from a $60k+ union job to a $40k non-union job with significantly less generous fringe benefits is a bit more significant than just 'walking across the street'.
I do agree though that a $40k American job is better than no American job. However, there is a trade-off. When GM changes to ultra low cost offshore parts sourcing, it will result in increased corporate profits. Some portion of those profits will be paid to the US gov't in the form of taxes. On the other hand, Honda's corporate profits are realized in Japan beyond some US taxes, plus the US gov't will lose Honda's tariff income as their US made content rises. Also, in creating new jobs with American subsuppliers, Honda (through their subsupplier) has undoubtedly taken advantage of tax breaks, gov't economic development benefits etc. which cost US fed, state and local gov't's money in direct expense and/or forgone tax receipts. Plus the amount of income taxes paid as well as the amount of 'consumer spending' by that $40k American auto worker are VASTLY lower than the amount of taxes and 'consumer spending' of the former 60k+ auto worker.
Thus the net monetary impact on the US economy is not as simple as Honda provides new US jobs while GM is outsourcing them. It's entirely possible that the US federal, state and local gov'ts have collectively lost more tax revenue and spent more money on benefits in order to 'create' one new American $40k job than Honda's subsupplier's new $40k American job will replace.
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Last edited by Melonie; 06-23-2006 at 02:30 AM.
I'm having trouble following the logic.
GM outsources parts to another country; Honda buys its parts in this country. GM is better.
Given the option of Honda importing all its cars to the U.S. and keeping all the profits and jobs in Japan, but paying tariffs, or employing tens of thousands of Americans and sending a smaller slice of the dollar back to Japan, it's better for us if Honda stays in Japan.
When given the choice of a supplier that charges more or a supplier that charges less, Honda should pick the supplier that charges more so that it's competing fairly with GM.
I never said anything was simple. Of course, I also wasn't trying to dismiss every up side and pick out every theoretical downside of one particular company whose philosophy I don't like because .... well, I'm not sure why. What I said by implication was that it's getting harder to tell what's "domestic" and what's "foreign." And that's been going on for quite a while, in all kinds of manufacturing endeavors.





^^^ again I'm agreeing with you. However, there are two yardsticks in use at the same time ... overall economics and 'apparent' economics. The 'apparent' economics comes into play with lots of industries that federal and state govt's decide they want to attract - without regard for the indirect costs of the tax breaks and gov't benefits given to that company on taxpayers. A fresh example hit the news today in my local area, with the federal gov't and the state of New York spending an estimated 1 billion dollars in tax breaks and gov't benefits to attract Advance Micro Devices to build a chipmaking plant in New York which will provide 1200 'good' jobs. This translates into $833,000 in tax forbearance and gov't spending PER EMPLOYEE. Considering that the 10 year bond rate is now 5.2%, this is the economic equivalent of not building the new AMD plant but handing 1200 unemployed New Yorkers $43,000 per year out of the public coffers for the rest of their lives. Of course there is not a word being mentioned in mainstream media of how much tax money was spent or foregone in order to attract 1200 'good' jobs ... only the fact that there will be 1200 'good' jobs added to New York instead of in Germany or South Korea or wherever else AMD might have outsourced/expanded.
Granted this is an overdramatization, and granted that a new plant of this scale will provide spin-off jobs and extra tax revenue, but on the other hand the new plant will increase other gov't costs for infrastructure, services etc. Bottom line is that the overall economics are often quite different than the 'apparent' economics. A corrolary to this point is that the US federal gov't and the state of Alabama are spending hundreds of millions of dollars of US taxpayer's money to subsidize Honda to add X number of 'good' jobs in Alabama ... with a direct byproduct being the undercutting of 'better' jobs at GM, Ford and Chrysler (whom the feds have already stated they will not subsidize/assist).
If someone were to sit down and add up the net financial effect on gov't coffers of adding income tax on $40k Honda jobs at the expense of losing income tax on $60k+ GM jobs, plus lost Honda import tariffs, plus the cost to gov't coffers of tax forbearance and subsidies/benefits to attract Honda in the first place, plus the partial loss of tax on Honda corporate profits being shifted to Japan as well as the total loss of tax on corporate profits to GM due to whatever market share is lost to Honda ...
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Last edited by Melonie; 06-24-2006 at 02:39 AM.
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