There's been a fair amount said about the demise of GM & Ford, or to paraphrase Mark Twain has news of their death been greatly exaggerated? With IBM selling out their PC side to Lenovo, and another Chinese company's failed bid for Unocal 76, can US industry recover?
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Domestic
No problemo, american industry is just optimizing. Once you get rid of the cost factors like manpower, raw materials, finished inventory and real estate there's nothing left but profit!
Wondered about manufacturing, typically a manufacturer would work on 30%, the rep, 10%, WD, 25%, and the jobber, 30%. But these percentages start off from the bottom so an item selling for a buck, the manufacturer would earn a gross profit of 12 cents, the rep would gross 6 cents, the WD, 15 cents, and the jobber, 23 cents. The product cost is about 43 cents, in the event of a warranty or a return, the manufacturer had to burden the cost that would come out of his 12 cents, hardly seems fair while the guys further up the ladder were making 45% of the selling price.
In dealing with chains, very competitive, and had to work on 20% gross profit or even 10%, the retailer would gross over 50%. Point is, all the profit is not in manufacturing, but in retailing, so buying from a foreign country doesn't really make that much difference in gross national sales as manufacturing is in the bottom of the percentage chain so why even brother in manufacturing?
The urge is to go into retailing, but looking over a number of P&L statements, the bulk of the profits are going to the government and the bankers in taxes and interest. The bankers can be eliminated from the equation if you have the cash to put up your building, but if you have that kind of cash laying around, why even brother going into business? You would be better off to live off the interest. Another big bite off the profits are the cost of insurance, accounting, and legal expenses, good do the accounting yourself, but plan on at least a 17 hour work day. From the P&L statements I have seen, if you could just keep the sales tax you have to collect, would be a very worthwhile adventure not to mention the property taxes.
On the manufacturing end, have to put up with the EPA, DNR, ERA, OSHA, liability, plus all the other taxes and the city you are in expects a big cut of community development and may also have unions to deal with. But the biggest expense in any business is the government followed by the bank interest, then the legal and insurance costs. So why even fool with a retail business?
If you want to make the big money, start a government or become a banker.
Maybe that's why the business chatter these days has changed from "plastics" to "services". If you think about it, that's what the politicians have been doing for years - selling services. Now businesses are just legitimating what the government has been doing all along.
I don't think I'd want to be a Banker with the way people are living off credit cards, eventually all that interest is going to be unpayable after 30 or so years...I reckon the Banks will have to take these people's retirement plans...Low interest rates now, but the low rates don't apply to credit cards. People that pay the "Minimum Payment" are digging themselves a very deep hole...maybe thats the "plan" after all? Trillions in Retirement Plans...
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Lazy bum who lives off his wife.
01 BMW 530i Sport, 92 Porsche 968, 85 F150, 72 911, 08 GM SUV, 01' Ford Lightnin'
What every happened to cash deals for the best price? Just about every chain store in town has it's own credit card and will give an additional 10% off if you use it. Sooner or later, told my wife, we are going to be blackballed for paying the balance off each month. But we are saving 10% plus the cost of a stamp each time we use it and that is above the sale prices.
Our furniture and appliance stores offer zero per cent interest for the first year if you buy on time but won't give a cent off if you offer cash, that doesn't make the least bit of common sense.
Ha, don't offer cash to buy an airline ticket, every law enforcement department will be down your neck.
It sure does to the store, Nick.
For every one person who pays off their credit on time, there are many who dont and then they really get screwed on interest charges, making far more for the store than cash in the hand ever can.
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Never knock on deaths door... Ring the doorbell and run away, death really hates that!
I think Oldsmobile has brought "optimization" to the logical zenith....
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"Among the many misdeeds of the British rule in India, history will look upon the act of depriving a whole nation of arms, as the blackest."
~ Mahatma Gandhi, Gandhi, An Autobiography, M. K. Gandhi, page 446.
That's just the start. Chevrolet has to go for the same reasons Plymouth did. Then it's a tossup between Buick and Pontiac with cars like the Aztek making the choice easier. Gas prices should kill GMC and Hummer. Saturn has always been marginal. If there isn't a Cadillac hybrid pretty soon the company will be totally optimized.
What a bummer when your best american car choice is between Toyota and Honda.
Toyotas and Hondas rust out just as quick as domestic vehicles do with the Toyota SUVs and pickup trucks rusting out even much sooner than their domestic counterparts. I kept track of friends and relatives that traded off every two years and in a ten year period, paid more for vehicles than they paid for their homes. The automobile is not your second highest investment, it is your highest investment if you can even use the word, investment. After you drive them for a year or two, they are worthless.
With most of us 100% dependent on our private vehicles as our only means of transportation, they got us exactly where they want us. Ha, listened to those car talk guys last Saturday a woman called in for a recommendation for an older car she could buy for her son to fix up, they recommended an early 90's Volvo. Just a handful of transistorized parts would cost twice as much as what that car is worth. And dealing for parts from a Volvo dealer? Forget it. But all vehicles suffer that fate, no more complete fuel pump rebuild kits for two bucks, or a complete engine overhaul gasket set for four bucks.
Not only the cost of the vehicle, but the state gets into the act with high registration fees, high gas taxes plus the cost of insurance that has skyrocketed recently and now the high cost of the fuel to power the darn thing. And they are making vehicles today where even the most experienced mechanic can't repair them without access to way overpriced test equipment.
Am I painting a dark picture? No, that is the way it is and we are to blame, because, we as the consumer let it happen.
1990 Ford 150 4x4, poor paint job, ran like crap, had no power for a v8, brakes sucked and always pulled to the right. ABS chattered all the time Ford said this was fine. Door panels were make to fall apart and lets not forget the recalls on this vehicle.
95 Chevrolet Z28, I'll make this simple owned it 12 months and had it in the shop 11 times for expensive computer related issues and a water pump failure. If I would have had to pay for these repairs it would have cost as much as the car.
My Toyota does not have one bit of rust on it. So I guess we can apply the same reasoning as some have in the past when their homes were burnt down do to forest fires. Don't live where the vehicle is going to rust!
You guys waste you money on anything you want it makes no difference to me. But its not loyalty anymore to the American worker when buying US. Every dam part on a US vehicle is made outside the US anyway!
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For the most part, Toyotas and Hondas are more American made than most domestics. But I wasn't implying that the domestics were better than the Japanese cars, was more implying they all are consumer grade throwaway type products with a very limited life and super high deprecation rate. In other words, all passenger carrying vehicles are junk with some being a tad better than others. In any vehicle made for the American market the EPA and DOT are the chief dictators followed by the insurance companies requiring more engineering time to hack through these regulations than the actual design time of the component. That is how are vehicle market came out to be with dual standards for trucks versus the so-called car, both are passenger carrying vehicles, but with a different set of governmental rules, the truck class or SUV, far less stricter standards if that makes any sense.
The EPA couldn't care less about fuel efficiency and the car makers are more in a fashion war than building a practical to drive and maintain vehicle. But this is what the majority of the people want. Would be interesting if the public refused to buy a vehicle because it lacks a retaining ring for a compressor pulley bearing or an access plate to change a fuel pump without having to drain and drop the fuel tank. And not reason why cars can't run a million miles with just a few cents added here and there. The EPA also wants older cars off the road, perhaps the key reason for banning R-12.
You had a point?
I bought a 89 Olds Regency or 98 off my parents, can't remember model now. It had 130, 000 miles or more on it and really road and drove nice for a front wheel drive luxury car. Mom had it since new and there were very little issues with that car. But I don't think that car could be compared to an LS430. I'm sure some will jump on the cost of such a vehicle but I don't care what someone feels is too much to spend on a car. First I'm not running out to buy one and second I would prefer to spend $ 80,000 on a car that I can drive for 15 to 20 years then spend $ 30, 000 on a vehicle I have to take to the shop every month.
My Toyota is not perfect either, clutch is too small for my likes and the seat belts don't retract well. Bed could have used a thicker gauge metal. But Besides a break job and clutch plate this vehicle has been great for me. Opps, a couple oil changes also!
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Starting the day with a laugh, that's a good thing!
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