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Future of US industry Pages: 12

Streeter on Fri August 26, 2005 8:45 AM User is offlineView users profile


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?

Import




&

Domestic



Bigchris on Fri August 26, 2005 8:35 PM User is offline

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!

NickD on Sat August 27, 2005 7:34 AM User is offline

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.

Streeter on Sat August 27, 2005 10:19 AM User is offlineView users profile


Quote
If you want to make the big money, start a government or become a banker.

Yeah, why do you think so many want to get into politics?

The above explains why so much is getting outsourced to get around govt regs & fight cost. But can a developed country survive without a manufacturing base? It might result in a nation's worth of chatroom dwelling cyber folk!

Bigchris on Sat August 27, 2005 10:31 AM User is offline

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.

meaux on Sat August 27, 2005 2:07 PM User is offlineView users profile

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'

NickD on Sun August 28, 2005 6:28 AM User is offline

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.

Karl Hofmann on Sun August 28, 2005 8:57 AM User is offlineView users profile

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!

bohica2xo on Sun August 28, 2005 9:08 PM User is offline

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.

Bigchris on Mon August 29, 2005 12:42 AM User is offline

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.

TRB on Mon August 29, 2005 12:54 AM User is offlineView users profile

Quote
Originally posted by: Bigchris
What a bummer when your best american car choice is between Toyota and Honda.

What really was a bummer to me was wasting hard earned money on Chevrolet & Ford products. I'll stick with my Toyota until the US can design a quality vehicle again!



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NickD on Mon August 29, 2005 6:18 AM User is offline

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.

Bigchris on Mon August 29, 2005 8:58 AM User is offline

Quote
Originally posted by: TRB

What really was a bummer to me was wasting hard earned money on Chevrolet & Ford products. I'll stick with my Toyota until the US can design a quality vehicle again!
Which US car are you remembering? I've purchased a dozen new american cars over my lifetime and I don't recall any that were delivered defect free or not needing "dealer adjustment". The first time that ever happened to me was with a Nisson Z-car.

TRB on Mon August 29, 2005 10:15 AM User is offlineView users profile

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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NickD on Mon August 29, 2005 11:53 AM User is offline

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.

Bigchris on Mon August 29, 2005 11:35 PM User is offline

Quote
Originally posted by: TRB

... until the US can design a quality vehicle again!
You missed my point. "Again" implies they did at some previous time. I was asking which quality US vehicle had you experienced previously that you were waiting for somebody to equal? What is your "gold standard" when it comes to american vehicles that you've owned previously? I couldn't think of any.

TRB on Tue August 30, 2005 12:08 AM User is offlineView users profile

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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Contact: ACKits.com

Bigchris on Tue August 30, 2005 12:31 AM User is offline

Quote
Originally posted by: NickD
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.
I think a major difference is how easy it is to decide you're looking at a piece of junk when you test drive a new American car versus a foreign brand. The cheap, ill-fitting flimsy plastic parts in a typical interior is a clue as well as the visibly poor welds in the door frames and trunk interior. That's if you can get past the mismatched, orange peel paint on the exterior. Given those things and interior padding falling off the doors, rubber pads detaching themselves from pedals, rattles in the dash, a floppy shift lever, one channel cutting out in the stereo, and the glove box door falling open or refusing to open you've probably got an American brand. The Japanese were leaders in recognizing the importance of a good first impression and minimizing dealer warranty costs and it shows in their success.

I think Europeans were always more into repairable car parts than the Japanese although I don't know where their heads are now. I lived in France during the late '80s for several years and the first option there was always repair if possible with replacement considered "unskilled" work. At that time you had to be able to correctly describe the effects of underinflated tires and improperly adjusted points to get your French driver's license! You could also fail the test by "riding the clutch" or by failing to shift into neutral and taking your foot off the clutch when you stopped for a traffic light. And who could ever forget the shims and color-coded parts that went into making the old VW beetle such a durable car.

Bigchris on Tue August 30, 2005 12:33 AM User is offline

Quote
Originally posted by: TRB
You had a point?

There, I took my hat off. Can you see it now?

TRB on Tue August 30, 2005 10:16 AM User is offlineView users profile

Starting the day with a laugh, that's a good thing!

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When considering your next auto A/C purchase, please consider the site that supports you: ACkits.com
Contact: ACKits.com

Streeter on Tue August 30, 2005 10:34 AM User is offlineView users profile


Quote
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.

That's a good example, or something like a Caddy CTS-V. Great car on paper and to drive, but, you would be taking a risk on whether it was a lemon or not, and the depreciation. The other bad side is the easy financing GM and Ford offer on trucks/big SUVs, especially to those with poor credit record. I heard one case where the guy was tied to the same model, just kept getting a Suburban without paying it off. Even the other dealerships in the area wouldn't touch him because of the credit risk. That can't be good business for GM in the long run, company subsidised easy finacing.

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