Wednesday, March 28, 2007

Big Three, Big Losses: Declining Market Share


The Big Three continues to lose market share, 15 percentage points over the last 17 years to be exact (71.6% in 1990 to 56.6% today), see chart above. A 15 percent loss of market share translates to more than 2.25 millions vehicles per year that are NOT being produced any more by the Big Three.

That loss of market share also translates into huge losses by the Big Three: Ford lost $12.7 billion in 2006, GM lost $2 billion in 2006 after losing $10.4 billion in 2005, and Chrysler lost $1.5 billion last year. Meanwhile, Toyota, Honda and Nissan continue to gain market share (almost double since 1990 to 33%), and make profits, see the comparison in stocks price above between Toyota (+150% in the last 5 years) and GM (-50% over the same period).

The current 4-year UAW contract expires in September, and negotiations for a new contract will soon be under way. In advance of the contract talks, 2,500 UAW members have just signed a "no-more-concessions" petition, suggesting they won't agree to pay any more of their own health care costs.

From today's Investor's Business Daily, "If the UAW isn't careful, it could kill America's Big Three. The union has made it clear that it will oppose the carmakers' insistence that workers have a larger financial stake in their own health care.

With Ford, GM and Chrysler projecting that they will pay $12 billion this year in health care costs for their U.S. employees, retirees and family members, that seems to be a reasonable request.

The UAW's golden era is over. Unless its leaders and members concede that it's been overtaken by economic reality and begin to act accordingly, the UAW will soon move into its rust years."

11 Comments:

At 3/28/2007 10:51 AM, Anonymous Anonymous said...

Look who's singing a different tune now that the impact of free trades appears to be hitting a little closer to home.

Alan S. Blinder -- Princeton University economist, former Federal Reserve Board vice chairman and perennial adviser to Democratic presidential candidates that's who.

Here's a small excerpt from today’s WSJ: Mr. Blinder, whose trenchant writing style and phrase-making add to his influence, remains an implacable opponent of tariffs and trade barriers. But now he is saying loudly that a new industrial revolution -- communication technology that allows services to be delivered electronically from afar -- will put as many as 40 million American jobs at risk of being shipped out of the country in the next decade or two. That's more than double the total of workers employed in manufacturing today. The job insecurity those workers face today is "only the tip of a very big iceberg," Mr. Blinder says.

For the full story go to:

http://online.wsj.com/article/SB117500805386350446.html?mod=todays_us_page_one

I suppose your opinion may depend on where you stand.

- Mark Harris, MBA student at U of M - Flint.

 
At 3/28/2007 11:22 AM, Anonymous Victor said...

Does anybody have any idea as to how the UAW would fix the problems? I have heard in the past that the "Big Two and Chrysler" and the UAW have been pressuring the government to step in and establish universal health coverage. How much is this going to raise the top 1%'s taxes? Is this the solution? If it is, how long can the "Big Two and Chrysler" keep losing money? Can they wait for the 5-10 years that it would take to get that ball rolling? Of course, during that same time, they are still losing market share. They are still paying retirees and employees’ health and benefits. They still have major problems with their suppliers. They still don't make decent money on a vehicle that is sold.

It is hard to see how the "Big Two and Chrysler" can survive, and the insistence that the UAW will not accept more setbacks all seems to portray a portrait of doom. One other thought, are the GM workers in Mexico supporting the UAW workers in the US?

I’m sure that McDonald’s is hiring… I would have said Wal-Mart, but this blog suggest that Wal-Mart has 300 jobs and 15,000 applicants per store...not very good odds of getting a job there.

 
At 3/28/2007 2:36 PM, Anonymous spike said...

Umm... how about Universal Health Care that's not tied to your job? You know, like every other industrialized country? We waste our breath denouncing trade tarriffs and the like, and totally ignore the greatest trade subsidy the world has ever known, namely other countries' health care systems.
This, by the way, is why Health Insurance reform is on the table again; US Businesses want the taxpayer to pick up their Health Insurance costs. I fear it will be too late for GM and Ford, but please don't lay this at the door of the UAW. It's our whole system that is non-competitive in the world arena.

 
At 3/28/2007 3:03 PM, Anonymous Anonymous said...

The tax environment is a much larger % of the cost of doing business than the cost of labor!

If we were to move everything to sales tax today, imported cars would actually cost more than domestically produced ones. The same goes for many products.

I also invite everyone to compare the total executive compensation for US corps vs Japanese or even German companies. With upper management siphoning off up to half of the profit left after the government takes their 35% for 50 years now, there's not much left over for R&D or investment in new equipment.

 
At 3/28/2007 3:33 PM, Anonymous Bob Wright said...

The response to government provided health care in other countries is not government provided heath care in the U.S.[read socialism].

The response should be free market health insurance. That is, stop employer provided health care altogether.

Individuals can buy their own health insurance just like they do their home owner's insurance, life insurance, long-term care insurance and auto insurance.

Their is no longer a reason for people to get their health insurance through their employer.

Eliminate the corporate tax deduction for health insurance premiums and allow EVERY U.S. tax payer to deduct their individual health insurance premium.

 
At 3/28/2007 3:35 PM, Anonymous Walt G. said...

Your graph is a little deceptive; however, there's not a lot of room for description on the graph, so I understand the labeling. I think you’ll agree with me that the “Japanese” automakers are firmly entrenched in the US and have very American workers. In other words, they are a lot like us because they are “us.”

The days of using the transplants as scapegoats should be over. It isn’t some “slanty eye” person’s fault we are losing market share. The new “American” auto plants are here, they are staying, and we better get used to it. To think otherwise takes the focus off the important goal of producing quality cars at a price the consumer wants to pay. As a UAW member, I like to feel that we can compete with anyone if we put our mind to it. Don’t let the posturing of bargainers fool you; we know that we can’t get a piece of the pie if there isn’t any pie.

 
At 3/29/2007 2:03 PM, Anonymous spike said...

Hey, Bob Wright, I'm assuming you're the picture of perfect health, right? Otherwise, good luck finding health insurance in a "free market" system. Unless, of course, you want the government to compel insurers to cover people they don't want to, which lands you right back where you started, the slippery slope to Socialized medicine. You need a "pre-existing condition" to knock some sense into you, my friend.

 
At 3/29/2007 4:40 PM, Anonymous Bob Wright said...

Anyone with a pre-existing condition can get health insurance today from Blue Cross Blue Shield.

My sister has chrons disease [spelling?] and BCBS signed her up.

She didn't need socialized medicine to get health insurance.

 
At 3/30/2007 7:54 PM, Anonymous Used Car Loan Insurance Guide said...

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At 4/01/2007 8:00 PM, Blogger http://www.autosavant.net said...

I disagree with your premise. GM is now on it's way back, albeit slowly, Chrysler is going to new owners, and who can say what their future is right now, and lastly, the only thing we're in agreement on is Ford's immediate prospects. Those prospects are very bleak.

 
At 9/09/2007 5:41 AM, Anonymous Anonymous said...

UAW VEBA IS A ROYAL RETIREE BETRAYAL


http://www.speroforum.com/site/article.asp?id=10043&t=UAW+betrays+autoworkers


While the rich get richer, American unions are betraying and sacrificing middle-class workers. A double standard for UAW officials, such as Ron Gettlefinger, and the rank and file will destroy the union from within.


In America the rich are getting richer, the poor are getting poorer and our middle class, which has always been the engine of our nation and the envy of the free world, are being methodically eliminated. Corporations, powerful unions and governmental forces are betraying and sacrificing middle class workers on the alter of corporate restructuring. They are viewing middle class retiree’s as disposable legacy costs. While these issues are far from being limited to the auto industry, this paper discusses America’s domestic auto industry relative to our retirees, our middle class workers and our manufacturing communities. All three are tightly linked together.

America has seen the tremendous benefits that can occur for corporations, communities and workers alike when workers come together as a united voice. That said, there are terribly confused top union officials today that have been traveling down the wrong road and inflicting irreparable damage to workers and retirees. Their misguided leadership is profoundly changing the definition of the union.

Negotiations are now officially getting under way to secure a new four-year auto pact replacing the one expiring in September with General Motors, Ford and Chrysler. The domestic auto giants have intensified their ruthless drive to further downsize the auto industry by shutting plants, slicing wages, cutting benefits, speeding up the assembly lines and moving production to low-wage regions. What does this mean for America?
……………… More at http://www.speroforum.com/site/article.asp?id=10043&t=UAW+betrays+autoworkers


VICTOR REUTHER 50TH ANNIVERSARY OF THE UAW RALLY 1987
http://michaelwestfall.tripod.com/id16.html

I want to thank you for working with Mike in organizing this event.
When I return to Flint I am coming home……………………..Applause………………..
And it is fitting that at this moment of history in our great union and in the history of this beloved country of ours that you should gather again here in Flint and provide a clear sense of direction and commitment to the greatest force that you have within your command that’s your union………………………………………………….applause……………………
There are some and unfortunately some in the U.A.W. leadership that suggest that Walter Reuther might be turning over in his grave at the thought of what his younger brother was saying these days.
WELL, LET ME SET THE RECORD STRAIGHT………….APPLAUSE………………….
IF THERE IS ANTHING THAT WOULD CAUSE Walter Reuther to turn over in his grave it’s the thought that General Motor’s is getting away with what they are doing today. ………………………………………………………..Applause……...Ovation…………………
I want to say so that it unmistakably clear that I don’t have to consult a deceased brother to know that what gm is doing is a betrayal to its commitment to its workers, a betrayal to the communities that has helped it prosper, and a betrayal of this nation………………………………………………….applause………ovation………………….
That should be made clear not only in union halls but in city councils and state legislatures and in the government of the United States……………………..applause……………………
This great nation that once held in its hand the freedom and the destiny of the people of the world because it was the arsenal of democracy is now having its industrial strength exported bit by bit …why ? To enhance the profits of private corporations.
There is no thought of the impact on the nation or the communities because their loyalty never extended beyond their own pocketbook. More at …
http://michaelwestfall.tripod.com/id6.html

 

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