When your 'foreign' car isn't

[Cremazie]

Edmonton Sun Article

When I bought my first car, a Toyota Tercel, in Winnipeg in 1985, they were so popular there was only one left in the city. It was red. I snapped it up.

Two decades later, Japanese vehicles are even more popular. For the first time, Japanese automakers made more vehicles in North America last year than General Motors, according to a new Scotiabank report.

Faced with ongoing losses in market share, GM reduced its vehicle production in North America to 4.6 million vehicles in 2005. In contrast, Japanese automakers boosted their vehicle assembly here by 12% to 4.8 million cars and light trucks.

In 1985, when Japanese manufacturers were starting to produce vehicles in North America, and when I happily drove my spiffy Tercel off the lot, GM produced 7.4 million vehicles - 6.8 million more than offshore manufacturers with plants on this continent.

However, the gap has narrowed consistently since then, according to the Scotiabank report.

And while GM has announced plans to close plants and shed a significant chunk of its workforce by 2008, Japanese and other Asian automakers are expanding in North America.

Things look pretty bleak for General Motors. How could this happen to an American icon?

"By and by, they're going to run out of cash," says University of Maryland business professor Peter Morici, who flatly declares GM will have to declare bankruptcy. "They got fat and lazy and they negotiated overly generous contracts with their workers. If you pay people more money than they're worth, you're going to go out of business."

Including wages and benefits, GM workers make about $75 an hour, says Morici. There's also traditionally been a cushy no-layoff policy. "If they don't need a worker, they just get paid for playing checkers," he says.

Generous retirement and health benefits have also been bleeding GM dry, Morici adds.

But that wouldn't matter so much if GM made vehicles people actually wanted to buy. The Japanese automakers have the edge when it come to reliability and design, he says.

"They need radical change to shake up their bureaucracy, slim it down (and) design more attractive products," he says of GM.

The argument for buying domestic vehicles has always been that you should buy the cars your neighbours build and support the local economy.

Well, I grew up in St. Catharines, Ont., which has two GM parts plants (one is closing), and still bought an import. I liked the design, it was fun to drive and everyone told me Japanese cars were superior.

The experts don't disagree. GM vehicles are "mediocre," says Morici.

My Tercel was made in Japan but Toyota makes a significant percentage of its vehicles in North America now. So even if you pick an import, you're supporting the local economy.

"There's a myth out there that Americans can't get along without American-made cars," says Morici.

GM is in such financial trouble, it's losing about $6,000 a car, while Toyota is making money, he points out.

I drove my Tercel for 10 years and then bought another Japanese car, a cool Mazda Precidia in 1995. Soon, it will be time to car shop again. Since a relative works for GM, perhaps I should buy a domestic car this time. Er, maybe not.

"General Motors' future is becoming very questionable and you have to consider whether the warranty will be there," warns Morici. "If the union wants fewer factory jobs in the United States and Canada, it should continue to hang tough in its negotiations and all of its workers will be at McDonald's before they know it."

[ellives]

And somehow strangely Morici will still have his head up his ass when he's living off his tenure-based pension in retirement.

Edmonton Sun Article

When I bought my first car, a Toyota Tercel, in Winnipeg in 1985, they were so popular there was only one left in the city. It was red. I snapped it up.

Two decades later, Japanese vehicles are even more popular. For the first time, Japanese automakers made more vehicles in North America last year than General Motors, according to a new Scotiabank report.

Faced with ongoing losses in market share, GM reduced its vehicle production in North America to 4.6 million vehicles in 2005. In contrast, Japanese automakers boosted their vehicle assembly here by 12% to 4.8 million cars and light trucks.

In 1985, when Japanese manufacturers were starting to produce vehicles in North America, and when I happily drove my spiffy Tercel off the lot, GM produced 7.4 million vehicles - 6.8 million more than offshore manufacturers with plants on this continent.

However, the gap has narrowed consistently since then, according to the Scotiabank report.

And while GM has announced plans to close plants and shed a significant chunk of its workforce by 2008, Japanese and other Asian automakers are expanding in North America.

Things look pretty bleak for General Motors. How could this happen to an American icon?

"By and by, they're going to run out of cash," says University of Maryland business professor Peter Morici, who flatly declares GM will have to declare bankruptcy. "They got fat and lazy and they negotiated overly generous contracts with their workers. If you pay people more money than they're worth, you're going to go out of business."

Including wages and benefits, GM workers make about $75 an hour, says Morici. There's also traditionally been a cushy no-layoff policy. "If they don't need a worker, they just get paid for playing checkers," he says.

Generous retirement and health benefits have also been bleeding GM dry, Morici adds.

But that wouldn't matter so much if GM made vehicles people actually wanted to buy. The Japanese automakers have the edge when it come to reliability and design, he says.

"They need radical change to shake up their bureaucracy, slim it down (and) design more attractive products," he says of GM.

The argument for buying domestic vehicles has always been that you should buy the cars your neighbours build and support the local economy.

Well, I grew up in St. Catharines, Ont., which has two GM parts plants (one is closing), and still bought an import. I liked the design, it was fun to drive and everyone told me Japanese cars were superior.

The experts don't disagree. GM vehicles are "mediocre," says Morici.

My Tercel was made in Japan but Toyota makes a significant percentage of its vehicles in North America now. So even if you pick an import, you're supporting the local economy.

"There's a myth out there that Americans can't get along without American-made cars," says Morici.

GM is in such financial trouble, it's losing about $6,000 a car, while Toyota is making money, he points out.

I drove my Tercel for 10 years and then bought another Japanese car, a cool Mazda Precidia in 1995. Soon, it will be time to car shop again. Since a relative works for GM, perhaps I should buy a domestic car this time. Er, maybe not.

"General Motors' future is becoming very questionable and you have to consider whether the warranty will be there," warns Morici. "If the union wants fewer factory jobs in the United States and Canada, it should continue to hang tough in its negotiations and all of its workers will be at McDonald's before they know it."

[the_yellow_dart]

Man, this is FOG bait if I've ever read it.

[bowtie_dude]

I stopped reading when he compared General Motors to ALL of the Japanese automakers.

So GM builds 200,000 LESS vehicles a year than Toyota, Honda, Nissan, and Mitsubishi combined? O RLY? @_@

What a dip$h!.

[carstar]

who design gm cars?

[Newbiewar]

I stopped reading when he compared General Motors to ALL of the Japanese automakers.

So GM builds 200,000 LESS vehicles a year than Toyota, Honda, Nissan, and Mitsubishi combined?  O RLY?  @_@

What a dip$h!.

its still a first...

[carstar]

Man, this is FOG bait if I've ever read it.

yep i guess fog should be there soon

[ellives]

I try to help him out when I can.

Of course, one must consider the old rule: "Those who can, do. Those who can't, teach."

Hopefully I live long enough to see the day when foreign educators decimate the US higher educational system. This is the system that has increased tuition at double digit rates for over 20 years. It's also the system that has the same, with tenure "cushy no-layoff policy" he claims GM has had.

I only hope I get to see it.

Go GM!

Man, this is FOG bait if I've ever read it.

Edited April 6, 2006 by ellives

[mustang84]

Where the hell are they getting their figures from? The last I remember reading, GM doesn't lose $6000 per vehicle...more like half that.

This article is an exaggerated opinion piece without much substance.

[ellives]

Why don't we all send her email and ask her?

Her email address is: [email protected]

Where the hell are they getting their figures from?  The last I remember reading, GM doesn't lose $6000 per vehicle...more like half that.

This article is an exaggerated opinion piece without much substance.

[ellives]

Here's the Scotiabank article:

http://www.canadanewswire.ca/en/releases/a...6/04/c2099.html

Japanese automakers overtake General Motors in North America, says Scotiabank Economist

TORONTO, April 4 /CNW/ - Faced with ongoing losses in market share,

General Motors reduced its vehicle production in North America (Canada, the

United States and Mexico) to 4.6 million vehicles in 2005. In contrast,

Japanese automakers boosted NAFTA assemblies by 12% last year to 4.8 million

cars & light trucks, overtaking General Motors for the first time on record,

according to the latest Canadian Auto Report released today by Scotia

Economics.

The surpassing of General Motors by Japanese automakers is the

culmination of developments underway for nearly two decades. In 1985, when

Japanese manufacturers were just starting to produce vehicles in North

America, General Motors assembled 7.4 million cars & trucks - 6.8 million more

than offshore manufacturers with plants on this Continent. However, the gap

has narrowed consistently since then, swinging in favour of offshore

manufacturers for the first time in 2005.

"In recent months, both General Motors and Ford have announced plans to

close numerous facilities, eliminating roughly 2.4 million units of North

American capacity through 2008. We estimate that once these restructuring

initiatives are complete, North American capacity for the 'traditional' Big

Three will likely drop below 10 million units, down from over 12.5 million in

2005," says Carlos Gomes, Scotiabank's auto industry specialist.

In contrast, Japanese automakers (as well as other Asian manufacturers)

continue to announce expansion plans in North America. Scotia Economics

estimates that the assembly capacity of offshore manufacturers will climb by

nearly 40% through 2008, lifting Asian and European assembly capacity to

roughly 7.3 million units.

"All three major Japanese automakers are expanding capability in North

America. However, Toyota is the most aggressive. The company operated its

existing facilities at 117% of 'design' capacity last year, and plans to boost

its current 1.1 million capability to 1.81 million units by 2008," comments

Gomes. "Toyota is building a new light truck plant in San Antonio, Texas and

will add a new facility in Woodstock, Ontario. The new Canadian plant will

ramp up production in 2008, and will have the capacity to produce 150,000 RAV4

crossover utility vehicles."

According to the report, Korean automakers are following the Japanese to

North America. Hyundai began production at its new facility in Montgomery,

Alabama last year, and Kia Motors will follow in 2009.

"Despite rising North American vehicle output by foreign automakers, the

region is losing its global dominance in vehicle assemblies. We estimate that

by late 2008 - once GM & Ford's restructurings are complete - North American

assembly capacity will decline to 17 million units from the current

18 million," says Gomes. "At that point, North America will represent less

than 20% of world capacity, down from 25% of output in 2005, and more than 30%

as recently as the turn of the century. Asia - already the world's largest

vehicle-producing region - will be the big winner. Its share of global

capacity is expected to increase to 37% by the end of the decade, up from 34%

in 2004."

If domestic automakers follow through with current announcements,

Canada's share of North American output will drop to 14.2% from the current

15.5%. However, in an attempt to win a new product mandate and keep GM's No. 2

Oshawa plant open beyond the scheduled 2008 closure, autoworkers have recently

approved a cost-reduction deal that enables the facility to compete for the

assembly of the all-new Camaro. The Oshawa No. 2 plant is the fourth most

productive in North America.

Turning to auto parts, Canadian suppliers remain almost exclusively

focused on North America, and still rely on the NAFTA region for 98% of sales.

However, the industry should recognize that while North America will remain a

significant vehicle-producing region, restructuring initiatives are leading to

lower capacity. Furthermore, a significant shift is underway globally, with an

additional 20% expansion set to occur in Asia by decade end. China has emerged

as the world's fastest-growing auto market, with Thailand, India and Malaysia

also key destinations for auto industry investment. However, with a few

notable exceptions, Canadian suppliers do not appear to be tapping into this

overseas growth. For example, Canadian auto parts exports to Asia only totaled

$271 million last year - 1% of Canadian shipments, down 6% from 1997.

Looking at recent sales developments, purchases were mixed across North

America in March. Volumes rebounded in Canada, but fell below a year ago in

the United States - the first decline since December. U.S. passenger vehicle

sales fell 3% year-over-year in March, reducing purchases to an annualized

16.6 million units, from an average of 17.1 million over the previous two

months. Fleet volumes had buoyed U.S. sales in early 2006, but have now

started to subside, and retail activity remains weak - especially for North

American models.

In Canada, new vehicle purchases strengthened to an annualized

1.65 million units in March, up from an average of 1.56 million in January and

February. Last month's performance was the strongest since July, and reflects

some improvement in consumer confidence, following last year's sharp plunge

due to soaring energy prices in the aftermath of Hurricane Katrina.

Scotia Economics, part of the Scotiabank Group, provides clients with

in-depth research into the factors shaping the outlook for Canada and the

global economy, including macroeconomic developments, currency and capital

market trends, commodity and industry performance, as well as monetary, fiscal

and public policy issues.

For further information: Carlos Gomes, Scotia Economics, (416) 866-4735;

Stacy Morris, Scotiabank Public Affairs, (416) 866-6203

[mustang84]

This was the figure from Fbodfather's post a while back about how much GM loses per vehicle on average:

GM loses $2,331 per vehicle

That's quite a big difference from what Ms. Jacobs said!

[thegriffon]

Morici is a recent "find" by the media, due to some self-promotion oh his part. BM may like him, but he's far from an expert and seems to know almost nothing about GM. He should know better than to just believe the common perception.

[FUTURE_OF_GM]

WOW, Morici sounds SO anti-GM that you can see right through it...

I'd rip this article apart, but I have moral issues about shooting DEAF and BLIND fish in a barrel with an AK-47.

P.S. It's also easy to see where this authors bias lies... With her 'Oh so in demand' Piece of $h! (Seriously, these are the OLD imports that sucked) imports.

Probably the only reason why she got the last Tercel was because it was one of 2 Toyota sold in that town on that particular year. LOL.

See, this is what's wrong with the media.... WHERE did this idiot who is EXPLOITING GM's problems for his own gain, even COME FROM?!?!?!? She refers to him as "AN EXPERT" but I have yet to see any credentials.... And therein lies the problem, because people are TOLD that he is an expert and that his opinion is worth more than tits on a boar, they'll BELIEVE EVERY WORD HE SAYS.

Me, personally... I think we should take everyone like him out behind the barn analyze his thoughts first hand, if you get my drift.... But then, there'd be no media now would there?

[sciguy_0504]

its still a first... 

[regfootball]

there's a lot of journalists out there that will simply write and publish anything to create more news and therefore jobs in the media industry. This is simply another regurge piece with some shock value and the like. Thing is, everyone is jumping on the bandwagon writing pieces like this now.

There's too much media in the world and they just write repetitive stuff.

Maybe instead of cutting auto jobs and slashing pay, maybe we ought to cut about half of the useless journalists and media outlets in the world.

Edited April 8, 2006 by regfootball

[ellives]

People still buy from them - thus the reason they exist unfortunately.

there's a lot of journalists out there that will simply write and publish anything to create more news and therefore jobs in the meida industry.  This is simply another regurge piece with some shock value and the like.  Thing is, everyone is jumping on the bandwagon writing pieces like this now. 

There's too much media in the world and they just write repetitive stuff.

Maybe instead of cutting auto jobs and slashing pay, maybe we ought to cut about half of the useless journalists and media outlets in the world.

[sciguy_0504]

There's too much media in the world and they just write repetitive stuff.

That deserves to go into the sig.

[deftonesfan867]

I was on the phone last night with my g/f when i was reading this and explaining all this to her, she's not as big of an automotive enthusiast as I am, but hey she listens. I think spreading the word that articles such as this are full of errors and bias is important. She knows im a GM fan, but she also knows that I can't stand dishonesty and I will call GM and other automakers out when they make bad decisions. Our country may be based upon a free enterprise, but i'll be six feet under before I call ANY import company and american icon! LONG LIVE GM!

[regfootball]

That deserves to go into the sig.

damn, now I've been quoted twice in other people's signatures!

[Sixty8panther]

Wow... his first car was an 1985 Tercel!