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[MrKLUKE]

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[wm3798]

It would be a good idea to show this to everyone who thinks that "bailing out" Detroit is a bad idea...

Lee

[Chris333]

I'm having problems playing the video.
It started playing, but with an echo like two videos were playing so I closed it out. Now it won't play at all for me.

[asciibaron]

i wonder what my great uncle would have to say - he was in charge at Sam Rea when he retired on 31 March 1976.

-Steve

[asciibaron]

It would be a good idea to show this to everyone who thinks that "bailing out" Detroit is a bad idea...

not sure i follow - what about this correlates to 3 the auto makers in need of assistance?  Toyota, Honda, and BMW don't need bailed out, they make cars in the US. 

-Steve

[wm3798]

Union Pacific, Burlington Northern and Santa Fe didn't need bailing out in 1974 either...  But what would their fortunes have been if they couldn't move anything at all to or from Pittsburgh and New York?

The auto industry is very much interdependent on a vast network of suppliers.  If the company that makes cup holders for GM, Chrysler and Toyota suddenly can only do business with Toyota, it's going to effect the cost and availability of each cup holder.  Multiply that concept over the thousands of parts that go into each car, and you start to see how fragile the whole thing is.

Just like PC, the Big Three are being strangled by antiquated work rules, inadequate facilities, a seismic shift in their markets, and an onerous set of federal regulations.  (PC had to deal with the ICC and a 100 year old rate system, the auto industry has to deal with the EPA, safety equipment mandates, insurance industry standards... etc. etc.)  And just like the PC, it has glimmers of hope, but is hampered by the albatross of plunging sales and the resultant lack of money to make the necessary upgrades.

The bottom line is, if a huge portion of an industrial sector isn't healthy, it doesn't take long for the illness to spread.  The collapse of the American steel industry is a good example of what NOT to do.  While our engineering expertise was rebuilding the industry all over the world, usually with our money through vehicles like the Marshall Plan etc., our industry was left to work with plants that were 50 to 100 years old.  Again, you had a few glimmers of hope like Burns Harbor, Indiana, but by and large we've ended up with moonscapes like Youngstown and Bethlehem.  A little Federal investment here and there might have altered the fate of our steel towns...

Lee

[asciibaron]

The bottom line is, if a huge portion of an industrial sector isn't healthy, it doesn't take long for the illness to spread. 

so free market capitalism is bad for business?  PC needed bailing out because it was failed from the start, then they were forced to eat the NH and that only exacerbated the problem.  sure the Northeast lost a great deal of manufacturing, but you are forgetting that trains could not compete directly with trucking rates - that's where the business in the Northeast went - over the road.

the PC disaster is nothing like the 3 auto makers looking for a handout - GM has been on the ropes for years and MoPar was bought by Daimler as a way to gain distribution in the US for the Daimler products - you make a crap product, you go out of business, why is that so hard to swallow?  diversification is the key to survival - if you are a parts supplier and rely on a single buyer, regardless of the industry, you are at the mercy of that buyer.

maybe the system needs to fail for it to get better.  suckling at the government nipple is not going to fix the problem, PC is a great example of how that does not work.

-Steve

[wm3798]

You're looking at it completely backwards.

The problem isn't that the suppliers are tied to one customer, it's that they are tied to all of the automakers.  The loss of the Big 3 would CREATE the problem of having fewer customers, which would have the corrolary effect of decreasing production volume and competition, thereby increasing costs.

And the Penn Central wasn't the only factor in its financial woes.  They couldn't compete with truck rates because the government didn't allow them to.  Plus, it wasn't just the traffic that hit the road, it was whole industries in the Northeast, from textiles to steel, that started to evaporate.  Conrail became profitable because it was able to coordinate schedules to move intermodal back and forth across the northeast, not because it had lots of steel mills to serve.

If you look at the auto industry globally, you can lay a lot of problems at government's doorstep as well.  While we allow a very open market and you can buy a car from just about any point on the globe, the rest of the world doesn't work that way.  You can't sell a Chevy in Japan or a Dodge in Beijing without paying a hefty tariff, if at all.  In this case the problem isn't necessarily that our markets are too open... I believe that has forced the US manufacturers to build a much better product.  But when we can't play the game by the same rules overseas, the international builders have a bit of an edge, wouldn't you agree?

I believe we can be more competitive on the world stage.  From the products I've driven in the last 6 years, I'd have to say they're doing a much better job than say, 20 years ago, but I agree, there's more to do.

I agree whole heartedly that the US auto industry needs to reinvent itself in terms of products offered, labor relations, and technologies needed.  But given the global environment in which they operate, you've got to be blind to think that this will happen in a vacuum. 

There's no way in hell the Northeast would have gotten competitive rail service if it had to wait for private markets to fund it.  As we have seen, they are driven by emotion, most notably fear.  The fear mongers are already planting the notion that no one will buy a car from a company that's in bankruptcy.  If that plays out, then do we even have an auto industry to talk about?

I'm not sure I want to have to choose between a Volga and a Trabant next time I go shopping for a car...
Lee

[Ed Kapuscinski]

Lee, I agree on many fronts, but I must disagree with these two statements

I believe we can be more competitive on the world stage.  From the products I've driven in the last 6 years, I'd have to say they're doing a much better job than say, 20 years ago, but I agree, there's more to do.

They may be doing better than they were 20 years ago, but they're NOT doing better than their competition today. My friend test drove a Ford Fusion, Pontiac G6, and Saturn Aura (I know, it's mostly an Opel...) and ended up with an Accord. And she went to Kettering (GM University for those of you who don't follow Engineering Schools). It was an agonizing decision for her, but the financials (higher purchase price, but will actually have a resale value) didn't make sense for the domestics. Even more though, the "domestics" (although they were built in Canada & Mexico) were better than they had been, but couldn't hold a candle to the Honda (built in Ohio).

The main problem is that the GM management structure is an absolute cancer on the company. The place has a horrible corporate culture where excellence is punished. It's no surprise in that environment that mediocrity prevails.

And

You can't sell a Chevy in Japan

You can't sell a Chevy in Japan because the Japanese are used to much better cars.

[asciibaron]

You're looking at it completely backwards.

If that plays out, then do we even have an auto industry to talk about?

why do we need to have an auto industry?  to create jobs for suppliers?  seems Toyota is able to build cars in the US and remain competitive, why can't the older US based companies?  Market drives production.  the steel market changed so naturally did the production resulting in a loss of traffic for many steel roads.  Conrail reinvented itself, why couldn't PC?  it has more to do with poor management and bad ideas than it does with government control.

wouldn't the loss of manufacturers mean an increase in production at the remaining companies?  wait, i see the problem, over-production.  that is the price you pay for efficiency i guess, market saturation.  i blame the past 20 years of financial mismanagement in the households across America for the bulk of the problems.  living beyond their means had to catchup to them at some point...

but what the hell do i know, i'm looking at it backwards

-Steve

[wm3798]

Perhaps you're right.  Perhaps we should just retire to our Roman baths, marvel at our mosaics and eat peeled grapes until the Barbarians come down from Gaul and finish us off.

Then in 5,000 years we can start over with a nice tourist industry, and shuttle Chinese people around in buses to look at our historic ruins! 

I better add "Mud Hut" to my list of eligible designs for affordable housing...

Lee

[wm3798]

You're looking at it completely backwards.

If that plays out, then do we even have an auto industry to talk about?

why do we need to have an auto industry?  to create jobs for suppliers?  seems Toyota is able to build cars in the US and remain competitive, why can't the older US based companies?  Market drives production.  the steel market changed so naturally did the production resulting in a loss of traffic for many steel roads.  Conrail reinvented itself, why couldn't PC?  it has more to do with poor management and bad ideas than it does with government control.

And Just HOW did Conrail reinvent itself?  Explain that one without any reference to government assistance.  I dare you... I Triple Dog Dare You!!!

I would also argue that without the assistance of large piles of US dollars and a huge amount of US engineering "know how" during the reconstruction after WWII, those overseas industries would have died pretty quickly, causing a global economic crisis that would have led to another potential World War.  (Germany was pretty much smashed after WWI and left to its own devices, but that turned out just fine, didn't it?)

I guess our primary fault is we're too generous with our success.  We invent the steel industry, then show the world how to it better than we do...  Same with the auto industry.  What do we do for a living in this country anymore, other than sell hamburgers to each other?

wouldn't the loss of manufacturers mean an increase in production at the remaining companies?  wait, i see the problem, over-production.  that is the price you pay for efficiency i guess, market saturation.  i blame the past 20 years of financial mismanagement in the households across America for the bulk of the problems.  living beyond their means had to catchup to them at some point...

but what the hell do i know, i'm looking at it backwards

-Steve

Unfortunately, those textbook theories have few applications in the real world.  There's too many "Ifs" to be able to stand solidly behind your "therefores."

Lee

[Ryan87]

We invent the steel industry, then show the world how to it better than we do...  Same with the auto industry. 
Lee

The "modern" steel industry came from Great Britain. (Although I admit the United States wasn't far behind...)

And Just HOW did Conrail reinvent itself?  Explain that one without any reference to government assistance.  I dare you... I Triple Dog Dare You!!!

Comparing the modern auto makers to the bankrupt northeast roads is not a fair comparison, the large issue in the northeast rail crisis was saving the infrastructure, not the companies themselves.  Also when the government created Conrail they got something out of it (They owned/controlled the railway) It wasn't just a handout for the management to spend as they see fit. Besides the downward spiral comparison This is a completely different situation...

Personally I think what the US automakers need most is not money, but a fair playing field. Lee mentioned the Trade tariffs some countries have imposed. (China, Japan & the European Union for example) If the Us Automakers had the opportunity to compete in Japan (130 million people...) don't you think they would... The fact that The Asian & European Automakers have no real competition at home is a big help...

Unfortunately the entire country is going through a huge "economic correction", Eventually the cost of US labor will drop to the point that It's cheaper to make stuff at home again. rather then making it overseas and shipping it here. The way you speed that process up is by regulation of trade and imposing tariffs, but with the country so in debt to China that probably will never happen.

Ryan
(P.S. I'm one of those poor slobs that lost his job because of this "Correction")

[Ryan87]

More on topic the video is a interesting look on the dark side of the industry in the 1970's. Railroad media is usually directed to customers and investors therefore it's usually sugar coated focusing only on the positive. This paints a different picture and also gives more of a human perspective...

As someone who has always known railways as a thriving industry. I find this look into the past fascinating... No wonder people thought that railroads were done for...

Thanks for posting this Jeff

[DKS]

Personally I think what the US automakers need most is not money, but a fair playing field. Lee mentioned the Trade tariffs some countries have imposed. (China, Japan & the European Union for example) If the Us Automakers had the opportunity to compete in Japan (130 million people...) don't you think they would... The fact that The Asian & European Automakers have no real competition at home is a big help...

Actually, one of GM's biggest customers is China, who bought over a million GM cars last year alone (compared to US sales of less than 4 million). So, if it weren't for the country that has helped suck the US dry of manufacturing jobs, GM might have already gone belly up.

It's a really strange world.