Economic Bad News
The most obvious news cited by the doomsayers is the GM layoffs. Well, all of the commentators repeat the mantra that nobody wants GM cars, because they are no good. It reminds me of Yogi Berra's comment on a hot nightspot: "Nobody goes there anymore-it's too crowded!"
GM sells more cars than any other company. Unfortunately, next year it may very well be in second place. It is saddled with extremely high costs; as, labor laws and contracts constrain it from doing what the Japanese have done: build plants in the old south, where unions have less power, wages and taxes are lower, and people are grateful and enthusiastic to work. Thus, the bulk of Toyotas and Hondas sold here are assembled in the south; and, the cost of producing the cars is less. And the younger workers cost less in pensions and medical. As far as quality, if you read J.D.Powers, the quality differences are tiny, and the cars with the fewest problems are often a surprise. The competition is intense, and American companies have improved quality and efficiency greatly, in the last bunch of years.
Today, many cars with foreign nameplates are not only produced here, they are manufactured by American companies for overseas manufacturers, especially specialty vehicles such as SUVs. Some people would be greatly surprised to find that GM or Ford built their SUV, even though it says Honda, Nissan, or I believe, BMW. Still, G.M. is like all old, large, mature companies: even when it adapts to the current demands, the public does not perceive their offerings as "cool." Of course, since it is so difficult to stop a freight train, many times the offerings are not so cool. And worse, when the company adapts, it often hurts its popularity with their older customer base. So, sometimes, there is nothing that quite works. Note the problems with Kodak, Xerox, and IBM. They are not substandard; they are just not of this generation, and their costs are too high. Also note that, although we are seeing the "creative destruction" of some of our revered giants, their decline is more than offset by the new employers, many from overseas. Note that the successful foreigners design, develop, and often engineer their products right here in the good old US of A. That is often a major key to their successes.
The bottom line is that the major media distort the economic picture greatly, as you know. My favorite is Jeannine Aversa, of the AP. If unemployment drops, she unfailingly says something like, "Although unemployment has dropped by x%, there are still..." etc.
She makes a sunny day seem like the perfect storm.
GM sells more cars than any other company. Unfortunately, next year it may very well be in second place. It is saddled with extremely high costs; as, labor laws and contracts constrain it from doing what the Japanese have done: build plants in the old south, where unions have less power, wages and taxes are lower, and people are grateful and enthusiastic to work. Thus, the bulk of Toyotas and Hondas sold here are assembled in the south; and, the cost of producing the cars is less. And the younger workers cost less in pensions and medical. As far as quality, if you read J.D.Powers, the quality differences are tiny, and the cars with the fewest problems are often a surprise. The competition is intense, and American companies have improved quality and efficiency greatly, in the last bunch of years.
Today, many cars with foreign nameplates are not only produced here, they are manufactured by American companies for overseas manufacturers, especially specialty vehicles such as SUVs. Some people would be greatly surprised to find that GM or Ford built their SUV, even though it says Honda, Nissan, or I believe, BMW. Still, G.M. is like all old, large, mature companies: even when it adapts to the current demands, the public does not perceive their offerings as "cool." Of course, since it is so difficult to stop a freight train, many times the offerings are not so cool. And worse, when the company adapts, it often hurts its popularity with their older customer base. So, sometimes, there is nothing that quite works. Note the problems with Kodak, Xerox, and IBM. They are not substandard; they are just not of this generation, and their costs are too high. Also note that, although we are seeing the "creative destruction" of some of our revered giants, their decline is more than offset by the new employers, many from overseas. Note that the successful foreigners design, develop, and often engineer their products right here in the good old US of A. That is often a major key to their successes.
The bottom line is that the major media distort the economic picture greatly, as you know. My favorite is Jeannine Aversa, of the AP. If unemployment drops, she unfailingly says something like, "Although unemployment has dropped by x%, there are still..." etc.
She makes a sunny day seem like the perfect storm.
posted by ~~Robert at
5.4.06
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