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PostPosted: Wed Jun 09, 2004 7:41 pm    Post subject: US Auto Industry loss is auto buyers gain. Reply with quote

U.S. automakers in price squeeze
As expenses go up, they can't charge any more
June 4, 2004


The U.S. auto industry is facing the same dilemma that other troubled industries like clothing makers have for decades: They can't raise prices despite rising costs, a just-released comprehensive study shows.

Like those other beleaguered industries, automakers have to respond by continuing to send more work and jobs overseas, say experts.

Clothing and appliance makers have been dealing with overseas competitors for years and responded in the 1980s and '90s by moving work to low-wage countries like China, Taiwan or Mexico. Today, U.S. automakers are facing the most intense competition ever from foreign automakers like Hyundai or Toyota, limiting the ability of General Motors Corp. or Ford Motor Co. to raise prices.

While the cost of nearly everything from health care to food has gone up the last decade, the auto industry has been able to raise its prices by only 0.1 percent since 1994. By comparison, the price of personal-care products rose 10 percent since 1994; food prices rose 25 percent and college tuition prices rose 61 percent. Health care, a multibillion-dollar expense at Detroit's three automakers, rose by 43 percent.


Rogelio (ro-hel'-lyo)
07 Ody EX-L w/navi&dvd
The other cars...

08 Nissan Altima Hybrid
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PostPosted: Wed Jun 09, 2004 10:46 pm    Post subject: Re: US Auto Industry loss is auto buyers gain. Reply with quote

Somehow, this doesn't surprise me.

With "free trade" (loosely defined) and a large market, the US will always have competition from low price suppliers of any market moveable product or service (see IT outsourcing).

It often takes decades for it to evolve (especially with complex products or high skill services), but it will always come to who can supply the good or service desired in the most cost effective manner.

If you study history, specialization of labor has always led to trading countries dominating an industry worldwide. Follow the textile industry from Brittain in the 18th century with the first scale manufacturing of cloth (eliminating the craft of custom designed, hand sewn clothes), to the US in the 19th and early 20th centuries with the development of mechanized carding, spinning, and weaving of cotton (eliminating the custom hand made material), to the 21st century with computer automated patterning and cutting(eliminating the skilled patterning, allowing the currently difficult to automate buy not highly skilled tasks of sewing to go to cheap, easily trained labor in Asia.

The only reason auto assembly has returned (from Japan) to the US is that the logistics and expense of moving fully assembled inventories from overseas (and the currency risks of doing so on a high value product) gives a slight advantage to assembling vehicles in the local market. High value per shipping cost parts still flow freely from market to market (see duratec engine in MPV and Chinese engine in new Equinox).

We are truly blessed to have such choices in the marketplace because of this competition and truly cursed to have little employment security, as knowledge gains continue to put more and more professions under this same competitive pressure.

Reminds me of a Chinese curse... "May you live in interesting times"

2003 LX Coastal Blue - Rear Air - 195,000 Miles. Sold 9/27/2013.

1990 Lumina Rust Bucket - 125K miles and rusted out Scrapped 8/05

2008 Scion xB Silver - Just automatic transmission - 60K Miles goaliegirl's ride

2011 Scion xB Crimson - Automatic transmission and Alpine Audio - 25K Miles My ride

2007 Passat Wagon from the in-laws - DW's ride.

Been there, done that.
Went somewhere else, did it again.
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