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6824 messages, Last post on Jul 04, 2009 at 7:35 PM
You are in the Automotive News & Views Forum. Your Hosts are steve_ & claires
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Replying to: 62vetteefp (Dec 01, 2008 11:12 am) You're confusing 2 things as one. Capacity is how many vehicles your plants can make. If you have Plant A that can make 100,000 Malibus, but the market is only buying 75,000 Malibus, then the plant has to adjust to make 75,000 Malibus, and it thus is being utilized 75%. If they are selling 60,000 Malibus then the plant slows down and they make 60,000 Malibus and the plant is utilized 60%. It is idle 40%, or it is running slower than optimum. If you close Plant A then yes you have cut capacity. You would cut capacity 100,000 Malibus. If you reduce how many cars Plant A is making, then you have reduced utilization. 2 different things; try some of the following: http://www.newyorkfed.org/research/quarterly_review/1976v1/v1n1article2.pdf When demand goes down, utilization goes down, thus resulting in a higher cost/unit, thus reducing profit (or increasing loss per unit). (I'm a Mfg. Engr. and have an MS in Business Management.) If plant closings keep going down and corresponding new plants are not built then sooner or later there is a crossover and the country will have under capacity. "Mothballing"; are you familiar with that? Or the good manufacturers can deal with the good and bad times. I hate to use this example but what is Toyota doing during this slowdown, that's also affecting them? They are training people in new skills, and doing extra maintenance; while they still may idle for a week here and there. They can run at 50% utilization for the next 6 months if need be, and then if GM goes under run at 100%. A good manufacturer has long-term planning, and is a marathoner not a sprinter. Most manufacturers will simply ride out this "storm", and take advantage of the turnaround.
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Replying to: 62vetteefp (Dec 01, 2008 12:28 pm) Standard business terms are anywhere from Net 30 - Net 60. Almost any sale between companies gets paid 30 to 60 days after delivery. Customers do this partly to insure that the delivered goods are of acceptable quality, and partly to hold onto cash as long as they can, to minimize the cash they themselves need to borrow. My company also figures in its plans that about 3% will never get paid. This delay in getting paid is why companies need liquidity. That is why you hear that GM needs a certain amount of cash (something >$10B) to stay in business. Any business needs to initially raise their startup funds + have enough $ to pay their expenses for 60+ days. |
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Replying to: kernick (Dec 01, 2008 1:30 pm) this is the paper on what happens if we lose the big 3 or one of them. Not sure who the other experts are but this group is very informed. http://www.cargroup.org/documents/FINALDetroitThreeContractionImpact_3__001.pdf
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"Standard & Poor's expects U.S. light-vehicle sales of 13.3 million units this year -- the lowest annual total in 15 years -- and 12.3 million units in 2009, down from 16.2 million in 2007. Edmunds.com has forecast 850,000 sales for November, the third straight month below 1 million. Before the current stretch, industry volume hadn't been that low in more than 15 years. September's 26.6 percent decline was followed by a 31.9 percent fall in October. The year-to-year decline in November sales would mark the 13th consecutive monthly drop in U.S. auto sales, extending a slump expected to run well into 2009. The market will bottom out in the first quarter of next year, Tom Libby, an analyst at J.D. Power and Associates, said in an interview with the newscast Automotive News Today. After that, he said, sales gradually will strengthen. Said Libby: "We do see 2010 definitely being a recovery year." " |
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Replying to: 62vetteefp (Dec 01, 2008 2:46 pm) http://car.osu.edu/drupal/index.php?q=node/46 The director of the Center for Automotive Research has and will be funded by, and I quote from my OSU link "His research has been funded by, among others, General Motors, Ford, DaimlerChrysler, Delphi , Visteon, Dana, ArvinMeritor, Fiat, Honda, Lamborghini, Magneti Marelli, Oshkosh Truck, Cummins, ..." So this is like a drug company hiring a former and possible future consultant to verify their new drug is safe and effective. It's BIASED. You need to go outside the cozy circle of the auto world, to get as far from the $ influence.
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Replying to: 62vetteefp (Dec 01, 2008 4:09 pm) OK, what is this guys track record regarding forecasts. I mean last year did he predict this year right? Because in order to know how many vehicles will be sold next year requires a good understanding of macroeconomics. Is this guy a PhD in economics? Not even the best minds on Wall Street or in Washington have a good handle on what's going to happen next month. The situation we're in economically is far more serious then what we're in now. The quote from the other day is that we're in the 1st inning of the next real estate crisis - commercial real estate. And then we have a trillion $ mess with credit card balances that will be hitting soon. And if we have any sort of terrorist attack that wrecks more havoc with trade. If you want proof of the mess we're in, consider that after all the blood that's been shed in the stock market so far, and all that the Treasyury is doing to prop up the financial system including multiple interest rate cuts, financial stocks fell an average of 17% today.
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House leader says Detroit CEOs should be fired On the eve of Detroit’s day of reckoning with the United States government, House Majority Whip Jim Clyburn, a South Carolina Democrat, said that the future of the auto industry was up to him, the CEOs of Chrysler LLC, Ford Motor Company and General Motors would be fired. “If I had my way, all three of those guys would be in the unemployment line and I think that ought to be one of the conditions for us doing this,” Clyburn told reporters at a press conference earlier today. “They need to be giving up their jobs, not just their packages.” “We need to have new leadership. That’s what we would do if we had this kind of failure on a football field. We would be getting a new coach — sometimes a new athletic director,” he said. “We need to clean house with these guys and bring in new people.” Clyburn will be responsible for actually rounding up the votes needed for an automaker rescue plan. He has stated that he wants the $25 billion the automakers are requesting to come from the $700 billion previously set aside to help out Wall Street and banks. All three CEOs - Chrysler’s Bob Nardelli, Ford’s Alan Mulally and GM’s Rick Wagoner - met today in Detroit to finalize the plan they will present to Congress beginning tomorrow. Perhaps Friday they will all get their severance packages!  Regards, OW
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Replying to: kernick (Dec 01, 2008 6:26 pm) We should listen to someone outside the auto world to get data on the auto world? These guys know the automotive world inside and out. Yes, perhaps they could be biased but they know their stuff. But hopefully we will never have to figure out if they were incorrect. "His research has been funded by, among others, General Motors, Ford, DaimlerChrysler, Delphi , Visteon, Dana, ArvinMeritor, Fiat, Honda, Lamborghini, Magneti Marelli, Oshkosh Truck, Cummins, IBM, Motorola, Allied Signal, the National Science Foundation, NASA, the U.S. Department of Energy, the U.S. Army TACOM, the National Renewable Energy Laboratory, and DARPA." They also have done this before and I do not recall anyone disputing their findings. These studies include: The Center for Automotive Research. Contribution of the Motor Vehicle Supplier Sector to the Economies of the United States and its 50 States. Prepared for the Motor & Equipment Manufacturers Association, Ann Arbor, January, 2007. The Center for Automotive Research. Contribution of Toyota to the Economies of Fourteen States and the United States in 2003. Prepared for Toyota Motor North America, Inc., Ann Arbor, June, 2005. Institute of Labor and Industrial Relations, University of Michigan and the Center for Automotive Research. Contribution of the U.S. Motor Vehicle Industry to the Economies of the United States, California, New York, and New Jersey in 2003. Prepared for the Alliance of Automobile Manufacturers, Inc., Ann Arbor, May, 2004. Institute of Labor and Industrial Relations and the Office for the Study of Automotive Transportation, University of Michigan and the Center for Automotive Research. Contribution of the Automotive Industry to the U.S. Economy in 1998: The Nation and Its Fifty States. A Study Prepared for the Alliance of Automobile Manufacturers, Inc. and the Association of International Automobile Manufacturers, Inc. Ann Arbor, Winter 2001. The Office for the Study of Automotive Transportation, Transportation Research Institute, and the Institute of Labor and Industrial Relations, University of Michigan. The Contribution of the International Auto Sector to the U.S. Economy. A study prepared for the Association of International Automobile Manufacturers, Inc., Ann Arbor, March, 1998. McAlinden, Sean P., et. al., Economic Contribution of the Automotive Industry to the U.S. Economy – An Update – A Study Prepared for the Alliance of Automobile Manufacturers, Center for Automotive Research. Ann Arbor, Fall 2003. Office for the Study of Automotive Transportation, Competitive Survival: Private Initiatives, Public Policy and the North American Automotive Industry – Prepared for the U.S.-Canada Automotive Select Panel. University of Michigan Transportation Research Institute, Ann Arbor, June, 1992. The research staff of the Center for Automotive Research performed a number of these studies when located at the University of Michigan’s Office for the Study of Automotive Transportation.
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Replying to: circlew (Dec 01, 2008 6:38 pm) Smart guy. Nardelli has been there less than one year and Mullaly two years. Yep, they come in with a losing team and things get worse due to issues beyond their control. Yep fire them and bring someone else in. |
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Replying to: 62vetteefp (Dec 01, 2008 7:11 pm)  Regards, OW |
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