could this possibly be true?

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Juvysen's picture
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could this possibly be true?

http://www.msnbc.msn.com/id/30636895/

Quote:

Restructured GM to build more cars overseas

When plan completed, number of new cars built abroad will roughly double

WASHINGTON - The U.S. government is pouring billions into General Motors in hopes of reviving the domestic economy, but when the automaker completes its restructuring plan, many of the company's new jobs will be filled by workers overseas.

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Re: could this possibly be true?

Wow, 14 views and no one knows?  I thought there was some sort of tax manipulation for companies that sent jobs overseas.  I'm so confused. 

Say it ain't so! 

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Re: could this possibly be true?

What I do know about this story is that one bright spot in GM's biz is that in China they are selling a lot of cars.  Whether they are exporting US jobs to China or simply ramping up production there to meet Chinese demand I cannot say.  And all the US car makers are retooling old plants here in N.America (that made SUVs/light trucks) to produce smaller cars.

Viva -- Sager

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Re: could this possibly be true?

Yeah,

That really helps American jobs huh?!?

 

However, read between the lines. It is getting harder and harder to manufacture ANYTHING in the U.S. because of back-breaking regulations, laws, and union interference. Even from state to state, the regulations are so obscure it is becoming harder and harder to do interstate commerce.

At first, I thought that the likes of Toyota and Honda were licking their chops at getting their hands on American manufacturing infrastructure (industrial plants) when the automakers failed. Now, I have changed my mind. Why would they want to inherit a broken system that drove the previous owner out of business.

FWIW - C.

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Re: could this possibly be true?

Haven't seen the report but I'm sure it's true.  It makes absolute sense from a business stance/profitability.  Labor is cheaper.  Building Mfg. plants is cheaper and they can build with the newest technology at a fraction of the price.  GM has been selling more and more vehicles throughout the rest of the world at a yearly increase in comparison to the US where it has decreased dramatically.  Countries have lined up in the past to throw the best tax breaks at large corp. that set up shop in their countries.  NO LABOR UNIONS!  Biggest advantage of all.  The cost of unionized labor in the US over the years has been one of/if not THE main reason for manufacturing jobs to have gone elsewhere.  I know some of you are members of unions and they've been able to help the worker in many ways.  But they are the absolute worst thing to have happened to corporations/profits.

There are many more reasons for mfg. companies to leave the states that to stay.  50 years ago consumer spending equaled approx. 25% of the US economy....now, it's at 70% (if not higher).  This country cannot survive much longer being a service/consumer oriented economy....it just can't! 

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Re: could this possibly be true?

it just adds insult to injury for those of us that oppose bail outs... like uh, the majority of americans i thought...

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Re: could this possibly be true?
LogansRun wrote:

NO LABOR UNIONS!  Biggest advantage of all.  The cost of unionized labor in the US over the years has been one of/if not THE main reason for manufacturing jobs to have gone elsewhere.  I know some of you are members of unions and they've been able to help the worker in many ways.  But they are the absolute worst thing to have happened to corporations/profits.

LogansRun - (Logan 8 I presume? )

You and I have disagreed in the past but we are in 100% agreement here.  Unions have outlived their usefulness when a UAW member earns more by not working at a Ford or GM plant in Detroit than someone working at Toyotoa in Tennessee?

Guys like Gettelfinger are almost as much to blame as the insiders at GS, AIG, Citi, etc.  At least with respect to the devastation that has happened in the auto industry.  For years the UAW has accused the GOP of trying to break them up - now it appears as if they have in large part contributed to the demise of the industry they have held hostage for years.  Poetic justice perhaps?

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Re: could this possibly be true?

Well, GM already produces a vast amount of autos overseas.  This next chart shows both autos produced and the number of employees.  One thing that jumps right out is that fewer autos are produced per worker in North America than compared to Asia (and undoubtedly at a lower cost).

You can be certain this is driving the business decision.

The question then becomes, "what is driving the political decision"?  I mean, if US taxpayers are shoveling public money into a "US"  company that then turns around and does what's best for the company, namely go and shift production overseas, then I think this is inarguably an extremely poor use of public money.

Which was your point, I believe.  I concur.

 
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Re: could this possibly be true?

Juvysen - in a similar waste of public money, some of the biggest recipients of the AIG bail-out went to three European banks - France's Societe Generale at $11.9 billion, Germany's Deutsche Bank at $11.8 billion, and Britain's Barclays PLC at $8.5 billion.

Our private Federal Reserve has some European owners, so I guess we shouldn't be surprised.

Larry

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Re: could this possibly be true?

But, what are the tax incentives or whatever Obama was talking about to keep companies from going overseas?  I thought he was going to be doing a lot to try and keep US companies from moving jobs to cheaper countries?  I admit I didn't pay a lot of attention to it previously.

Also, Chris are there fewer autos per worker in the US because of the job banks?  I think I'm missing *why* that would be the case, although it doesn't surprise me.  I think unions have done a lot for the american work force, but I have to believe that they may have outlived their usefulness.  Clearly something's gotta change.

 

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Re: could this possibly be true?

Chris,

I think Middle East as shown in your graphic is actually Europe.

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Re: could this possibly be true?

Where does Chris get all these crazy charts and stats from????

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Re: could this possibly be true?

I don't know about the GM situation, but the big outrage here in Wisconsin is that, while Chrysler is shutting a plant in Kenosha, they're opeining one in Mexico to make the same engine as was supposed to be produced here: http://www.jsonline.com/business/44370847.html

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Re: could this possibly be true?
Juvysen wrote:

But, what are the tax incentives or whatever Obama was talking about to keep companies from going overseas?  I thought he was going to be doing a lot to try and keep US companies from moving jobs to cheaper countries?  I admit I didn't pay a lot of attention to it previously.

Also, Chris are there fewer autos per worker in the US because of the job banks?  I think I'm missing *why* that would be the case, although it doesn't surprise me.  I think unions have done a lot for the american work force, but I have to believe that they may have outlived their usefulness.  Clearly something's gotta change.

 

You hit it on the head when you stated UNION.  Union contracts are so over bloated with regulations regarding not only worker pay, but worker hours, worker breaks, worker holidays, worker "hand holding".  Also, being as I worked with both US Auto Organizations as well as Japanese and German (plus one Korean CONGLOMERATE), I can tell you that the technology used in ALL of the foreign plants were like going from a Waffle House to a Morton's.  And, the GM plants in Europe look almost exactly like a VW plant in Europe.  Also, if you go to the Subaru plant in Indiana or the BMW plant in SC you'll see manufacturing of vehicles being done in the same manner that you would see in most European Plants.  The Japanese plants IN Japan are on another level altogether.  Even the workers look like machines in the way that they work.  And if a job needs to get done or there's a hitch in the cycles and the work gets backed up, they don't stop.  They'll work through the evening if need be to get it done.  And again, there's no union representative at every turn making sure the regulations are being upheld.

There are other issues obviously and to throw OUR money at a problem that IMO can't be solved is robbery.  Shipping the jobs off AFTER we give the money just makes it a burglary/homicide.

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Re: could this possibly be true?

Yep you're right! My goof....I hope you don't mind, but I fixed it. 

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Re: could this possibly be true?

Looks to me like the union thing is a lot like the gun and immigration thing in the US

Its hard for me to get a handle on; not living in the same place as most of you. Not having land borders, few guns and weak unions.

But; Why is better to have profitable corporations than protected workers? Is any work better than no work. For whom? Is money the only measure of value? Who is it serving?

Do I have to come and live with you (in the US) to understand at least these three significant aspects of your life? Because from the other side of the planet I don't understand any of them.

Don

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Where people go deserts follow

 

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Re: could this possibly be true?
Juvysen wrote:

I think unions have done a lot for the american work force, but I have to believe that they may have outlived their usefulness.  Clearly something's gotta change.

Jenna,

I grew up surrounded by the auto industry, and almost every friend and family member back home is being impacted by what is happening right now.

I agree with you something has to change, but I don't believe the unions have outlived their usefulness.  I have always viewed the relationship between unions and auto companies as "ying and yang."  At first the auto companies had all the power, and they took every advantage that they could from the workforce.  Over time, the unions became more powerful, and started to stick it to the auto companies, taking better medical benefits, higher wages, more breaks throughout the day, etc.

The auto companies have now put themselves in the situation where there is no way possible for them to pay for future obligations (sounds a lot like the social security / medicare situation in the United States).  So who's fault is it?  The auto companies for letting it happen?  The unions for having a stronger negotiating position?  I'm not sure there is a clear answer.  Both sides are responsible.

The question I would ask is what makes auto manufacturing different in the US compared to Germany or Japan?  Is it innovation?  Cultural differences?  A sense of obligation by both companies and workers to "do the right thing"?  The issue we have right now is a great mistrust between unions and auto companies.  Each side feels that if they give an inch, the other side will take a mile.  They rightfully should have this fear, since past history dictates this is a likely outcome.

Ron

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Re: could this possibly be true?
pir8don wrote:

Looks to me like the union thing is a lot like the gun and immigration thing in the US

Its hard for me to get a handle on; not living in the same place as most of you. Not having land borders, few guns and weak unions.

But; Why is better to have profitable corporations than protected workers? Is any work better than no work. For whom? Is money the only measure of value? Who is it serving?

Do I have to come and live with you (in the US) to understand at least these three significant aspects of your life? Because from the other side of the planet I don't understand any of them.

Don

_________________________

Where people go deserts follow

 

Don,

Ron Shimshock has given you a pretty good sense of the interaction between the auto companies and the auto unions. It's been an adversarial relationship since I can remember.

Auto companies used to treat their employees like slaves which is why the employees organized and created unions - to protect themselves. Over time, unions became overly imbued with their power and began to be as ruthless as the auto companies and this antagonistic relationship has continued to this day.

Rather than work together to make an excellent product and an appealing work environment, the two sides have done nothing but abuse each other. This attitude caused the quality of their products to decline significantly. I quit buying American cars in the 80's because they were such pieces of junk. I still haven't gone back. Imagine buying a brand new car and the first thing the dealer tells you is to drive it a couple of weeks, make a list of all the problems, then come back and they'll start fixing them! This really happened to me.

To give you an idea of the idiocy that prevailed when I was still trying to find a decent American car I offer this brief tale. I had a Chrysler product that generated a significant wind whistle above 30 - 35 mph. Not being able to locate it myself, I went back to the dealer and they had their top technician go for a ride with me. When we reached the speed where I could hear the noise, I turned to the tech and asked him if he could also hear it. He looked at me and shook his head no then said that it was kind of hard to tell seeing as how he was deaf in one ear! To say I was nonplussed is putting it mildly!

Conversely, the Japanese companies long ago learned to create an environment where their workers took pride in their product. When was the last time you saw American auto workers wearing white gloves as they built their cars? When I drove a Japanese car off the lot, I wasn't asked to make a list of problems because there weren't any!

Another thing that you may find incomprehensible is that American executives in virtually all businesses are driven by the almighty dollar. I don't know if it's something they are taught in business school but it is sickening. As you are most likely aware, the difference in pay between the top executive, in too many American companies, and the lowest employee is absolutely huge! These CEO's are doing nothing more than playing the game of "He who dies with the most toys (and the most money) wins!" Most of us average folks find the whole concept obscene which is why there are such antagonistic relationships between employers and employees in this country. Witness the idiots on Wall Street and their inability to understand the problems on Main Street.

Do I have to come and live with you (in the US) to understand at least these three significant aspects of your life?

Don - I wouldn't recommend it. Enjoy the relative tranquility of your country. Personally, I'm glad I'm retired and out of the rat race.

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Re: could this possibly be true?

 Don't get me wrong.  I'm all for unions, but I believe that they have, over the years, priced themselves out of the market.  My friends and I were all shaking our heads last fall when the machinists struck here in WA.  I was just put on a furlough schedule with the city I work for, but the police and fire departments don't have to participate.  If they won't make concessions, then some of us are getting axed.

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Re: could this possibly be true?

Thanks Sam

I guess its the animosity that I am seeing from here without knowing the history. Thanks for making it clearer.

I imagine the living space and lifestyle of a US worker differ very markedly from that of an assian worker but there seems no place for that in the money equation where competition rules. I would have thought that with the betrayal by banks, big business and government that sentiment toward unions might soften but I see from what you and others have written that it is pretty well entrenched.

There is still this unreal sense I get that if only the system could have worked as it should then everything would be different. If only the workers hadn't abused their power then something worthwhile might have been made. US vehicles might compete and free trade might save the planet. Maybe me being too cynical - just trying to keep up

Don

___________________________________

"And I'm neither left or right
I'm just staying home tonight,
getting lost in that hopeless little screen.
But I'm stubborn as those garbage bags
that time cannot decay"

Leonard Cohen - Democracy
 

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Commentary: UAW, General Motors headed for a showdown

Detroit News: UAW, General Motors headed for a showdown (May 7, 2009)

This is about to turn real ugly.

The bankruptcy of Chrysler LLC -- promised to be "speedy" -- is shaping up to be anything but. The umpteenth restructuring of General Motors Corp. is giving new meaning to the word "draconian," mostly because the time for negotiation and cajoling is being replaced with the hammer -- take the deal or we'll see you in court.

Which is why a United Auto Workers vice president used an upbeat event at a rival plant Wednesday to send a clear message to the General, one day before last-ditch bargaining is scheduled to go into high gear: Avoiding bankruptcy may be preferable, but not if it means complicity in using taxpayer dollars to benefit foreign autoworkers and gut the union.

"There are some today that don't understand what the Ford leadership understands," UAW Vice President Bob King, head of the union's Ford Department, told an audience that included Ford Chairman Bill Ford Jr., CEO Alan Mulally and Gov. Jennifer Granholm. "There are some companies who want to sell products here that they're not going to build here.

"There are some restructuring plans that are saying they want to take the jobs out of America. And they want to build ... in Mexico rather than build in the United States of America." Then, his voice rising in expectation of a unanimous response from gathered members of UAW Local 900, King asked:

"If you're going to take American tax dollars -- our tax dollars -- where do you build?"

....

What we're witnessing here isn't so much a paroxysm of nationalistic fervor, because driving that line in the North American auto business means little if the automakers end up in liquidation. No, these are the opening salvoes in a political battle to win hearts and minds of competing constituencies.

First, to show union members that their leaders are fighting the good fight against punishing odds, a horrific economy, a skeptical Congress and a critical public. And, second, to show GM insiders that the union knows it has five days, starting today, to influence the "manufacturing footprint" (i.e., plant closing) plan scheduled to be presented to GM's North American Strategy Board on May 12.

Not much time. For years, UAW-Big Three negotiations have been the three equal parts of economics, politics and theater. Now, there's a fourth component -- survival. It's fueled by theater and shaped by politics, but it will be decided by the numbers, one way or another.

 

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Re: could this possibly be true?

 Has anyone found Hoffa yet?  It seems that 30 years ago the unions were necessary, but with the underlying inflation in America, about the only real increases in wages have been union jobs.  I can't be sure how companies support the truly ridiculous numbers I've read about back east (75$/hr even if your not working), but if that really is the case I don't really have a lot of sympathy for them getting laid off.  On the other hand, if the rest of our jobs had kept pace we might not be in this position.  INFLATION IS A MF!  especially when you're not aware of it.

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Re: could this possibly be true?

I believe I can incite both sides on the union debate with my opinions, so here goes...

Unions will never outlive their usefulness.  As long as we need to work for another individual/corporation, there is the risk that the employer(s) become overbearing or unreasonable.  Of course the problem is most likely to occur in the bracketed plural sense, when the owners/corporations unite, and try to dictate unreasonable conditions. 

One (the?) rational response to such a situation is for the workers to unite, so that they have some bargaining power.  The biggest benefit, imho, from this is the fact that a united workforce, or populace, will not only try to stop work, but will not support the unreasonable business.

As was mentioned above, there is often, or always, a back and forth wherein one party or the other makes unreasonable demands.  The auto workers reached the point of unreasonable long ago, and various government regulations that supported these unions contributed significantly to this, as did the entitlement mentality pervasive to our culture.

Essentially, the powerful unions long ago stopped empowering or protecting workers.  The unions are now employers, who do little more than act as a VERY expensive contractor, providing a  labour force to the manufacturer.  One root of the current problems is that as an employer, the unions have their primary interest in attracting the labour force, so they bid high (wages and benefits) to attract and control the workers, knowing that once they control the workforce, they can blackmail the manufacturer.  Notice that the entity formed by the workers in the industrial revolution, to protect the workers against outrageous employer demands, now controls the workers, though most people do not realize to what degree this is true on a large scale.

Please note that I was specific in my reference to regulation.  The only regulation required for a "union" to exist, and therefore do it's job, is the freedom of association.  In fact, in smaller shops, and local situations, a better solution is often a less formal worker's association, and these have become a viable option in Canada in shops which are not union shops, but the workers want a stronger voice.

And if you've read this far, I'll point out that I've worked in union and non-union shops, as worker and as management.  I've always found that a union is a great thing for your neighbor or competitor to have, as the threat of a union normally keeps the employers in line.  The reality of working under a union, especially a large, national union, often doesn't align very well with the inflated expectaions many people have.

Again, these are just my opinions, so flame away...

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Re: could this possibly be true?
kwwilson wrote:

The unions are now employers, who do little more than act as a VERY expensive contractor, providing a  labour force to the manufacturer.

Very well put, kwwilson.  One ironic twist to your comment that the "unions are now employers" -- the UAW now owns 55% of Chrysler, as noted by Jon Stewart the other day (for those who like the Daily Show) ...

http://www.thedailyshow.com/video/index.jhtml?videoId=226583&title=clust...

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Re: could this possibly be true?

http://market-ticker.org/archives/689-Where-We-Are,-Where-Were-Heading-2009.html

Where We Are, Where We're Heading (2009)

Wednesday, December 31. 2008

<snip>

There will be no improvement in the economic condition of our nation until each and every one of us ask ourselves these questions, honestly contemplate our answers, and then put our outrage (or desire) for those economic conditions into firm, no-nonsense peaceful action to force our elected and unelected government officials to act as we direct.

Please realize that if just one third of one percent of the population of America was to get upset enough with the blatant fraud, theft, Racketeering and Ponzi Finance that has literally decimated the economic structure of our nation, American households and our future (not to mention our children) and were to show up in Washington DC in peaceful protest, occupying The Mall, Constitution Avenue and surrounding areas and refused to leave until every one of these charlatans resigned in disgrace or committed seppuku on national TV the protesters would number one million

Such a mass of people would be literally impossible to refuse to answer to.  That we have not yet seen it simply means that the population of this nation either doesn't care that it is being systematically looted, is too full of Prozac to pay attention to the racketeering and theft or is simply not paying attention.  (My vote, by the way, goes to the latter - at least for now.)

Further, if we the people were to organize as few as one hundred individuals in each major city we could effectively slow commerce to the point that it would break down entirely, all through peaceful means.

How?  Envision your local freeway; you, and three of your friends (four lanes each way, four drivers) line up parallel and then slow to a crawl (if you're in "rush hour" traffic) or to 20mph if not.  Traffic would instantaneously snarl behind you and remain that way for hours.  Your risk?  A traffic ticket.  A few hundred dedicated people in each major city could very effectively demand that real reform take place and that all the fraudsters go to jail, refusing to stop their daily protest until it was done.  Again - a tiny fraction of one percent of the population of this nation could, through entirely-peaceful actions in protest, force a stop to this nonsense.

It hasn't happened.  Why not?  Are there not a few hundred unemployed as a consequence of this fraud in every major city across America?  Are we really all so neutered as Americans that we will refuse to peacefully protest in an effective manner?

You want to know why the fraudsters - including everyone screaming to be bailed out of their ill-conceived schemes - are winning? 

It is because Americans refuse to get off their ass, even though very effective and fully-peaceful means of demonstrating and demanding change - Constitutionally Protected means of expression that would have vast and immediate effect - exist. 

Simply put, we are consenting as individuals and a nation to the economic rape being served upon us by the scams and schemes of the few.

<snip>

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Re: could this possibly be true?

i have to wonder how much of the union pushing has to do with the wage-unfairness.  Ok, that sounds obvious, but I mean, when the CEO of a corporation makes SOOOOO much more than the average worker, it just seems ridiculous and I can imagine everyone would want a piece of the pie.  I don't know if that makes sense, I guess I haven't thought it out completely.  My thought, though, came from the fact that the CEO of toyota makes FAR less (although still piles of money) than the average american CEO.  There's some sense of, I dunno, working together or something?  that he doesn't take, take, take like the american CEO, but that's my uninformed feeling on it.

Ok, looking back, that post was a jumble.  I guess I'm wondering what you all feel could be the relation of top officer pay on employee morale or something?  I'm  not sure exactly.  LOL

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Re: could this possibly be true?

I would not work for a company with a union because I don't break contracts that I make, striking (blackmail) should be illegal. Adversational relationships between employers and employees are not benificial to either, there are alternatives and Ken Iverson's plan is one of the best I've seen.

"The human relations plan was designed to lower costs by increasing labor productivity. The plan started with Iverson's belief that, "With everything you read about job enrichment and group participation, I think there are probably two things that are very important to most people and certainly to hourly workers. One is what am I going to get paid and the second is am I going to have a job tomorrow?" (McManus, 1980).Given that view of the psychology of his employees, Iverson developed a plan which was expected to give the worker an opportunity for good pay and stable employment. This could be done by raising the level of labor productivity to the point where Nucor could underprise the competition (thereby maintaining production and employment) whyile at the same time paying better wages and salaries than found at comparable companies.

To achieve that high level of labor productivity Iverson decided to employ a compensation system that relied heavily on performance bonuses. But, unlike older bonus plans, Iverson's system would be administered in a manner that promoted teamwork and a feeling of long term loyalty to the company. In addition to production workers, all levels of management were included in the bonus payment system, including Iverson.

Additional techniques were used to create a team spirit and culture of loyalty. Most of the potentially divisive signs of status found in many other companies were eliminated. At Nucor executives would have to eat in the company cafeteria with all of the other workers; no fringe benefits would be given to managers unless the same benefits were received by the hourly workers; executives would be expected to chosse the least expansive way of doing things (E.g. air travel would be by coach, not first class). And any hourly worker who had a problem with a manager could take the complaint directly to Iverson (Years later Iverson would comment, " I probably get 10 to 20 of these (complaints) a year. In some cases they are right and we do reverse (the manager's) decision." (McManus, 1980)."

http://www.anbhf.org/laureates/keniversen.htm

Would also recommend the book "American Steel" by Richard Preston for more info on this type of management'

http://www.amazon.com/American-Steel-Richard-Preston/dp/0380718227

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Re: could this possibly be true?

The biggest reason that we are losing so many jobs, year after year, is not the unions - it is the result of the globalization of "free trade."  Free trade sounds kinda nice, but in reality it is destroying our nation as we import products and export jobs.

No country can survive if it chronically imports more than it exports.  The US has been able to run a huge and continual trade deficit because we hold the worlds reserve currency.  But, that will end too.

Free trade should be replaced by balanced trade.

Larry

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Re: could this possibly be true?
Larry wrote:

The biggest reason that we are losing so many jobs, year after year, is not the unions - it is the result of the globalization of "free trade."  Free trade sounds kinda nice, but in reality it is destroying our nation as we import products and export jobs.

No country can survive if it chronically imports more than it exports.  The US has been able to run a huge and continual trade deficit because we hold the worlds reserve currency.  But, that will end too.

Free trade should be replaced by balanced trade.

Larry,

While I do not disagree with your conclusion (that free trade has cost the US jobs), the reasons are a little more complicated than how you've put it (that we import products as we export jobs). 

Those are symptoms, not causes.  The reasons why we are exporting jobs and importing products are what really matters.  Looking at only the end-result of these phenomena do not reveal anything useful.  Also, although jobs are lost due to free trade, there is another side of this, which is the effect cheaper goods from foreign countries have on our cost-of-living.  Obviosuly, the consumer benefits from cheaper products, and the cost of living in the US has benefited from this (assuming you are employed in the first place).

I do not have all the answers as to why we are exporting jobs and importing products, but I believe these are a few:

The US has regulatory, tax, and product requirements that make the US a more expensive place to do business.  Therefore, it is cheaper to produce goods elsewhere and ship them to the US market.  To reverse this force, we have two choices:  ban imports from any country we deem to lack the regulatory systems in place on the product in question.  This would raise the cost of production in those countries (if they chose to adopt them) closer to mainland US costs.  I guess that might bring some jobs back stateside, while it would increase consumer prices.  Keep in mind that while this may bring some jobs back home, the product in question would be sold only in the US.  We wouldn't be exporting said product because foreigners would still be able to produce it for less.  We would only be protecting our own labor market, and in doing so, we should weigh the benefit of the extra jobs created against the effects of an increased cost-of-living for all US consumers after they have been blocked from buying cheaper goods from outside the country.

The other choice is to say goodbye to free trade and impose trade tarrifs.  This was one of the key blunders leading up to the first Great Depression.  This would increase the cost on any product which was made in whole or in part from imported raw materials, raising the cost-of-living for all Americans, as well as making the end-product less competitive for the overseas export market.   Many a country has been ruined through trade tarrifs, including our own, not only once (GD1) but twice (Civil War caused by the North imposing trade tarrifs on Europe, which retaliated in kind, but only affecting the South which exported cotton.  The South revolted in response, the rest is history).  Again, I am urging extreme caution and consideration of the unintended consequences of what at first appears to be a net good idea.

Why else have we been exporting jobs and importing products?  As you pointed out, we've had the luxury of owning the world's reserve currency and being able to borrow in our own currency.  Our net export for 30 years, and until very recently has been debt.  It only makes sense that if debt is your main export, products and the means to make them will be your main import.  Obviously this is unsustainable.  Perhaps the disparity in production/consumption between the US and the rest of the world (we consume 25% of the world's resources) is a distortion created by the unnatural presence of a reserve currency based on nothing.  Moving forward, US consumption will collapse (uh, well it already has, but I think more is to come) because our net available purchasing units will have been slashed due to the ever-bigger proportional amount of monies we have to put aside just to pay off debt.  Maybe this is the giant correction that has been 30 years in the making.

Once we've "corrected", I don't see us consuming 25% of the world's resources anymore.  We cannot sustain the growing debt with the same levels of consumption.  Also, foreigners are not going to be as giddy about accepting our money, so their prices to us are going to go up.  Maybe then, we'll see some of the things we haven't seen produced in the US for decades start to make a return.  Not because we've been smart, but because we've bankrupted ourselves and have been living a fairy tale. 

As always, intervention in the markets is not sustainable.  It's like pushing water uphill.  Eventually, the reality that would have occured without the intervention comes to pass, most often with very painful interludes. 

 

 

pir8don's picture
pir8don
Status: Gold Member (Offline)
Joined: Sep 30 2008
Posts: 456
Re: could this possibly be true?

Lets put some things together;

1) Lada jokes

What do you call a Lada at the top of a hill ?
A. A miracle.

Sam wrote:

Imagine buying a brand new car and the first thing the dealer tells you is to drive it a couple of weeks, make a list of all the problems, then come back and they'll start fixing them! This really happened to me.

Charles Hugh Smith wrote:

All that makes sense, but suppose we not only have too much stuff, we don't even need 90% of what we already have? Consider vehicles. The general theory is we can stop buying 16 million vehicles a year here in the U.S. for a few months or maybe a year, but then cars will starts expiring by the millions and "consumers" will have no choice but to borrow $20,000 and go buy a shiny new vehicle.

Hmm. Ever seen photos of Cuban streets in the 90s? The ones with the 1950s-vintage American cars? I can assure you I will not need another vehicle for 10 years, as I own one vehicle, a 10-year old 1998 Honda Civic which will easily last another 10 years and perhaps even 15. Lots of construction types have "beater" trucks (yes, U.S.-made) which continue to run a decade or two after they "should" have been replaced.

The pundits declaring that autos will have to replaced must live in very tony neighorhoods. If you don't mind various electrical problems, duct-taped fenders and an engine light that flickers on and off, you can buy an old American car for a few hundred bucks which might well last for many years despite its dilapidated exterior.

http://www.oftwominds.com/blogmay09/consumerist-gods-fail05-09.html

Patrick Brown wrote:

As always, intervention in the markets is not sustainable.  It's like pushing water uphill.  Eventually, the reality that would have occured without the intervention comes to pass, most often with very painful interludes.

We have this picture of financial wealth flowing now from the US (perhaps all western economies) to Asia. We joked about Communist Block cars because we had better ones. But communist block residents still had transport to get where they wanted to go. Now we see Western block economies failing and the Ladas don't look so bad against the present US made cars. Turns out Socialism and capitalism both made cars and its hard to tell the difference now. Perhaps we have enough cars n stuff to last us till the oil runs out anyway.

Making things competitively vs doing things cooperatively. Two different paradigms. Under the first only the richest get the shiny new faultless car and the poor make do with their castoffs. Under the second everyone might get transport for a while yet but it won't be shinny.

Time for a new paradigm?

Don

___________________________________________

Our greatest strength is diversity, complacency our greatest weakness

SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
Joined: Feb 11 2009
Posts: 2252
Re: could this possibly be true?
pir8don wrote:

Making things competitively vs doing things cooperatively. Two different paradigms. Under the first only the richest get the shiny new faultless car and the poor make do with their castoffs. Under the second everyone might get transport for a while yet but it won't be shinny.

Time for a new paradigm?

Don

Ladas?

FWIW, my boy Nathan (Tauranga Boys' College 1985) had a Skoda (from Czechoslovakia).  That carb on that thing would clog up all the time...tho' most likely to do so when you had a car fulla people trying to get somewhere (or so it seemed).  But that issue was user-serviceable and we always got where we were going.

My mechanic will be able to keep my current cars ('03 Dodge Dakota & '08 Toyota Yaris) running until the petroeconomy grinds down, if what he says can be believed (and IMO it can [grin]).  It's a strange (if fine) feeling to think you've purchased your last car.

Viva -- Sager

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