GM Is Now Detroit’s Smallest Auto-Making Employer
bloomberg.com
bloomberg.com
I was looking at their trucks, and left the showroom when I saw one that had 45% domestic content. I bought a truck that had the most USA content...a Honda Ridgeline.
The flaw in this theory is obvious: Eventually you run out of poor people willing to build things they themselves cannot afford to buy, and since the buyers of your stuff no longer have jobs, they're no longer buyers either.
And that's where we are today. It sucks, but a lot of wealthy people made a lot of money on the float while it lasted.
American workers are too highly paid to make many manufacturing jobs viable in the US. If GM et al. were to pay American workers more they would either not be making enough money to stay afloat, or the cost of their cars would rise considerably (and likely lose sales and not be profitable anyway).
In the year 1916, Henry Ford lowered the price of the Model T to 345 USD[1]. Using an inflation calculator[2], this tranlates to roughly 8120 US-$. At the same time, Ford raised the salary to 5 US-$ per day[1]. That makes 160 US-$ per Month (calculating with 4 x 5 days). Using the same calculator as in[2], we end up with a value of 3766 US-$. So a Model T costs 2.5 months of labour for an average worker.
Fast forward 2019 - the avarage salary is maybe 40k US-$ a year for an automotive worker?[3] So, using the same reference as above, this would translate to 166 US-$ per day, and 3320 US-$ per month.
Now, what's the successor of the Model T nowadays? I don't know - so I followed the "successor" links in the Model T wiki article[4], and ended up at the Ford Fusion. Ford says, it's starting at 23.170 US-$[5]. That's 7 months worth of labour for an average worker. So, yes - compared to 1916, it's 2.5 times more expensive.
I'm surprised.
[1] https://www.fomcc.de/t.htm (German page, sorry)
[2] http://www.in2013dollars.com/us/inflation/1916?amount=345
[3] https://www1.salary.com/Automotive-salaries.html
[4] https://en.wikipedia.org/wiki/Ford_Model_T
[5] https://shop.ford.com/build/fusion (I used 10005 as postal code, cause I'm not from the US)
For one, far fewer households today are single salary. Say what you will about whether this is a good or bad thing, but I think it's probably more appropriate to base the numbers on an "automotive household income" if that's such a thing.
Also, your salary resource is a little weak. It has a huge range ($34k-$144k average). I speculate this isn't relegated to just using automotive manufacturers but also includes their suppliers. Anecdotal experience shows me that the lowest paid Tier 2 union employees on a line make that much if you include overtime. Tier 1 workers make much more (close to double, in my experience). Then you take the skilled trades (e.g., electricians and machinists) where its more common than not to make six figures, all things considered. This is all before we're getting to the degreed engineers. Payscale.com shows average Ford engineer salary nearing $90k. Engineers on the line generally make more because of the work conditions and overtime (it wouldn't be uncommon for a process engineer to make double that). I don't know what the actual numbers are, but I wouldn't balk at data that's easily double the numbers you covered. It could easily be on-par or even below the Model-T numbers when it comes to monthly household income.
And when it comes to 'automotive household income' the numbers work out even worse than MrGilbert's example. The average American household owner more than one car per driving adult. https://www.bts.gov/archive/publications/passenger_travel/ch...
Yes, yes - perhaps the autoworkers we are talking about are not 'average' and own fewer cars per household. And yes, yes - moving the minimum wage probably resulted in wage increases for higher paid workers as well. If you want to move the goalposts again do some legwork and show some work, otherwise you're just promoting a paper-thin narrative on the basis of "but what if".
But I stand by the assertion that claiming a $40k average wage is way off. The base salary of most Tier 1 non-skilled employees was still in the $70k-$80k range, and this was years ago. The skilled trades made much more. This is without overtime. It seems like MrGilbert was cherry picking the data. And I hope you also realize that there is a difference between the manufacturing engineers and design engineers. Manufacturing engineers probably should be included in my opinion, and they are some of the highest paid, but I'd even be willing to concede that and still stand by the general point.
I included overtime because it is a such a large part of the manufacturing experience. And yes, some people game overtime as a way to inflate their wages. And the overtime pay increases didn't come about until the Fair Labor Standards Act. If you look at the history, the $5 per day wage actually does include overtime (if you define overtime by today's standards). We could debate whether or not this is progress (many of those I personally knew would call it progress because they wouldn't have the opportunity to make that wage elsewhere, which is why there is little turnover even today). I actually don't think it's unfair to include overtime to get the total compensation comparison, but even without overtime the $40k number seems pretty far off.
The larger point being, it's not as simple of a comparison as 'don't include overtime' and select the lower end of the overall automotive salaries (including lower paid suppliers). We can further complicate things by factoring in the preferred employee pricing etc. It's complicated, even if we want it to be a simple narrative.
The loss of manufacturing jobs is a big part of the reduction in size of the middle class United States, especially in the Rust Belt. This is largely due to automation reducing the number of available well-paying jobs not because the car companies are systematically mistreating workers. People still vie heavily for those jobs because they are some of the highest paying jobs available.
"To run the factory continuously instead of only eighteen hours a day, giving employment to several thousand more men by employing three shifts of eight hours each, instead of only two nine-hour shifts, as at present." https://archive.nytimes.com/www.nytimes.com/learning/general...
Not to belabor the point, but it's not a simple one-to-one comparison like the OP was trying to demonstrate. I don't think the wages are nearly as bad as they made it out to be.
I was not - I had to work with what I had, and I clearly stated at the beginning, that you have to take it with a grain of salt. However, I did not cherry pick any data. That‘s a false accusation.
> For one, far fewer households today are single salary. Say what you will about whether this is a good or bad thing, but I think it's probably more appropriate to base the numbers on an "automotive household income" if that's such a thing.
How many households had two Model Ts, and how many households today have two cars?
Like my response above, I think that's a valid and interesting point that should be factored in. I'd also be curious to see how much this plays into the overall debt load of consumers. I.e. does the necessity of dual-incomes force the need for multiple vehicles which in turn forces a higher debt load than previous generations? Where I come from, taking on vehicle debt is considered as much of a given as mortgage debt.
Actually, I'd say that is precisely the case. The vast majority of cars in the US are bought on credit, which means people can't actually afford a car, they can only afford to borrow money to pay for a car for a few years, then get out of that one and move onto another one.
The massive, massive majority of vehicles are not owned by the person driving it, they're owned by banks.
The price of a model T in 1908 was $825 or $850 (google results vary). The median annual income was between $450 and $525 (again, sources vary). So a Model T cost 1.6 to 1.7 times the median income of a US worker. For a car that had no air conditioning, no radio, no airbags, and a top speed of 45 mph. Near the end of the production run (mid-late 20s) the cost of the model T had gone down by over half - thanks to production line manufacturing.
This site provides a breakdown for the cost as a fraction of median annual income of Chevys over the course of the 20th century: https://cars.lovetoknow.com/Car_Ownership_Statistics
By comparison, the current US median income is just over $60k. You can buy many of these cars for less than half of that. Some less than a third: https://www.truecar.com/prices-new/kia/ Each of these cars is drastically safer, more comfortable, and with amenities like aircon radios and more.
Elizabeth Warren’s paper from a decade or two ago did a fair job doing some pricing comparisons of the day to turn of the century American household microeconomics and demonstrated the primary change in the past 100 years was the additional cost of a second bathroom.
Microeconomic comparisons are very easy to tweak to achieve a conclusion determined a priori. Some goods and services like electronics, air travel, communication, and transport become orders of magnitude cheaper over the course of the 20th century. Others like healthcare and housing on average get more expensive, especially in the latter half of the 20th century. If you want to show lowering costs of living, weight the model towards the former. If you want to show a higher cost of living, weight the model towards the latter.
As Chairman and Chief Executive Officer at GENERAL MOTORS CO, Mary T. Barra made $21,870,450 in total compensation. Of this total $2,100,000 was received as a salary, $4,452,000 was received as a bonus, $3,425,006 was received in stock options, $11,081,760 was awarded as stock and $811,684 came from other types of compensation. This information is according to proxy statements filed for the 2018 fiscal year.
GM's business is shrinking while most automakers have expanded in the last five years. It makes perfect sense that GM would contract their employee count as sales decline backwards by nearly two decades.
GM sales 2014: $155b | 2018: $147b
Their sales in 2005 were $193b by comparison. Automotive sales were $158b that same year.
Fiat sales 2014: €96b | 2018: €110b
Volkswagen sales 2014: €202b | 2018: €235b
Toyota sales 2015: ¥27.2t | ¥30.2t
Ford sales 2014: $144b | 2018: $160b
Honda sales 2015: ¥13.3t | 2019: ¥15.9t
I seriously doubt that... at $50,000+ for a new pickup, and $35,000+ for a new car? And used vehicles are still quite expensive as well (unless you buy an absolute pile of junk).
Financing terms keep stretching longer to keep the appearance of an affordable monthly payment, but many Americans have become wary of the overall cost of a vehicle, which is by no means low today.
On the other hand, it drives down the price of my vehicle purchases. So go right ahead!
People buy $35K cars because they can.
Look at sales of something like the SmartCar. They were very low despite the car being $12K-15K as people were willing to pay more.
Yeah it’s not amazing but people are buying trucks and SUVs with much worse MPG for more $$$.
People want the additional capabilities, safety, or even just the status symbol of having a nice truck or expensive car.
Few were going to sacrifice comfort, room, performance for a tiny car with bad mileage. Just because its manufacture was 'eco-friendly'
https://www.glassdoor.com/Salary/Ford-Motor-Company-Detroit-...
GM offered me 110k.
And after 8 years, Nissan at 120k.
Ford pays the worst for engineering
https://www.forbes.com/sites/timworstall/2012/03/04/the-stor...
I’m looking at the Toyota Tacoma as my number one choice, but this is not a strongly held desire if there is something better.
I'm always a bit bemused by this. We were urged to buy British in the late seventies and early eighties. My dad lapped it up and the reward for his loyalty was a string of really crap cars.
Tacomas are expensive, the dealers don't deal and they hold their resale value. The new (2019) Tacoma trades heavily on it's reputation IMO, without really adding much new over the past 3-4 years. It's a real off-road vehicle though, if that's important to you.
In this format/size I'd suggest you take a look at the new Ranger. It's nothing fancy but much more affordable. It's pretty much the polar opposite of the Ridgeline.
The people I know who own the 3rd gen Tacomas seem to like them just as much as I like mine.
This is exactly opposite for me - I want a pickup that is "short bed, standard cab" - I want a small pickup - like the original Ranger/Mazda B3000.
Sadly, due to CAFE rules I can't get that any more.
Now - what I (and many others) lusted after was something Jeep showed off as a concept vehicle: It was a short-bed version of their new Gladiator pickup.
Probably the only way that I might - might - give up my TJ. Damn, that thing looked so sweet. But again, they probably couldn't build it because of CAFE rules. So if you want the Gladiator, you have to get the 4-door. I don't like 4-door vehicles, I have no need for one. I want a 2-door pickup, standard cab, short bed - nothing less.
Either that, or give me one of these - another vehicle I can't own:
My thought, years ago, was to wait for the 4Runner to break down then upgrade, but I’m now starting to wonder if that’s still a few years (decades?!) off.
I don’t think you can go wrong with Tacoma/4Runner/Landcruiser 70 series.
Compare the size of an early 90s F150 with that of today's new Ranger, and you'll see what I mean (while you're at it, compare the sizes of an early 90s F250 with today's F150).
I honestly think (I have no proof) that what Ford did was kill off the Ranger (ie - stop rebadging them from Mazda), because of CAFE rule changes, but then they found that even the F150 was too small, too. So they moved the F250 down a notch (it became the 150), and maybe the 350 too (it became the 250). I'm not sure about higher numbers; most people never bought anything bigger than the 350, at least on the consumer end (I have seen some "consumer" 450s and 750s on the road - but they are very rare).
Then people clamor for the Ranger (have you ever tried to find an original Ford Ranger that is in normal condition, in good repair, and hasn't been "pre-runnered"? Not easy - and when you do, it ain't cheap, either - wish I never gave up my 94) - so they dig out the old F150 - which is smaller than today's F150, dress it up and tada: "new Ranger!"
Again - this is just my impression; I'm not sure of the truth or facts or anything.
I'll tell you where Ford also made a mistake: They announced a "mini-Raptor" - but afaik, it was only released in Australia (and I think it had a diesel engine option to boot!). Gah!
Something better for what?
A Dodge Dakota or an old Ranger (the ones not based on the global platform) are far superior if your goal is to overload the piss out of them without hurting the truck.
You'd probably enjoy your time in a new truck far more though.
That said, several of the car sites tally up the origin of the parts and assembly and calculate the percentage (likely on a value-added basis) to determine "domestic content":
"Tesla declined to furnish enough information to be included in the 2019 American-Made Index."
Hate to break it to you - but you didn't buy a truck. You bought something shaped like a truck. I personally don't know if I could trust it doing actual truck jobs, if I needed it for that. I don't know how well it would fare if I took it off-road on some of the trails I've been on that can easily break regular pickups and jeeps.
Just something about it being a unibody car-like construction that makes me cringe. Then again, I know there've been other pickups built like this in the past (I know that various manufacturers have experimented with this); plus, the Jeep Cherokee has (almost?) always been of a similar construction (not sure if unibody - but it doesn't have a ladder-frame chassis, but rather front and rear subframes) - and it's known for it's off-road prowess.
Part of my concern on the Ridgeline, also, is that Honda isn't exactly known for its pickup trucks (at least here in the USA), unlike other Japanese brands still on the market - but that's just bias on my part.
That said, I think we're likely to see more unibody pickups along the way, and maybe the engineering of the Ridgeline will help lead that direction. There are advantages to it; I'm just biased toward ladder-frame as that's what I've always considered a real truck to use...
Body on frame construction is a dying art and it makes me pretty sad. I love that my 4runner is still built strong.
All of this is to say that I would trust the domestic manufacturers on anything truck related before I would trust one of the foreign companies, Toyota definitely included. It's simply a matter of core competency, regardless of percentage of US content.
[0] https://www.consumerreports.org/car-recalls-defects/honda-ri...
https://www.drivingline.com/articles/top-gear-tries-to-kill-...
Top gear is automotive themed entertainment not a documentary. Anyone who has ever worked on cars knows this. You can bet there was a lot of off camera hackery to get the truck running each time. It didn't just drive away.
I used to pull these trucks (well, all sorts of vehicles) apart for a living. If you pulled the same stunt 10x with 90s Hiluxes and 90s Rangers you'd have more Rangers driving away in one piece because they have a better (taller web specifically) frame and that was the the weak point (at least in topgear's test it was).
As someone that has owned lots of foreign and domestic trucks and family has as well, this is a completely absurd thing to say. My Dad’s farm truck Toyota Tundra is past 333k miles on the same engine.
Yeah it pulls a camper well but what good is that if brakes give out.
Of anything on that list - I'd get this one fixed. I mean, if it's doing that - what's to say you'll be surprised one day it failing causing you to have an accident? Or it not working correctly in an accident.
You might look into what it would take for a custom shop to replace the seats with something else - even something from another vehicle. Manual controls, etc. Something that would be safer. Might be a lot cheaper than getting it "fixed" (which might just fail again in the future).
I once was in the market looking for a used 2-door Tahoe (not easy to find). I ended up finding one that I was going to test drive; looked like a real sweet ride. But then I did some research on the vehicle - it seems that for that particular model, there was an issue on the driver's side seat, where a bracket would fail, usually on acceleration (like an on-ramp for a freeway), and the seat would fall backward. There was never a recall for it. I considered the thought of having something custom done to fix it, but for something like that, I just noped out of it (good thing, too, as I ended up finding what I really wanted - a 1999 Isuzu VehiCROSS - which, while somewhat of a money-pit, I love).
> The Chevrolet Silverado 1500 LD and GMC Sierra 1500 Limited, both carryover models from the prior generations, come from Canada.
https://www.cars.com/articles/cars-coms-2019-american-made-i...
"Ford Motor Company (Ford) is recalling certain 2018 Ford Expedition, F-150, and Lincoln Navigator vehicles equipped with 3.5L GTDI V6 engines. These vehicles have high pressure fuel pump assemblies with welds that can fracture, which may cause an oil or fuel leak."
That said, I don't own a pickup from any manufacturer.
A neighbor of mine had a Ford Explorer affected by it, he ignored the recall notice. It eventually burst into flames one day while parked in his driveway and the fire department had a great time smashing his windows while putting it out.
Anyways Ford knew about the problem in the mid-90's but was in love with this design so much that they kept it in place until 2004. Check out the list! https://www.autosafety.org/ford-cruise-control-deactivation-...
I would strongly recommend avoiding Ford products.
But there's always been a dealbreaker. Frequently the transmission. I mean, even before it was fully verified that the DCT in the Focus was a disaster, I certainly expected it to have problems and never understood why they would take the risk on a low-end car. People always blame "bean counters" for automotive failures, but it seems (based on my imagination as an outsider) like it's more an unhealthy intersection of cost-cutting and engineers that want to be daring.
GM recall 368k trucks for fire risk: https://www.reuters.com/article/us-gm-recall/gm-recalls-3680...
GM recall 1mil trucks for power steering problems: https://www.usnews.com/news/national-news/articles/2018-09-1...
Well...
I follow auto news a lot, and I hear the opposite.
Chevy Silverado is one of the worst truck up there with Dodge. Dodge isn't even domestic any more.
OTOH, a Lexus GX or Land Cruiser should do fine for modest towing duty, reliability, and low-ish depreciation.
There's something to be said for an Odyssey with an uncovered cargo area (the styling on the current generation really drives that point home IMO). For that kind of use the Ridgeline is great.
Got any evidence one of those has actually caught on fire in a car wash?
It would be at the top of my shopping list for when my '05 RAM finally dies but for the bed being too short for most of my motorcycles. I wish 'utes would make a come-back in America and up-size to be more competitive with pickups, a four-door 'ute w/ a 76-inch bed and 1,000lbs of payload would suit me perfectly.
Probably I'll just buy a trailer and put a receiver on my R-350, it can tow plenty and replaced a lot of trips in the RAM.
As you go down the economic ladder people become more willing to shoehorn vehicles into uses that would make wealthier people hem and haw.
I see this a lot less in Germany, maybe because nationalism in general is seen as somewhat in bad-taste here.
My country does not have car manufacturers, but still supplies a lot of parts to car manufacturers around the world. My BMW was assembled in the US. Not in our neighboring Germany. The car manufacturing industry is much more geographically integrated than most people assume.
How much is outside of Detroit vs outside of US?
https://talkbusiness.net/2017/07/ball-state-study-automation...
That means you get a choice between losing some jobs to reduced labor requirements from automation but keeping the remaining ones, or losing all of them to foreign labor competition. Which may itself use automation regardless of what you do domestically.
You can also get net job gains from automation in markets subject to the Jevons paradox. You make each widget cost 50% as much by reducing jobs by 50%, but that causes people to buy ten times as many widgets, so you really end up with five times as many domestic jobs. Or five times as many foreign jobs, if the other country automates and you don't.
In some cases, automation leads to net job growth (e.g., there are more bank tellers now than before the invention of ATMs), but I think that is the exception rather than the rule. Especially in manufacturing, automation absolutely guts jobs. A line that was run by dozens can be run by a just a couple. The balance is so far to one side I think it's hard to make a case that automation saves many jobs. It seems to me that the paradox you bring up would only apply to very limited use cases; I don't know many products people would want to increase consumption on scale with the job loss for that to work. But I may be biased by my automation experience in high dollar products.
Example: I know of an onion farmer who recently automated. Even if all other onion farmers automated im not going to 5x my consumption of onions, and that's a low cost product
You're also looking at the overall market rather than a single company or country. If you automate before your competitors, the result is that you can produce onions for 20% the original price because you need 20% as many workers per kilo of onions. Even if people buy exactly the same total number of onions at the lower price, they now buy 25 times as many from your company and your country because you have the best price on the world market, so you hire five times as many domestic workers.
If other countries do the same thing then you're back to parity and everyone requires 20% as many jobs to produce that many onions, but you still have more domestic jobs than if they automated and you didn't, because in that case you would end up with zero flat rather than at least keeping 20% of the original workforce.
As the efficiency continues to improve, if demand doesn't follow suit the will be an inevitable job loss. The factories I witnessed automation come in did not ever bring those lost jobs back. Sure, in the short term the displaced workers were sometimes moved to a different plant, but those jobs are almost certainly getting automated in the future too.
Outsourcing implies going to the lowest bidder and less investment locally with fewer peripheral jobs. It is also "brute force" and commoditization. Inevitably the destination nation will develop competition which may be able to compete with the abroad nation who will have little special on them. It risks the loss of the industry even as an outsourcer.
I know this is true for a lot of things, but my occasional experience with the auto-industry gives me the sense that it is more true for the auto industry than other places.
https://www.reuters.com/article/us-autos-gm-treasury-idusbre...
You have to count the losses from the Motors Liquidation Company half of the split.
I'm not sure your nitpicking distinction really matters here...
Oh, okay.
I mean, I do, being from Detroit myself. I just don't know why you got this twisted.
(Grand River & Five Mile)
The real point of TFA, though, is that GM employs the least unionized labor of the Detroit three, which really should have been the headline.
Vs talking about stuff like Ford not being Detroit because it’s merely close as hell to Detroit and essentially considered Detroit when talking about Detroit as a car industry hub.