Re: OT: labor costs, auto bailout

John R. Carroll wrote:
"Ed Huntress" <huntres23@xxxxxxxxxxxxx> wrote in message news:49400c28$0$20292$607ed4bc@xxxxxxxxx
"F. George McDuffee" <gmcduffee@xxxxxxxxxxxxxxxxxxxxxx> wrote in message news:0stvj4dg8aa5te3ohh62u6q0qup40gpbst@xxxxxxxxxx

<snip>

In the meantime, as the article says, 2009 is not the year to let Detroit tank. Maybe 2010. It's cheaper for us now, and better for short-term economic recovery, to keep them afloat. But as soon as possible, I'd cut the lifelines and let them break up.

OK Ed but you have excluded something important. I'd be surprised if you weren't aware but that migh be the case.
Being here in the Los Angeles basin this is pretty much in my face.


All of the importers, without a single exception, have a very large and increasing inventory of unsold vehicles moving from the ports onto rented land in the local area. Large tracts of vacant land, hundreds of acres, are becoming populated with Asia and Europes latest creations.
They can't ship them to dealers because the dealer networks can't finance floor planned inventory.

The Asian builders have plenty of cash and their governments will step in if required to provide more if necessary.

Demand for new cars is headed for just about zero in the NA market and it will arrive at that point in January.
None of the Big Three can finance new vehicle sales today and in January the importers will start to broom their inventories at fire sale prices and provide whatever financing is needed in order to convert their inventory to whatever cash they can.

I think it's safe to say that with the exception of trucks and specialty vehicles, the Big Three or even the Big Six, won't need to produce a single passenger vehicle in North America for three to six months.

Do I need to draw you a better map than that?


JC


Much the same is reported in the news as happening in the UK also. Production exceeding purchasing so storage of excess cars and reducing production and hours. It gets reported on the local news here as one of the main, or the main UK Honda plant is up the road in Swindon.
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