Auto Industry

Toyota Plant: The Competition Is With Canada (and Mexico)

Marcy Wheeler — Fri, 31 Jul 2009 10:30:06 -0400

I've been meaning to cover the likely closure of the joint Toyota-GM plant in Fremont, Calif., for some time. But this comment from DiFi is worth a post in itself.

Sen. Dianne Feinstein, D-Calif., led a delegation of state lawmakers who said Thursday that they were exploring the use of stimulus funds among other moves to keep Toyota in California.

"But one of the things California has to come to grips with is that the competition here is Kentucky and Mississippi, and you have this high cost-of-doing-business problem," said Feinstein, who phoned Gov. Arnold Schwarzenegger to talk about Nummi.

The NUMMI (New United Motor Manufacturing Inc) plant was opened as a joint venture between Toyota and GM in 1984. Back then it was a shiny new-fangled plant-—the future of auto assembly in the United States. It's also, notably, Toyota's only unionized American plant. GM has pulled out of the partnership as part of its bankruptcy, which has led Toyota to consider closing the plant altogether. DiFi and the rest of California's politicos are scrambling to save the 4,700 high-paid union jobs.

And, apparently, DiFi has created a myth for herself that she is competing with (just) Kentucky and Mississippi for these jobs.

To the extent that California is now putting together a set of incentives to convince Toyota to stay—a model pioneered by Southern states—she is correct. And to the extent that Toyota might move the Corolla and Tacoma production to their currently vacant Mississippi plant (which was originally slated to assemble the Prius), she is correct that she's competing against MS.

But the more likely location for the production currently done in Fremont is, for the Tacoma, Mexico and, for the Corolla, Canada—where factories that already produce those models are currently running below capacity.

In addition, Toyota has plenty of unused production capacity in North America—including factories in Mexico and Canada that make the Tacoma and the Corolla, said George Peterson, president of Tustin consulting firm AutoPacific.

[snip]

Toyota's sales in the U.S. are down almost 38% this year as the auto industry suffers its worst slump in decades. As a result, the automaker has excess production capacity at its North American auto plants, which can produce more than 400,000 vehicles a year.

In the first six months of this year, the assembly line making the Vibe and the Corolla rolled out only 76,000 vehicles, a 25% decline from a year earlier, while the line making the Tacoma saw an 83% drop in production, according to the Automotive News Data Center. The plant was unprofitable last year, Michels said.

The distinction is critically important because DiFi's fiction that Kentucky and Mississippi are the problem pretends that the problem here is just wage costs (and, though she doesn't say it, union labor).

But if Toyota's moving these jobs to Mexico and, especially, Canada, then it's not just hourly wage costs that are the problem. It's health care.

You'll recall that Toyota made precisely this calculation a few years back, when it decided to site a new RAV-4 factory in Canada because it wanted better education levels than were available in the South, but it also wanted the government health care available in Canada.

We are—as we speak—about to lose another 5,000 middle class jobs in this country because our health care system sucks. And DiFi is doing little more than wringing her hands and trying to use stimulus funds rather that fixing the root problem.

(Cross-posted from emptywheel)

Who’s Dismantling GM?

OurFuture.org Staff — Wed, 03 Jun 2009 09:07:10 -0400

A Lemon of a Bailout

OurFuture.org Staff — Tue, 02 Jun 2009 08:47:48 -0400

The 'New GM': Layoffs, Factory Closings, Offshoring

OurFuture.org Staff — Tue, 02 Jun 2009 00:33:46 -0400

I Pledge to Buy a Made-in-U.S. Car

Roger Hickey — Mon, 18 May 2009 17:27:48 -0400

I pledge that soon I will buy a new, fuel-efficient car—built in America by United Auto Workers members.

I'm asking YOU to take this pledge with me and get others to do so, too.

If enough Americans take this pledge—and pass it on—we can revive our country's auto and manufacturing industries. And we can give a big boost to the workers and communities—and to our country—that depend on those crucial industries.

Click here to take the American auto revival pledge. On that page you can pledge that:

Your next car will be manufactured in America.
It will be more fuel-efficient than my last one.
It will be made by UAW workers.
You will only consider foreign cars built in the U.S. if the UAW represents their workers.

You can also pledge to sign the Petition for Auto-Supply Chain Jobs sponsored by the Alliance for American Manufacturing, the Mayors and Municipalities Automotive Coalition, and the United Steel Workers.

In this disastrous economic meltdown, the workers in the auto and supplier plants and dealerships of our country are losing jobs by the hundreds of thousands. And the proud UAW has made painful yet patriotic wage concessions in an effort to save America's most important industry.

I want Barack Obama's plan to save the industry and revive manufacturing to succeed—so I'm stepping up to do a small thing: I pledge that my next car will be made in the good old U.S.A.

Now, I know that for some of us, buying American may feel like a sacrifice. But a Malibu matches the quality of a Honda these days. And even Americans lusting after a BMW will be amazed at the performance of today's small Cadillac. And the Ford Escape hybrid gets mileage comparable with the Prius. If we all do this together, we can make American cars cool again—and give American companies the time to invest in a new generation of fuel-efficient competitive automobiles.

This recession is a national emergency—as serious as 9-11. Back then no one was asked to do anything—except our soldiers. This time, it is our economic future that's at stake.

GM, Ford and Chrysler sold 6.3 million domestically-produced cars and light trucks in 2008, two million fewer than in 2007. Auto analysis expect that sales will drop to 4.4 million this year.

A typical assembly plant can build about 250,000 vehicles and will employ about 2,500 workers. If we collectively bought 1 million additional vehicles this year, that would save the equivalent of about four assembly plants and the jobs of 10,000 workers.

In addition, every job in Big Three domestic auto assembly creates an additional nine jobs in supplier industries and communities. So, if 1 million new buyers purchase domestic vehicles, it would create or save an estimated 100,000 jobs, based on data from the UAW and independent research groups.

We all have to step up. If you agree, take the pledge, and then, if enough of us do it, we can revive America.

After a nationwide bus tour, a Capitol Hill Teach In on Auto Jobs on May 19 will feature national economists, labor and business leaders, Members of Congress, local elected officials and everyday workers. MSNBC's Ed Schultz will lead off discussion of principles for revitalizing the auto industry by supporting American jobs and communities. To learn more about how the auto manufacturing industry impacts local communities, visit www.americanmanufacturing.org.

A personal note: At 6 a.m. one day last week I was sitting in the DMV auto inspection line, hoping my 1990 Plymouth Laser would make it through one more inspection. Other people in the line complained about how slow it was moving. They're laying people off here too, one guy explained. And those layoffs, as in every city and state in America, are due to lowered tax revenues due to growing unemployment and the deepening recession.

As I sat idling in the DMV line I knew that, even if it passed inspection, my old car (which has no air bags or anti-lock brakes), was putting more carbon dioxide and other pollutants into the air than it did when it was new. I realized that my frugality in nursing along this old car (which has served me well) was not only likely to kill me, it was helping to kill the planet and the economy.

Amazingly, my old Plymouth passed. But I drove to work that morning grateful to have a job to go to—and resolved that it was time to buy a new car. And the car will be made in the U.S.A.

Don't get me wrong. I didn't make the decision out of altruism. Like most Americans, I really enjoy getting a new car. Some of my green friends try to pretend they don't need a car. But they all have at least one, maybe more. And most of us—even the greenest of greens—really enjoy driving a new car, especially when circumstances push them over the edge. Many of my friends with kids who have left the nest, for example, have been thrilled to graduate back from their minivan to anything that doesn't feel like driving a bathtub. Like them, I had just handed myself the excuse to start car shopping.

As many of us who can, let's pledge to buy a new, fuel efficient car made by the UAW.

What's Good for General Motors Is... Never Mind

Robert Borosage — Wed, 13 May 2009 09:29:54 -0400

Is the Obama administration saving General Motors or is it saving auto industry jobs in the U.S.? Is it saving GM as an American brand or GM as an American manufacturer?

These aren't academic questions. General Motors, which has been buttressed by $15.2 billion in loans from taxpayers with more to come, has been circulating a plan for its recovery which envisions it doubling the number of cars that it builds in China, Korea and Mexico and sells in the U.S. According to a United Auto Workers analysis, GM projects opening the equivalent of four plants abroad to build cars for the U.S. market, while closing more than that here at home.

Labor costs in those countries are far lower. While paying a U.S. autoworker with benefits cost about $54 an hour (before the massive concessions), a South Korean worker earns about $22 an hour, a Mexican worker earns less than $10 an hour and some Chinese workers can earn as little as $3 an hour. This may make sense for GM's bottom line, but it makes no sense for American taxpayers.

Although GM is an American brand, it is a global manufacturer. What's good for GM is no longer necessarily good for America.

This isn't the first time the administration's efforts to rescue the U.S. economy have run into the reality of globalization. The furor over the bonuses paid to AIG executives distracted from the real scandal: that $93 billion in taxpayer money was funneled not simply to Goldman Sachs, which is bad enough, but to a parade of Europe's leading banks—Germany's Deutsche Bank, France's Societe Generale, UK's Barclays. No explanation was made on why U.S. taxpayers had to pick up the entire tab.

Knowing that the U.S. can't afford to lift the entire global economy, Obama went to the G-20 meetings intent on getting Europeans to adopt bold deficit-financed recovery plans like that of the U.S. But, led by the Germans, the Europeans pretty much stiffed the president they so admire. That left the U.S. to do the lifting, and rack up the debts, dangerously weakening the recovery effort.

Saving good jobs in America can't be done simply by rescuing GM or Chrysler. The Europeans get this. The Italians provided $1.7 billion in aid to Fiat, on the condition that the plants stay open in Italy. France loaned $8.5 billion to its big three automakers, but again with pledges to retain jobs in France.

The U.S., however, is the champion and the protector of the global market. Americans have served as the consumers of last resort for the world. We've largely spurned industrial policy—other than that associated with the military industrial complex, agribusiness and finance. We've followed—from Reagan to Rubin—a high-dollar policy that made imported goods a bargain and U.S. exports expensive. We've allowed our global corporations and banks to define our trade policy, while borrowing $2 billion a day to cover record trade deficits. As William Greider summarizes, we've assumed that aiding multinationals in the global economy served the national interest. "That is how America became a debtor nation with its steadily weakening industrial base and stagnant wages. That condition became the predicate that led to financial crisis."

Now those days are over. Our trading partners must be put on notice that the old order isn't coming back. The U.S. can no longer afford to borrow unsustainable amounts to buy stuff made abroad with the jobs our companies have moved there. We need to lower the dollar and balance our trade. We need to build things in America once more.

Saving GM won't work without broader changes. Export-led countries like Germany and China must be challenged to generate internal demand (the Chinese have done far more of this than our European allies) to help reverse the global downturn and as a first step to a new and sustainable growth model. Taxpayer dollars should be conditioned on the maintenance of good jobs here—rather than subsidize their export abroad. We should be leading, as Obama has done, global efforts to help developing nations recover and lift their own standards in the process.

Demanding that taxpayer dollars go to save jobs here will be denounced as protectionist. But it is squandering billions in public monies on companies that then move jobs abroad that will fuel a protectionist fury.

Save General Motors or save an auto industry and jobs in America? The president and the Congress have to decide. It ain't necessarily the same thing.

The Bus Ride To Save American Manufacturing

Steven Capozzola — Wed, 06 May 2009 14:41:54 -0400

Assembly-line workers and Michigan communities aren’t the only ones with a stake in a strong U.S. auto manufacturing industry. More than 7.2 million paychecks are tied to U.S. autos, ranging from supply manufacturing to health care, education, service, retail and other jobs.

Even individuals outside the auto industry benefit in communities where middle-class auto and supply chain workers’ income and property taxes fund public services such as teachers, firefighters and police officers.

That’s the message that workers, community leaders, elected officials, labor leaders and others will bring to an 11-state, 36-stop “Keep it Made in America” bus tour the week of May 11.

Bus tour participants will include workers from steel, iron, glass, plastics and rubber, aluminum and auto parts facilities, local auto dealers, community employers, and local leaders. The tour is sponsored by the Alliance for American Manufacturing (AAM), the Mayors and Municipalities Automotive Coalition, and the United Steelworkers (USW).

On April 30, President Barack Obama said, “If you are considering buying a car, I hope it will be an American car.” Participants in the “Keep it Made in America” tour support the president’s call and recognize the millions of jobs tied to the fate of the U.S. auto parts chain.

Auto parts suppliers drive economic growth in states all over the country. Auto parts suppliers are either the top industrial employer or among the top five industrial employers in 19 states. The “Keep it Made in America” tour will stop at six states where auto parts suppliers are the top industrial employer: Michigan, Ohio, Indiana, Kentucky, Tennessee and Missouri. The tour will also stop in Illinois, Arkansas and Alabama—where auto parts suppliers are among the top five industrial employers—and in Texas and Louisiana.

A website featuring regular updated tour footage, www.madeinamericatour.org, will be launched on May 11.

Steven Capozzola is communications director for the Alliance for American Manufacturing. The alliance is in a partnership with the Institute for America's Future to promote American manufacturing jobs.

Treasury's Bailout Promises Runneth Over

OurFuture.org Staff — Wed, 31 Dec 2008 12:44:07 -0500

Bailing Out the Financial Bailout

OurFuture.org Staff — Fri, 12 Dec 2008 15:34:13 -0500

We are retrieving your content. If it does not appear in a few seconds, please click here.

ALLOWING AUTO INDUSTRY TO GO UNDER WOULD CREATE “BODY BLOW” TO SLUMPING ECONOMY

Toby Chaudhuri — Thu, 04 Dec 2008 00:00:00 -0500

WASHINGTON – With U.S. automakers facing opposition for an expanded $34 billion rescue package on Capitol Hill today, Campaign for America’s Future co-director Robert Borosage said allowing the auto industry to go under would create a “body blow to the already battered economy.” Borosage noted that there’s a big difference between how lawmakers are responding to the good faith effort from the auto companies and its unions and how they dealt with the banks that caused this crisis in the first place.

STATEMENT OF ROBERT BOROSAGE

The U.S. would be foolish to allow its auto industry to go under, which would be a body blow to an already battered economy. Congress should not make the auto companies the victims of their failure to impose sensible conditions on Wall Street.

Any bridge loan should be conditioned on commitments to moving towards high efficiency cars, limits on executive compensation, and oversight of global operations. U.S. taxpayers should not be subsidizing the transfer of more and more production abroad. An independent board must be set up with authority to enforce those conditions.

Much of the congressional posturing on the auto companies is displaced passion. The auto companies and its unions have come to the Congress with far more detailed plans, including concessions on CEO compensation and wrenching concessions by the unions.

The contrast between that good faith effort for a bridge loan and the ease with which the banks that have caused this crisis have garnered literally trillions of guarantees, loans and investments without any commitments on changing their business plans or on executive compensation is stark.

# # #

**NOTE: To schedule an interview with Borosage, please contact Jennifer Ettinger at jettinger@ourfuture.org or 202-587-1614.**