Foreign Makers, Settled in South, Pace Car Industry

Discussion in 'Economics' started by trader99, Jun 22, 2005.

  1. trader99


    It's NOT all negative outsourcing. Some of it is insourcing. Perhaps, one day when China and India become developed enough like Japan, perhaps they will start opening operations here in the U.S.

    So, it will reverses one day.. Except most people's bosses will be foreigners. HAHA.



    HUNTSVILLE, Ala., June 17 - By most accounts, the United States auto industry is in deep trouble. But don't tell that to the newest workers here in Alabama, where foreign carmakers are redefining the auto industry in America.

    Automakers from overseas first began building manufacturing plants in this country in the 1970's, largely as a defensive response to protectionist threats. But even as General Motors and Ford have been announcing thousands of job cuts, the foreign automakers are aggressively building new factories and expanding plants they opened not long ago.

    In Alabama alone, Mercedes-Benz has doubled the size of its plant outside Tuscaloosa in the last year, while Honda has done the same at its factory in Lincoln. A new plant from the Korean automaker, Hyundai, opened just last month in Montgomery. And Toyota is adding 300 more workers here at its two-year-old plant in Huntsville to produce powerful engines for the big pickup trucks that will be made in a factory opening next year in Texas.

    In other industries, American manufacturers have been some of the most avid investors abroad. But in the case of the auto industry, the competition has been brought right to Detroit's doorstep as the strongest foreign companies are moving to states eager for their investments, most of them in the Deep South, and hiring workers seeking the stability that home-grown companies can no longer offer.

    As a result, a quarter of all cars and trucks built in the United States are now made in factories owned by foreign automakers producing foreign brands, up from 18 percent in 2000. The assembly plants alone employ nearly 60,000 people, and that number continues to grow.

    The employment at the American companies still dwarfs that of the newcomers. Automakers in Detroit employ four times the hourly workers - 250,000 - but that number is continuing to fall. Already, G.M. has announced that it plans to cut 25,000 of those workers by 2008.

    Union jobs at the Big Three plants pay a dollar or two more an hour - about $26 an hour compared with $24 or $25 an hour for the nonunion jobs at the foreign plants. But compensation at the American automakers swells to an average of $55 an hour when health care, cost of living and other benefits are counted, compared with $48 an hour, on average, at Toyota.

    Toyota gets more out of its workers. Its plants operate at about 107 percent of the manufacturing capacity, meaning that they are constantly running on overtime, according to Harbour & Associates, a consulting firm that tracks manufacturing. By contrast, G.M.'s plants are operating at only 75 percent of their capacity, Harbour found.

    For David Herring, who grew up in Pontiac, Mich., outside of Detroit, his new job at Toyota's engine plant in Huntsville is a return to the industry that employed his uncle and other family members, but that he had originally decided to avoid. He earned a football scholarship to the University of North Alabama and then became a social worker. The job wore him down, he said, and he saw opportunity and stability at Toyota.

    "Basically, auto country is moving down south," said Mr. Herring, 29, who met Toyota's president on his first day on the job. He added, "Fate brought me here."

    For the most part, the first wave of foreign-owned plants were farther north, in places like Ohio and Kentucky, while the newest factories are concentrated in the Deep South.

    The state of Alabama has been particularly generous in wooing auto companies. In 1993, it provided $258 million in incentives and tax breaks to land its first foreign automaker, Mercedes. The state has spent hundreds of millions since to attract the Honda, Hyundai and Toyota plants.

    But what may have clinched the deals was the state's laws - similar to those on the books throughout much of the South - that do not require workers to join unions even if their plants are organized.

    "The auto industry has found a welcome down here," said Johnny L. Mathis, a business development manager with Qore Property Sciences, a company that has prepared the construction sites for many of the new auto factories and parts plants.
  2. trader99


    (Page 2 of 2)

    Since 2000, the Big Three automakers have lost eight points of market share just to their Japanese competition. Detroit now holds 57 percent of the American car market, while foreign automakers have 43 percent.

    Among the companies adding jobs, no company is courted more than Toyota, the world's richest car company, which is gaining strength even as G.M. falters. Beyond expanding its engine plant here, where its ultimate investment will be $450 million, Toyota is building a $1 billion factory in San Antonio - set to open next year with 4,000 workers. And company officials are looking at even more places, including Arkansas, to build additional factories.

    Toyota's impact on the nation's economy has been powerful. A study by the Center for Automotive Research, which has yet to be published, estimates that Toyota's investments in the United States had led to 386,600 American jobs as of last year - including jobs at suppliers and in surrounding communities.

    That includes the 29,000 assembly workers at Toyota's plants, plus another 74,000 people employed by the automaker in its California headquarters, design and engineering centers and at its dealerships. And those figures do not include Toyota's expansion plans. In Texas alone, the study estimates, Toyota will help create another 9,000 jobs.

    The impact helps explain why "states are falling all over themselves to land a car company," said James T. Bolte, a Toyota vice president in charge of the Alabama plant.

    In a state where the average wage is $31,000 a year, according to the Commerce Department, Toyota's workers earn $45,000 on average, with overtime, plus a benefits package valued by the company at $10,000. Workers receive medical, dental and life insurance coverage; a traditional pension plan and a 401(k) plan; an allowance for child care; and an annual cash bonus, which was $3,850 a worker last year.

    Prospective employees are lining up to apply for jobs at the new factories. About 30,000 people vied for the 2,000 additional jobs at the gleaming white Mercedes plant west of Birmingham, where its workers dress in royal blue shirts that bear the company's three-pointed star logo on the right shoulder and their names on the left.

    For Tammy Young, 36, the sprawling Mercedes factory was a prize after being laid off at U.S. Steel's big Birmingham operation, where she worked for nine years. In between, she held a temporary job at the Honda plant and worked at a dairy store.

    The factory has just begun building the new R-class, a luxury station wagon, which will sell for about $50,000. It joins a new version of the M-class sport utility, the original vehicle produced here, whose sales are up 66 percent since it was updated last spring.

    Toyota, which opened its plant with 150 workers in 2003, had 9,000 applications for those positions, even though jobs in an engine plant lack the allure and glamour of building cars at places like Mercedes.

    The process of getting a job at Toyota is rigorous, meant to weed out those not meant for the repetitive, sometimes hot work inside the plant, which sits on 200 acres surrounded by cotton fields.

    After interviews, job seekers had to complete five weeks of pre-employment training at a center, which is run and paid for by the state, across the road from Alabama A&M University. The drill included exercises to see if they could work on teams and hours spent on a practice assembly line. None of the applicants were paid. Anyone who was late or missed a training session was instantly cut.

    The few successful applicants went through nine weeks more training inside the engine plant, including two hours a day in a fully equipped gym where they ran on treadmills and lifted weights to build endurance.

    Unlike plants run by Detroit automakers, where a worker can spend 30 years screwing on the same parts, everyone on the Toyota line is taught to do every type of assembly job, so they can switch positions when needed to keep production flowing.

    "It was hard," Mr. Herring said, "but it all had a purpose."

    To many, the purpose is the stability of a job at Toyota, which earned $4.8 billion in 2004, as the Detroit companies struggled. Jewal Fossett II, 31, was encouraged to apply by his father, who had bounced from one Ford job to another.

    The younger Mr. Fossett, who previously worked for MCI, said he had one reason for applying: "I have my own family to raise."

    Noralyn Lassiter, 22, said she gave up her job as a customer service representative at DirecTV, where she spent days at a desk "on a headset." Now, she will stand for hours a day at a workstation, redolent with the faintly acrid smell of engine coolant. But, she said, "It's hard to find a job that you can stick with a long time."

    Lately, at least some Toyota officials in Japan have expressed concern that the automaker's rapid growth could cause political problems, with one senior executive proposing that the company might raise prices or temper its expansion to give G.M. and Ford a break.

    But, Mr. Bolte, the Toyota executive, is doubtful that the company is planning to retreat. "I haven't heard anybody say, 'Slow down,' " he said.
  3. EBenson


    ...the way that Detroit used to take "care" of the competition obviously doesnt work with japanese and euro carmakers so they are getting killed by the competition that is showing the Detroit wise guys that cars can still be made,partly designed and sold for a profit in the US...but yea,stupid me - i forgot that the unions are the ones to blame...strangely though the BMW management forgot to complain about the strong euro in past 1.5 years...those germans have still a lot to learn from "real" management guys

    Anyway,a small reminder from Detroit's "glorious" past :

    "An Open Letter to The Automobile Industry In The Interests Of The American Motorist By Preston Tucker President, Tucker Corp.


    As you know, we are building a completely new motorcar—the rear engine Tucker. Being new-comers in the field we have had to start from scratch and work harder and faster than most of you. For example, instead of the 20 months you usually take to produce a new model of conventional design, my engineers have taken less than 10 to perfect a car which I firmly believe opens a new era in motoring.

    In this same year, we have completed a nationwide dealer organization, acquired the largest most modern automotive plant in tile world, and cleared the decks for mass production. These things have been done—and well done—in spite of persistent and unfair opposition from within the automobile industry.

    Please don’t misunderstand me. Many of you have gone out of your way to be friendly to the Tucker Corporation. It’s true, some of you have not shared our conviction that a rear-engine car is the car of the future, but you have been willing to let the American motorist judge that for himself, in the firm belief that what’s best for the motorist is best for you in the long run.

    But there is another group-a very powerful group—which for two years has carried on a carefully organized campaign to prevent the motoring public from ever getting their hands on the wheel of a Tucker. These people have tried to introduce spies into our plant. They have endeavored to bribe and corrupt loyal Tucker employees. Such curiosity about what goes on in the Tucker plant should be highly flattering, I suppose. But they haven’t stopped there.

    They even have their spokesmen in high places in Washington. As a direct result of their influence, Tucker dealers all over the country—men of character and standing in their communities—have been harassed and grilled by agents of the government and Congressional Investigating Committees.

    My associates and myself and the Tucker Corporation have been investigated and investigated, time and again. Millions of dollars of the taxpayers money have been squandered in an utterly fruitless effort to kill the Tucker, to bar us from needed raw materials, to keep us so busy defending ourselves and our efforts that the motoring public would tire of waiting for a completely new rear-engine car. But they haven’t been able to stop us.

    You know, perhaps, that our bid on a government owned steel plant in Cleveland was recently refused. Let me tell you the inside story of that; Sealed bids were called for, in accordance with law. Only two were submitted, one by the steel company operating the plant, the other by the Tucker Corporation. The bids were opened nearly five months ago. The Tucker Corporation’s bid was high. If Tucker’s bid had been accepted, it could have given taxpayers as much as four million dollars more for the plant than the steel company offered.

    This plant would provide ample raw materials for volume production of the Tucker and would serve numerous small businesses now starving for steel.

    You would think our high bid for the plant would have been accepted long ago. For five months political pressure, ruthless and barefaced, has forced delay after delay. We’re still waiting. We don’t know who is responsible for this. But who do you suppose is getting the raw material from this plant we want for Tucker and small business? None other than some well known - and unfriendly—automotive manufacturers.

    Most of the political pressure and investigations we have had to face these last two years can be traced back to one influential individual who is out to "get Tucker." If he acts from honest conviction in his efforts to prolong the motorcar, then I hope he will have the courage to tell the public just that.

    But personally we believe he has more obvious motives. Evidence in Tucker files, for example shows the controlling interest in a large sales agency of an automotive corporate subsidiary is in his wife’s name. And when he gave an elaborate party at a Washington hotel a few months ago, who do you suppose paid the bill? None other than an official of an automobile manufacturer—a manufacturer distinctly unfriendly to the Tucker Corporation. Is all this, too, just coincidence?

    Now once more we are being investigated. Just at the time we are getting into production on a car that has won the hearts of the million motorists who have seen it, just when the job of making automobiles demands all our time and energy, my associates and I are asked to take time out again and again ever since we had the temerity to suggest America is eager for a completely new car.

    What would you think in our place? Would you say it was just coincidence—or would you think it was planned that way?

    You wonder, perhaps, why I have made these statements in an open letter. Here’s why: As President of Tucker Corporation, I’m responsible to 1,872 Tucker dealers and distributors and nearly 50,000 Tucker stockholders. These people have put $25,000,000 into the Tucker Corporation. And I am going to protect their interests.

    In addition, we have promised American motorists a completely new rear-engine motorcar, and hundreds of thousands have written us that they are ready and waiting to buy it. Every day letters come to us from people who know that in fighting to put the rear-engine Tucker on the road we are, at the same time, fighting for their right as motorists to get the finest engineering American ingenuity can produce.

    We are going to justify the support these motorists so generously have given us. We are going to give them the car they want at a price they can afford, and without paying tribute to the Black Market. How this will be done will be announced today.

    But in the meantime, I want to register the fact that we have just begun to fight. We have been patient so far, but our patience is wearing thin. We can give names, dates and places to prove our charges of unfair competition, and if necessary we will do it.

    When the day comes that anyone can bend our country’s laws and lawmakers to serve selfish, competitive ends, that day democratic government dies. And we’re just optimistic enough to believe that once the facts are on the table, American public opinion will walk in with a big stick."
    June 15, 1948
  4. yeayo


    This can't be right. So the total compensation - all benefits included - for the average auto worker is about 100k a year. Thats pretty damn good.
  5. trader99


    The writer isn't clear. But what he MEANT to say is that the U.S. union workers get ONE or TWO ($1-$2) MORE than the average Toyota autoworkers.

    BUT if you account for pension cost, health care, blah blah,etc. it swells up to an average of $55/hr. The workers dont' get paid $55/hr. BUT that's what it effectively cost the companies.