December 16th, 2008 at 11:33am
The debate about bailing out the Big Three has hit a fever pitch. It seems like everybody wants to weigh in with their opinions, and the louder they rant, the more coverage they get.
Strangely, the media is devoting far more attention to the $25 billion bridge loan for the automakers than it is to the $700 billion bailout to the financial industry. How does that makes us a better informed citizenry?
There are always two sides to every argument, but this discussion shows how much misinformation, misperception and wrong-headed “facts” are being bandied about. So here is my chance to debunk the five most popular myths that I keep hearing.
“The Big Three only build cars that nobody wants.” Oh really? Somehow last year they managed to find over 8 million customers to buy those cars nobody wants. And a good many of those people are not just satisfied with their purchase, they are passionately devoted to them. Corvette, Mustang and Viper have practically created cult followings. F-150, Silverado and Ram owners are the most loyal buyers in the business. Even with all their other vehicles, customer satisfaction has never been higher.
“The Big Three build crappy quality.” Says who? According to J.D. Power’s Vehicle Dependability Survey, Mercury and Cadillac are rated ahead of Toyota. Buick and Lincoln are ahead of Honda. Ford is ahead of Infiniti. Chrysler and Dodge are ahead of Mini, Scion and Volvo. In fact, of the 10 brands at the bottom of the list, 8 of them are import brands. The J.D. Power numbers show the Big Three have closed the quality gap.
“The Big Three cars don’t get good fuel economy.” Only if you don’t look at the EPA numbers! Do an apples-to-apples comparison of vehicles with the same size footprint and powertrain and you’ll see the Big Three match, or in some cases, beat their foreign competitors. When it comes to hybrid technology, all of the Big Three have hybrids in their showrooms right now. Only two of the eight Japanese automakers make hybrids (Nissan buys its hybrid technology from Toyota). Not one Korean or European automaker has a hybrid yet.
“UAW plants are not competitive with the transplants.” Only if you ignore the facts. The 2008 Harbour Report shows Chrysler is tied with Toyota and ahead of Honda in manufacturing productivity. GM is ahead of Nissan. Ford is ahead of Hyundai. But this is a “How many angels can dance on the head of a pin?” argument. All of them are within one labor hour or so of each other. In other words, they are all extremely competitive.
“Those greedy UAW workers make $75 an hour,” or “Those greedy UAW workers make $150,000 a year.” Wrong. This includes total labor costs, which dumps the cost for all retirees into the equation. The average worker on the line actually earns $55,000 a year, which comes to about $28 an hour. With benefits those numbers have been a lot higher in the past, but after last year’s historic UAW contract those benefits get whacked down to levels roughly equivalent to the transplants.
The Big Three have been going through a painful, gut-wrenching restructuring for several years, and that process will continue into the future. I’m just amazed they don’t get credit for the significant progress they’ve made. And I’m puzzled why these myths continue to persist in the face of the facts.