7 myths about American products and workers

http://www.freep.com/article/20081205/COL14/812050400

7 myths about Detroit automakers
BY MARK PHELAN • FREE PRESS COLUMNIST • December 5, 2008

This column by Free Press auto critic Mark Phelan originally was published on Nov. 17 and has been updated.


The debate over aid to the Detroit-based automakers is awash with half-truths and misrepresentations that are endlessly repeated by everyone from members of Congress to journalists. Here are seven myths about the companies and their vehicles, and the reality in each case.

Myth No. 1: Nobody buys their vehicles
Reality: General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of nearly 700,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.

Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year.

Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.

Myth No. 2: They build unreliable junk
Reality: The creaky, leaky vehicles of the 1980s and '90s are long gone. Consumer Reports recently found that "Ford's reliability is now on par with good Japanese automakers."

The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands' overall quality as high as or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.

J.D. Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.

Myth No. 3: They build gas-guzzlers
Reality: All of the Detroit Three build midsize sedans that the Environmental Protection Agency rates at 29-33 miles per gallon on the highway.

The most fuel-efficient Chevrolet Malibu gets 33 m.p.g. on the highway, 2 m.p.g. better than the best Honda Accord. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient non-hybrid Honda Civic.

A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate.

Myth No. 4: They already got a $25-billion bailout
Reality: None of that money has been lent out and may not be for more than a year. In addition, it can, by law, be used only to invest in future vehicles and technology, so it has no effect on the shortage of operating cash the companies face because of the economic slowdown that's killing them now.

Myth No. 5: GM, Ford and Chrysler are idiots for investing in pickups and SUVs
Reality: The domestics' lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry.

The most fuel-efficient full-size pickups from GM, Ford and Chrysler all have higher EPA fuel-economy ratings than Toyota and Nissan's full-size pickups.

Myth No. 6: They don't build hybrids
Reality: The Detroit Three got into the hybrid business late, but Ford and GM each now offers more hybrid models than Honda or Nissan, with several more due to hit the road in early 2009.

Myth No. 7: Their union workers are lazy and overpaid
Reality: Chrysler tied Toyota as the most productive automaker in North America this year, according to the Harbour Report on manufacturing, which measures the amount of work done per employee. Eight of the 10 most productive vehicle assembly plants in North America belong to Chrysler, Ford or GM.

The oft-cited $70-an-hour wage and benefit figure for UAW workers inaccurately adds benefits that millions of retirees get to the pay of current workers, but divides the total only by current employees. That's like assuming you get your parents' retirement and Social Security benefits in addition to your own income.

Hourly pay for assembly line workers tops out around $28; benefits add about $14. New hires at the Detroit Three get $14 an hour. There's no pension or health care when they retire, but benefits raise their total hourly compensation to $29 while they're working. UAW wages are now comparable with Toyota workers, according to a Free Press analysis.

Contact MARK PHELAN at 313-222-6731 or phelan@freepress.com.

The biggest difference I can see is that the competition has national health insurance that is not provided by the employer.

This adds a lot to the production cost of American autos, especially the funding of retirees' benefits in addition to current employees'. (I have seen estimates of $2k per car but cannot confirm that right now.)

The beginning wage is $14 per hour, hardly excessive.

And the top rate of $28 per hour is just over $50k per year. Comfortable but not excessive, imo.

Very interesting.

Looks to me like what they need is a better PR guy.

Looks to me like somebody other than a cheerleader from the Detroit Free Press ought to do the arithmetic. Highest pay, he says, tops out at $28 an hour. Benefits are free? Okay, top wage and benefits isn't $70. It isn't $28 either. It is probably only about $60.

The guy makes a lot of good points, sherman, no doubt. And I think it is pretty accurate. But you have to remember he is a cheerleader for Michigan. Your link is clearly marked: "...column by Free Press auto critic Mark Phelan..."

"The oft-cited $70-an-hour wage and benefit figure for UAW workers inaccurately adds benefits that millions of retirees get to the pay of current workers, but divides the total only by current employees. That's like assuming you get your parents' retirement and Social Security benefits in addition to your own income."

Think about it OC.

That would be like adding the pensions of every retired teacher in wv onto amount paid to current teachers.

Their average pay would probably be $70 per hr. if you did that.

I had heard the $14 per hour starting wage before on Sirius but did not mention it here because I knew the big 3 opponents on here would just deny it.

(like they know)

Seems to me like a lot of this stuff is just urban myth.

Fifteen years ago when I had to calculate labor costs and our highest paid craftsman made $22 an hour, we used $49 an hour. Health insurance and workers comp may be much less in Michigan but I doubt it.

The two-tiered wage where newbies make about 50% what everybody else makes is increasingly common and a union-busting tool. I don't like it but it's there.

The UAW conceded to lower wages for new employees in 2005/2006 contracts to keep higher wages for older employees PLUS job banks and other union perks.

Contrary to what you say Sherman, no one here wants to see the Big 3 put out of business. That’s a misconception you keep repeating. I guess if you say it enough, maybe you think you can get someone else to believe it.

The simple fact is, everyone here, except YOU realizes that the Big 3's troubles didn't start with this current markdown, they've been in trouble for years and this economy is only magnifying their troubles.

Personally, even though I know we likely have to do something, it bothers me to see our government throwing good money down the drain on a failed company and I don't think I'm alone in that line of thinking.

Of the 3, Ford is in the best situation as they can likely withstand this slow down. Chrysler and GM can't. Realistically, the only shot GM has is to reorganize, whether it's mandated by the government tied to loans or in bankruptcy court.

As you've noted many times, Chrysler had their shot 30 years ago. They managed to turn around somewhat but now they're in worse shape then they were in the 70's. They need to go the way of Edsel and Studebaker.

There is no reasoning with him, guys. He only sees what he wants to see, hears what he wants to hear, and he believes what he wants to believe. I'm now convinced he simply can't help himself.

One thing I picked up on right away was his claim that the competition doesn't have the cost of health insurance. This is a newsflash to me.

Did you guys know that the employees of Toyota, Mercedes, and others were beneficiaries of the nationalized healthcare systems of other nations?

I know people who work at Toyota in Buffalo and they not only have excellent health benefits, they provide low cost auto, home, and life insurance as well.

What GM is finding out is you can't hire someone at 25, allow them to retire after 25 years and then carry them on your rolls for another 25 years. Close to a third of that $70.00 wage is for retirees.

Aaron wrote:What GM is finding out is you can't hire someone at 25, allow them to retire after 25 years and then carry them on your rolls for another 25 years. Close to a third of that $70.00 wage is for retirees.

That is why Shermmy has such loving eyes for GM employees.

They are like family to State employees.