> Healthy competition ensures that best
> pactices are emulated

Of course, it also ensures that bad practices are emulated. Such as the race to the bottom, the transfer of earned wealth from one group of stakeholders (the employees) to others, the reversal of Henry Ford's "$5/day" insight, looting of pension funds, etc.

Cranky

The more important question is whether foreign-owned firms are going to be more innovative, less innovative, or as innovative (or uninnovative) as/than American-owned firms in meeting the need for (1) much greater fuel efficiency and eventually (2) a true alternative energy vehicle. These kinds of microeconomic arguments don't go far enough.

The Big 3 and the UAW received a wake up call in the mid 70s.

Unfortunately they pulled the blanket over their collective heads and went back to sleep for 20 years.

Now they will never catch up, and will continue to lose market share.

The federal government should not worry about the Big 3, other than keeping competition fair.

The federal government should worry about the middle class if we continue to destroy manufacturing jobs at the current pace (auto and non-auto). We can't have too many people working $9 an hour jobs.

Cranky is correct, as usual.

I've read that demand for the Toyoto Pious (oops Prius) outstrips supply because Toyoto is losing money on every vehicle it sells. If true, don't expect too many more P's to be built.

Please give federal dollars to american auto companies. Mexican auto plant workers could be loosing jobs!

The domestic autmakers - both management and labor - are getting what they deserve. Management wasted billions and billions of dollars buying companies such as Jaguar,Range Rover SAAB and HUMMER - all of which then required billions of more investment to be sustained. Had those billions been invested in actual product, ie passenger cars, GM and Ford might have product line ups that bring customers into the showrooms.

For labor, it is a crime that the UAW negotiated contracts with totally unrealistic terms that could never be sustained (and management knew could not be). When I learned that GM extended health care coverage to the grandchildren of UAW employees I was appalled.

There are starting to be glimmers of life at GM, but they need to shed 2-3 brands at least so they can focus resources. I say take Buick, Hummer and SAAB out behind the woodshed and shoot em or sell em to somebody. The Chinese appear to be in the market for global brands - maybe they'll buy them.

Bill Ford is in way over his head and FoMoCo will likely have to fall further before they wake up.

The Japanese do a great job building cars in this country and I say more power to them. It shows that American workers and factory management can be globally competitive in the automotive industry .

Cranky, protectionists have long warned of the "race to the bottom", especially in terms of the environment. Do you have any evidence to support your claims?

Further, Ford's efficiency wages were OK when they were voluntary.

SteveinVT, as usual, is correct.

Toyoto is losing money on every vehicle it sells.

Yeah, but its making it up in volume!

Toyota does not lose money on any vehicle it makes, the Prius nor any other. If the Prius begins to sell well in the United States. Toyota will follow their usual practice and begin manufacturing it in the US. This is normal business practice for Toyota, Honda, and Nissan.

And Cranky, profits are put back into the business except for dividends and the like, and all the Japanese auto manufacturing companies are publicly traded on the Nissei and the US stock exchanges. If you want to reap some of that profit benefit, buy some stock. The employees of these companies in the US are well paid and receive competetive benefit packages, as well as discounts on the product, etc. I know this to be true because I am employed therein. Bad practices emulated? I think not. Learn before posting, that's my philosophy.

the Prius is built in Japan specifically because it's currently sold to a small "boutique" audience.

If it ever becomes a mass market and profitable vehicle, I strongly suspect production will migrate somewhere else.

> the Prius is built in Japan specifically
> because it's currently sold to a small
> "boutique" audience.

I wouldn't call the Prius a "boutique" product, but rather a long-term R&D effort. The current Prius is the 2nd generation (3rd if you count the various prototypes that have floated around since 1965, but 2nd if you count only serious efforts), meaning that Toyota is absorbing its lessons and is well into designing the 3rd generation. Meanwhile they have licensed their _1st_ generation technology to GM and Ford.

Now, hybrid might be a bad design choice and not go work out in the end. Or it might lead to pure electric, fuel cell, or something else. But in any event Toyota and Honda have been in the arena, learning the difficult lessons and gaining invaluable feedback. While GM in particular has concentrated on (1) scrapping its industry-leading pure electrics (and if I know anything about GM, sending anyone involved in that program to Siberia (2) praying that gas prices go back down to $2 so they can sell one more slug of super-heavy SUVs. Which do you think is the better long-term plan?

Personally, I doubt that Toyota is making an operating loss on the Prius either; the components are for the most part less expensive than an equivalent all-gas car.

Cranky

There's some pretty drastic cherrypicking going on the Cato paper.1993 was the worst year for the industry since the early 80s. The data in the Figure 1 suggest that output has been essentially flat since the mid-80s, and below the peak attained just before the first oil shock.

Cranky writes: "Personally, I doubt that Toyota is making an operating loss on the Prius either; the components are for the most part less expensive than an equivalent all-gas car."

And their Prius R&D is far more likely to have good long-term returns than, say, yet another hemi retread. I would guess that some work in the electric/digital portions of the hybrid could be widely licensable for non-automobile applications. Everyone would like better batteries, for instance.