Chery to be Detroit's new nightmare

Quality cars at a low price could shake auto industry to its foundations when it arrives in 2010, analysts say

GREG KEENAN
Reuters News Agency and Bloomberg News

July 5, 2007

Small cars made in China and bearing the Dodge or Chrysler name will begin arriving in North America in 2010 in what will be a watershed moment for an industry that employs hundreds of thousands of people in Canada and the United States and generates tens of billions of dollars in wealth.

The newly independent Chrysler Group signed a deal yesterday with Chery Automobile Co. of China to develop subcompacts and other small vehicles that will be sold in North America and Europe in a little more than two years.

If Chrysler and its Chinese partner are able to deliver to developed markets a high-quality car at less than $10,000 (U.S.) - the auto industry will be shaken to its foundations. It has the potential to create massive job dislocation in high-cost countries with long-established vehicle manufacturers.

The strategy of low-wage workers in China building mid-sized cars, pickup trucks and sport utility vehicles to be shipped into Canada and the United States is a nightmare scenario for the CAW and the United Auto Workers.

Although Chrysler and Chery have been in talks on a deal for months, the signing ceremony in Beijing yesterday came on the eve of the opening of contract talks that Chrysler and its Detroit rivals Ford Motor Co. and GM will hold this summer with the UAW in the United States.

The companies have warned privately that unless they can dramatically reduce a labor cost disadvantage of $25 an hour versus their Asian competitors in North America during these talks, they will shift more and more investment offshore.

The number of vehicles produced in North America by members of the CAW and UAW fell by two million between 1995 and 2006. The two unions produced just 56 % of the 19.9 million vehicles sold in North America last year, compared with 79 % of the 16.5 million sold on the continent in 1995.

The deal with Chery will fill a major hole in the lineup for Chrysler, which has no subcompact as the North American market shifts to smaller vehicles amid soaring gas prices and mandates from Washington for cleaner emissions.

$73 .....Average amount unionized assembly line workers make per hour in the United States, including benefits (U.S. dollars).

83¢ .....Amount in U.S. dollars that Chinese auto maker Chery says it pays assembly line workers per hour, a total of $132 a month.

 

Boy oh boyfor a moment I thought that you meant Don Cherry was moving there :rolling: Seriously though you can now kiss your motor industry goodby.

 

I live near Detroit, we kissed it goodbye several years ago. Thats why we are in the condition we are in now as a State. We are number 50 in everything.... Ooops. wrong. #1 in unemployment! (at least thats the way it seems and feels around here) Good thing is the state population is dropping rapidly, opening up more land for me!

 

We killed our own auto industry. Healthcare expenses are killing the industry (if we had listened to Hillary in the early 1990's we would have a chance, but we blew it).

 

Kiss Detroit's overpriced crap goodbye

 

This will probably be the final nail in the coffin of US manufacturing. The auto industry will bring down most of what remains of the US manufacturing base. The international corporations have been trying to smash the US standard of living for a couple of decades now, and this will probably do it. The outcome will be an equalization of wages and standard of living between the US and third world. It is still barely possible that people will become outraged enough to awaken their economic nationalism and implement wage equalization tariffs to level the playing field. Health care costs are a small part of the problem of trying to compete with slave labor.

 

Never fear! Hillary and Pelosi, along with the other Democrats will get with the management of the unions and we will all be led out of the valley of darkness, and back into prosperity. There isn't anything this upcoming administratin can't do along the lines of mending fences and making it right for ALL of the little people who look up to them for guidance and deliverance.

Gosh, I can hardly wait....come on 2008. Plenty of time before 2010!:whistle:

 

No one is killing the U.S. auto industry. It's committing suicide. The Big Three haven't created anything but plasticized junk for many, many years.

If you own a big, tough, manly, macho Silverado truck go out and tap the "chrome" bumper with your finger. It's thin, hollow and tinny. Compare it with bumpers made... say 30 years ago... there's a world of difference. You might say, "Well, they make them that way to save weight". Sorry, if they can't add another 10 pounds to a bumper to actually give it some heft, I don't want it.

Plasticized as they may be Toyota and Honda at least have "perceived quality" which has been lacking from the U.S. auto makers for a looooooooooong time.

Besides, the U.S. auto makers should have told the unions to go take a hike when they made their exhorbitant demands. The workers may have walked, but there are certainly other workers waiting in line to take their place.

 

It used to be in Russia that to own American car was the great thing have. It hard enough to buy Volga sedan, or Lada but only way get American car was know seaman on fishing boat etc. Now American cars be seen, but more people prefers the German Audi or Mercedes.

 

I think this is the very core of the debate. Somehow, over time, corporations have turned the majority of folks against unions. Now, unions have done a lot of things over the years to deserve criticism with bizzare work rules. At the same time, I've always believed that most companies get the unions they deserve. But if you put that aside for a moment, there is an "anti-worker prosperity" to the tone of many discussions these days. I don't know what could be better for global corporation CEOs than to listen to workers complain that other workers are overpaid. Why, they've even convinced many people that supporting higher wages and rising standards of living is "socialist." Weren't rising wages and higher standards of living the original goal of the economy? When did prosperity become redefined as "corporate profits?" The USA used wage equalization tariffs for about 120 years to protect American citizens from having to compete with exploited workers in Europe and Asia. Over the same time period, we had the fastest growing economy in the world and the highest standard of living. So, obviously, prosperity doesn't depend on low wages, and is not incompatible with high wages. It's a shame Americans forgot that and permitted themselves to be pursuaded that the opposite is true.

 

Laugh if you will, but healthcare costs more per car than parts do. If Hillary-care passed in the early '90's, Detroit would be doing just fine.

 

It was not the unions that did it, it was the Republicans who refused to pass a healthcare program and refused to pass cafe standards. Anyone who says it was the unions is ignorant.

 

Whats wrong with people making a good living? how much are you willing to work for? And not that what ever it took to feed your family. If you are a skilled worker, and some guy earning $150,000 a year says ''You work for $10.00 per hour, pal. Cause theres someone right behine you who is willing to do it for less.'' Are you that wealthy that you can shrug off someones elses line of work as overpaid? Dont think for a second that the big three auto makers arent making money. They just arent making as much as they want to. And unions provide health care for those guys not GM.

 

American workers can't compete with foreign workers making a dollar a day or less with or without healthcare. Cafe standards are irrelevant to the cost of production.

 

Can you read a financial statement?

 

That's what I was thinking.



I guess that I will now renounce my affiliation with Chrysler.
I refuse to knowingly buy Chinese products.

 

Well laugh all you want to but I don't buy my car health insurance! It's dang lucky I change the oil once each year. That oil costs a lot more then what I spend on it's healthcare, so any more wise suggestions?

 

the healthcare costs of the employees surpasses the price of the parts. That means it is not a workable system and really proves that healthcare should be a gov't responsibility.

 

better milage= more sales.

 

That is for sure.
Look at Toyota's market share.