BW: Toyota - Driving Detroit Even Crazier

[Perian]

This BusinessWeek article is very scary...one quote:

"Toyota expects global sales to hit 8.5 million next year...on par with General Motors."

Toyota's current cost cutting plan "is on track to save the automaker some $10 billion over its five year time frame."

This is a must read: http://businessweek.com/magazine/con...8/b3921062.htm

[desmo9]

The whole China thing is a big joke.

We get the impression that we'll save a few bucks on our next car because it's made of low-cost Chinese parts. But then Chinese demand for raw materials to make the parts raises prices.

So in the end, we lose our manufacturing base as more production is outsourced to China, and the benefit of lower-cost products is never realized. Car prices are poised to go UP as a result of high steel prices. The savings of doing business in China are not outweighing the added steel costs! This is the big "joke" I speak of ... the little-known truth.

I've always been all about globalization. But the floodgates are being opened too quickly, and at the other side is a country with a billion and a half people. It's a recipe for disaster if left unchecked. Time to intervene.

Our trade deficit for 2004 was as large as our budget deficit.

[gmsickofan]

Originally Posted by desmo9

The whole China thing is a big joke.

Our trade deficit for 2004 was as large as our budget deficit.

Maybe if they build some assembly plants here we can feel good about it while a huge portion of our monthly income to China in car payments, like so many Americans feel good about buying Japanese or Korean.

Then 10 years later, when Detroit is bankrupt, they can pull out and manufacture EVERYTHING in China - and we'll no longer be able to build or engineer cars in Detroit.

[cincygoblue]

Originally Posted by gmsickofan

and we'll no longer be able to build or engineer cars in Detroit.

or Computers, or Appliances, or Satellites, or Plasticware, or Textiles/

Though you jest, think about all the knowledge transfer going over to China (and India and others), and the manufacturing and engineering base we are losing here in the US. I don't mean to sound alarmist or jingoistic, but what happens if we need engineering and manufacturing skills to mobilize for something like a war? What are we going to do, buy our tanks and ships from China? Hyperbole, perhaps, but this rush to China is a bad thing all-around for America.

Just as when you buy an American product, your money provides wages for another American worker, who then can go out and buy another American product, sending your money to China, helps another Chinese man or woman buy another Chinese product, which pays wages to another Chinese worker to buy more Chinese stuff. It's the multiplication of money, and it's why lowering interest rates from the Central Bank kick-starts the economy. Ever hear of Alan Greenspan's work?

I'm not attempting to "talk down", and this might not be the right audience, but I can't believe how little attention people in this country pay to where something is made. I know this board had been full of discussions about where profits go for a Toyota versus a Chevy, etc, but if you think the Chinese aren't looking to buy Chinese products and the Japanese don't favor Japanese products, you're kidding yourself. BUY AMERICAN!!!

[spudglo08]

^ very true!! I agree

[New_Mexico_Sunset_on_Rt66]

So what happens when Americans stop buying Toyota's?

[mgescuro]

I think this is a very smart move for Toyota. By putting pressure on its supplier network to reduce costs, it continues to force down its own costs. GM is gaining ground rapidly in its own efficiency drives, and Toyota needs to look for cost cutting savings anywhere it can.

If China is the new benchmark for cheap, high quality parts, then so be it. It really forces suppliers to think about its own efficiencies to compete with the Chinese. If the suppliers truly value the business with Toyota, then it woul dbehoove them too kepp up with the pace.

Unfortunately, this also comes down to supplier relationships. Toyota and most other Japanese car makers have better relationships that the Big 3. I don't believe giving UAW supplier power is the correct route... but that's for someone's business master's thesis to analyze, and I won't go into that right now.

Toyota is essentially taking a page out of WalMart and Dell's playbook: Squeeze the supplier because they are the 800 lb gorilla... and they can...

[Bravada]

The Chinese actually are buying anything from Europe, and all Chinese manufacturers of almost everything are trying to make their products look European. China's biggest white goods maker adapted the "Haier" name to sound German. And it was for the domestic market, long before they started exporting to Europe.

As far as cars are concerned, China's most popular brands are Volkswagen and Buick.

Chinese airlines lately bought a few dozen Boeings, choosing Boeing to be their supplier for big planes, which means a slew of orders for Boeing in the coming years (unless Airbus comes in with a very big bribe).

I am not saying that China's development is great - they already compete for resources and raw materials with the rest of the world and there seems to be no consistent policy towards it. The worst thing is that all the world's leaders look towards China with a mixture of fear and hope for business opportunities, but have no common idea what to do with it. There are also many pitfalls ahead of China, but I don't know whether we will be so happy when China stumbles on them.

[mgescuro]

Originally Posted by cincygoblue

Though you jest, think about all the knowledge transfer going over to China (and India and others), and the manufacturing and engineering base we are losing here in the US. I don't mean to sound alarmist or jingoistic, but what happens if we need engineering and manufacturing skills to mobilize for something like a war? What are we going to do, buy our tanks and ships from China? Hyperbole, perhaps, but this rush to China is a bad thing all-around for America.

While technically correct, the government isn't as stupid as you think. Industries key to the government and national security will always remain with factories and companies that are US-based. The US wouldn't even allow the purchased of Lucent Technologies by Alcatel, the French Telecom Giant because of "issues of national security."

However, as this is no longer a domestic or foreign economy system but a Global economy... you will notice that even the most "american" tanks and weaponry have bits and pieces made world wide. You seriously think the control chips in US missiles come from US companies? Chances are, they're made by Japanese chip companies.

Just as when you buy an American product, your money provides wages for another American worker, who then can go out and buy another American product, sending your money to China, helps another Chinese man or woman buy another Chinese product, which pays wages to another Chinese worker to buy more Chinese stuff. It's the multiplication of money, and it's why lowering interest rates from the Central Bank kick-starts the economy. Ever hear of Alan Greenspan's work?

I'm not attempting to "talk down", and this might not be the right audience, but I can't believe how little attention people in this country pay to where something is made. I know this board had been full of discussions about where profits go for a Toyota versus a Chevy, etc, but if you think the Chinese aren't looking to buy Chinese products and the Japanese don't favor Japanese products, you're kidding yourself. BUY AMERICAN!!!

Again, while technically correct, it doesn't go far enough in understanding the machinations of the global economy.

Name me one product that is 100% Made in the US. Fact of the matter is, they are few and far between.

So... say you buy a Dell monitor. It's an American name. it may even say made in the US on the back. but fact of the matter is, the picture tube is a Trinitron... which is Sony... which is Japanese but manufactured in Mexico.

Just keep in mind that the Chinese and Japanese economies are manufacturing based economies, while the US is a service based economy. Our manufacturing is done mostly outside of the US under the auspices of US management. The US has managed to maintain control over its foreign plants while realizing the cost effectiveness of placement outside the US for whetever the reason may be: lower labor, better taxese, shorter supply lines, etc.

[driverblogger]

Go Toyota Go!!!

[driverblogger]

Originally Posted by New_Mexico_Sunset_on_Rt66

So what happens when Americans stop buying Toyota's?

like that will ever happen

[Cortazzo]

While I agree that it is more difficult to buy american than it ever has been, I still feel that buying a car from the big 3, which has 80% of domestically sourced parts as opposed to the japanese 50-60% is better for our economy, as more of the price goes to domestic folks, keeping those dollars for our GDP totals, giving more strength to our economy.

It is nice that toyota USA and honda USA are relying more on US development and design, the fact of the matter is that their ridiculous profits still go primarily back to Japan. That's why I get mad at Toyota's advertising as calling themselves 'American'.

[mgescuro]

Originally Posted by Bravada

Chinese airlines lately bought a few dozen Boeings, choosing Boeing to be their supplier for big planes, which means a slew of orders for Boeing in the coming years (unless Airbus comes in with a very big bribe).

That was a VERY big order for the new 787s!!!! I don't believe the Chinese airlines have ordered any A380 SuperJumbos yet. There are a very limited number of arports around the world that can handle teh SuperJumbo. in fact, the only airport in the US that can handle the A380 is San Francisco International. New York, Chicago, Atlanta, and Los Angeles won't be ready until at least 2007-8. First A380 flight is Singapore to SFO.

Anyways... I believe that China bought the Boeing because of "pressure" from the US. This would decrease the deficit between the 2 countries. More as a "good faith" gesture.

But India just announced a major purchase of Boeing jets as their study of aircraft and efficiencies were released. Boeing jets prove to be easier to maintain (737, 777, and 787) than their Airbus counterparts. So why is Airbus whoopin Boeing's behind!?!?!

[tgagneguam]

Originally Posted by driverblogger

Go Toyota Go!!!

Hmmm, I wonder why the success of a mostly foreign firm at the expense of a more American firm would cause you to delight. I find that curious.

[tgagneguam]

Originally Posted by mgescuro

...So why is Airbus whoopin Boeing's behind!?!?!

Well, the SuperJumbo was financed by... The European Union. And yes, it went over budget by... billions of dollars. Thankfully, the European tax payers paid the bill. So, if you can develop products at no cost, effectively subsidizing its price when it goes to market, then yes, you will "whoop" your competitor's behind.

That's why I pray the new 7E7 (?) hammers the rest of the Airbus lineup.

While I can appreciate that Toyota is a well-managed company, and its successes are definitely deserved, I certainly do not hold Airbus in the same regard.