Competitive Connection

February 5, 2007

A look at the competition . . .
U.S. companies and auto jobs
Despite the massive buyouts at General Motors and Ford, American automakers will still support 2.5 times more jobs for every vehicle they build in the United States than their foreign competitors, according to a new report. The Level Field Institute projects the U.S. auto industry will lose 42,750 jobs this year, falling to 378,250 workers. The decline comes from expected cuts at GM, Ford and the Chrysler Group. Level Field expects foreign automakers to add about 3,000 jobs to raise their total U.S. employment to 106,000. Even after the cuts, the Detroit automakers will employ 33 U.S. workers, including white- and blue-collar employees, per 1,000 vehicles sold, compared with 14 workers per 1,000 vehicles for foreign brands. Chrysler leads with 42 workers per thousand, followed by Ford at 31 and GM at 29. – Free Press, January 18, 2007
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A look at the competition . . .
Toyota sticker price for Tundra based on reputation
Toyota is putting its reputation as a premium automaker to a test by pricing its redesigned pickup, the Tundra, several thousand dollars higher than comparable trucks made by General Motors and Ford.

Sticker prices for the bigger and brawnier 2007 Tundra, which goes on sale in mid-February, will begin at $22,290 for the most basic model and go as high as $41,850. The Chevrolet Silverado, which also was revamped for 2007, has a base price of $17,860, while Ford's F-series, the segment's longtime leader, starts at $18,275. There are 31 versions of the Tundra and dozens more of the Silverado.

''Toyota is confident in their new product. They know their brand strength will probably carry the price point,'' Jesse Toprak, an analyst with Edmunds.com said. ''They hope that people who buy this truck will not need a good deal or a high incentive – they'll buy the vehicle on its merits. Perhaps that's a little bit arrogant, but it's been kind of their continuing strategy.''

Toyota considers the new Tundra, built in San Antonio as well as Princeton, Ind., to be the most important vehicle it has ever sold in the United States. It expects to sell about 200,000 trucks a year, primarily to owners of other Toyota vehicles who purchased pickups from G.M., Ford and Chrysler. –Source: New York Times, January 25
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A look at the competition . . .
To become more efficient, automakers are trying to standardize manufacturing
You’ve probably never seen the firewall, that slab of steel between you and the heat of your car’s engine, nor do you care about it. But the way it’s designed and welded into vehicles may be the key to financial survival for U.S. automakers, and the key to how much you pay for cars in the future.
Currently, Ford, DaimlerChrysler AG’s Chrysler Group and General Motors have dozens of firewalls.

But Toyota Motor Corp., the recognized leader in manufacturing efficiency, has only a few, and the only difference in those is the width. All the holes for wires and ducts are in the same place, and a worker at any plant worldwide can install one in almost any of Toyota’s models because they fit together the same way. It’s the commonality of thousands of parts, from the firewall to the frame, and standardized manufacturing techniques across the globe that make Toyota and Honda Motor Co. more efficient.

The lack of common parts is one reason Ford, GM and Chrysler made an average of $2,400 less per vehicle in 2005 than their Japanese competitors, according to a study by the Harbour-Felax Group released late last year. – Source: Associated Press, January 24
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Then and Now
The competition in the U.S. has exploded in the past twenty five years. In 1981, GM sold 4.6 million vehicles in the U.S. and had a 43% market share. In 1991, we sold 4.37 million vehicles and owned 34% of the market. In 2006, we sold 4.12 million vehicles and got 24% of the market. That's only a 10% reduction in sales, yet a drop of 19 market share points.

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What others are saying . . .
GM is on the way out of the swamp, Ford is in the middle of the swamp and Chrysler is now in the edges and the water is starting to go over their boat.

The last time all three automakers dealt with losses in the same year was 1991. – Detroit Free Press, January 24, 2007

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