Competitive Connection
October 8, 2007
A look at the competition
Wages vary among transplants
When the 2,000-employee Honda car assembly line opens next year in Greensburg, IN, production workers will earn $14.84 an hour -- about $31,000 a year before taxes -- with an automatic $3.71-an-hour raise in 2009.
By locating far from big cities, the Japanese plants can set wages to fit in with rural economics. When Tokyo-based Toyota opened a pickup truck plant in 1999 in farmland near Princeton, north of Evansville, the base wage was about $14 an hour.
In San Antonio, Toyota's new 1,600-employee pickup truck plant will pay $15.50 to $20.33 per hour, rising after three years to $21 to $25.
In Lafayette, base wages in Subaru's assembly plant, where 1,000 Subaru workers make Toyota Camrys, are about $23.50 an hour for permanent workers and $13.50 for temporary employees. Hourly wages average about $25 at Honda's Marysville, Ohio, complex. --Source: The Indianapolis Star, October 2, 2007
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A look at the competition
New products help sales
Ford's U.S. sales, hurt by slumping truck figures, dropped 20.4 percent. But a redesigned Escape was a bright spot with sales increasing 10.3 percent. The all-new Ford Edge is the third-best-selling vehicle in Ford's lineup for the month.
Sales for Honda, which launched a redesigned Accord in September, were up 9.4 percent. Nissan was up 6.7 percent thanks largely to the Altima, redesigned in late 2006. A new coupe version was added this year.
Toyota's U.S. sales fell 4.4 percent in September, marking the third straight month of declines.
A larger, redesigned Tundra pickup, launched in February, was up 30.1 percent, but it was not enough to overcome sales declines in Toyota's small-car and SUV lineup. The Corolla, Yaris and Highlander all were down.—Source: Detroit Free Press, October 3, 2007
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What others are saying . . .
GM’s plan to outmaneuver Toyota
The idea that General Motors needs to shed divisions like Buick, Hummer and Saab to compete against Toyota has a certain common-sense appeal. After all, Toyota is continuously gaining U.S. market share with just three brands: Toyota, the Lexus luxury line and the tiny Scion brand of small, trendy compact cars.
But by shedding divisions, GM could give up its greatest competitive advantage. Because Toyota must sell a large number of vehicles through just two main channels, it's forced to ply the middle of the road.
But General Motors can indeed have it both ways. While Chevrolet goes middle of the road, GM's other divisions can cover the side roads, back alleys and unpaved trails. That's exactly the approach that GM is taking, according to GM marketing executives and division heads.
Platform sharing must go on, of course. The whole point of maintaining distinct brands is to maximize the sales potential of GM's investment in research and manufacturing by creating multiple products that share underlying components.
· GMC’s Job: Get truck buyers into combined Pontiac/Buick GMC showrooms
· Pontiac’s Job: Bring "car guys" back to GM
· Hummer’s Job: Take on Jeep, but adjust to the realities of a fuel-conscious world
· Chevrolet’s Job: Face down Toyota. The focus is on value and quality.
· Buick’s Job: Take on Lexus
· Cadillac’s Job: Take on Mercedes-Benz and BMW
· Saab’s Job: Bring in European car shoppers
· Saturn’s Job: Bring in American car skeptics
–Source: CNNmoney.com, October 2, 2007
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What others are saying . . .
Material costs are “scary”
General Motors, like its competitors, is looking to cut costs. But price inflation in key commodities makes that task more challenging for the industry.
"The most scary thing for me is the development on raw materials," said GM global purchasing chief Bo Andersson.
He noted that prices for aluminum, steel, copper and zinc in particular are up.
"The first thing is to reduce consumption and the second thing is to find alternatives," he said. "Use less aluminum and more magnesium and less steel and more plastic." —Source: Dow Jones, October 1, 2007
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Then and Now
Where cars come from
The foreign companies against whom the Big Three compete are selling more and more cars that are not made at their factories in the United States. They are importing again — in fact, quietly importing almost as many cars as they did in the 1980’s.
Back then, the Japanese responded by putting factories in the United States. “Transplants,” they were called. They are all still building factories here and expanding “domestic” production.
But imports are once again rising, and the message is that shrinking labor costs within the United States won’t be enough. In a global economy, there are too many ways to gain market share. Marketing Toyota’s hybrid Prius, made only in Japan, as a fuel-efficient, ecologically friendly vehicle is one example.
Imported vehicles — coming now especially from Japan, Germany and South Korea — accounted for 23.4 percent of the vehicles sold in the United States this year through August, according to a compilation of government data by Moody’s Economy.com.
That has risen gradually from 11 percent in 1996. The numbers don’t include imports from Mexico and Canada, considered part of the domestic North American market. Even so, the import share is approaching the high of 27 percent in 1987. —Source: The New York Times, September 30, 2007
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To read previous editions of the Competitive Connection or to access other information about manufacturing and labor at GM, visit http://www.gmmanufacturing.info