Sunday, December 14, 2008

Automakers facing car sales hit by slowdown

Automakers facing car sales hit by slowdown: These are transformational times in a nation rooted for a century in a life of lunch buckets, calloused hands and belching smokestacks. That life is being upended and it's on to new, more ephemeral things.

America doesn't build like it used to. Services R Us.

The auto executives and labor bosses who came to Washington pleading for a bailout represented a waning industrial age that delivered decent wages, good benefits and stable employment for millions, over generations.

They could not help but look like yesterday's men, grasping for a chance at tomorrow.

They stood not just for a gasping industry or a shrunken labor movement but for America's wrenching transition from the familiar ways of putting food on the table and kids through college.

How many people do you know who go to work each day and make something you can hold or touch?

In most places, probably not many.

Not even in Trenton, N.J., where the bold sign on a railroad bridge boasts "Trenton Makes, the World Takes," harking back to when it made rubber, wristwatches, parachutes, linoleum, armaments, glassware, fine china, toilets, cars, wall plaster, farm tools, mattresses and cigars.

Now it makes policy and bureaucracy, mostly employing people in state and local government. In that state, one worker in 10 makes something, down from one in two in 1950.

'Like a ton of rocks'
So it goes across the country. Not quite one worker in 10 is in manufacturing.

The swagger of the American blue-collar worker has been gone for so long that books about that endangered species have turned yellow at the edges.

"A Ford or a U.S. Steel is there, on the ground, like a ton of rocks," the Chicago labor lawyer Thomas Geoghegan wrote in a tough-love ode to the labor movement.

His book, "Which Side Are you On?", is more than 15 years old. Much rock has become rubble since then.

Even then — before "Made in China" became the norm — there was a sense that the times of little pink houses were a-changing.

"Automation always seemed to lead to more jobs, somewhere, at some point," Geoghegan wrote. "Now it seems to lead nowhere. Workers used to think: It's OK, it's leading to the next industrial revolution.

"But now the word on the street is: There isn't going to be a next industrial revolution."

To be sure, America still makes more than Americans think it does. The products are less visible, unless you've got a semiconductor on your holiday list.

American exports
The biggest export in recent years has been commercial aircraft and parts, worth over $100 billion last year. Next comes autos and auto parts, worth $80 billion, both from domestic and foreign factories in the U.S. Earth-moving equipment and MRI scanners are other examples of high-end products still made in the USA.

U.S. manufacturers make more with fewer people. Some 3 million manufacturing jobs — nearly one in four — have been lost since 2000 while productivity has gone up. The service sector drives 80 percent of the economy. That's schlepping fast food, processing information technology and a lot in between.

The industrial economy was built by bombastic corporate and union leaders working together and at head-butting odds during decades of negotiation, strikes and bloody confrontation.

Now everyone hangs on to a swiftly tilting planet, a mix of the known and unknown.

Changing worlds
The sociologists Robert and Helen Lynd described it this way: "A citizen has one foot on the relatively solid ground of established institutional habits, and another foot fast to an escalator erratically moving in several directions at a bewildering variety of speeds."

They wrote that in the 1920s, while studying life in Muncie, Ind., when America was entering the industrial age it now appears to be exiting, job by outsourced job, industry by archaic industry.

The auto and labor leaders of today came to Washington cowed and needy, no bombast to be heard.

The company executives were shamed by lawmakers into driving from Detroit instead of flying in their corporate jets.

The United Auto Workers officials were funneled into a make-or-break meeting where Republicans from states that host foreign car makers with nonunion work forces demanded sharp wage concessions from the Detroit crowd as a condition for the rescue.

The union said no, like the old days.


In Uk Auto Makers facing car sales hit by slowdown:

Union bosses have joined calls for the government to urgently give financial support to the UK's car industry.

With global sales tumbling, carmakers want a substantial financial package from the government to help them through the tough economic climate.

Senior motor industry figures met with ministers last month to appeal for assistance during the downturn.

But there is uncertainty over whether any substantial help will be offered, amid fears of major job losses.

About 850,000 people work in the manufacturing and supply sides of the UK auto sector.

And the Sunday Times quoted one unnamed senior car industry executive saying that he feared the worst if intervention did not come soon.

"There will have to be layoffs, and there is a real danger of a clearout among component makers, who are finding it more and more difficult to get funding," they said.

Among the requests put to government are a state-guaranteed credit facility, more credit for manufacturers and suppliers, easier access to cash for car finance firms and a delay in the rise in vehicle excise duty.

"There is no doubt in my mind that it was the banks and the bankers who created this problem but we must not allow UK manufacturing to be hit further by this," said Tony Woodley, joint leader of Unite.

"If it was right to bail out the banks, and it was, then it is right to aid manufacturing. This is not like the US where drivers are in love with gas guzzlers and big vehicles.

"UK manufacturing is productive and efficient but our market has collapsed. We need short-term financial support to keep companies alive until the market picks up again."

The Sunday Times reported that the government was now set to offer a string of measures to try and kick-start sales.

Loan guarantees for car firms' finance arms and low-cost loans are expected to be offered, the paper said.

However according to the Mail on Sunday, Treasury sources said there were no firm proposals for an urgent rescue package for the embattled sector.

This week car manufacturer Vauxhall has offered its workforce at one plant the chance to take a sabbatical on 30% pay.

General Motors approached unions at the plant in Ellesmere Port, Cheshire, with the plan.

Under the scheme, staff would stay away from work for up to nine months between January and September 2009 on less than a third of their basic salaries.

A spokesman said the company wanted to avoid making any compulsory redundancies.

In the US, the White House says it is considering using money earmarked to rescue the US banking industry to bail out the country's "Big Three" carmakers.

It followed a $14bn (£9.4bn) bail-out deal for the US car industry which failed to get Senate support, raising fears of job cuts.

The White House said a disorderly bankruptcy in the motor industry would be a huge blow which the US economy could not withstand.

Meanwhile General Motors said it was temporarily stopping some production. And Honda is also to cut back output in North America.

Last month the European Commission proposed to give at least five billion euros to the car industry to help develop green technologies.

Chinese car sales hit by slowdown:

Chinese car sales have plummeted and the country's retail sales have slowed as the global economic downturn hits the economy.

Car sales fell by 14.6% in November compared with the same month last year, a bigger drop than had been expected.

Overall retail sales growth slowed, but by less then expected, from 22% in October to 20.8% in November.

Last month, the Chinese government announced a huge investment plan to kick-start its slowing economy.

State aid

"This is a serious problem," said China's Minister of Industry Li Yizhon of the drop in car sales.

The minister called on the government to support the country's industrial sector with subsidised loans.

"Industrial growth is sharply declining and we have not seen a turning point yet. We feel a lot of pressure," he said.

Loan guarantees by the government to restore confidence would be key, he added.

Despite the poor economic data, Chinese government officials said they were confident that the country would hit its target of an 8% economic growth rate in 2008.

They believe that the economy must achieve this rate of growth to provide enough jobs for the country's rapidly expanding workforce.

"Stiff headwinds are undoubtedly ahead and we expect a further slowdown in the coming months, but fiscal expansion will likely buffer a rapid fall in retail sales," analysts at Merrill Lynch said.

Unlike the US, however, consumer spending does not account for the majority of China's economic activity.

China has not experienced single digit economic growth for six years, but the country's economy is still expanding rapidly as many western economies head into recession.

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