Think a collapse of one or more of the Detroit automakers would be a good thing for Toyota, Nissan or Honda? If you do, you would be wrong. Very wrong. All the automakers are tied into suppliers which service all these brands. It would be a lose-lose situation for all involved.
"We're deeply concerned," said Mike Goss, a spokesman for Toyota Motor Engineering & Manufacturing North America Inc. in Erlanger, Ky. "Seventy-five percent of the vehicles we build in North America are sourced in North America, and many of those suppliers are shared with the Big Three."
The supply industry, which is made up of roughly 6,000 firms in North America, two-thirds of them in the United States, "is an integrated system," said Sean McAlinden, vice president of research at the Center for Automotive Research in Ann Arbor. "It's a house of cards. You knock down enough of the cards in the bottom rows and it all goes down for months," he said. "It's going to cost Toyota and Honda a great deal if this happens," McAlinden said. "They're incredibly worried."
orangutan says:
07:51 AM, 11/13/08
If we hit that bull's eye, the rest of the dominoes will fall like a house of cards. Checkmate.
hondacura4 says:
02:19 PM, 11/13/08
"Toyota Motor Engineering & Manufacturing North America Inc. in Erlanger, Ky"
My father is employed there. =)
ateixeira says:
03:59 PM, 11/13/08
Then why isn't your handle ToyotaLexus4? ;)
flicmod says:
06:38 AM, 11/14/08
Ugh... I've heard this reasoning before to justify a bailout of the automobile industry. The fact is, it's completely false. Keynesian economics is flawed and ill-conceived.
Read this article for explanation: http://www.mises.org/story/3194
Pay special attention to the "circular flow" section.
hondacura4 says:
10:12 AM, 11/14/08
"Then why isn't your handle ToyotaLexus4? ;)"
Believe me, I catch a lot of heat from my father for being a Honda/Acura enthusiasts and although Ive owned 2 Lexus products (Lexus ES300/GS400) the driving dynamics and overall feedback just dont cut it for me. Solid products that in no way cater to the driver.
estreka says:
01:37 AM, 11/15/08
The argument is illogical and doesn't take into account the vacuum created in the market. There'll still be the same number of cars produced in the marketplace. For instance, if GM goes under (I pick GM since it's the drama this week) those GM customers aren't going to just disappear. They'll shift to other products produced by other makes. The end result is zero loss for supply orders.
What will happen is a reduction in manning since fewer specialized parts will be made. Suppliers will become more efficient since they won't need to produce 18 different types of rearview mirrors (Ford).
Honestly, if anything, the market will boom from the reduction in supply costs. Throw out the least efficient means of auto production and you're left with a stronger industry. Simple free market Darwinian physics.
flicmod says:
07:17 AM, 11/17/08
Right on, estreka!