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The mismanagement contribution to Detroit's collapse
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pjp
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PostPosted: Mon Jan 21, 2013 2:52 am    Post subject: The mismanagement contribution to Detroit's collapse Reply with quote

Does Detroit have the discipline to stay on top?
Quote:
“The illness” that sent two of the Detroit Big Three automakers into bankruptcy and nearly wrecked the third “was horrible and brought on by ourselves,” stresses Sergio Marchionne, the blunt-talking CEO of Chrysler and its Italian partner Fiat.

Automakers had added far too much capacity, he says, to meet sales levels that wouldn’t have been necessary – or possible -- if the industry was actually responding to consumer demand. That meant companies like General Motors and Chrysler – as well as many of their foreign-owned rivals – had to lavish massive incentives on the market to lure buyers into showrooms. The great irony is that in the boom years during the middle of the last decade, the industry was already in serious trouble. The 2005 U.S. record of 17.5 million vehicles was an “artificial” high, concurs senior industry analyst Tom Libby, of data tracking firm R.L. Polk.

Laurel Hess, a Detroit TV host, recalls leasing a Chrysler Town & Country minivan for just $120 a month, barely half what it should have gone for.

Ironically, the higher sales went, the more some companies lost. GM was already running up billions of dollars in red ink even as the industry hit its all-time peak. And as the market collapsed, it became increasingly clear the giant maker – along with cross-town rival Chrysler – would plunge into bankruptcy, eventually surviving only with the help of a massive U.S. government bailout.

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PostPosted: Mon Jan 21, 2013 3:06 am    Post subject: Reply with quote

A flag was thrown. Technical foul.

Detroit is not on top. Toyota is.


With that cleared up, the article does have some rather damning points that should serve as a lesson, but will probably get ignored.
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PostPosted: Mon Jan 21, 2013 3:44 am    Post subject: Reply with quote

It also demonstrates a problem with consumption as an economic driver (no pun intended). I intend for my next vehicle purchase to be used, and hopefully in cash.
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