Quote:
Originally Posted by Mr. Clean
I think it is pretty obvious that I am not in the industry, or I would have said so. I am a consumer and have worked in the business world for over three decades. So, I have a pretty firm grasp about the principles of business and the benefits of profitability and the detriments of the contrary. Do you have a point? Or, are do you wish to argue that if one is not in the industry, you can't possibly have a clue and therefore a valid opinion?
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I was curious. I wouldn't say that people not in the industry don't have a clue, but I will go so far as to state that whether we're talking about GM, Ford, and Chrysler, or Toyota, Honda,and Nissan, the steps in bringing product to market, and a lot of the industry's practices, don't mirror other consumer products, or a lot of other business models. A lot of it mirrors industrial products in how long it takes to get to market, with the added complexities of changing consumer tastes coloring and complicating all of the business.
Trade credit is one area I found the auto industry deviates from a lot of the business world in a way that's somewhat unhealthy. Almost every area of the business world I've been exposed to is that payment terms are Net 30 days. The auto industry pays it's tier one suppliers net 45 days. Except for tooling. Tooling for the plants is net 45 days
after job one. Anyone who supplies equipment for an assembly plant, or and other OEM plant, like an engine or a transmission plant, is often waiting for months after delivery, to get paid, for something that may have had raw materials delivered to the supplier three, four, even eight months before project completion. machine tool builder doesn't get paid until the car, that the equipment was designed to help build, starts production.
And that's not just a Detroit practice - the other auto makers do it as well.
It's a dysfunctional business model all the way around, in ways too numerous to list. It's a wonder anyone makes a buck in it anymore, and Toyota's $336 Million third quarter North American loss may show the cracks in their armor.