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The "Other" US Auto Industry


R80RTKen

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An article from the CS Monitor points out that southern, right-to-work states are building cars, selling them at a profit, and while certainly not paying "Middle Class" wages, are building cars and selling them.

 

http://www.csmonitor.com/2008/1205/p01s04-usec.html

 

Why doesnt Detroit file for Bankruptcy, ditch the union extortionists, offer the truly experienced and talented workers relocation to a right-to-work state, and let the the suppliers continue to supply them with parts at fair market rate.

 

They dont need a federal bailout, they need to compete on the same level as other automakers making autos in America, with American labor, selling them at American dealerships.

 

I do not wish to start a union / anti-union flame war... but UAW Fender Stampers seem to be making 70$ and hour, whether they work or sit in the Job Bank not working, while engineers with masters and PhD's at my company are making $30-$40 per hour (including benefits)

 

Somewhere something is amiss...

 

Bulldoze the whole operation and start it over using the same good business practices that the southern foreign manufacturers are. Pay engineers and management reasonable pay based on their education and experience, and pay uneducated labor accordingly. The government hands out student loans like candy, so night school for low paid assemblers is not out of reach.

 

rant>

 

 

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Naw, life in the South is not what it's cracked up to be. It's hot in the summer and we've got sand gnats to contend with. I'm telling you, you all really, really don't want to relocate down here. Really, you don't.

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Dave McReynolds

The idea of adjusting all the labor contracts through a bankruptcy proceeding appealed to me also. However, the fear is that once a car company goes into bankruptcy, potential buyers will have no confidence that the warranties on their cars will be honored, etc., and so sales of cars will plummet even more than they already have. Something in the Wall Street Journal I was reading this morning picked up on the same thought, with the idea that congress might set up some kind of binding arbitration procedure outside of bankruptcy that would accomplish the same thing, as a condition for the bailout. However, as the car companies feel that they will be out of money by the end of this month, I don't see how there is enough time to do anything more than either throw more taxpayer money at the problem or just back off and wish them the best of luck.

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Jees Ken........it sounds like you have been eaves dropping on our lunch conversations this week in the engineering lunch room. You have some good points there.

 

I have a lot of personal feelings on unions.....pros and cons, but I'll keep them to myself. I will say that I would like to see them fix the problem right there in Michigan, but I think that is going to be almost impossible.

 

This is what happens when companies or unions give you the opportunity to better yourself with excellent wages/benefits, and the majority of those people are content being unskilled, uneducated, and overpaid.

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but UAW Fender Stampers seem to be making 70$ and hour, whether they work or sit in the Job Bank not working, while engineers with masters and PhD's at my company are making $30-$40 per hour (including benefits)

 

Uhhh, not true... would explain it here, but K.O. sums it up best... start watching at the 1:51 index mark.

 

Classic.

 

 

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but UAW Fender Stampers seem to be making 70$ and hour, whether they work or sit in the Job Bank not working, while engineers with masters and PhD's at my company are making $30-$40 per hour (including benefits)

 

Uhhh, not true... would explain it here, but K.O. sums it up best... start watching at the 1:51 index mark.

 

There are certainly others who sum the point up better than that pompous blowhard.

 

So, let's say we just change the statement that "UAW Fender Stampers seem to be making $28 and hour excluding benefits and pensions, whether they work or sit in the Job Bank not working, while engineers with masters and PhD's at my company are making $30-$40 per hour (including benefits.)"

 

It's difficult to argue -- though many will try -- that unions haven't run amok with their protected status. It would be one thing if these were workers who were producing high quality, well assembled products, so that such comparatively high wages could be readily justified by a nation of taxpayers being asked to lend money to support their salaries. But since the opposite is true, it makes for a very difficult argument.

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There are certainly others who sum the point up better than that pompous blowhard.
+1. (The guy's a pretty good sportscaster but hasn't done anything worthwhile since.)
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I do not wish to start a union / anti-union flame war... but UAW Fender Stampers seem to be making 70$ and hour, whether they work or sit in the Job Bank not working, while engineers with masters and PhD's at my company are making $30-$40 per hour (including benefits)

The Job Bank will soon be history in any event. If any kind of deal is struck for an auto industry bailout then the job bank will be gone as the UAW has realized they are going to have to go away as a part of any concession package. And if a deal isn't struck... then the job banks will be gone in that case as well...

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It's difficult to argue -- though many will try -- that unions haven't run amok with their protected status. It would be one thing if these were workers who were producing high quality, well assembled products, so that such comparatively high wages could be readily justified by a nation of taxpayers being asked to lend money to support their salaries. But since the opposite is true, it makes for a very difficult argument.

 

So the northern workers in Detroit can't build quality cars because they're in a union but the southern workers in SC and TN and AL can build quality cars because they're not in a union? What, union membership makes workers stupid?

 

Could it be, perhaps, that the car companies in the South are foreign companies with different corporate cultures than the Detroit car companies? That the cars built in the South are built on more modern production lines (subsidized by government tax breaks) and are engineered better because their management made better choices than the management in Detroit? Did the unions hypnotize Detroit management, or put a gun to their head, to coerce them into signing the contracts that provided all those benefits?

 

The management of the Detroit auto companies has been criminally stupid. They build the wrong cars at the wrong time. Their designs and engineering are three steps behind the Japanese and Germans. And speaking of Japan and Germany, both countries provide, through government or mandatory private programs, the health care and unemployment benefits to their citizens that you think our workers should do without.

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Francois_Dumas

 

The management of the Detroit auto companies has been criminally stupid. They build the wrong cars at the wrong time. Their designs and engineering are three steps behind the Japanese and Germans. And speaking of Japan and Germany, both countries provide, through government or mandatory private programs, the health care and unemployment benefits to their citizens that you think our workers should do without.

 

 

Surprised?

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Whether it's the fault of unions or corporate cultures, it's still not a good idea to move them to the south. Bad weather. Hurricanes. Banjo's.

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So the northern workers in Detroit can't build quality cars because they're in a union but the southern workers in SC and TN and AL can build quality cars because they're not in a union? What, union membership makes workers stupid?

 

No. Union membership removes incentives for laborers to perform to anything but the most minimal standards. The UAW has routinely stood in the way of any attempts at modernizing manufacturing, except at far-flung, otherwise independent facilities like Spring Hill or NUMMI.

 

Could it be, perhaps, that the car companies in the South are foreign companies with different corporate cultures than the Detroit car companies?

 

Sure. Corporate cultures not laid to waste by years of strife with the unions.

 

Did the unions hypnotize Detroit management, or put a gun to their head, to coerce them into signing the contracts that provided all those benefits?

 

Let's see. The companies can't permanently replace striking workers. The workers can destroy the companies by striking. They all but but guns to the heads of management.

 

And speaking of Japan and Germany, both countries provide, through government or mandatory private programs, the health care and unemployment benefits to their citizens that you think our workers should do without.

 

I think you're making up arguments I never made.

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Calvin  (no socks)

Detroit is trying to swim with an anchor around its neck. It will be impossible to survive living in the past. A metamorphosis must occur.

Yea, come on down to the south... the workers will have to start at minimum wage. The CEO will get the axe. Lifetime warranty offered... or 200,000 miles.... I can see it. :grin:

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And speaking of Japan and Germany, both countries provide, through government or mandatory private programs, the health care and unemployment benefits to their citizens that you think our workers should do without.

 

What does this have to do with Mercedes employees in Alabama?

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So the northern workers in Detroit can't build quality cars because they're in a union but the southern workers in SC and TN and AL can build quality cars because they're not in a union? What, union membership makes workers stupid?

 

 

I attribute the difference to lack of accountability. If you're a substandard employee at a southern factory, you don't get promoted or possibly get let go. If you meet expectations, you get promoted to a more skilled, but slower paced job, as a reward for your excellent performance. With a union, you get promoted because of senority, and can only get demoted or fired due to gross neglegence, and even then it's mostly likely a 2 or 3 strike system.

 

I'm not saying union workers, don't work hard, only that the system fails at rewarding the best workers and being able to effeciently place workers where their talents are best utilized. 1 worker may be slower, but more detailed oriented. You place him in the paint inspection area, the faster guy preps subassemblies like rear view mirrors on windshields or installs the seats. In a union shop, the guy with poor eye sight works in the paint inspection because its' a slower paced and he used his 30 years of senority to get that job. Now testing and qualification during a probationary period can help improve this as well as doing a better job of screening new employees, but in the end, union offer less flexibility and less accountability for MFG's.

 

I know, we have a union shop at my factory, and there's some electricians that should only be changing light bulbs, and others that should be only troublshooting instrumentation and processes.

 

As for vehicle quality. I think it's become fairly equal these days. Most quality issues I beleive now are due to supplier quality problems, poor cost vs. quality decisions by purchasing. More speciafically it's not about quality in terms of reliability, but quality in terms of content. The content of foreng vheciles is higher because their labor costs and overhead are lower. So instead of a $0.10 knob on the radio, they use a $0.12 knob.... and instead of fabric that's $3/ sq foot, their use material that's $4 or they place their profits back into R&D.

 

Personally, I thin Ford will survive this downturn and emerge much stronger and the new leader. They have a more streamlines product line and I'm impressed by ther new powertrain line-ups comming in 2009/2010. Their use of sucessful global platform is keeping them well positioned. The Mazda partnership in particular deserves much of the credit.

 

I think GM needs to trim down it's offereing to just Chevy, Cadillac and allow Pontiac and Buick to be absorbed by Chevy and Cadillac. GMC can be dropped altogether.

 

 

For the CEO's and upper managemnt. Their compensation about their base salary, should be based on performance targets at 2, 5, and 10 year results. The reason the unions had so much leverage is that managment was never willing to risk bad results past 1 or 2 quarter for sustainabilty 5 or 10 years out.

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The problem with letting the companies out of contracts through bankruptcy is that legacy costs are then passed to the taxpayer. Union workers will still get their (Government guaranteed) pensions, and health care costs will pass to Medicare, eventually.

The shame is in the fact that the companies were not forced to declare bankruptcy when they still had assets to cover some of their debts. They have managed to actually leave nothing but a smoking hole.

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So the northern workers in Detroit can't build quality cars because they're in a union but the southern workers in SC and TN and AL can build quality cars because they're not in a union? What, union membership makes workers stupid?

 

No. Union membership removes incentives for laborers to perform to anything but the most minimal standards. The UAW has routinely stood in the way of any attempts at modernizing manufacturing, except at far-flung, otherwise independent facilities like Spring Hill or NUMMI.

 

 

No. It's not union membership that's the issue. It's years of management agreeing to bad contracts. If they didn't insist on having a way to get rid of bad employees, it's management's fault. For 50 years Detroit was the only game in town and management let the auto companies get fat and lazy and gave away the store to the unions because they could get away with it because there was no competition.

 

The union is there to get the best deal they can for their members. If that includes great pensions, great health insurance, and too much job security, and management was willing to give it to them, why is it the UAW's fault if they took it?

 

Could it be, perhaps, that the car companies in the South are foreign companies with different corporate cultures than the Detroit car companies?

 

Sure. Corporate cultures not laid to waste by years of strife with the unions.

 

 

And whose fault is the strife? As you can see from this article, the Japanese auto makers in the US provide wage and benefit packages similar to those of the US manufacturers, yet the workers in those plants don't feel the need to unionize. Why? Because the Japanese companies treat their employees well without the UAW prodding them into it. As the old saying goes, it takes two to tango. The difference between the Japanese plants and the US plants isn't the workers, it's the management.

 

Did the unions hypnotize Detroit management, or put a gun to their head, to coerce them into signing the contracts that provided all those benefits?

 

Let's see. The companies can't permanently replace striking workers. The workers can destroy the companies by striking. They all but but guns to the heads of management.

 

 

Let's say there was some part that the auto industry relied on. Call it a widget. Let's say there's only one company that can make widgets - they're patented. Every car made needs a widget. The widget company tells Detroit, "this is how much widgets cost, take it or leave it." Detroit can't replace the widget company. The widget company can destroy Detroit by striking. Would you argue that the widget company unfairly has a gun to the head of Detroit? No, I think you would consider it a shining example of the free market capitalistic system in operation. The widget company has the same hold over Detroit as the UAW does. It does not become improper because it's a supplier of labor rather than a supplier of materials, it's simply one side taking advantage of it's market power.

 

And speaking of Japan and Germany, both countries provide, through government or mandatory private programs, the health care and unemployment benefits to their citizens that you think our workers should do without.

 

I think you're making up arguments I never made.

 

No, the point is that in Japan and Germany, workers have the benefits that the UAW has obtained for US workers, so that has to be figured in to any argument about the "drag" on the US auto industry from the UAW benefits - the auto companies overseas have successfully offloaded much of their cost onto the government. It can't be the health care costs, the generous employment and pension programs dragging down Detroit, because they have those overseas, too, just allocated differently.

 

Labor is only about 10% of the cost of a car. Labor costs are not the sole cause of Detroit's problems. It's bad strategic direction (sticking with gas-guzzling big vehicles through every gas price crisis), bad engineering, no corporate commitment to quality (Deming went to Japan because Detroit wouldn't listen to him), bad marketing (GM's multiple overlapping brands and models), bad business decisions with the dealer franchises that resulted in too many dealers, and arrogant management that refused to see Japan and Germany automakers as realistic threats until it was too late.

 

Yes, the UAW has kept too many bad workers on the job, yes the UAW has gotten insanely generous benefits. But management was perfectly happy to put up with that all those years that they were selling cars. If you have a spoiled child, it's the fault of the parents, not the child.

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No. It's not union membership that's the issue. It's years of management agreeing to bad contracts. If they didn't insist on having a way to get rid of bad employees, it's management's fault. For 50 years Detroit was the only game in town and management let the auto companies get fat and lazy and gave away the store to the unions because they could get away with it because there was no competition.

 

The union is there to get the best deal they can for their members. If that includes great pensions, great health insurance, and too much job security, and management was willing to give it to them, why is it the UAW's fault if they took it?

 

I never excepted management from fault. However, to suggest that unions, given the legal protections afforded unionized workers, don't exacerbate problems just doesn't make any sense. It may be that bad management gave rise to UAW power, but the fact is that now, the UAW fights tooth-and-nail to prevent management from changing. Bad management might have started them down the path, but it is management and the union that have prevented any real change from happening.

 

Therefore, I'm perfectly happy seeing what happens if the Big Three go under. Then we'll see what kind of deal the UAW negotiated for its workers, won't we?

 

And whose fault is the strife? As you can see from this article, the Japanese auto makers in the US provide wage and benefit packages similar to those of the US manufacturers, yet the workers in those plants don't feel the need to unionize. Why? Because the Japanese companies treat their employees well without the UAW prodding them into it. As the old saying goes, it takes two to tango. The difference between the Japanese plants and the US plants isn't the workers, it's the management.

 

The foreign car companies have the advantage of having set up shop without the unions already present. It's hardly an apt comparison to compare the current state of union involvement with the Big Three with union involvement of relative latecomers to US auto manufacturing. Surely you don't believe there's much Big Three management could realistically do to get their laborers to deunionize, do you?

 

Let's say there was some part that the auto industry relied on. Call it a widget. Let's say there's only one company that can make widgets - they're patented. Every car made needs a widget. The widget company tells Detroit, "this is how much widgets cost, take it or leave it." Detroit can't replace the widget company. The widget company can destroy Detroit by striking. Would you argue that the widget company unfairly has a gun to the head of Detroit? No, I think you would consider it a shining example of the free market capitalistic system in operation. The widget company has the same hold over Detroit as the UAW does. It does not become improper because it's a supplier of labor rather than a supplier of materials, it's simply one side taking advantage of it's market power.

 

If there was truly a widget that only the American car companies required, and they had no way to engineer around the widget or change their design to get away from the widget, and it was something that was introduced in the limited life of a patent, then clearly the problem would be with the companies that pinned themselves to the widget in the first place.

 

Unfortunately, companies don't have a choice of whether or not to deal with a duly elected union, and they can't simply replace or engineer around the union if the union's members strike against the company. There's surely no law requiring the automakers to use the widget, but there are laws requiring the automakers to deal with the union.

 

 

And speaking of Japan and Germany, both countries provide, through government or mandatory private programs, the health care and unemployment benefits to their citizens that you think our workers should do without.

 

 

I think you're making up arguments I never made.

 

 

No, the point is that in Japan and Germany, workers have the benefits that the UAW has obtained for US workers, so that has to be figured in to any argument about the "drag" on the US auto industry from the UAW benefits - the auto companies overseas have successfully offloaded much of their cost onto the government. It can't be the health care costs, the generous employment and pension programs dragging down Detroit, because they have those overseas, too, just allocated differently.

 

I never suggested denying workers those benefits. What I believe is that the only economically feasible way for our industries to compete globally is for those burdens to be lifted from our corporations.

 

Labor is only about 10% of the cost of a car. Labor costs are not the sole cause of Detroit's problems. It's bad strategic direction (sticking with gas-guzzling big vehicles through every gas price crisis), bad engineering, no corporate commitment to quality (Deming went to Japan because Detroit wouldn't listen to him), bad marketing (GM's multiple overlapping brands and models), bad business decisions with the dealer franchises that resulted in too many dealers, and arrogant management that refused to see Japan and Germany automakers as realistic threats until it was too late.

 

Saying "10% of the cost" is a bit like saying "$70/hour." It's a phony number, because there's a more realistic actual number of around $2000 to $2500, depending on the source. That legacy number, a product of historically poor management and a myopic union, is what requires the US automakers to push large, high-profit vehicles, because it's the only way they can make up for losses on small vehicles. Take away sales of high-profit vehicles, and there's nothing to support the cost above and beyond what the manufacturers without that legacy number have to pay American workers.

 

As for Deming, I guess I'd say that's so "The Machine That Changed the World." The US manufacturers still leave a lot to be desired, but their hardly churning out uniformly junky cars anymore.

 

Yes, the UAW has kept too many bad workers on the job, yes the UAW has gotten insanely generous benefits. But management was perfectly happy to put up with that all those years that they were selling cars. If you have a spoiled child, it's the fault of the parents, not the child.

 

Sometimes, kids have to grow up.

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It's difficult to argue -- though many will try -- that unions haven't run amok with their protected status. It would be one thing if these were workers who were producing high quality, well assembled products, so that such comparatively high wages could be readily justified by a nation of taxpayers being asked to lend money to support their salaries. But since the opposite is true, it makes for a very difficult argument.

 

So the northern workers in Detroit can't build quality cars because they're in a union but the southern workers in SC and TN and AL can build quality cars because they're not in a union? What, union membership makes workers stupid?

 

Could it be, perhaps, that the car companies in the South are foreign companies with different corporate cultures than the Detroit car companies? That the cars built in the South are built on more modern production lines (subsidized by government tax breaks) and are engineered better because their management made better choices than the management in Detroit? Did the unions hypnotize Detroit management, or put a gun to their head, to coerce them into signing the contracts that provided all those benefits?

 

The management of the Detroit auto companies has been criminally stupid. They build the wrong cars at the wrong time. Their designs and engineering are three steps behind the Japanese and Germans. And speaking of Japan and Germany, both countries provide, through government or mandatory private programs, the health care and unemployment benefits to their citizens that you think our workers should do without.

 

Building the wrong cars at the wrong time? Absolutely agree with that....I have not bought an american car/truck since 1979. Why...I realized back then they had their head up their a$$. And it hasn't gotten any better.

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Building the wrong cars at the wrong time? Absolutely agree with that....I have not bought an american car/truck since 1979. Why...I realized back then they had their head up their a$$. And it hasn't gotten any better.

 

I disagree. I've had two Chevrolet Silverado's in the last decade (2002 1500HD, 2008 2500HD) and I like both of them. For what I use them for, they are the perfect fit for me.

 

Maybe we just have different needs?

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A very good example of wrong cars, wrong time is the recently released new Malibu. Right before its release a year or so ago, GM pulled it back and REFINED IT. They made it quiet insside, they tweaked the heck out of it, smoothed the edges and basically went the canonical "extra mile".. The doors close easier, the ride is a litte smoother, the heat and the AC a little quieter.. They reversed cost cutting measures and made quality improvements.

 

Detroit KNOWS THE DIFFERENCE, however, on most of their cars and trucks, they have chosen the cost cutting over the competitive-quality details. This has given Toyota and Honda and Nissan a lot of edge.

 

Go to a Ford dealer and close the door on an F-150. Then go to a Toyota Dealer and close the door on a Tundra. The small differences are obvious if you look for them.

 

Yes, cheap V8 trucks that look good and tow a lot are great, but once you test drive the competition, all the shortcuts and hacks that GM and Ford took become obvious.

 

I work in QA at an American company. We all have read "The Toyota Way" .. So has Rick Wagoner and Alan Mullaly. Choosing to cut corners has been one piece of the problem.

 

Foreign owned factories make more refined cars that get better mileage, have fewer defects and sell them in the US at a profit.

 

UAW workers do a great job building the Piece of Junks that the management chose to tell them to build. They maximize their peice of the pie building them, reducing the companies profit.

 

The blame can be spread all around, but expensive labor making low quality cars on purpose, sold at less of a profit than other US made cars is not a business model the taxpayers should have to own.

 

 

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I never excepted management from fault. However, to suggest that unions, given the legal protections afforded unionized workers, don't exacerbate problems just doesn't make any sense.

 

Therefore, I'm perfectly happy seeing what happens if the Big Three go under.

 

Sometimes, kids have to grow up.

OMGAWD, I think Greg and I agree on something.

 

It’s easy (but a bit intellectually lazy) to lay blame for the US big three’s failure at the foot of the unions, or the cost of labor, or the CEOs and executives, or the product designs & quality, or the marketing of specific product types and past consumer demand for them, or other singular factors.

 

But in reality it’s a combination of all of these factors and more. The US has been making big mistakes in manufacturing (of any products) for decades now. Its roots go all the way back IMHO to a poor education system. It’s hard to keep advancing doing better than the rest of the world when the rest of the world is doing a better job of learning and teaching how to do things better.

 

Can it be fixed, reversed in the US? Personal opinion – no. It’s too late. But perhaps a country-wide awakening and cosmic shift will happen in the USA and sometime, perhaps in 40 or 50 years or so, the pendulum will swing back in favor of the US.

 

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Francois_Dumas

 

Finding who are to blame is easy......... finding REAL solutions is what should be the talk of the day.

 

Not so easy.

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"But in reality it’s a combination of all of these factors and more"

 

And that means it is a problem created by management and can be solved only by management - if at all.

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"But in reality it’s a combination of all of these factors and more"

 

And that means it is a problem created by management and can be solved only by management - if at all.

 

It means just the opposite.

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"But in reality it’s a combination of all of these factors and more"

 

And that means it is a problem created by management and can be solved only by management - if at all.

 

I think it can be solved by management, just not the same management.

 

 

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I think it can be solved by management, just not the same management.

 

 

Dr. W. Edwards Deming (1900 - 1993) was asked to consult for Ford in the '80's when they were in trouble.....He told top management that they, management, were the problem..They were shocked ....How could it be us?....It's the unions, competitors, suppliers and on and on........Seems obvious that if a company goes south that management is responsible...... In the 50's he went to Japan with his 14 point program (search Wikipedia Deming) to help rebuild Japan's industry...He infused these manufacturing principles into the Japanese soul...He is considered a hero in that country and is the primary reason that they are still known as a high quality producing nation in all areas.....

 

After Dr. Demming started with Ford the Taurus was produced.....Probably one of the biggest success stories by American car makers..They sold a whole bunch of them.....I had two and they were reliable, comfortable relatively good quality cars...Both had about 100m miles with no major problems....Obviously his manufacturing principles weren't infused in the Ford organization....

 

The whole industry system needs to be restructured using something like Dr. Deming's principles IMHO .....Putting whip cream (bailout money) on this problem will only make the next time worse......What if the bailout is given and they fail again? And they will without changes being made.....The government (taxpayers) just walk away after giving them 30 - 50 billion or more?....Nope, we're on the hook....

 

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Taurus? Good car? Ooooh kaaaay. A POS in my opinion, just like the Escort. But, I will agree with you that Ford really turned things around. The best car they ever made (in my opinion) was the Crown Victoria, and their F-150's, using the same modular engine, are quite good as well.

 

The main problem with the big three auto makers is that they are primarily managed health care/retirement companies that just happen to make cars as a sideline. They can't afford to operate that way, and they need to get out from under the unions in order to do so. Letting these companies bankrupt themselves would be a good thing - it will give them a chance to reorganize under new management, and operate like well-managed companies.

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I agree Phil, W.E.D. was a paradigm shifter. I remember doing a lot of research on him in colletge and and I wrote a few papers on him as well.

 

I always thought his 8th point (drive out fear of repercussions) was one of the most salient. Saturn used to have a policy about workers being able to stop the production line for quality issues. They were proud of it, and even ran a series of radio commercials about "The day I stopped the line..."

 

I think the Big 3 need to fail. That the CEO of GM had to stop and change into his Volt 20 miles from DC instead of driving it from Detroit shows how clueless they are. One more example of just how clueless they is the pandering to the wealth envy crowd. Yeah sure the CEO of a major corporation flew someplace on a private jet. Big Fat Hairy Deal...

 

Let them fail, put together some very targeted loans together to allow them to reorganize/restructure.

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Matt......I was fortunate enough to be able to go to Japan in the mid 1980's and spend 16 days visiting many Japanese manufacturers....From Toyota to Canon and a lot in between......It certainly changed my perspective and I am gratful that I had the opportunity......We tried to bring it back and instill the principles in our business (a major manufacturing corporation) but it just didn't work long term..Kind of like Ford when Deming was there consulting and when he left it slid right back to where it was....I believe the trip did help me however....I've been out of management for a long, long time now and retired and I can't remember all the principles but I know that he knew how to make an organization operate and succeed with management and workers all working toward a common goal....

I agree, even though it will be very painful for the country, that the best thing is to let whatever happen, happen, to GM, Ford and Chrysler and rebuild from there....

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After Dr. Demming started with Ford the Taurus was produced.....[snip]

I had two and they were reliable, comfortable relatively good quality cars...Both had about 100m miles with no major problems....

Taurus? Good car? Ooooh kaaaay. A POS in my opinion, just like the Escort.
Hey, ANY car that you can get 100m miles out of is OK in my book. 100k miles, not so much... :)
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Point is that Ford made a widely accepted car, with good quality, at a decent price and it was a financial success.....Of course, Iacoca did the same thing at Chrysler with the K car but it's appeal was the price and certainly not it's quality......They sold a lot of them too....And Iacoca paid the government back the loan he needed to tool up for the K.......

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I hope I'm not too late to chime in.

So the Union wages are killing the Auto industry? Was it Henry Ford that decided to pay auto workers considerably more money than they were making, so they could buy their own cars?

I know the Unions get carried away some time, I belong to one, but with out it, no way would I be driving a car, and certainly not a BMW motorcycle. I'm sure that a person making $12-$20 an hour can't buy a new car, certainly not where I live.

 

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I see the problem as a three headed monster...

 

1. You can't pay $50 an hour for sub-skilled labor until your company is making billions of dollars profit a year, every year. Job banks have got to go, no worky no checky.

 

2. Management can't be overpaid either especially when your product is a turd in a churn to begin with. When the company is hurting mgmt will fly coach and stay at Motel 6 just like everyone else. Private jets and begging for bailouts don't mix.

 

3. You must change with the times and build a QUALITY product that actually has a resale value 4-5 years down the road.

 

I don't buy American vehicles anymore because every one I did buy was a piece of junk in 3 years and the resale value was zero when I wanted to sell it. Yes YMMV and if you love FordChevyDodge then have at it.

 

As far as unions go they breed mediocrity job performance ONLY because lazy mgmt doesn't document sorry workers so that they would be fired like at any other workplace. Ask me how I know? I work for a major company and I am a union employee. Do I agree with everything the union does? No, but without it I would be making $10 an hour with no benefits whatsoever while my CEO gets 64 million a year regardless how our company's bottom line performs. We have no job banks and I certainly don't make $50 an hour either. If my company is doing poorly than I am all for giving back but when it is clearing billions of $ a year (yes that is a B) and mgmt is getting huge bonuses and employing 24 pilots for the corporate jets why would I make concessions? For the record I am also a stockholder (not a major one of course) of this company so I also have a vested interest.

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I've been following this thread and other threads and some good point are being made on all sides. The question I have is why is everyone bashing the CEO. Correct me if I am wrong but isn't the compensation for the CEO set by the board of directors. They hire the CEO and negotiate the contract. Just like the union the CEO negotiates the best contract he can get. To me that makes it the fault of the board for giving out a ridiculous contract that rewards failure as much as it rewards success. Management will only improve when the compensation is tied to success.

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I've been following this thread and other threads and some good point are being made on all sides. The question I have is why is everyone bashing the CEO. Correct me if I am wrong but isn't the compensation for the CEO set by the board of directors. They hire the CEO and negotiate the contract. Just like the union the CEO negotiates the best contract he can get. To me that makes it the fault of the board for giving out a ridiculous contract that rewards failure as much as it rewards success. Management will only improve when the compensation is tied to success.

 

To me, the entire "CEO as Criminal" motif that has become so fashionable is wealth envy. People earl what they believe they're worth. IF they can sell that believe to someone capable of paying it, then more power to them. At that level of "power" you're only as good as your last company which is probably one of the reasons these guys pen such great big "golden parachutes" for when they fall on their asses and get the boot.

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"Management will only improve when the compensation is tied to success."

Where I work (a union shop) unskilled workers make considerably less than skilled workers. Also any one starting there is paid a much lower wage. I agree with this, but the problem is that very few people who are new there have any skills, and minimal work ethics, because if they were any good they would be working somewhere else for more money.

Three years ago there were companies willing to pay above the going rate for skilled workers. More than a dozen of them left where I work to make 30% higher wages plus the over time rate, and there was lots of it. The people they were replaced with did not have the skills nor the work ethics. The super (stupid intend-ant) at work told me that the labor cost were 50% higher, because we don't have skilled people any more.

 

Don't you mind paying more money for a better job, or a better product? It doesn't seem that way when it comes to paying workers. You need good pay to attract good workers, not just outrageous salaries for good executives

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Correct me if I am wrong but isn't the compensation for the CEO set by the board of directors.
Yes, but it’s a closed loop house of cards game. Boards are far from objective. They (usually) consist of top people in other corporations, and they set Jim’s new salary at ABC Co. based on what Fred over at XYZ gets, who knows what Charlie just demanded at 123 Inc., who is on the board of ABC, 456 Limited, etc., etc., etc. And around and around it goes. With everyone knowing in the background that they all will each profit themselves as they themselves rase the bar up and up and up.

 

Performance at the job is almost an afterthought. It’s the fundamental concept behind why golden parachutes were invented to start with – “I’m so important the future wellbeing of the company that you have to pay me if I’m forced to leave because the wellbeing of the company in the future turned to be not so ‘well’.” It’s the perfect crime. Rewarded when you do good, rewarded when you do poorly.

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The US has been making big mistakes in manufacturing (of any products) for decades now.

That's an awfully broad brush. Granted, it's a niche product, but I am fanatically loyal to Leatherman tools which, as far as I can tell, are still made in the USA. I broke the plier jaws on an early Leatherman 25 years ago; they sent me a new one, no questions asked. After a year with one of the first-generation Waves, it had loosened up a bit, and made a slight rattling noise when I walked. I mailed it back, and asked if they could tighten it a little to stop the noise; they sent me back a new Wave -- with little springs added to keep it tightly closed (no rattle), and a knurled area on the back of one of the blades, so you could tell which blade was which by feel. Tim Leatherman seems to be constantly improving his products with small, incremental changes.

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