Saving the US Auto Industry

[cowhead]

the whole thing stinks.. no one was tried to 'bail out' bennigans when they closed and 20+thousand food service workers got canned.. fuck 'em they should have seen this coming years ago. Isn't that what they pay the high-muckity-mucks multimillion dollar salaries for? geez.. I saw this coming..and when the last little news blurb about them not wanting to produce smaller more efficient cars in favor of the more expensive and higher profit trucks and suvs'... I don't know.. I've never bought a new car and if I can help it I never will. here's my little idea. offer a deal to one of the 'big 3' and the first one to jump lives.. the others can fend for themselves.. the deal is that the company has to sell all of their vehicles at a 1% profit margin(to repay the debt over god knows how many years), be subject to intense accountability where a non-profit company (ideally a german or japanese efficiency/quality control company)will scrutinize every little damn dime.. as well as hold employees accountable for their actions (the thing in the industry in which I work.. if you can't do the job.. and do it well... BLAM! you're canned so fast it'll make your head spin. then again I have stayed away from the corporate segments because they encourage (thru inaction) laziness, incompetence and a profound lack of..of.. just caring about your job..pride in your work? ) and produce cars people actually want and can afford.. the new volkswagen if you will.. anywhoo.. that's ,my little bit..

[TheMercenary]

Beeigans sucks.

[TheMercenary]

We have seen a number of large dealarships start to close their doors. I think this only the beginning.

Auto Dealerships Teeter as Big Three Decline

http://www.nytimes.com/2008/11/30/bu.../30dealer.html

[classicman]

I think there are too many of them too. The strong shall survive the weak and poorly run will disappear. Natural selection - simple as that.

[tw]

Consumer Reports noted a need to eliminate dealers long ago - maybe in early 1990s. I don’t remember the numbers – maybe 20,000 dealers reduced to 7,000. Also expected to eliminate so many dealers were direct car sales via the internet and publication of dealer prices from the manufacturer. Consumer Reports routinely advocated buying a car at manufacturer's cost plus a few hundred because dealers (should) bring so little value to a sale.

Indeed, those who have prospered most in the auto industry were dealers. Ironically, GM would punish troublesome executives (ie those who advocated better quality) with an early retirement and an opportunity to quit the company by owning a dealership.

[TheMercenary]

This was interesting. From Boortz.

HAVE YOU SEEN THIS VIDEO?
By Neal Boortz @ November 26, 2008 8:21 AM Permalink | Comments (44) | TrackBacks (0)


We got dozens of emails yesterday to Nealz Nuze saying that I must see this video about a Ford plant. Okay you are probably thinking "big deal, Boortz." But if you watch the video it explains how Ford has created a new, innovative manufacturing plant that streamlines production and makes operations much more efficient. They can make 5 different types of vehicles at this plant. It does this by allowing Ford suppliers to be integrated into the assembly line process. So the suppliers making the seats, the dashboards, the fuel systems ... they have assembly lines right inside the Ford factory. Makes sense, rather than relying on shipments of parts. No waiting. No shipment costs or delays.

Oh but there is one thing I forgot to tell you. This Ford plant is in Brazil.

Yep. And do you know why it is in Brazil? Unions. The UAW is opposed to this type of innovative manufacturing. They are opposed to innovation that would actually help their employer because they stand the risk of losing jobs. And if they lose jobs, they lose power.

I'm sure another reason, although it doesn't say it in the video, is tax rates. But that's a whole other issue.

http://boortz.com/nealz_nuze/2008/11...his-video.html

[xoxoxoBruce]

What I get from that video is the parts are not made there, but shipped in and assembled into sub-assemblies, by these vendors. There is no reason why Ford couldn't use the exact same plant, and have Ford employees do the sub-assemblies. The innovation is in the design of the vehicles that allow that assembly system, and the design of the facilities that make it possible.

Oh, and the biggest innovation is someone running the show that doesn't have their head up their ass.

[tw]

The ultimate pattern ... is that today's metal-bashers will disappear. In their place will be vehicle brand owners (or VB0s). They will do only the core tasks of designing, engineering and marketing vehicles. Everything else, including even final assembly, may be done by the parts suppliers.

… Already Magna, a Canadian company with innovative manufacturing techniques for body parts, is taking over more contract assembly from Detroit. Significantly, the car factory that DaimlerChrysler is selling in Austria is being bought by a Magna subsidiary (Magna Steyr), which will continue to make Chrysler Voyager minivans there under contract. Magna Steyr also has contracts to assemble niche cars for Mercedes, BMW and Saab.

Before anything goes that far in volume car making, the assemblers have to redefine their relationship with their suppliers. They need to become more co-operative and less adversarial before design and engineering processes can be re-assigned. This re-drawing of the boundary between the car company and its suppliers is least advanced in America. In Japan and in Europe it is already working quite well.

The task for American manufacturers is to bring their relations with suppliers into line with Japan's. Ten years ago, the big three manufacturers in Detroit turned aggressively on their suppliers as they sought to recover from heavy losses. The charge was led by Jose Ignacio Lopez, head of purchasing at GM, ... the traditional Detroit way of dealing with suppliers is “to beat them over the head”.

Head-bashing, however, was not enough to rescue the American industry, although the failure was disguised by the unexpected boom in profitable minivans and sport utility vehicles (SUVs). ... The resulting over-capacity encouraged firms to sell extra cars at marginal prices in order to bring in cash. ... The reality is that American manufacturers have been losing money on cars, while they have been coining it on SUVs.

The handsome profits and shareholder returns achieved at points in the 1990s were, to some extent, illusory. When operating profits are measured in relation to the size and cost of capital, the suggestion is that Detroit has for some time been consuming rather more wealth than it has been creating. Mr Ferron maintains that the business model of the traditional American car manufacturer was broken as its return on capital plunged from around 20% in its heyday.

Throughout the 1990s boom, the car makers of Detroit never managed to raise their return on capital above 3%.

By ignoring even spread sheets, Detroit management made low tech, high profit SUVs without innovating. Assembly techniques described by Boortz in TheMercenary's post happen when 'car guys' design and build cars. Boortz simply demonstrates another innovation long stifled by MBA trained management who viewed everyone as an enemy.

Cars were assembled from many individual parts all attached to one frame, one part at a time. Drop an engine into that frame somewhere during assembly. Even the very first Hondas did it differently. For example, engine, front suspension, steering, and drive train were assembled elsewhere, merged into a sub assembly, and then pushed up from underneath the car in one integrated assembly - that even eliminated wheel alignment. (By this point, everyone should understand why an engineer designed car never needs wheel alignment.) Even dashboards were designed and installed as a complete assembly rather than assembled part by part inside vehicle frames. When GM did this (only because everyone else was already doing it), well, the world had long moved on to other innovative assembly processes. Therefore GM, et al had what (according to The Economist in 2002)? Only 3% ROI.

Described above was how suppliers delivered parts directly to the assembly line. Twenty years later, GM addressed the same problem using part delivery robots - throwing money at a problem rather than fixing the problem. About the same time, car companies without bean counter management had now advanced to whole subassemblies delivered 'just in time'. That Boortz video simply describes it; what was well known even six years ago even in The Economist on 21 Feb 2002. It’s not about outside suppliers. It’s about integrating whole assemblies long before the final assembly plant. Performing assembly work in parallel; not in series. And it's about working as a team with suppliers; not beating them up and down.

What was GM’s solution? Well the Chevy sold in Thailand is actually made by someone else in Korea. GM management solved the manufacturing problem by having someone else to do all innovating. But that is really all that a MBA manager understands. Paying bills and selling something.

Rather than innovate, GM used grossly overpriced SUVs to mask 1968 technology engines and obsolete manufacturing methods. GM's problems are very old, known, and ignored. Boortz video manufacturing methods were international standards - innovation kept out of America by business school manager using cost controls.

What was necessary to make that innovation possible? W E Deming taught this stuff to Japan in the 1950s. Only MBA management beats on employees and suppliers like they were the enemy. The solution is not about having outsiders assemble cars or blaming the unions. It's about having suppliers provide what is necessary on the assembly line as even exampled here on 18 November.

Who asked a silly question of why tw hates MBAs? Common knowledge makes that contempt obvious. Boortz video only demonstrates that MBAs (like George Jr) stifle solutions for 20 years. Boortz video does not say it. But the Boortz video again demonstrates that Americans are finally doing today what was innovative 20 years ago. A boss who stifles innovation must then blame unions, unfair competition, legacy costs, government, environmental laws, greedy suppliers, fuel economy standards, tax structures, the education system ... everything but the few grossly overpaid executives who are 99% responsible for those problems. Boortz video demonstrates what can happen once suppliers are trusted – no longer the greedy enemy.

[TheMercenary]

tw = letter bomber = Theodore John Kaczynski.

I have a Manefesto. Hear me Roar!

[classicman]

Originally Posted by tw

...everything but the few grossly overpaid executives who are 99% responsible for those problems.

Wha wha whaaatttt???? When did the percentage change??? I did NOT get that memo.

[lookout123]

Now wait just a damn minute. It is a well know fact that 85% of all problems are directly traceable to top management. Google it if you don't believe me.

[Aliantha]

I thought it was only 76%...

[tw]

Originally Posted by classicman

When did the percentage change???

85% of all problems are directly traceable to top management. And when management says there is plenty of blame to go around, then 99% of problems are directly traceable to that manager. Any decent manager knows who is responsible. The most irresponsible (or ignorant - same thing) managers want to blame others or just call it an accident.

Meanwhile, post #188 demonstrates how much one need know to understand how anti-innovative GM has been. Whereas the Boortz video shows a ‘new’ production method, The Economist Feb 2002 articles says those manufacturing techniques were standard in both Europe and Japan even many years earlier. What the Boortz commentary forget to mention: just another example of how much innovation has so long been stifled by MBAs – or why patriotic Americans who believe in free markets have been buying foreign cars. In my inventory are so many more examples of why GM has been making so many crappy products for 30 years. Facts that get lost where fools promote ‘buy American’ or recommended GM products.

TheMercenary’s Boortz video simply forgets to mention that the innovative manufacturing techniques were being used 10 and 20 years earlier where top management are car guys. It demonstrates why GM cannot fix itself until Rick Wagoner is removed. In his case, 99% of all problems are directly traceable to … a man who did more to destroy America than Saddam Hussein.

[lookout123]

In all seriousness, what to you get out of your endless diatribes against gm?

[classicman]

We need a poll to see how many people actually read post #188. I for one am curious. Are there cliff notes available?