"We have insourced a lot of work in our plant alone (rotor/hub assembly, rear axle sequencing, leaf spring sequencing, other sequencing, IP build-up, etc.), and Ford continues to insource more work, even to the point of drawing the ire of the Canadian Government for causing a former supplier to close 2 plants and lay off those workers."
With all due respect, the data flies in the face of all of your anecdotal evidence.
"Fewer plants have more modern equipment, and Ford, through it's One Ford Plan, has eliminated a LOT, and let me emphasize again, A LOT of waste and has greatly improved efficiency."
No doubt a lot of waste has been eliminated, but understand the same types of activities are going on in all plants around the world. A former GM CEO personally told me that US manufacturing is doing a wonderful job improving productivity. The problem is the difference in wage structure makes it a moot point. Improving productivity 3-5% per year is meaningless when you're talking a 5-10x difference in wage and benefits costs. And he was right.
If it makes you feel better that the US work force is improving, that's OK. Just understand that the math doesn't work in your favor. Sorry.
"If that progression sounds logical then do you agree it is logical to say those manufacturers feel an "American" wage is too high? Our standard of living makes the US non-competitive?"
"In our plant we had the MODAP time standard system. Once this system was put into place (early 90's) Engineers went right to work to fudge the numbers and overload jobs."
In my more advanced plants (all of which were in Mexico), the hourly team leaders did the job design and line balance striving for continuous improvement. The Mexican workers and union have a much different philosophy than those here. The want a bigger pie, not a bigger piece of a smaller pie so the cooperation between the workers and management is much greater. They view a worker than is not pulling their weight with contempt and are pretty much self policing.
"I do not completely agree with Mr. Harbour's philosophy on jobs. "Value added" and other terms such as those sound like a lot of thought went into the process, and sounds nice, but I feel ignores reality."
There are several types of definitions of value added. When one is speaking of an individual worker, think of it as direct/indirect labor. It doesn't have any connotation or judgement attached to it.
When one is speaking of value add for a company it is referring to the total cost less the pass through essentially. Many countries have a value added tax (VAT) that they apply to the amount of value added in this definition.
Yet another definition, and this one is important when trying to design a job, the designer tries to minimize non value added work such as reaching, walking for material, twisting, waiting, etc. Only work that transforms the product in some way is considered value added.
"should be easy to do in the automotive industry because assembly is not that hard to do."
I don't think I would totally agree with that statement. There are typically three primary areas in assembly plants, general assy., body shop, and paint.
Of the three, I think that as long as you are receiving high quality parts to assemble, general assembly is the easiest to manage. Sure, you have people issues and maintenance issues on line tooling, but overall, not too bad. Maintaining an efficient line balance is also important.
In my mind, the next more difficult area is the body shop. You have to maintain fairly close tolerances over long distances with semi flexible parts. If you want to see chaos in an assembly plant, just get a few holes pierced off location on a frame component.
I would think that the most difficult to run properly is paint. I know that each assembly plant has paint experts that are heavily depended on to make that area run smoothly. Paint thickness, cleanliness, emissions control, robot maintenance, etc. are all issues that a paint manager has to deal with.
I fully admit that most of my career was not in assembly, but engine/power train manufacturing so I wouldn't call myself an assembly expert. I would be interested in posters opinions that work in assembly plants regarding the above.
So, hopefully I have a little credibility when I talk about productivity gains in an automotive plant.
There's no way that the reduction in GM UAW represented employees from 73,000 in 2007, to 48,500 in 2014 was due to productivity. I'm sorry but that is just incorrect.
Think about it, how many GM plants were closed just prior to, and during the bankruptcy? Many. How many were closed in Mexico? None. The vast majority of these jobs were lost because they went to cheaper suppliers both in this country and outside the country.
This is a direct result of the non competitive wage structure the UAW brings. Believe me or not, I don't care but somebody in the UAW better be paying attention.
Yes, only 5.7% of the total cost of a vehicle is direct UAW paid employees. I hope you remember the discussion we had on value added content for a manufacturer and why that 5.7% takes on a bigger role than one would suspect. I also hope you understand why that same 5.7% ought to be raising HUGE red flags at Solidarity House, but based on the FCA agreement, I doubt it. It doesn't matter that it's been 10 years without a raise, it only matters that the UAW wage structure is still about 5x non-competitive.
"No, you need to stop "deciding" what it is and go into a plant and "see" what it is. If you can't see something how do you know more about it to be able to definitively talk about it?"
You're barking up the wrong tree there bucko. I was asked for a bio several years ago and they wanted part of it to be a compilation of automotive OEM and Suppliers plants that I've been in. The total was 122, 62 were in the US, 21 in Mexico, 12 in France, 11 in Canada, and the rest spread out in Germany, Poland, Austria, Portugal, England, Japan, S. Korea, and China. I think I've probably seen a few more plants than you have my friend.
""They just put 2 bolts in a bumper" You didn't say that but I have read it on the boards often."
No, I didn't say that, but let's talk about what I have said. If you look back in my posts, I have consistently defended UAW workers and the hard work they do. We had industrial engineers that measured work content in 0.1 seconds and did all they could to fill up their TAKT time. The two problems I have with the UAW are the leadership and the cost structure. Unfortunately, these two factors are destroying a once powerful union.
Just for your information, there used to be a company called Harbour and Associates that issued an annual report on the major OEMs and their respective productivity improvements from year to year. They used to publish and anyone could obtain a copy for a price. In 2008, the company was sold to Oliver Wyman Consulting and stopped publishing publicly, but continued to sell copies privately to the OEMs. I knew Ron Harbour from my GM days and helped him develop some of the most recent reports on OEM productivity. Please don't presume to lecture me on automotive productivity.
"Your number are for 4 years not 3 months. Let be honest."
I assume that since you won't tell me what your number is, either you don't know or you know you are wrong.
"It is not "content," it is what the Big3 manufacturers pay THEIR workers in THEIR plants. THAT Labor works out to 5.7% of the cost to build the vehicles."
Yes, I understand all that. Please understand this though, it was 11.7% in 2007. It is less than half of what it used to be in just 7 years.
You're saying it's productivity? C'mon questy, that's quite a stretch. Do I need to research the number of UAW members that worked at GM in 2007 and 2014?
"Peanuts compared to this."
LMAO. You're obviously math challenged too. Add up your hieroglyphics and tell me what the total is. I'll just take a few out of my list (recognize that the big money is in the things that RDH quoted):
40,000 UAW members x $6K = $240 million
40,000 UAW members x 4x $1500 = $240 million
40,000 UAW members x 63 days x 8 hours/day x $28/hour = $565.4 million
$240M + $240M + $565.4M = $1,045,400,000
That's over a billion $. Let me know when you get to a billion with stock options and such, then I'll add up some more. Maybe we'll start estimating health care, pension benefits, etc.
"Peanuts compared to this."
You crack me up Jeye.
"GM should still deliver results that are in the black regardless of that $900M charge because sales of very profitable vehicles are going really, really well."
Agreed. In 14Q3 they made $1.4B net income, so I suspect you're right. Plus, as you say, the mix calculation should be a positive as well.
" I suspect they will take a special charge for the $900M ignition switch fine, so Q3 won't be so great."
Actually upon further review, they have already announced on Sept 17, they will take the $900M charge in Q3.
" GM is WELL on their way to cracking the 10% barrier. North American results WERE near or at the 10% level for the previous quarterly results."
Persie, actually North American EBIT margin was 10.5% for Q2, they don't measure profit by region. Consolidated profit margin was 3% (NI = $1.1B). I suspect they will take a special charge for the $900M ignition switch fine, so Q3 won't be so great.
"So for every guy making $27 an hour, or whatever, it was costing GM another bunch of money to pay for his health care, his family's health care, his retirement pension, and his future health care fund, since he was getting lifetime free gold-plated health care for life once he retired. "
Good starter list RDH. But don't forget programmed lump sum payments such as $6,000 signing bonus, inflation protection lump sums of $1500 per year, profit sharing, retirement incentives offered, paid 'family days', disability payments, wig benefits (for chemo patients), bereavement pay, jury duty pay, paid short term military leave, life and accident insurance, SUB pay, overtime premium, $50K lump sum for skilled workers to return to a production job, flu shots, tuition assistance, legal services, and 63 paid holidays over a 4 year agreement.
I'm sure there are more that I can't remember.
"stating all kinds of stuff about profit-margins at 10%, etc., as if anyone would believe that"
Fortunately, the union understands finances better than yourself. EBIT margin is about 10%, profit margin is 2.6%.
"You was upset with how the news wires reported CEO pay. I'm sure the same can be said how they handled hourly pay. "
How is the media misrepresenting hourly pay? Are they not reporting the right numbers? Is $28 per hour incorrect for unskilled labor?
"Then there must be another explanation for how UAW labor content has fallen from 11% to 5% since 2007. What is it?"
I noticed that someone gave me a thumbs down. Ordinarily I couldn't care less what other people thought of my opinions, but in this case, I was merely asking a question and was seeking input.
To the poster that gave me a thumbs down, which of the following would apply:
1. I don't think your facts are correct.
2. You made me uncomfortable with your question because I can't answer it without admitting that you're right.
3. I simply don't like you.
I sincerely hope that your answer is number 3, otherwise I would think that you need to reflect more on the content of your post before you hit the button.
"I don't know about GM but Ford has been insourcing work for years. This year at our plant they put in two new areas. One for sequencing rear axles and another for sequencing leaf springs. About 4 - 5 years ago they put in a from rotor build-up line, all insourced."
Then there must be another explanation for how UAW labor content has fallen from 11% to 5% since 2007. What is it?
""Labor accounts for a declining share of a vehicle's cost, said Sean McAlinden, chief economist at the Center for Automotive Research, noting that the three automakers' costs FOR UAW MEMBERS [emphasis mine] fell to 5.7 percent last year from 11.5 percent in 2007."
Good catch RDH. Instead of making an argument for the UAW, this is actually a condemnation of the UAW. Since auto sales have returned to pre-recession levels (17 million vehicles) and the UAW content has dropped from 11.5% in 2007 to 5.7% today, clearly, the answer is that a much bigger part of the labor to build a car is happening outside the UAW. For sure, productivity hasn't doubled, so at least I have no other explanation other than the automakers have been slowly, but surely continuing the trend of domestically out sourcing as well as off shoring labor.
They haven't made a big splash about it, you haven't seen this in the news, but the trend is continuing. It's a perfect example of the boiled frog parable.
I was thinking the other day that FCA was smart by putting car production in Mexico and trucks in the US because as CAFE standards accelerate to 2025, trucks will necessarily be a smaller portion of the national fleet. As the market for the highest margin vehicles decreases, so will the highest cost labor force decrease proportionately. Smart.
"You sound like a CEO its not my fault, its the guy on the line."
Jeye, you have lost any ability to carry on a conversation. Nobody said it was a line workers fault, not even close. But that's one of your favorite themes and you seem to want to talk about it regardless of the topic being discussed.
I think it might be time for you to hang up the old computer. Use it to play checkers or solitaire, but don't try to carry on a conversation that you can't keep up with.
"If the authorities REALLY want to get at the real story, they will offer one or two of the small fries a lighter sentence in exchange for names, dates, places, facts, etc. and information leading to convictions of the bigger fish."
"Conversely, if they DON'T cut these deals, you may safely assume they prefer that the real facts never be made known to the public."
When did you stop beating your wife? Got 'em both ways, right?
Consider this from Reuters on Tuesday:
"The inquiry has led to the suspension of more than ten senior managers. Only the names of the three top engineers, all of whom held key positions at the time, have surfaced in media reports.
The three are Heinz-Jakob Neusser, head of technical development at the core VW brand; Ulrich Hackenberg, head of research and development at premium brand Audi; and Wolfgang Hatz, the VW group's engine chief and head of R&D at sports-car brand Porsche."
Seems VW has a pretty good handle on this thing already. They say they have no proof yet, but they must have a pretty well developed scenario of what happened.
I assume your "big fish" is Martin Winterkorn, the former CEO that has already resigned. I find no reason why the new CEO, Mattias Muller, would not throw him under the bus if they have proof. It would do several things for Muller if he could show that Winterkorn was in on it.
First, it would satisfy the authorities (and the marketplace) that VW has left no stone unturned in ridding the company of these perpetrators.
Second, it would speed along the process of the being old news so that VW doesn't continuously find itself in the headlines.
Third, it would dis-associate Muller from Winterkorn so that Muller could go forward without being tainted.
I don't believe it will be very hard at all to get to the "truth" in VW's case. I think VW will hand this case to the authorities on a platter.
My wife and I spent some time in northern, lower Michigan this past week and had a great time in the early stages of fall colors.
While we were in Charlevoix, we saw one of the coolest houses I've ever seen. Whether or not you're a boat lover, you have to be pretty impressed with this house.
Go on one of the real estate websites (I use Zillow) and search for 125 Belvedere Ave., Charlevoix, MI and prepare to be envious. Click on the photos to see a slide show of the interior.