"Good editorial in the Detroit News. I am disappointed that the companies caved on wage increases so easily since I'd like to see more jobs in the US. The long term loser is the UAW. It will continue to shrink."
I saw that article this morning also and was going to post it when I got the chance, but you beat me to it (actually an editorial titled "Auto pacts place pay over jobs" if anyone wants to find it and read it).
It clearly states what some of us have been saying all along. There is a definite relationship between worker compensation and the number of jobs...and that relationship is inverse, as wages go up, jobs go down.
It's only common sense. It seems that the UAW has adopted the strategy that it will have the best pay and benefits for the last guy working in the U.S. I once had a financial adviser that wanted to know which financial plan I wanted to be on:
1. A hefty inheritance to my children.
2. Make my last check bounce.
Seems the UAW has made the choice of #2.
"What is sad is, this is not the workers' fault. They are being sold down the river by their UAW leaders and they have been unable to do much about it."
I know I have said that also, but I'm beginning to change my mind about that. The thing that changed my thinking is the rejection of the FCA agreement and the skilled trades rebellion at GM. Plus, the UAW didn't want to suffer the same embarrassment at Ford, so they made that deal even richer.
It was the rank and file that rejected these tentative agreements and they are to blame, for this one at least. You can make the case that the history of the UAW is based on greed, so why expect that to change at this point?
Anyway, more to come over the next few years.
"Unfortunately, I don't see much better leadership at the companies - at least in this area. I think it is clearly in the best long term interest of the companies to keep as much manufacturing & assembly in this country as possible. I was looking to see them work harder to help the workers understand that moving toward global competitiveness is in everyone's best long term interest."
I think that's a fair point Chebby. I will say this though, this DOES happen privately all the time. I've personally had discussions with UAW leadership regarding the consequences of their actions. Some times, they've even acknowledged my point, but shrugged their shoulders and told me that they weren't about to go back to their tools.
Going back to the 80's and 90's however, any plant manager talking to represented employees about this subject was warned by the union they were interfering with the union's right to represent the workers and was threatened with notification to the NLRB for violation of the Wagner Act. The UAW didn't want management to complicate THEIR message to the workforce. I'm speaking from personal experience here.
"Look t who is bringing up the Rear
Toyota and Honda."
It sounds like Toyota and Honda only fell below the average. It a little misleading there Jeye. Where did you find this so we can read it and find out what the article really says?
"It's the J.D. Power 2015 U.S. Sales Satisfaction Index Study."
Thanks Chebby. As I thought, Toyota and Honda have only fallen below average, not "bringing up the rear". I have learned to read Jeye's cut and pastes with some skepticism. Sometimes he only pastes what he wants you to know.
It would help if he would identify his sources.
" Why are all these transplants building in Mexico, if non union labor in the US is so cheap?"
Because labor in Mexico is a LOT cheaper than EITHER union or non union labor. I would have thought that was obvious.
"Again lack of Common Sense from the Government and the consumer."
Jeye, you are the perfect stooge for the UAW propaganda machine. You claim to be a Republican, but nothing you are adamant about follows the Republican ideology. Income equality, government interference in business, equilibrium between supply and demand, etc. I don't know why you are masquerading as a Republican, you must have your reasons.
So now its government and stupid consumers responsible for American manufacturing leaving. You really, sincerely, need to open your eyes.
"If wages went to $2/hr they would still be putting robots in (body and paint shops)."
That's correct Questy. There are several criteria for adding robots (programmable automation) besides eliminating labor. Some of these are:
-Eliminating potentially dangerous situations for employees by placing robots in hostile environments such as paint shops as you say, heat treat furnaces, testing areas, etc.
-To improve ergonomic situations, particularly in power train plants for handling heavy parts such as engine blocks, heads, transmission cases.
-To eliminate mind dulling repetitive jobs like transferring parts, unloading parts, packing parts.
Even in Mexico where the labor rates don't justify much automation for labor savings, you will still see applications like I've listed above using robots.
"So if you didn't own or the CEO of a company you was also a burden. What was the first manufacturering jobs to leave?"
"So now its government and stupid consumers responsible for American manufacturing leaving. You really, sincerely, need to open your eyes"
You might want to start by familiarizing yourself with Adam Smith and his theories. He was not on a level with you Jeye, but he was a noted 18th century economist. Pay particular attention to his theory on the 'invisible hand'.
"Like an obvious majority of Americans, I frankly do not care where it was manufactured."
Precisely. It's the way economics works. People will do what's in their best interests. They don't care where products are made, they will buy the product that gives them the best value, i.e., the most useful product for the least money.
"However, you are also provided with things like medical, dental, vision care, vacation, sick leave, holiday pay, workman's comp if you get hurt, and an employee savings plan."
Yes, those are all included in burden, but there's a lot more. If you look at a manufacturing plant's burden, it includes both labor and labor related, but also indirect material as well. Typically burden costs are gathered into '100 accounts'. For instance:
100 acct: Indirect labor...includes supervision and indirect, non skilled people (fork truck drivers, material handlers, inspection, janitors)
200 acct: Operating supplies....Oils, lubricants, safety supplies.
300 acct: Perishable tooling...tooling consumed in the mfg. process (drills, reamers, sockets, weld tips, mill cutters, carbide and diamond tooling)
400 acct: Utilities
500 acct: Maintenance...includes skilled labor, maintenance parts, tool/die room)
600 acct: Employee benefits
700 acct: Scrap/losses...parts that don't meet specifications, inventory losses
800 acct: Fixed costs...taxes, amortization, depreciation.
900 acct: Sundry....travel, union representatives
The total of all these costs is the total plant burden. When accountants talk about burden rates, they are talking about burden costs divided by direct labor cost. It's not unusual for the burden rates to reach 300%.
"You can write all you want, I still use and believe in Common Sense."
You believe in Jeye common sense which is different than most people's common sense. Jeye common sense says all of our problems are caused by stupid customers and government.
"To me my family comes first then our country."
Me too, more than you I think. Why? I don't want my kids to grow up without the benefit of a manufacturing base in this country. People like you are doing their best to drive it away.
"You sound like you would give a foreigner a job over your own children."
You're getting a little personal now Jeye. Are you going to suggest that I take my kids to a gay pride parade? If you want my advice, you will learn from your own experience to leave families out of our discussion.
"Now where did this statement come from? Sick"
Yes it is sick. And it wouldn't the first time you did it.
"No what I'm saying young American men and women are giving their lives defending the rest of the world and it cost money."
Yet another thing you've misunderstood. Our young people are overseas looking after the best interests of the US.
"But they will have to work for less than some third world country"
No, because they are not unskilled labor. In fact they are doing quite well, thank you.
"Soon after NAFTA was signed the Mexcian cut the value of the PECO in half.."
"The $60,000 you mention our Government will over $20,000 of that"
You'll have to have someone translate this into English for me.
"No hourly employee at GM cost $150 a hour with benefits maybe $75. The average for a 30 year employee would be a lot less over that lifetime.. "
Give it up Adrian. Jeye just doesn't have the tools to understand.
"Your job could be replaced by someone in India."
If that's true, why hasn't it?
"Ross Perot didn't like the way GM was being run, so they bought him off."
You have difficulty in sticking to the topic, don't you?
""No, because they are not unskilled labor. In fact they are doing quite well, thank you."
What about other parents that wasn't as fortunate as you."
Then their kids could do what I did. Put myself through undergraduate engineering school. Then work my butt off and get the company to pay for my graduate degree in business. Never cost my folks a penny.
Move my family any where in the world that they thought I could help, work any shift they wanted me to. Do the best job I could. Use my imagination and training to look for ways the company could do better. Have a consistent track record of good performance.
Worked out OK for me. Can't complain.
"Sure none of it for big business."
Certainly some of it is to promote US businesses around the world. Some of it is to make sure we have allies around the world. And some of it is to make sure we have influence in places that are strategic to us.
"I encourage ANYONE to go to the UAW website where you can download the 2015 agreement, and go to page 50 and read Appendix J - Continuous Improvement Forum. The language goes to page 59, and then there are letters after that. I think it would be an eye opener for many."
I did what you suggested and have a few comments. Before I lay out those comments, I really want you to know that I recognize that tremendous improvements have been made between the UAW and the various management groups in terms of the broad description of production systems (whether it be Ford, GM, FCA, etc.). Clearly, these are all patterned off of the Toyota Production System whether we like to admit it or not. I also recognize that the atmosphere on the production floor is significantly different than it used to be as well. You and all UAW members should feel good about that. It's been a learning exercise for both management and the union.
I have to tell you though, this type of thing is happening all over the world, not just in the US with the UAW. The inclusion of the worker in the improvement process has been going on in Japan since the early 50's when Taiichi Ohno first visited Ford Rouge. It interesting that we in the US need a 1,000 page document to describe the relationships between management and the workers. We are catching up, no doubt, but others have a huge advantage in lean manufacturing.
The bad news is that this spirit of cooperation is not an advantage for us because, as I said before, everyone is doing it and many plants outside the US, particularly in Mexico, have embraced these systems as the way work simply gets done. In my experience, this methodology proceeds much faster in places like Mexico where there aren't walls to break down between management and the union. In the Mexican plants I was responsible for, they identified themselves more by their plant affiliations, not by union and management groups.
To be continued
So, not only do they lead us at lean implementation, they have their inherent wage advantage as well.
I mentioned before that we made the same power train products both in Mexico and US plants. No difference, same part numbers for engines and transmissions, so we had a natural data base for comparison. One of the metrics we paid VERY close attention to was man hours per unit (HPU). When we compared the HPU for the same product in the US and Mexico, the US had a very slight advantage in raw HPU (like maybe 1.5%). When we analyzed these numbers and took out the effect of automation in the US, the Mexicans had about a 5% advantage.
So bottom line, the Mexican operations were slightly more productive, but with a 10x advantage in wage structure. For both engines and transmissions, the average HPU were in the neighborhood of 3.5 man hours per unit. With a labor cost of $5/hour in MX, and about $50/hour in the US, the differential was $45/hour x 3.5 HPU = $157 per unit advantage to MX. We could ship these products from MX to anywhere in the US (even to our big plants in the Toronto area) for $12 per engine/transmission by rail. That represents about a 12% savings in total landed cost at the assembly plants.
So, the question becomes what do we do about it. I think we are faced with some very difficult choices in this country. The biggest problem I have is that we don't seem to even maintain this level of non-competitiveness, we want to add to it. The latest agreements do nothing to close the gap, but add money to both the Tier I and II workers. Sure, the signing bonuses are one time events, but the scheduled increases plus the scheduled lump sums add about 3.5% for each year of the contract. In 4 years, that adds to a 14% increase in compensation.
It appears to me that the elimination of auto manufacturing will take place over the next 20 years or so, in our lifetime.
"I don't care if someone wants to buy a German car but man, a Communist Chinese car is not the same thing."
Here's another way to look at that. I've always believed that the more business ties two countries have, the better their relationship was probably going to be. GM clearly has significant capital investments in China, and if the Chinese valued that continuing investment, wouldn't that be an incentive to play nice?
Maybe interlocking business arrangements are the way to finally get the world community to tolerate their neighbors. Just imagining.