"Obviously, I don't know the numbers, but if you calculate Dearborn Truck at 1200/day, 300 days/year, $5,000/truck, you get $1.8 billion"
If that's the case, i.e., all costs are included, then Dearborn truck makes 72% of all Ford Automotive GLOBAL
profits. They must be losing big time on most of everything else. They should immediately close the other 61 plants.
"A question for you are American CEO's and their team competitive with global CEO's and their team?"
Here's the thing about CEO's regardless of where they may reside. They have no one like a union to fall back on if they screw up. You just can't seem to be able to distinguish between management employees and union employees. Their responsibilities are different, their compensation is different, and most importantly their employment risk is different. There is one way they ARE similar to hourly workers, if a CEO isn't providing value for every dollar he or she makes, he is "outsourced" just like UAW workers are.
I don't know what your definition of competitiveness for a CEO is, but here's mine. In order for a CEO to be competitive, he/she has to be:
1. Capable of doing the job, i.e., must have the educational background, experiential history, and aggressiveness to be achieving the desired results.
2. Be head and shoulders better than anyone else for the compensation is willing to pay.
3. Have the mental acumen to provide these results year after year.
4. Recognize that he/she is the most responsible person in the company in achieving lofty goals.
If he/she is not meeting these criteria, they are among the unemployed. Pay particular attention to #2. Do you honestly believe that the UAW fulfills this requirement? There are 675,000 Mexican auto workers that say they don't.
If an American CEO is replaced, it isn't necessarily with an American either. Foreign nationals are CEO's of companies like Chrysler, Nissan, McDonald's, Coca Cola, Kelloggs, Alcoa, Vodafone, Burberry, GlaxoSmithKline and many more.
"I think Questy's source meant his plant covers its own local peoples' bonuses, not the entire Ford Motor Company's. That would make a lot more sense."
I don't think so, maybe Questy can clarify that for us. Either way it was a dumb statement.
No Ford plant, just like GM, FCA, Toyota, etc. is a profit center. Whoever told Questy that is a moron. If you want to talk about profit at an individual plant there has to be an allocation of corporate SG&A, R&D, marketing, taxes, interest, etc. No car company does that. If some uninformed person wants to call total revenue minus plant expense profit, I wouldn't recommend you give them the time of day. Ford is like GM in that respect, they only report pre-tax profit regionally (NA, SA, Europe, Middle East and Africa, AP) plus the finance company.
Questy, next time "somebody" tells you something like that, ask them what the basis of allocation was, i.e., direct labor, revenue, value added, number of bricks in the building, etc. See what they say.
Another thing Questy, all these things "somebody" tells should raise a red flag for you. Everybody has a personal agenda so it would do you well to investigate their claims with a little critical thinking and Google.
"I was recently told that (and I need to be vague about this) one of the plants in particular makes enough profit to more than pay all of the bonuses (hourly, salary, Executive) every year. "
I promise your secret is safe with me. That's quite a feat. I began to wonder how much money is represented by the entire bonus structure of the hourly, salary, and executive programs at Ford. Here's what I've come up with so far:
1. According to the current Ford proxy statement, the 6 NEO's were awarded $48.9 million.
2. The $1500 annual inflation protection bonus that each of the 48,000 UAW members get amounts to $72 million.
3. The signing bonus for the 2015 contract appears it will be $6000, or a total of $288 million.
4. The profit sharing bonus averaging $6900 totals $331.2 million.
So far I'm up to $740.1 million and I haven't even touched the executive (other than the 6 NEO's) or salaried programs yet. I suspect that number will grow to at least $1 billion by the time I'm done. That must be some plant!
Seeing that the total of Ford Automotive made $2.5 billion last year, this one plant will have made 40% of all of Ford's automotive profits made in the rest of the 62 plants.
They should shut down the rest of them and they would have one hell of a company.
"Being in the machine trades and keeping up with what is going on, there have been many major advances in machining technology. It is the only way to compete with someone making $1.25/hr. The latest CNC machines are made very differently from yesterday's CNC. There are new tool holders that enable the machined to run faster, much faster, than before, while holding tolerance and not heating the cutter and dulling it. The popularity of 5-axis machines has really shot up as a result of this."
Do you believe this type of equipment is not available to the Chinese, Mexicans and others? Would it surprise you to learn that ALL Mexican GM plants are tooled with the identical....not similar, IDENTICAL equipment that we have in U.S. plants. This is also true of our Chinese and S. Korean plants. The only difference is that on some occasions we chose not to put in some parts handling automation due to justification issues as a result of the low cost labor.
Does Ford use different equipment in their Mexican plants? Really?
"The company and the UAW have worked very hard together (at least at Ford) to make the workforce competitive."
One last question, do you believe that UAW is competitive against other global work forces? Please be objective and support your belief.
"This is happening all across Ford."
Where else have you seen it? Maybe I've been in the same plant and we can discuss it. I do have data from some of these visits I've made.
"For your assertions to be correct I would have to see some of the opposite happening, but I don't see it."
Sometimes Questy, you can't be everywhere and see everything. As I explained earlier, I have been in many plants, some very recently and I don't think I can say that I can accurately analyze the industry from what I have seen in these individual plants. That's why I look at data from independent, trusted sources. Ward's Auto World and other publications of that source are generally regarded as the industry standard for factual data. Heck, some of the employment figures are from the UAW's own website.
If you won't accept this data, I guess this discussion is over. These numbers seem so fundamental to me and their conclusions are so clear, I don't understand why one would deny the outcomes, but that's just me.
A couple of years ago I went shopping for a new car and nearly bought a BMW 535i. In the end, I decided to buy something else based on what I considered boring styling and an unremarkable interior. I LOVED the handling and driveability but it couldn't overcome the styling.
I just saw some photos of a new i8. Beautiful car. The critics will say that it doesn't meet today's standards for EV mode (15 miles) and that is out of most people's range at about $135K, all true, but man, they sure have designed a beautiful car!
Would love to see one on the road. I'll be looking for a new car next spring (it won't be this one) but I'll probably make a trip to the local BMW dealer to see if he has one to look at. Haven't seen any on the road yet.
One advantage to living in MI is we see a lot of new cars on CTF (captured test fleet) road trips. Some are camouflaged, some are not. Saw the next version Volt on the expressway the other day. Have to say it's a big improvement.
"So you're saying America lost it's competitive edge because of high labor cost?"
I don't know about RDH, but I didn't say that at all. What I said was that the UAW wage structure is not competitive. And just like any other supplier with high costs, the future is not bright.
"[Had the same relationship been present in 2014 as it was in 2007, there should have been 525,081 UAW members in 2014 instead of 391,415:..."]
Could one infer from those numbers that the Uaw is now more efficient."
Not by that margin. I've been trying to find a comparison of cars sold vs cars made between 2007-14 in the U.S. That would be interesting, but haven't been able to track it down yet.
"The real R party, which used to be a "ship of state", left port in the '90's and it is now mostly a "ship of
fools" with more real conservatives leaving."
"They seem to believe that growing wages first will fix our ills, and somehow grow our economy and result in an economic boom.
I do not think we could find one dyed-in-the-wool union person on this board who would disagree with the above statement, do you?"
I think you're right again. They believe that putting more money in people's pockets will stimulate growth. What they ignore is the fact that everything will cost more due to the increasing cost.
As an aside, as I watched parts of the Democratic debate last night, I was again astounded at the childlike ignorance of Bernie Sanders. Sure, the answer to all of our societal issues is for the government to give away more stuff. Case in point, 'free' college tuition. For a government that is being over taken by debt service, isn't this type of thinking suicidal??
The Republicans are just as bad in a different type of way. They seem to want to be elected based on what the Democrats have done, not what they WILL do. And they are focused not on the issues of the country, but on continually making proclamations that are ridiculously extreme like solving immigration by building a fence and making Mexico pay for it. Seriously?
Sorry for the diversion. Just wish SOMEONE would talk about how we are going to stop drowning in debt.
"They are being played."
I've always thought that. But as I reflect on it now, and especially since the defeat of the FCA tentative agreement because it wasn't enough, I am starting to question that a little. Maybe it's not so much the leadership pulling them over the edge, maybe it's the rank and file that's pushing them.
The UAW leadership could have done a big service to their membership by allowing the Tier I people to attrite out and keeping the Tier II wages the same. THAT would have saved a LOT of jobs. But it was the rank and file (maybe conditioned to think this way over the years) that insisted that the leadership go the other way and continue the uncompetitive wage structure of the past.
"1. In 2007, according to Ward's Auto World there were 15,426,325 vehicles BUILT (not sold) in North America. In that year according to CAR, there was 11.7% of the total cost of the car attributed to UAW labor.
2. In 2014, again per Ward's, there were 17,422,866 vehicles built in NA, and only 5.7% of the total cost was UAW labor."
Look at it like this:
15,426,325 vehicles built in NA
UAW membership: 464,910
17,422,866 vehicles built in NA
UAW membership: 391,415
Had the same relationship been present in 2014 as it was in 2007, there should have been 525,081 UAW members in 2014 instead of 391,415:
17,422,866/15,426,325 x 464910 = 525,081
"I am also aware a 3 - 5% improvement rate is not going to do much."
Especially if it is offset by a 3% wage increase plus a lump sum of $6000 signing bonus.
"As for my original question about the American wage being too high, across the board, what is your resolution for that?"
It will resolve itself. The fundamental laws of economics will solve this for us. As employment in high paying, non skilled jobs continues to fall, it will be a buyers market, i.e., as more people are out of work, they will settle for lower paying jobs to reset the equilibrium between jobs and wages.
It's been happening for years already. More and more manufacturing jobs are being lost in favor of jobs in the service industries. Do you agree with that at least? Union membership will continue a trend downward as they refuse to acknowledge the data that is right in front of them and continue to demand raises. Exhibit A is the FCA agreement that was turned down.
This whole process is going to be very painful for a lot of people. It is truly unfortunate. But the stage is already set. The 75 history of continuous wage increases (yes, I know you haven't had one during the aftermath of the bankruptcies of GM and Chrysler, just a momentary blip in history) in excess of productivity gains has created an unbalance and the re-balancing of work to other countries.
This will continue to happen despite the political protests of people like Bernie Sanders and will in fact result in the wage gap continuing to widen. The owners of the businesses are subject to economic law, not politicians who feel they have to "support the little guy" when in fact they are doing nothing of the sort.
"You will need to elaborate on this. You say "data" is contrary to what is actually happening within the company, and thus the "data" is the more accurate information? When what I read is different than what I am watching, living, and experiencing, I tend to not believe what I read."
1. In 2007, according to Ward's Auto World there were 15,426,325 vehicles BUILT (not sold) in North America. In that year according to CAR, there was 11.7% of the total cost of the car attributed to UAW labor.
2. In 2014, again per Ward's, there were 17,422,866 vehicles built in NA, and only 5.7% of the total cost was UAW labor.
Said another way, there were 13% MORE vehicles built, but with less than half of the UAW labor content. That's pretty conclusive evidence to me that UAW labor is playing a much smaller role in the production of NA vehicles.
How can you interpret that any other way? If you don't want to believe the data that's up to you, and you wouldn't be alone in thinking that either. With what I know about the tentative agreement at FCA, plus the agreement that was turned down, neither the UAW leadership nor the rank and file at Chrysler has noticed the correlation between high (and rising) wages vs. jobs.
"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.