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Update: 12.09.2008... commentary from Forbes Magazine...


Posted by pkepf, 12/09/08 01:40 PM EST

A few years ago I started a small factory automation solutions provider.
In order to meke ends meet I worked part time for the IRS. We processed tax returns from Detroit, where I had the opportunity to witness the value placed upon our union auto workers (let's just say they were HIGHLY valued.
As my company grew we did considerable business with Tier 2 and Tier 3 automotive suppliers. Despite what the sales gurus may say, in this market the key selling point was price (not quality, not design... price).
As Japanese companies began moving in I discovered that I was able to discern the type of plant I was in with remarkable accuracy.
The domestic plants were the dirty ones with people standing around; the foreign plants were the clean ones with everyone working. I also discovered a refreshing curiosity and desire for involvement on the part of the "foreign" buyers. Not surprisingly, the result was a better deliverable for the customer and a more managable profit margin for us.

Let's just stop the gravy train for the arrogant and whiney management and labor in Detroit. Let the market share Detroit loses be absorbed by those willing to do a full day's work without whining, work consultatively with suppliers without picking their pockets and provide products that people want. And, the jobs provided by those companies would actually be in Alabama, Tennessee, Kentucky, California, South Carolina, etc. opposed to Canada, Mexico and Brazil. Yes, a bailout for Detroit nameplates (are they really "domestic" anymore?)really IS insane.


Posted by jharari 12/09/08 12:41 PM EST

The biggest managerial mistake by the automakers was the failure to confront their unions decades ago. Instead they have struggled to allocate capital between the competing demands of legacy costs and product investment. More often than not, the legacy costs received the largest piece of the pie.

When GM realized gains from successful businesses such as the sales of Hughes and EDS the proceeds were dumped into pension plans instead of being invested to catch up and leap ahead in product. Everytime the automakers thought they had put together the right balance between costs, capacity and product investment, market share would drop and more cuts were needed.

It's the old Michael Porter story about competitive advantage; once lost it is hard to regain. The opportunities to catch up were there if they had been seized early, with more imperative and with the resources that might have been available had a labor confrontation occurred in the 1980s. caterpillar confronted its unions in the 1990s and has thrived. the Big 3 didn't and have steadily fallen behind.


I'd like to add my own comment here:

There are many stories around describing how GM executives got company cars for their personal use as perqs for position. As the story goes, they'd drop the car off when they arrived at work, the car would be serviced, fluid levels checked, any necessary maintenance done, the car would be washed and vacuumed if necessary, and be waiting for the executive to take home that night.

In their own experience, GM executives "knew" that their cars worked perfectly and never gave them any problems.

In my not so humble opinion, part of any bailout package for US automakers should include the proviso that all CxO's buy and own their company's cars and each and every one of them must be personally responsible for all maintenance and necessary repairs, and that repairs must be handled by them by themselves as if they were a "normal" customer. Time away from work to go to the dealer, rental cars for long-term repairs, and direct billing to them for all maintenance and routine or non-routine service.

I think the value of that kind of education might be, as the commercials say, "priceless."

[started: 11.25.2008]:.. Auto Companies Bailouts??

Start with this movie about a Ford Plant in Brasil... and make sure you hear the last lines of the voiceover...

I'll add more, but here's my original thought from just a few days ago...

What if one or more of the auto companies were allowed to reorganize into a conglomerate, maybe operating like the Ford plant in the movie, but leveraging the mass production and robotic assembly skills, history and knowledge of the auto company to the inexpensive mass production of solar collectors, wind generators and the like?

Mass production would lower costs, the needs of standardization associated with mass production would get everyone on the same page for a minimum number of solar cell technologies and shape factors, and could be designed with flexibility to manage future collector technologies.

What a strange idea, eh?

Mine, first, here.

Here's another wonderful, weird idea, too... How to encourage companies and stores to be green. With profit, not "pain and complain."