The end of the road for U.S. carmakers? Are the Big Three worth saving?

[AndyN]

Their average worker costs are about 25$ less per hour. Paying legacy benefits is what's doing in the little 3. Follow the money.

But back in 1994 the B3 management knew there was too much capacity! So, what do they do? Carry on and increase the numbers of vehicles and complexity! What have they done to drive down internal costs? Reduce the variety of their own designs etc. ZIP, NADA, NOTHING!

Sure legacy costs are in there, but as has been said, there's more to it than that. Like a whole lot of staff who don't contribute very much to the operational efficiencies of those parts of the organization who make the money. The B3 have huge 'corporate' quality staffs, for example, but try showing what it is they do to affect the product that we buy or the effectiveness of the plants' operations!

I know of at least one major Tier 1 supplier who has their auditors go around all the plants (world wide) acting like CB auditors, so the plant can pass the next TS audit - since these folks only travel in work time, stay in hotels etc. what does this cost and what's the benefit? Passing a freaking audit? Give me a break - no wonder the transplants laugh at them and their certification!

Your legacy costs and foreign labor costs are starting to look like less of the real issue to me..........

 

[Marc]

Sure legacy costs are in there, but as has been said, there's more to it than that.

Yes, correct. But - I think that the legacy costs (mostly current retiree benefits) issue speaks to the talking point so many people are citing US$70 an hour for labor costs for US auto workers (big 3), rather than about other issues like big 3 long time management stupidity.

 

[AndyN]

Yes, correct. But - I think that the legacy costs (mostly current retiree benefits) issue speaks to the talking point so many people are citing US$70 an hour for labor costs for US auto workers (big 3), rather than about other issues like big 3 long time management stupidity.

True, Marc. While we're on that viewpoint, another 'thing' that rattles around in my ears is the statement about 'B3 quality has improved' and is comparable to Japanese cars. Oh, yeah? Really? Says who? JD Power? I'd rather them take a look at warranty costs, rather than "feel good" initial quality.:mg:

Sure, I loved my GM product when I got it (look in my photo album!). But after three attempts to fix the cold running, waiting a year to get 4 new wheels because the paint fell off after about 10,000 miles (APQP anyone?) and a few other silly faults (no of which were present in the first few days of ownership), I'd want to know how they are driving warranty costs down to Honda/Toyota levels! And it's been that way with all of the B3 vehicles I've owned - except the one from NUMMI!

JD Power's a game, anyways!

 

[Randy]

Tier one to many auto companies. Have quoted against India, China, Korea, Malaysia, Mexico, to name a few. Have worked for Motorola and most of their production is overseas now. Laid off from John Crane International when the production facility moved to cheaper labor. How about you Randy? Hows the weather in Arkansas?

Oh, I work for a company that does 3rd party systems certification and I teach a wee bit of the systems stuff occasionally...check out my profile

Weather in Arkansas? It is colder than normal for the Fort Smith area (hasn't got out of the 20's today) No snow or ice yet, but there is still time You poor guys up North are getting hammered!

 

[AndyN]

You poor guys up North are getting hammered!

I haven't touched a drop of the stuff, Randy, honest!

Oh, you mean hammered..........

 

[Helmut Jilling]

True, Marc. While we're on that viewpoint, another 'thing' that rattles around in my ears is the statement about 'B3 quality has improved' and is comparable to Japanese cars. Oh, yeah? Really? Says who? JD Power? I'd rather them take a look at warranty costs, rather than "feel good" initial quality.:mg:

Sure, I loved my GM product when I got it (look in my photo album!). But after three attempts to fix the cold running, waiting a year to get 4 new wheels because the paint fell off after about 10,000 miles (APQP anyone?) and a few other silly faults (no of which were present in the first few days of ownership), I'd want to know how they are driving warranty costs down to Honda/Toyota levels! And it's been that way with all of the B3 vehicles I've owned - except the one from NUMMI!

JD Power's a game, anyways!

Fair points... As you know the JD Powers looks at initial and 90 day quality. In these areas the B3 are at parity on many (newer) vehicles. Warranty is probably still a bit behind and is clearly an area where they need to quit being so stingy. They are really screwing some people over $1000 items.

However, it should all be pointed out this is the last few years. Any vehicle model from more than a few years ago is stuck with the quality as it was back then.

 

[Helmut Jilling]

Tier one to many auto companies. Have quoted against India, China, Korea, Malaysia, Mexico, to name a few.

That is the problem with the accountants looking at unitl abor and unit costs, not total costs including quality and sustainability. One of the stupidist mistake they have made. ...and they keep doing it...

Have worked for Motorola and most of their production is overseas now. Laid off from John Crane International when the production facility moved to cheaper labor.

That is largely due to the fact that Motorola was doing a lot of computer and circuit type production.

A lot of what I see at my clients, the shift to offshoring saved far less in many cases, than anticipated. Yet, they keep doing it, because the pain is felt at the plant level, not at Corporate. Do the Corporate folks actually LISTEN to the plant folks, or only dictate to them...?

 

[Sidney Vianna]

JD Power's a game, anyways!

But they are certified to ISO 9001....