Spot on. “American” cars are immensely successful overseas. Overseas markets are and have consistently been profitable. They win awards, and sell lots. It’s important to realize that American car sales in the USA still command 50% of the market. That’s 3 companies in a total “big player” market of 20 or so companies. That’s not too bad. That’s almost owning the market. The problem is, in order to own the market and pay the bills, it has to be done profitably. If you’re only going to sell 900,000 cars per year, you’ve got to be able to size your company to profitably build 900,000 cars per year. The Americans haven’t had that luxury. Sure, $30 per hour versus $12 per hour isn’t just a drop in the bucket, but it’s not even the primary concern. It’s the ability to manage your workforce in the most efficient manner. If it means firing people, then fire them. Adding shifts, then add shifts. The American’s hands have been tied due to labor contracts that were negotiated at a time when everyone had the same labor contract. If all of the imports had to support “jobs banks” and had the type of health care that the Americans had to support and all of the other inflexible work rules, then there’d be no disparity. Maybe Toyota wouldn’t build a better car, because it’s paying 3,000 people to do nothing. Or paying 6,000 people to do that jobs that 2,000 people could do. The new hourly rate is only a tiny, tiny bit of what will make the Americans more competitive. It’s all the other flexibility in the national contracts that allow the business to be right-sized for its demand, and being right-sized is where they can be immensely profitable. More than anything, don’t forget… three companies still share 50% of the market in a field of 20 big players.
I’m going to parse this out a bit, because some things are right and some aren’t quite true. Such as the quoted statement. Essentially all of the unskilled jobs (we call them “production jobs”) in a factory are simple, repetitive tasks that either (a) automation can’t handle, or (b) labor contracts won’t support elimination of. Body shops still depend on people to unload racks and load machines, and unload machines and load racks. Final assembly, though, requires a lot of dexterity that robots can’t necessarily handle. This isn’t to say that there are skills involved; there aren’t. It’s pretty much as Rick describes above.
Ah, but now we’re talking about skilled labor. One of the most important parts of my job is MTTR/MTBR so that we can not require as much skilled labor. These are talented guys, for the most part. Unfortunately union contracts almost universally favor seniority over any degree of capacity, so in eliminating jobs, we lose the young guys that are motivated and want to learn, and are stuck with the bitter old guys that still want to work with relay networks and ignitron tubes. As a consequence, what could take a talented person 40 hours of training to learn, often doesn’t get accomplished in any number of hours. There’s also no flexibility in jobs. For example to service a spot welding gun, you often need two hours for three different classes of skilled trades to effect a repair that any one of those guys could do in 10 minutes. Of course due to the learning curve, it’s often quicker to call in the vendor, and assign the trades to do absolutely nothing but watch. You see, they watch rather than get another job, because per the labor rules, the vendor is doing their job, and as such they’re entitled to do nothing while the vendor is effecting the repair!
This is mostly correct. Consider, though, that the union often doesn’t want people to change jobs and rotate and vary their day, because it would decrease the demand for labor. We try and try and try to have self-directed, cross-trained workgroups, but it’s the unskilled labor that resists us. They just want to do the same thing every day, all day. As I said, there are still some jobs we could eliminate with automation, but sometimes we’re prohibited from doing so. And again, it’s not purely the worker wages that’s at issue. Another example is the issue of worker classification. You know that GM/Chrysler now have the option to pay “non-core” jobs at the $14 per hour, up to a maximum 20% of the hourly workforce. Ford has 20%, regardless of classification. The idea here is to do things cheaply. For example, a $25 per hour worker can “bid into” a better job, such as cleaning the bathrooms. WTF? Why are we paying $25 per hour for substandard bathroom cleaning?
ASAKMOTSD, I appreciate the no-beef. I see that you’ve been there and done that. I’m still there, though, and Rick’s previous description is still pretty much spot on for the US manufacturers. I see, though, that you mean in reference to alienating potential customers, but I just don’t see that math working out. If we fire 100,000 people, that’s only 100,000 potential lost customers? And with buyouts, of course, they’re not really disaffected and continue to receive their employee purchase plans.
