The Koreans Are Coming

[Dieselman]

The premium German brands will have to rely more so on badge snobbery to survive I think!

The premium German brands need to rely a lot more on running their business without massive pension overheads and with improved productivity.

 

[Tiff]

.. Thinking back to the 80s advert, now everything IS as reliable as a Volkswagen.

God ,I hope not

 

[grober]

Bit of eye opener last night on Channel 4 when Hyundai Boss Ray Pope goes undercover to reveal how they were doing things wrong. You can see how they keep overheads down ! Undercover Boss - 4oD - Channel 4 They are predicting a 25% increase in sales in the next few years. Would be interesting to see how Mercedes would stack up to a similar scrutiny.

 

[wemorgan]

I quite enjoyed the program last night. It proved a valid point that managers need to walk down stairs to the shop floor more often. Offering gifts to the staff was smart PR at the end.

 

[st13phil]

The premium German brands need to rely a lot more on running their business without massive pension overheads

A bit difficult to shed the accrued liabilities, I would have thought?

and with improved productivity.

Is their productivity out of kilter with other industry players? I honestly don't know. What I do know is that it's notoriously difficult to get any meaningful productivity comparisons due to the different business models.

 

[rhud]

Long warranties are only useful if they are matched by customer service standards at dealer level.

 

[Dieselman]

A bit difficult to shed the accrued liabilities, I would have thought?

Absolutely. Which is why they keep reducing component costs.

 

[Dieselman]

Is their productivity out of kilter with other industry players? I honestly don't know. What I do know is that it's notoriously difficult to get any meaningful productivity comparisons due to the different business models.

I would have thought it would eb easy to find the information required, but after a bit of a search this is the best I can get. This is for North Aerican plants.

Toyota needs 2.73 workers to make a vehicle per day at its factories in the United States (1999), compared to 2.46 for Honda, 2.52 for Nissan, 2.97 for Ford, 3.04 for General Motors and 3.20 for Daimler-Chrysler.

 

[st13phil]

I would have thought it would eb easy to find the information required, but after a bit of a search this is the best I can get. This is for North Aerican plants.

Toyota needs 2.73 workers to make a vehicle per day at its factories in the United States (1999), compared to 2.46 for Honda, 2.52 for Nissan, 2.97 for Ford, 3.04 for General Motors and 3.20 for Daimler-Chrysler.

It is difficult to find stats isn't it?

One of the (many) issues with the oft-used measure of workers per vehicle per day or any similar metric is that the Japanese manufacturers typically have what are little more than tied suppliers producing components or sub-assemblies that the western manufacturers have typically manufactured in-house. This makes their per-employee production look artificially high while closer scrutiny reveals that their employed workers are actually producing rather less of the vehicle than their German or US counterparts.

I think you hit the nail squarely on the head when you mentioned pension (and by inference) other social commitments that the long-established manufacturers like Daimler, GM, Ford, etc. have. They can be as efficient as the best in terms of their current use of labour, but they still have an accrued responsibility for a raft of previous employees that they shed when they adopted more and more automation. As a friend of mine was once told by an Executive VP of GM in Detroit: "Don't run away with the notion that we're an auto-maker because we're not. We're a pensions and healthcare provider that happens to make the odd motor vehicle".

 

[Dieselman]

One of the (many) issues with the oft-used measure of workers per vehicle per day or any similar metric is that the Japanese manufacturers typically have what are little more than tied suppliers producing components or sub-assemblies that the western manufacturers have typically manufactured in-house.

Interestingly, only VW uses vertical in house manufacturing for many components. This makes it appear inefficient in terms of cars produced and sold per worker, but then somehow manages to make the most money.

 

[st13phil]

...but then somehow manages to make the most money.

Funny, that. Maybe it's because the entire value chain is theirs? Now that's a bit revolutionary!

 

[grober]

As a friend of mine was once told by an Executive VP of GM in Detroit: "Don't run away with the notion that we're an auto-maker because we're not. We're a pensions and healthcare provider that happens to make the odd motor vehicle".

As GM was going bust [ saved by the US government for the moment ] and doing the time honoured USA global company thing of sacrificing all its overseas plant before its home factories = GM putting SAAB to the sword and almost doing the same to VAUXHALL/ OPEL [ probably postponed long enough by threat of German government intervention] it was revealed that GM made very little money on selling new cars in the US ---they made it on the purchase finance deals ----- now where have I seen a heavy reliance on that business model before.

 

[Dieselman]

Interestingly, GM used to be a vertical manufacturer, with most components made in house. At that time they were the most profitable company in the World. They then outsourced component manufacture and started to lose profits.

 

[markjay]

At some point at the height of the crisis GM has 4,000 fully paid employees sitting at home doing nothing, some for well over five years.

They could not even be made redundant because of a bad agreement that management reached with the unions some ten years earlier during previous restructuring.

No company can operate in this way, it is not financially sustainable under any circumstances.

 

[Dieselman]

At some point at the height of the crisis GM has 4,000 fully paid employees sitting at home doing nothing, some for well over five years.

They could not even be made redundant because of a bad agreement that management reached with the unions some ten years earlier during previous restructuring.

No company can operate in this way, it is not financially sustainable under any circumstances.

Perhaps they should have gainfully employed them making common components, instead of outsourcing the supply.

 

[st13phil]

Perhaps they should have gainfully employed them making common components, instead of outsourcing the supply.

Ahh... The old "I'm paying these people to sit on their butts so I may as well get them to do something useful" solution. Like I said, revolutionary thinking

It's very easy to blame poor labour agreements made in the past. A smarter management team would have appreciated that the total cost of production was higher if they outsourced some of their manufacturing but still kept the employees on the payroll, and would have kept it in-house. Sometimes you have to play the cards you're dealt, not the ones you wish you had in your hand - nor for that matter the ones that someone on Wall Street who is clueless about manufacturing expects you to have in your hand.

 

[wemorgan]

Outsourcing has its advantages though:

- specialist suppliers tend to be more efficient
- no long term liabilities

 

[Dieselman]

Outsourcing has its advantages though:

- specialist suppliers tend to be more efficient
- no long term liabilities

Wasn't it the long term liabilities that were sitting at home...?

 

[wemorgan]

^ (confused). Are you agreeing with me?

Large OEM are slow to react to changing markets. Smaller suppliers offer than flexibility. Magna Steyr Gratz factory is a case in point, manufacturing niche cars for the OEMs.

 

[Dieselman]

^ (confused). Are you agreeing with me?

not really.

If GM had thought ahead, they could have converted the day sitters into producers of outsourced components.

Outsourcing is great for immediate reduction of tied up cash, but tends to reduce long term profit against, properly managed use of labour.
The trick is to have a company where people can move around in the business as requirements change.