F-Body Europe

A Japanese company (Toyota) and an American company (Ford Motors) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race.

On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.

Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 7 people steering and 2 people rowing.

Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion.

They advised, of course, that too many people were steering the boat, while not enough people were rowing.

Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 2 area steering superintendents and 1 assistant superintendent steering manager.

They also implemented a new performance system that would give the 2 people rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings, dinners and free pens for the rowers. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices and bonuses. The pension program was trimmed to 'equal the competition' and some of the resultant savings were channeled into morale-boosting programs and teamwork posters.

The next year the Japanese won by two miles.

Humiliated, the American management laid off one rower, halted development of a new canoe, sold all the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses.

The next year, try as he might, the lone designated rower was unable to even finish the race (having no paddles,) so he was laid off for unacceptable performance, all canoe equipment was sold and the next year's racing team was out-sourced to India.
Sadly, the End.

Here's something else to think about: Ford has spent the last thirty years moving all its factories out of the US , claiming they can't make money paying American wages.

TOYOTA has spent the last thirty years building more than a dozen plants inside the US . The last quarter's results:
TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses.
Ford folks are still scratching their heads, and collecting bonuses...

and to this ... (not that GM is any better)

Daaaaaaaaaaaaaaaaaaaaaaaaaaaaaam!

BTW:

Which doesn't help to win, either.

Some other thoughts to add to the equation.

The talks have broken down because the UAW would not agree to wage concessions in 2009 as Congress was asking. They would not agree to do it before 2011 when their contract expires. Company management, bondholders and major creditors were all willing to restructure, but the UAW wouldn't buy it.

The average wages (assembly line worker) at GM are $70 an hour. Since Toyota, VW, BMW, etc all built their plants in right to work states, their averages wages are $48 an hour.

Last year, J. D. Powers did a quality urvey, in Japan, comparing Toyota Corollas that were built in Japan to the ones built in the US and shipped to Japan. Guess which ones won, the ones built in the US.

Yes, American car companies have had a lot of mismanagement in the past, and still do. They started going down when they quit putting car guys in the top positions and started putting managers at the top. But the management levels are really coming down now. The only problem is that they are keeping the wrong guys. A couple of weeks ago, I talked to the manager of the GM Drag Racing program. He was offered a severance package to retire and told that if he didn't take it, he would almost be laid off on 1 Jan. He had two weeks to decide. He retired on 1 Dec.

I personally think that all of the big three will survive, but it will probably take Chapter 11 bankruptcy to do it. They will have to get the wages down and get leaner, but I think they will survive. At least if Congress doesn't dictate to them what kind of cars to build. This is a lot like the gas crisis in the 70s and again in the 80s. A lot of people went dumb and got rid of their big cars and trucks and were screaming for little economy cars. A year later, the big cars were selling well again and they couldn't get rid of the little cars. The difference this time is the entire economy went to crap because of some government programs to help people buy houses that they couldn't afford. It will all work out, but it will take time.

Is that really what the workers are getting or what the total costs are for GM? $70/h seems unbelievably high to me.

I'm not sure. The article said that the average assembly line worker earned $70 an hour. The starting wage is over $28 an hour. In the late 90's, one of my reservists worked at the GM truck assembly plant in Pontiac, Michigan. His job was to put the wheels on one side of the truck. He just had to put the wheel on and put one lug nut on to hold the wheel on until the next station. Ten years ago, he was making almost $90,000 a year. He got his Master's degree and they tried to get him to switch over to management. He turned it down because it would have been a big cut in pay. He told me it would probably take him at least 15 years to get back up to the same pay so he couldn't see where it would be worth it. I have no idea what he is making now. It is much higher that it is worth. I agree that it seems unbelievable, but it is what they make. They don't even have to have a high school degree.

$70 an hour would add up to well beyond $10k a month ... can't be ...

I'd be glad to make that money...

Even a total cost of $70 per hour is pretty high ... I think in our firm, we're somewhere around the 30-40€ range ... unless they also added machinery cost to that ...

Maybe the $70 is the number that goes into the calculations for the production of a car ... sale price or something ...

$70 per hour is what the worker will cost the project / company, not what he takes home.
As an example (for every person on my budget) I have to pay his wages, then add the pension and medical supplements, holidays, bonus and also pay rent for the building etc. It all adds up to be about 60% on top of his wages.
From what I read every car the (not so) big 3 build is already burdened with $2000 just to pay pension and medical. This is the type of shite you get into when you act as your own underwriter (they invested the pension contributions as cheap loans into their own companies instead of spreading the risk).

All I know is what was in the news article. Personally, I believe the $70 is wages, not total cost. When I was in Indiana, there were a lot of assembly line workers living in 300-400K houses, 4 or 5 news cars and wearing probably 5-10K in jewelry when they went to the clubs. That was the ones in their late 30s to early 40s, not the ones getting ready for retirement. Having spent almost 5 years in the Detroit area, you can't believe the union mentality in that area. In my opinion, based on my observations, I'm confident that the largest problem, by far, in the US auto industry is the UAW. The second largest problem is the government regulation. For example, when I first got here, I bought a 91 BMW convertible. I thought about shipping it to the States, until I found out it would cost me at least $7,000 to make it meet US standards. I no longer have it.

Absolutely!!!!!!!!!!! I am so glad someone finally posted that. They are burying themselves.

Sure the automakers have made mistakes. ALL of them have...including foreign makers. I am COMPLETLY disagree that trucks and SUV's are what put them under. Trucks and SUV's were a sign of the times. They all made BIG bucks selling them. Sure they are not for eveyone as each and every vehicle has their own specific purpose. I run the same logic when running my own personal stable. I have the SS as a fun car (when I can drive it), the classic mini is my long term fun project, and the BMW is the everyday drive-it-as-long-as-you-can-with-minimum-maintenance-vehicle. My big SUV/Suburban was AWESOME for my previous businessis and is AWESOME for hauling anything and touring the country....and the surrounding countries in complete comfort. We have even been known to sleep in it. I absolutely enjoy each one....for itsw own reason/purpose.

I am VERY opinionated with this for some reason so sorry for my short rant.