CEG\'er
Joined: Jul 2000
Posts: 443 |
Originally posted by loggerbomb:
must say thats the big one. Japanese hate unions, man i work at a japanese parts supplier and when a C.A.W. guy showed up to hand out flyers they went on red alert. Must say another thing is the quality, yes this has been bantered around before but Ive seen the specs and tolerances the japanese use and Ive seen the specs domestics use and the japanese are much harsher on quality. In some cases the tolerances were 3 times bigger on the domestics versus the imports. I wouldnt worry about GM or Ford going out of business because the second that happens Honda, Toyota and all the others will scoop up the rest of the pie.
What you are referring to is called lean production (versus mass production) in regard to the quality issue. The Japanese pioneered lean production during the 60's. American manufacturing plants have largely converted over to lean production models at this point in time, which is why we see the quality and defects per vehicle numbers narrowing between American and Japanese vehicles. In fact, most European cars have the highest defects per vehicle numbers in all honesty, including VW, BMW, and Mercedes. Please note defects per vehicle has nothing to do with the quality of materials used (which is what many buyers use to judge how well built a car is).
Regarding unions, I'll say what I've said many other times, unions served a historic purpose during the early to mid 1900's when the DOL (labor law) didn't exist. Now that we have very healthy labor laws on the books coupled with a litigious society, companies are no longer free to abuse employees as they were during the height of the industrial revolution. This means that the primary purpose of unions is effectively extinct, which was to prevent blatant abuse of employees and their interests.
Speaking of the industrial revolution, on to my next point, which is that we're now in the information/service revolution, at least here in the good old U.S.A. Our economy is increasingly based upon service revenues, not manufacturing revenues. There are those who wish we would "return to our roots" so to speak and reinvent a manufacturing revolution, but quite frankly I'm not certain we can compete with emerging foreign economies in this respect. Japan, who in the 1990's struggled on multiple societal levels as their emerging ecomony leveled out from a major growth stage into a mature growth stage, is now facing the same competition that we are, though I still believe they are much better prepped to endure it at least in the automotive sector. The emerging economies of Korea, China, and India are going to prove to be major competitors over the next few decades for all of the mature industrialized nations. Emerging economies don't have major investments in existing infrastructure that need to be upgraded or replaced, they can build from the ground up with the best and brightest new ways of approaching modern manufacturing practices, and they don't have a significant retiring workforce to hinder them either, because these countries are just entering the competitive industrialized markets, they only have one or two generations of active workers grapple with (versus the 5+ generations U.S. manufacturing companies have to deal with). Emerging economies have a built in advantage. Many U.S. companies have recognized this reality and have already moved or are moving a larger portion of industrial manufacturing work to these emerging economies as a result, or at the very least are purchasing significant interests in the companies that are emerging in these markets native to their chosen industries. Many of these same companies have shifted their focus to the service/information economies as well, here in the U.S. A great example of this is in the technology manufacturing sector, IBM/Dell/Compaq/HP have all significantly ramped up their service revenues and while they are still significant hardware manufacturers, almost all manufacturing is performed offshore in emerging economies, and perhaps at most the finished product is assembled here in the U.S.
That said, thanks to the costs of tariffs and taxes between countries, lean production models have proven efficient enough to allow companies to build manufacturing plants in local markets to forgo these costs. Most Japanese manufacturers now have U.S. manufacturing plants that service the majority of product demand for the U.S. market (not entirely though - but they're getting there). German manufacturers have followed suit as well. American manufacturers have done the same in Europe, Canada, and Mexico, and are moving into China now. The exception is Japan, which has largely been a closed market and a protected economy to the outside world from this perspective (i.e. I don't believe any foreign manufacturers are permitted to build plants inside Japan's boundaries). Couple this with the globalization of corporations (DC being a good example) and conglomerations, what we're seeing at a strategic level is vehicle design occurs in the localized markets, parts manufacturing occurs in emerging economies (or if economically sensible parts manufacturing occurs in the localized market), parts are shipped to localized assembly plants in country, assembly and final delivery of the manufactured product occurs in country. This global model allows corporations to take advantage of huge economies of scale on a global level, yet permits catering to local market preferences.
My point to all this? Unions by definition do not work well at a global level. They have no power across borders because the legal aspects change significantly. Couple this with my assertion that unions also don't work well for service/information based economies, which the U.S. is increasingly moving towards, and I see a declining relevance for unions. This is proven out by the fact that unions in 1950 held 43% of the U.S. workforce under their umbrella, because we were predominantly a manufacturing economy at that point in time, but today unions comprise only 12% of the workforce. Unions are hanging on for dear life in the few remaining healthy manufacturing sectors here in the U.S., but they need to be very cautious that they don't make themselves completely irrelevant in the process of trying to cling to outdated ideas of how the world works from a manufacturing perspective.
Unfortunately for the unionized workforce, the information/service economy values higher education by default (information demands intelligence and education in order to utilize it effectively). It used to be that a highschool diploma would do just fine because you learned how to work with your hands in relatively simple manufacturing jobs when you took a job. No longer is this the case in our new economy. The demand for relatively straightforward manufacturing trade skills has declined significantly. The demand for a highly educated workforce on the other hand has increasingly significantly, and this demand has created higher paying jobs in the information and service sectors. Ironically one area that is experiencing good demand and job growth is in the area of auto repair (mechanics), because the people in this area need to be increasingly better educated in troubleshooting electronics, not just mechanical troubleshooting. Unions are now attempting to prevent the laws of supply and demand from taking effect. As demand for a certain kind of skillset falls, so does the payment rendered for that skillset. Unions are shooting themselves in the foot by interfering with this economic process. The economic laws of supply and demand, however, cannot be denied forever. Either the workforce must accept the new reality, or the corporation supporting that workforce may just pay the ultimate price, then everyone loses. I noticed the CAW (Canadian Auto Workers) union recently accepted concessions for healthcare at least, I guess that's a step in the right direction, but it's not enough. One advantage for the increasingly global corporations is that if they cannot get the required concessions from the unions, then the leadership needs to step up and make bold decisions to move the assembly process to somewhere that makes fiscal sense. This move is necessary for the long term survival of the company and for the shareholders. Only time will tell how well the U.S. auto manufacturers deal with these challenges...
|
