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Yesterday, the ax fell on 119 Union-represented designers at Chrysler. Excerpts from the Detroit News:

A UAW leader is promising to fight Chrysler LLC’s abrupt layoff of 119 union-represented designers Thursday — many of whom were escorted out of the Auburn Hills headquarters with less than one hour’s notice.

Jeff Hagler, president of United Auto Workers Local 412, who represents the affected workers, said Chrysler failed to follow protocol by not giving union leaders proper notice of the layoffs and by pink-slipping workers selectively, rather than by seniority. Hagler met Thursday with other union leaders at the local in Warren to determine the best approach to filing a grievance.

Management disagrees. Chrysler spokeswoman Michele Tinson said the automaker followed the procedures outlined in its contract with the union.

It’s still possible, she said, that those pink-slipped Thursday could be offered a choice between typical layoff benefits and the $100,000 voluntary separation packages the automaker has offered to other groups of workers. The buyout packages also come with six months of health coverage. Typically, laid-off workers receive nearly full pay for 48 weeks and then can spend up to two years in a job bank.

“We are working closely with the UAW and are having ongoing discussion about special programs,” Tinson said.

She said the layoffs are part of Chrysler’s Nov. 1 plan to eliminate 8,500 to 10,000 union jobs as it pares down its work force in response to lower production levels.

UAW officials, however, suspect the layoffs will allow more work to flow to non-union contract workers and possibly to the overseas engineering centers Chrysler announced it would open in four developing countries last week.

“Chrysler seems to be taking a very anti-union attitude,” Hagler said. “I sent a letter to senior management two weeks ago very sincerely saying we want to work with them to have the best engineering work force in the world. But they don’t seem interested in that.”

Hagler said if the cuts were truly related to declining sales, the union would not protest. These, he said, are an attempt to shift work to non-union contract workers. “They have 250 contractors working in the same department as those who were laid off,” he said.

Yes, I’m represented by the UAW, and I’m worried. Not about being laid off – I can find employment elsewhere (just maybe not in Michigan), but where the automotive industry is headed. Cuts are happening everywhere – Ford, GM, and Chrysler are offering buyouts to multiple employees. Cut too much, and valuable experience will be lost. I hate to say it, but I have serious doubts that the automotive companies, as a whole, will survive this hack & slash way of doing business.

Recovery is not just around the corner…

Excerpts from the Associated Press as reported by MSNBC:

Chrysler LLC is offering buyouts of up to $100,000 to hourly workers at 11 of its U.S. facilities as part of its goal to cut up to 21,000 manufacturing jobs, or nearly half its U.S. hourly work force, a company spokeswoman said Monday.

Chrysler has approximately 45,000 UAW-represented hourly workers.
Chrysler is in the midst of a restructuring after a majority stake in the automaker was sold last summer to private equity firm Cerberus Capital Management LP. The auto company announced in November it planned to cut up to 12,000 jobs, including 8,000 to 10,000 hourly and 2,000 salaried jobs.
The cuts came in addition to 13,000 layoffs Chrysler announced last February, including 11,000 hourly and 2,000 salaried workers. Around 6,400 hourly workers had left the company under than program as of June, Tinson said, but additional retirement packages could be rolled out under that program, which was scheduled to run through 2009.

Ford Motor Co. and General Motors Corp. are offering similar buyouts and early retirement packages to cut costs and reduce production capacity to match sagging U.S. demand.
On Thursday, Ford announced it will offer buyouts to all of its 54,000 UAW-represented employees.

GM has offered early retirement packages and buyouts to 5,200 UAW hourly workers at service and parts operations but has yet to make similar offers to workers in assembly and parts plants. GM is close to agreeing with the UAW on the second round of buyouts and hopes to announce details next month, GM spokesman Dan Flores said. Once the second round is announced, the buyouts are expected to cover 46,000 workers.

Not what the state of Michigan really needed to hear. More cuts, more people out of work looking for jobs in an economy that is the worst in the nation. On top of that, the housing market is so bad that people can’t afford to leave the state to find jobs.

Just a really, really bad situation.

On the way to work this morning, I heard this on the radio. Excerpts from the Detroit News:

General Motors Corp. will roll out retirement incentives to nearly two-thirds of its 72,000 hourly workers and may have to further cut U.S. production in 2008, which could mean eliminating shifts or closing plants, the company announced Thursday.

It was unclear how many workers GM hopes to clear out, but CEO Rick Wagoner said 46,000 blue-collar workers will get incentives to retire, setting the stage for another dramatic reduction to GM’s work force. More than 5,000 workers received offers earlier this month. The second phase of the buyouts will be rolled out in February.

Wagoner told Wall Street analysts gathered at a Dearborn conference that even after those workers are gone, anemic U.S. auto sales may force cuts at assembly, powertrain and stamping plants throughout the country.

U.S. industry sales are 1 million lower than when GM crafted its 2005 turnaround plan that called for closing 12 factories. GM later added another plant, in Massena, N.Y., to the closing list. With all but a few of those plants now closed, GM still has too much factory capacity given the demand for its cars and trucks.

Gettelfinger said plant closings are not under discussion. “We’ve gotten the strongest plant commitments we ever had and we intend to enforce those,” he said.

GM, as part of the UAW contract, promised to keep products flowing to dozens of U.S. factories for years to come, but the job guarantees are contingent upon having enough consumer demand for cars and trucks. The deal also doesn’t restrict GM from cutting shifts or reducing the line speed at factories.

By the end of 2012, Wagoner said he wants to cut structural costs as a percentage of revenue to 23 percent from 34 percent in 2005.

Of course, the UAW is crying “FOUL!!” But you know, read the contract that was signed and ratified by the membership, and you had to know that this had to be coming.

Cutting costs is necessary, but cutting too deep is dangerous.  What seems to be the short term solution to a cash crunch and bad decisions is to sharpen and swing the ax, but it seems that the worker and not the managers making the bad decisions are the ones typically bearing the brunt of the cuts.

Yes, I know that deadwood would need to be cut from the corporate tree for the tree to continue growing. But cut too much, and the tree will die.  Cut in the wrong place, and the result is the same.  Is this going to be too much? Only time will tell.

I know that there are rumors that there is going to be another round of retirement packages at my work even before the above announcement was made by “that” company down the road. But nothing has been confirmed nor denied by my management.

What this does do is land another blow on the already shaky Michigan economy. Michigan (and the auto companies) certainly didn’t need this news, especially on the week right before the North American International Auto Show. All this just makes you think that GM is all show but no substance. If anything, the timing couldn’t be worse for GM for an announcement of this nature.

There are many pundits, experts, and politicians bemoaning the demise of the heavy industry of this country. There are many reasons for this, but here are a few on my short list.

Fair Trade or Free Trade?

There is no such thing. NAFTA did this country a huge disservice. Many companies relocated factories to Mexico (which then moved to China). With China as a most favored nation to trade with, the pressure is even higher on US industry to make products faster and cheaper. The only recent chink in China is lead paint used in toys. But this is most likely the tip of this iceberg.

Subsidization of Industry

What country does not subsidize its industry? The United States, which believes in free market. Just about every other country subsidizes or otherwise supports the industry of that country. Of course, their population usually pays higher taxes…

Lower Labor Costs

Much has been made about lower labor costs in other countries. When there is a lower standard of living, what else would you expect? Live in a rat hole with almost nothing to eat, $5 a day buys a feast for the family, and you get the picture. Of course, a certain amount of corporate greed is involved, but that is a whole different subject (or is it?)

Corporate Greed

There, I’ve said it. Long term planning of today’s corporate world is anywhere from 2 or 3 years in the future. The quick buck to satisfy an ever impatient stockholder (and corporate bonuses) is an overwhelming mandate of the corporate executive.

Differing Standards

I saw the below video, and was reminded of an incident from several years ago.

The company I worked for at the time built two machines for a Korean automotive company. They came in to the plant to buy off the machines, took one look at the equipment, and told us that they wanted us to take the safety guards off. Of course, we told them “no,” stating that the guards were for the safety of the operators. They replied, “We have many operators.”

Let us also not forget the differences in environmental standards & regulations that industries in foreign countries do not have to worry about. Here, in the United States, everyone from Aunt Martha, the EPA, and the Sierra Club have to sign off that undue numbers of earthworms wont be displaced by the building of a new plant.

An Indifferent Government

I have noticed that every election cycle the political parties court the labor vote. The rest of the time the politicians ignore or screw over the unions and the citizens of this country. And like idiots, we do not hold the politicians accountable for such self-destructive actions that undermine the security of this country. It is no longer America First, but me first.

A Biased Media

I’ve have also noticed that the media of this country has gone out of its way to portray the United States as inferior to the rest of the world. We are to blame for the ills of the world. And by the way, foreign made products are cheaper and just as well made as domestic made goods.

The Squeezed Consumer

The consumer, buying into the hype and needing to stretch the family finances, will buy the cheaper goods, especially if the products get good ratings. Pity…but then, look at how many goods, products, and components are made in foreign countries. Computers to sneakers to cars to clothing are made in foreign countries from China to Malaysia to Taiwan.

Hostile Countries

It doesn’t matter what country calls itself our ally, that country will put itself first. Economic warfare is bloodless, but no less effective. Dumping of cheap steel on this country killed the steel industry. Japan dumping cars at a loss to the consumer leveraged market share in the 1980s, and continues to this day. The economic fallout is tremendous, and cuts into the capabilities of this country to manufacture goods without reliance on foreign sources.

“But it’s a Global Economy!”

Yes, it is, but you don’t have to cut your own country’s throat to compete.

All I’m looking for is for our government to act on the behalf of this country and this country only. To many of the other countries of the world, the United States is a source of foreign aid, and there is little or no allegiance. We are also the apparent defacto policeman of the world – if someone gets in trouble, they don’t call the UN, they call the US. This country cannot afford to ignore the economic reality of industries relocating offshore. Yes, it may be attractive in the short run, but devastating in the long run.

Passing by the Union board this afternoon, I briefly read a notice on how the UAW Leadership would like us to vote in the Michigan Primary coming up in about 12 days. What I read was disgusting, but not surprising.

The Leadership basically wants us to cast our votes for the top three Democratic candidates – HRC, Obama, and Edwards. Rather than voting for any of the other candidates, the instructions were to vote uncommitted, which means that any of the delegates could nominate anyone that they want, even though we didn’t cast our vote for them.

No Republican (or other) Party candidates were listed.

I think that this whole process is insulting, especially coming from the Union Leadership. Not only do they wish to dictate who to vote for, but give them the liberty to nominate someone that you didn’t want in the first place! Have we no minds of our own, or do they think that we are sheep that need leading? And what about even considering a candidate from another political party?

Union membership is declining, probably for good reasons, and this is one of them. Considering the terms of the last contract that our “leaders” signed, it’s no wonder. And then there are the reasons from a prior post titled Unions for Democrats? Why?

Now understand that the next statement is not an endorsement, but it shows that the Union in Michigan is not paying attention to what the times are, but falling in lockstep with the same old BS as before.

Listening to the Sean Hannity show, Mitt Romney was talking about how he is from Michigan, his father was a past governor, that the state is in a one-state recession, that the Big Three must survive, and that he would do what is possible to get this state back on its feet again.

I ask our Leadership: What other candidate for President has publicly made these statements, and has strong ties to Michigan? None. And even though the Democratic Party has shafted the Union on more than one occasion, they refuse to consider alternative parties and candidates.

If the Union refuses to change with the times, they will go the way of the dinosaur. And you know what happened to them…

…or to translate from German – “on the road again.”  Yes, I’m a traveling man again, only this time, it’s overseas to Germany.  The traveling won’t start until after the first of the year (thankfully).

I got picked for a program, interviewed, and then selected.  It’s a big responsibility, and I’m pleased that they wanted me, but there is a downside.

Travel.

Fortunately, it doesn’t look to be over six months of foreign travel, but it looks like around a year in a plant in another state to help start the lines up.  Ugh…but that’s part of the job.

An upside is that I just might have time to post and read everyone’s posts with a little more regularity than recently.  And by the way, I’m counting on all of you to keep me informed on what’s going on back in the US.

So keep posting, and I’ll keep reading!

With crude oil prices edging toward $100 a barrel, and gasoline prices past a national average of $3.15 a gallon, I thought it would be interesting to explore the relationships of energy, Global Warming, and the economy.

Energy:

Energy, specifically petroleum related, is mostly purchased by the United States from Middle Eastern countries. As everyone knows (or should), this region is becoming increasingly unstable. Additional pressures to the supply of Middle Eastern petroleum supplies come from India and China as they rapidly develop their economies. The markets react by speculating that oil futures will increase in price. This translates to higher prices at the pump.

The reaction of Congress is to raise CAFE standards, mandating higher miles per gallon for all vehicles. In many respects, this is unnecessary. Higher gasoline prices will eventually dictate a shift in consumer preferences toward higher mileage vehicles. Should the automotive companies not react, then they will lose market share, and eventually close their doors.

One of the alternatives that has been proposed is alternative energy sources such as ethanol and biodiesel production. While this route appears to be feasible, a widespread production and distribution network is years in the future. Short-term relief is not in the immediate future.

Other transportation energy alternatives include hybrid, fuel-cell, and pure electric vehicles. While these alternatives are possible, and in some respects are already in production, there are drawbacks to some of these technologies from an environmental respect. For instance, components of the batteries used in electric vehicles are not environmentally friendly in either the mining or in the processing/manufacture of these batteries (post here).

Regardless of what energy that is used for powering our vehicles, what about the generation of electricity that allows our society to function? Without electricity, computers, lights, elevators, and many other essential appliances would cease to function. In other words, our country (and most of the world) would stop dead in its tracks.

Nuclear energy is not dead, but a new plant has not been built for 20+ years. Coal & gas fired generation introduces CO2 into the atmosphere. Wind power and solar power isn’t as reliable as demand requires. And there are only so many dams with hydro-electric facilities that can be built.

So here is the problem – there is no easy solution, nor would the solution be as inexpensive in the short run as everyone would like. We are far short of the energy independence that was outlined in a previous post.

Global Warming:

Global Warming is becoming a huge political topic, and the data is being spun in so many different directions that confusion on this issue reigns supreme. For instance:

In 2004, history professor Naomi Oreskes performed a survey of research papers on climate change. Examining peer-reviewed papers published on the ISI Web of Science database from 1993 to 2003, she found a majority supported the “consensus view,” defined as humans were having at least some effect on global climate change. Oreskes’ work has been repeatedly cited, but as some of its data is now nearly 15 years old, its conclusions are becoming somewhat dated.

Medical researcher Dr. Klaus-Martin Schulte recently updated this research. Using the same database and search terms as Oreskes, he examined all papers published from 2004 to February 2007. The results have been submitted to the journal Energy and Environment, of which DailyTech has obtained a pre-publication copy. The figures are surprising.

Of 528 total papers on climate change, only 38 (7%) gave an explicit endorsement of the consensus. If one considers “implicit” endorsement (accepting the consensus without explicit statement), the figure rises to 45%. However, while only 32 papers (6%) reject the consensus outright, the largest category (48%) are neutral papers, refusing to either accept or reject the hypothesis. This is no “consensus.”

The figures are even more shocking when one remembers the watered-down definition of consensus here. Not only does it not require supporting that man is the “primary” cause of warming, but it doesn’t require any belief or support for “catastrophic” global warming. In fact of all papers published in this period (2004 to February 2007), only a single one makes any reference to climate change leading to catastrophic results.

How can this be? I’ve addressed this topic in a previous post titles Politics and (Junk) Science. Politics, funding, and power all contribute to the spinning and misinformation that is published.

Of a larger concern is the recent announcement that China will soon be a bigger contributor of CO2 than the United States. China is not the only producer of CO2, but India is progressing toward the status of a high producer. Part of this is due to their “developing economies,” but coal mine fires also are a huge contributor.

What bothers me is that the Global Warming fanatics are screaming for the United States to reduce greenhouse gas emissions, but nary a word is stated about China & India. And both of those countries get a pass on the Kyoto Protocols while the United States is flamed for not signing that treaty.

The Economy:

Consider this excerpt from Business Week by Alan Zibel:

Making big cuts in emissions linked to global warming could come at considerable cost to the U.S. economy: between $400 billion and $1.8 trillion in reduced growth over the next four decades, a new study says.

The study published Monday by a nonprofit research group partially funded by the power industry concludes that reducing emissions of carbon dioxide — the main greenhouse gas linked to global warming — will require “fundamental” changes in energy production and consumption.

The Electric Power Research Institute said the most cost-effective way to reduce the level of carbon dioxide in the atmosphere is to make many changes at once, including expanding nuclear power, developing renewable technologies and building systems to capture and store carbon dioxide emitted from coal plants. Reducing demand for fossil-fuel power is also key, the institute said.

The EPRI cost estimate is based on a 50 percent economy-wide cut in carbon emissions from 2010 levels by 2050. Without such a cut and the shifts in technology it would bring, the Energy Department projects that U.S. carbon emissions will rise from about 6 billion metric tons a year in 2005 to 8 billion metric tons by 2030.

The report calls for more modest cuts in emissions than some proposals currently being considered in Congress. Bigger cuts could well be more expensive.

What all of the above means is that we are going to be hit with higher energy costs no matter what. It doesn’t matter if the companies are going to buy carbon credits, develop alternative energy sources, or modify their equipment to emit less carbon dioxide, we are going to pay for it. And our elected officials, the politicians, aren’t going to help. In fact, I think they are part of the problem.

The politicians need to show that they are doing something worthwhile, and since Global Warming is the next biggest “crisis” that has been published, they will do what they can to show that they care. And in the process of “caring,” they will drive the economy of this country into the ground with unnecessary legislation and regulations. Lost in the process is the health of the United States and of its citizens.

Our civilization, as we know it, needs energy in different forms for it to prosper and survive. But there must be some “common sense” in developing new forms of energy as well as making compromises in weaning ourselves off of Middle Eastern oil and not sinking the economy of the country on futile efforts to combat a problem that scientists cannot agree upon. A delicate problem indeed, and one that I do not believe that our politicians can solve.

No, our politicians need to stay out of the Global Warming & Save the World business. Instead, they should focus on developing incentives to develop new energy technologies and industries (no, not carbon credit offsets…). They should also grow some backbones and intelligently allow development of resources within the boundaries of the United States Territories, and to take the high road of putting the country first and not their political careers.

In our personal ambitions we are individualists. But in our seeking for economic and political progress as a nation, we all go up or else all go down as one people. – Franklin D. Roosevelt

Chrysler is going to cut 12,000 jobs.  So much for job security, especially if the extra jobs don’t fit the business model.

I told you in a previous post that the contract didn’t guarantee anything…

Nobody listens to me – ever!!

Came home this evening from the match (see previous post) and saw that the contract has been settled. Per the Detroit News:

A new four-year national labor contract between Chrysler LLC and the United Auto Workers has been ratified by rank-and-file workers, overcoming significant opposition.

The agreement was approved by 56 percent of production workers and 51 percent of skilled trades workers, the UAW said in a statement Saturday. Ninety-four percent of office and clerical workers approved the pact and 79 percent of UAW-represented Chrysler engineers voted for the contract.

At least that’s settled. We’ll see what happen to Ford now…

Voting is almost done.  I goofed – there’s one more plant over in Illinois that will be voting tomorrow.

But the votes are close.  However, it does look like the contract will be ratified.  And I have mixed thoughts on that as well.

The contract isn’t the best one that I think could have been agreed to, but given the economy and a new company, maybe it was the best one.  At the same time, I really didn’t want to head back out to the picket line either.

We’ll know how the voting numbers turned out soon enough.