Mr. Pebble
10-09-2005, 05:31 PM
Well, Delphi tock refuge behind Chapter 11 which was inevitable. With competitors paying half the wages and one third the benefits, Delphi could not sustain itself. Notice that they waited until after the start of Q4 so the really bad news won't come about until GM's Q4 report comes out in January. There is a good chance that GM will be taken under, caught in Delphi downdraft.
Delphi simply didn't or couldn't react fast enough and, like Visteon, suffered from not being created a lot earlier, giving it enough time to adjust. With albatross plants like Saginaw and the old AC Spark Plug in Flint, there was no quick way to move production to a less costly facility and become competitive. With the current UAW agreement, the product would have to wait for an engineering change and start up as a new piece with a different inventory number, allowing the phase out of the old line plants as the product line became obsolete. Brutal but the only option.
Delphi tried more efficient plants and would have succeeded, given time. In Lansing, they took over cockpit assembly for LCA C & M lines and set up a factory on Mount Hope Road across from the GM Parts Plant. In actuality, there were only four Delphi employees at that location and all the rest were contract workers. They started out at $10 per hour and were UAW members. The plant closed when LCA closed and the jobs are gone.
As I tried to get across in my plan for GM, no one at Delphi ever wanted to be more efficient. They just tried to balance the books by cutting wages and benefits, and like Tower Automotive and some others, slave-drive the workers to the point that the turnover only became acceptable because the management was so incompetent. Now the costs will be passed on to GM and Chapter 11 may be GM's only alternative.
Look for the same at Visteon. Ford, like GM, has lost the concept of operating efficiently and, without change, can not survive either. Take a look at the frame for the Ranger. It is made in Milwaukee by Tower but, rather than become efficient, they are closing the plant and moving production to Cleveland. Unfortunately, the Ranger is assembled in Ford's St. Paul, MN facility and since frames are unwieldy and hard to ship, the added transportation cost will only make the parts more expensive rather than less costly. Like their Lansing Plant, Tower has no leadership from top to bottom and deserves to be in bankruptcy. What little chance Ford has to avoid Chapter 11 is going away like GM, just at a barely imperceptible slower rate.
In the short run, Delphi still remains horribly inefficient but forces lower wages until plants can be closed. GM, lacking the leadership to survive will force the suppliers to buy from low-cost Asian suppliers and production will move East, mostly to China. The Japanese and some Europe based manufacturers will locate here to fill the void created by the market-losing strategy of GM and Ford. Eventually, we will become so ill-educated and unproductive and our trade and financial deficits will grow so large that the Japanese and others will no longer grant us any more credit and let their currency float against the dollar. Foreign suppliers will become uncompetitive and stop shipping, foreigners will own most of our infrastructure and the government will no longer be able to cover up the huge inflation any more as it becomes the dominant feature of our society. The slow leak in the tires of our standard of living which started to flatten out in 1974 when the interest on our debts first exceeded the growth in our economy will start to increase and as out tires go flat, we will run on the rims as long as we can until the point comes where we will have to accept Third-World status, something we already have in the regards of foreigners, especially for our moral values.
England used to be the most backward and inefficient producer in the industrialized world. It took the Japanese to show them the way to efficiency and employee relations. Now England is the most cost-efficient producer in Europe. America will be a lot more challenging. About two decades ago as Japanese imports were flooding our country, the Americans read the riot act to the Japanese at a meeting in Illinois, demanding that Japan import more American goods. The Japanese listened with their customary politeness and then advised the Americans that: 1) The Japanese do not buy junk, 2) The Japanese do not overpriced junk, and 3) without the money from the sale of Japanese imports, there would be no one to finance the out-of-control federal deficits which the government was covering up. The Americans departed with their tail between their legs and nothing has changed in the 20 years since.
The problems at Delphi are simply GM's problems moved to a new location and as long as GM and Ford respond to crisis by cranking up their arrogance quotient, things will get worse until things get beyond the point of no return. Corporate America's solution to its problems has been always to create ever more lucrative golden parachutes for their executives. Can't and won't ever work. Maybe if executives who fail have to give up their stock and return all of the wages they drew for their incompetence, then and only then will they get off their fat rumps, stop drowning themselves in Six Sigma stupidity and make things right.
Unless they get the message quickly, we will have to call the Cayman Islands to tell them that they need to return and pick up their golden parachutes. They can round up all of America's corporate jets for disposal by going to the airport near their tax deductible company seminars, located right next to where they are holding the Super Bowl.
Why don't we screw up our courage, kick ourselves in the seat and take our free-enterprise Democracy back. It would be good for all of us.
Mr. Pebble
Delphi simply didn't or couldn't react fast enough and, like Visteon, suffered from not being created a lot earlier, giving it enough time to adjust. With albatross plants like Saginaw and the old AC Spark Plug in Flint, there was no quick way to move production to a less costly facility and become competitive. With the current UAW agreement, the product would have to wait for an engineering change and start up as a new piece with a different inventory number, allowing the phase out of the old line plants as the product line became obsolete. Brutal but the only option.
Delphi tried more efficient plants and would have succeeded, given time. In Lansing, they took over cockpit assembly for LCA C & M lines and set up a factory on Mount Hope Road across from the GM Parts Plant. In actuality, there were only four Delphi employees at that location and all the rest were contract workers. They started out at $10 per hour and were UAW members. The plant closed when LCA closed and the jobs are gone.
As I tried to get across in my plan for GM, no one at Delphi ever wanted to be more efficient. They just tried to balance the books by cutting wages and benefits, and like Tower Automotive and some others, slave-drive the workers to the point that the turnover only became acceptable because the management was so incompetent. Now the costs will be passed on to GM and Chapter 11 may be GM's only alternative.
Look for the same at Visteon. Ford, like GM, has lost the concept of operating efficiently and, without change, can not survive either. Take a look at the frame for the Ranger. It is made in Milwaukee by Tower but, rather than become efficient, they are closing the plant and moving production to Cleveland. Unfortunately, the Ranger is assembled in Ford's St. Paul, MN facility and since frames are unwieldy and hard to ship, the added transportation cost will only make the parts more expensive rather than less costly. Like their Lansing Plant, Tower has no leadership from top to bottom and deserves to be in bankruptcy. What little chance Ford has to avoid Chapter 11 is going away like GM, just at a barely imperceptible slower rate.
In the short run, Delphi still remains horribly inefficient but forces lower wages until plants can be closed. GM, lacking the leadership to survive will force the suppliers to buy from low-cost Asian suppliers and production will move East, mostly to China. The Japanese and some Europe based manufacturers will locate here to fill the void created by the market-losing strategy of GM and Ford. Eventually, we will become so ill-educated and unproductive and our trade and financial deficits will grow so large that the Japanese and others will no longer grant us any more credit and let their currency float against the dollar. Foreign suppliers will become uncompetitive and stop shipping, foreigners will own most of our infrastructure and the government will no longer be able to cover up the huge inflation any more as it becomes the dominant feature of our society. The slow leak in the tires of our standard of living which started to flatten out in 1974 when the interest on our debts first exceeded the growth in our economy will start to increase and as out tires go flat, we will run on the rims as long as we can until the point comes where we will have to accept Third-World status, something we already have in the regards of foreigners, especially for our moral values.
England used to be the most backward and inefficient producer in the industrialized world. It took the Japanese to show them the way to efficiency and employee relations. Now England is the most cost-efficient producer in Europe. America will be a lot more challenging. About two decades ago as Japanese imports were flooding our country, the Americans read the riot act to the Japanese at a meeting in Illinois, demanding that Japan import more American goods. The Japanese listened with their customary politeness and then advised the Americans that: 1) The Japanese do not buy junk, 2) The Japanese do not overpriced junk, and 3) without the money from the sale of Japanese imports, there would be no one to finance the out-of-control federal deficits which the government was covering up. The Americans departed with their tail between their legs and nothing has changed in the 20 years since.
The problems at Delphi are simply GM's problems moved to a new location and as long as GM and Ford respond to crisis by cranking up their arrogance quotient, things will get worse until things get beyond the point of no return. Corporate America's solution to its problems has been always to create ever more lucrative golden parachutes for their executives. Can't and won't ever work. Maybe if executives who fail have to give up their stock and return all of the wages they drew for their incompetence, then and only then will they get off their fat rumps, stop drowning themselves in Six Sigma stupidity and make things right.
Unless they get the message quickly, we will have to call the Cayman Islands to tell them that they need to return and pick up their golden parachutes. They can round up all of America's corporate jets for disposal by going to the airport near their tax deductible company seminars, located right next to where they are holding the Super Bowl.
Why don't we screw up our courage, kick ourselves in the seat and take our free-enterprise Democracy back. It would be good for all of us.
Mr. Pebble