Why does US auto industry have so much trouble competing?

[pirc1]

US auto makers are losing money like crazy and losing market shares every years. The auto industry have been trying to improve the quality of the cars since the 90's but they still can not compete with Japan and German cars. Why is this happening? Is it the US manufacturing culture that is the problem?

[wouldabeen23]

What we REALLY need is Michael Keaton to revamp our antiquated factories and get the union folks on board for a commitment to quality and excellence....GUNG HO!

[pirc1]

Originally posted by wouldabeen23
What we REALLY need is Michael Keaton to revamp our antiquated factories and get the union folks on board for a commitment to quality and excellence....GUNG HO!

Many of the factories are not old, they have the state of the art equipment, committment ot quality and excellence would be cultural issue right?

[wouldabeen23]

Originally posted by pirc1
Many of the factories are not old, they have the state of the art equipment, committment ot quality and excellence would be cultural issue right?

just jokes pirc1...just jokes :cool:

[pirc1]

Actually union is a big problem in the US industries. Unions have gone away from protecting worker's rights to the point of interfering with how the manufacturing process should be working.

[wouldabeen23]

Originally posted by pirc1
Actually union is a big problem in the US industries. Unions have gone away from protecting worker's rights to the point of interfering with how the manufacturing process should be working.

You are right, the unions have over-played their hand in many respects, however, we can bemoan the plight of the U.S. auto makers because they are building their cars in Mexico--the unions just want to hold on to the US manufacturing jobs that are left.

The factories are more modern and the technology is better, but US auto makers are not comitted to the same degree of perfection that German and Japanese makers are.

I bought a 5-speed, '95 4wd 4Runner with 150,000 miles on it and thought nothing of it--150 thou on a Toyota is barely broke in--they are designed, from top to bottom, to last for 250-300,000 miles.

Compare and contrast, would you buy a 95 Blazer with 150,000 miles on it and not be a tee bit more concerned that it was going to fall apart?

Untill US auto makers copy the Japanese model to a "T" when it comes to engineering products that are reliable, they will continue to loose ground.

[Lil Pun]

Toyota, Nissan, and Honda is the way to go from what I told. I remember people used to say not to buy the types because repairs would cost a lot because it's a foriegn model but now I think that's all change due to parts manufacturing over here in the states but I may be wrong.

[bnb]

Originally posted by wouldabeen23
but US auto makers are not comitted to the same degree of perfection that German and Japanese makers are.



I see you've never owned a volkswagen....

[pippendagimp]

You think our auto industry's having trouble right now, wait till cars start arriving from China in a couple years! :o

[pirc1]

Originally posted by pippendagimp
You think our auto industry's having trouble right now, wait till cars start arriving from China in a couple years! :o

First Chinese auto import will arrrive in 2007! But I will not buy it until it is proven :D

[steddinotayto]

Originally posted by bnb
I see you've never owned a volkswagen....

A good percentage of their cars are built in Mexico and not in Germany. I think the only cars that are built in Germany is the Passat, the Touraeg, and the Phaeton.

I agree with everyone else that says Unions are the cause of inferior American cars. I read in Newsweek one day that over in Japan, one car manufacturer will have one of it's managers go out to the factory and read out loud to EVERY worker there all the mistakes that were made AND who made them. It's a way to call them out and make sure they don't mess up again. It's a pretty cold tactic, but it works.

As for nissan, toyota, and honda, I always thought they put quality into their cars. But now, I think Honda is slipping. Sure an Accord or Civic can last you a bit longer than the general american sedan, but they aren't build as strong as a toyota or a nissan and this is coming from a Honda owner.

Another example of Japanese craftsmanship: my mom drives a 1993 Lexus Ls400 and it has like 183,000 miles on it.

Would I consider buying an American car? Of course. I, being asian, used to have the mentality that American cars suck. But as the ignorance fades and I get older, I wouldn't mind buying American. I think US carmakers have actually increased the quality of their vehicles in the past decade. It's still not as great as a German or Japanese car, but it's better than the 1992 Ford Thunderbird my sister bought.

[langal]

Originally posted by wouldabeen23
What we REALLY need is Michael Keaton to revamp our antiquated factories and get the union folks on board for a commitment to quality and excellence....GUNG HO!

what about Gedde Watanabe?

and think of all the hilarious hijinks those 2 would get themselves into.

[rockbox]

I don't think it has to do with unions or quality since most popular asian cars are actually made in the US. I think it has to do with designing ugly cars with mediocre performance.

Look at the new chevy malibu. That car is supposed to compete with Camry's, accords, and altimas. The jap cars are boring but the malibu is boring, ugly and unrefined.

Same for the cobalt.

GM and Ford spent too much time and money on SUV's and trucks while neglecting their cars. With rising gas prices, this has bit them in the arse.

[SamFisher]

Originally posted by rockbox
I don't think it has to do with unions or quality since most popular asian cars are actually made in the US. I think it has to do with designing ugly cars with mediocre performance.
.

Precisely. Perhaps 25 years ago, simply stating, "unions must be the problem/japan has better quality" might have carried some weight, even though overly simplistic, however those days are long, long gone. Nowadays, that kind of explanation doesn't make much sense.

http://www.businessweek.com/bwdaily/dnflash/mar2005/nf20050321_4309_db084.htm

[glynch]

Sadly the auto industry is the victim of a fundamentalist ideology that says you should never make laws to regulate anything. In addition you have some oil guys in control who love to sell fossil fuels. Also a corrupt political system that allows the auto makers and big oil to spend big money to elect bozos who keep trying to help the gas guzzlers.

Any moron has known for at least 30 years that the future was in small fuel efficient cars. The government could have helped by sticking to the standards that required the industry to make these cars. We didin't need to get our clocks cleaned by Japanes hybrids. Instead the fundies got in and allowed the SUV's to be called trucks and thus not subject to fleet gas mileage standards.

So now you have them trying to give away the gaz guzzling SUV's, even after the Iraq War and the fact we spend roughly $1 per gallon on unnecessary miitary spending to try to make the US gas guzzlers a little more competitive.

So sad. Only extremists thinks that the world runs best with virtually no government or regulation (Market as God folks), or virtually everything should be owned and or regulated by the government (Communists).

[NJRocket]

unions

[TL]

Rockbox and SamFisher are on target.

I've worked with the Big 3 on a few advisory projects. Unions are a bitch, but they hurt the car companies from a profitability and production flexibility standpoint, not a sales/market share standpoint.

The designers and senior management in the car companies are too reactive. They put all their eggs in the SUV basket. It worked for a while and they were making tons of money per car. Now, gas prices are too high and the US companies don't sell any exciting cars. And the ones that they do sell are really novelty cars more than threats to the Accords of the world.

A couple years ago, a very significant portion of their sales were to rental car companies (I wish I could remember the number, but I know it was north of 30%). They don't make cars consumers want. Unions are a problem, but revenues are the big problem now.

[bnb]

Ahhhhh....the glory days of Detroit!

Is there any Japanese car that's still covetted once it's more than ten years old? Has anyone ever written a song about a Honda?

Muscle cars Rock!!

....but them days are gone :(.

[rockbox]

Originally posted by bnb
Ahhhhh....the glory days of Detroit!

Is there any Japanese car that's still covetted once it's more than ten years old? Has anyone ever written a song about a Honda?

Muscle cars Rock!!

....but them days are gone :(.


Old land cruisers and nissan 240Z. Also, the reason you covet the older cars, is because the new ones suck.

Now, here is a question for you. Is there an american car(not truck or SUV) that you would buy that was exactly 10 years old and had over 100K miles on it.

[NJRocket]

Originally posted by rockbox
Is there an american car(not truck or SUV) that you would buy that was exactly 10 years old and had over 100K miles on it.


there isnt any car id buy thats 10 yrs old w/ 100K on it

[bnb]

Originally posted by rockbox

Now, here is a question for you. Is there an american car(not truck or SUV) that you would buy that was exactly 10 years old and had over 100K miles on it.

Nope :(

(but i'd hardly consider 1995 the glory days of Detroit!).

[pirc1]

Originally posted by SamFisher
Precisely. Perhaps 25 years ago, simply stating, "unions must be the problem/japan has better quality" might have carried some weight, even though overly simplistic, however those days are long, long gone. Nowadays, that kind of explanation doesn't make much sense.

http://www.businessweek.com/bwdaily/dnflash/mar2005/nf20050321_4309_db084.htm

Why did most people buy Camary Accord and Altima?

I bought because it is very high quality. I have not had any problem with it for 8 years now, only have to replace suspension and brakes. I used to drive Taurus that game me all sort of problems, tell me why would I want to buy Ford again?

[SamFisher]

Originally posted by pirc1
Why did most people buy Camary Accord and Altima?

I bought because it is very high quality. I have not had any problem with it for 8 years now, only have to replace suspension and brakes. I used to drive Taurus that game me all sort of problems, tell me why would I want to buy Ford again?

You would buy a Ford if you wanted an SUV or a heavy truck or a mustang. That is what fueled the resurgence of American automakers for the last 15 years - Why is it surprising that super-cramped, hyper-expensive Japan is better at building and marketing small & mid-sized fuel efficient sedans, while open-road, cheap gas US carmakers do better with large trucks, SUV's, & gas guzzling sports cars? Not surprising in the least, especially since gas-guzzling is now on the outs with higher fuel prices. I don't understand why people don't think the business cycle and other market forces don't affect the auto industry like they effect everything else.


To close the book on unions - it's both amusing and somewhat sad that people automatically think that fat-cat, greedy American union workers are responsible for the downfall of the auto industry - Let's examine the major auto producing nations: who do you think has a sweeter labor set-up from a worker's perspective:

1. A Japanese auto worker who has a guarantee of lifetime employment; 2. A German auto worker where the trade unions are very powerful and who lives in a social welfare state w/government health care, et etc etc ; or 3. A UAW worker at a GM plant in Flint Michigan?

If you said number 3, you're smoking crack.

[Invisible Fan]

The domestic utility vehicle market is eroding as foreign autodealers are moving in.

Toyota has been quick to adapt to regional pressures. They've been training regional managers to handle regional duties. They've also allowed home grown designs to hit the market. The US designed Scion and Prius have been surprises for their success. Meanwhile, GM designs their cars in Europe and tries to slap the same model across the world.

Their planned hybrid Camry is set to make a killing. For all the talk domestic car companies have dished for hybrids and new technologies, they've let a foreign company trump them again.

[wizkid83]

I think when one of the GM guys came to UT to recruit, I think he said something that kind of tell why there was a problem. In the 70's and 80's, GM hired most of engineers and designers from Michigan area, mostly likely someone who were offsprings of other GM engineers and designers. In as sense, you basically are hiring someone for most of his life is getting a new car every two to three years because his dad gets specials and etc. That cause a problem with not only not looking ahead and building cars to last, but also really killed innovation with not having people from a diverse pool to create these cars.


They end up with a lot of car nuts and gear heads (and I say that with affection) that can make some really good top of the line cars (corvettes) but when it comes to an average family sedan, they just don't know the idea well enough to design a good competetive one. They are trying to change now, hiring college students that are from different backgrounds, but I get the feeling that its just playing catchup and it'll be a couple of years before there are suffecient new blood to cause a revolution.

[SamFisher]

Originally posted by Invisible Fan
The domestic utility vehicle market is eroding as foreign autodealers are moving in.

Toyota has been quick to adapt to regional pressures. They've been training regional managers to handle regional duties. They've also allowed home grown designs to hit the market. The US designed Scion and Prius have been surprises for their success. Meanwhile, GM designs their cars in Europe and tries to slap the same model across the world.

Their planned hybrid Camry is set to make a killing. For all the talk domestic car companies have dished for hybrids and new technologies, they've let a foreign company trump them again.

They missed out big on hybrids and are miles behind - for the last 10 years, when people talked about better fuel efficiency & particularly SUV's, and the associated matters like global warming, US carmakers simply changed the subject to vaporware, and said "hey, look at the pretty FREEDOM CAR!", gambling that the SUV golden goose was going to keep laying eggs indefinitely. Now high gas prices are here and thier vehicles aren't as popular and they are missing out on the hybrid market - that's what happens when you make a losing bet.

[bigtexxx]

Unions and their effects cannot be overlooked as easily as SamFisher is trying to play them off. GM has about 2.5 retired pensioners per active employee. Those pensioners' health care costs amount to about $1,500 PER VEHICLE sold by GM today. That, my friends, is a problem. The Japanese manufacturers do not have this issue to deal with. This problem is to blame for GM's financial woes, which together with their missing of the boat on consumer car preferences has led to major issues at the world's largest auto maker.

[Doctor Robert]

Originally posted by rockbox
I don't think it has to do with unions or quality since most popular asian cars are actually made in the US. I think it has to do with designing ugly cars with mediocre performance.

Look at the new chevy malibu. That car is supposed to compete with Camry's, accords, and altimas. The jap cars are boring but the malibu is boring, ugly and unrefined.

Same for the cobalt.

GM and Ford spent too much time and money on SUV's and trucks while neglecting their cars. With rising gas prices, this has bit them in the arse.
Precisely. Extremely poor design. Extremely ugly. Average performance.

Since I like sports cars and I have fairly limited means, there is absolutely nothing offered by the American car industry that is appealing. The only American cars I can think of that were even somewhat in the same category were the Fiero and the 2nd Gen Probe. The Fiero used to have problems with the engine dropping out when the mounts would unexpectedly and catastrophically fail. I wouldn't buy a 2nd Gen Probe because I knew someone who owned a 1st Gen, and the quality level was horrible.

[apostolic3]

[i]Originally posted by Invisible Fan[/]
Their planned hybrid Camry is set to make a killing. For all the talk domestic car companies have dished for hybrids and new technologies, they've let a foreign company trump them again.
The hybrid Camry is very exciting. This car will be really hot. I wonder how Toyota will price it. I'm sure there is no way I could afford it.

[wizkid83]

Originally posted by bigtexxx
Those pensioners' health care costs amount to about $1,500 PER VEHICLE sold by GM today. That, my friends, is a problem. The Japanese manufacturers do not have this issue to deal with. This problem is to blame for GM's financial woes, which together with their missing of the boat on consumer car preferences has led to major issues at the world's largest auto maker.


This is an article i found, i bolded the response specific to your quote but the whole journal is one big refute and explanation on the problems.

----------------------------------------------

http://www.dfw.com/mld/dfw/business/columnists/ed_wallace/11745990.htm?template=contentModules/printstory.jsp

Then and Now
Not only is the world different now, but what we know of what’s past is often wrong
By Ed Wallace
Special to the Star-Telegram


"It is unfair for us to complain about American jobs in the automotive industry being outsourced to other countries when Japanese, German and Korean automakers are outsourcing their formerly home-done jobs to the United States. There are now 23 foreign-owned car and parts plants operating in North America, and more are coming."

“The biggest drain on GM’s profitability is their welfare system. It is their health care obligations and their pension obligations. The SUV is not killing them, and don’t let the media tell you that — and don’t let a bunch of knucklehead, numbskull, ignoramus activists in the media tell you this — because that’s not what’s causing General Motors’ or Ford’s or Chrysler’s problem.”
— Rush Limbaugh, earlier this month

It is unfair to discuss what’s said by brethren in radio, without saying that on many issues I’ve agreed with the positions Rush has taken. I could say the same thing about Al Franken or anyone else on talk radio. No one is right all the time, nor are they wrong all the time.

All that said, in the discussion excerpted about the problems facing Detroit, Rush also quoted a column by George Will, whom Rush agreed with, saying that Will had postulated it is only the exorbitant costs for health care and retirement plans that are breaking the banks in Michigan, not lost market share or a reduction of the high gross profits associated with sport utility vehicles. Rush later added that Social Security should be dumped and replaced by the pre-Great Depression plan: self-saved retirement.

Well, the problem with that is history. It tells us that in that period few individuals managed to save a strong nest egg for their retirement, and then they watched it be completely broken and emptied by the Depression. And in the period before 1929, the American middle class was nowhere near as large as it is today. Only a few jobs paid so well that a person could enjoy a reasonable lifestyle and still have enough left of their weekly paycheck to fund retirement.

I would also take exception to anyone’s classifying people who work full-time and receive payment that includes benefits, such as health care and some form of retirement package, as welfare recipients. That being said, let’s discuss what truly ails Detroit.

Rebirth or Reincarnation?
Paul Ingrassia, president of Dow Jones Newswire, wrote in a May 17th Wall Street Journal article that what we are witnessing today is not the death of the American automobile industry, but its rebirth. Ingrassia added that it is unfair for us to complain about American jobs in the automotive industry being outsourced to other countries when Japanese, German and Korean automakers are outsourcing their formerly home-done jobs to the United States. There are now 23 foreign-owned car and parts plants operating in North America, and more are coming.

First, let’s take up the issue of Mr. Will’s column and Rush’s quotes from his show, and why they are inaccurate. Last year General Motors earned $3.9 billion — and GM predicted that its health care costs would rise as much as $1 billion in 2005. Government reimbursement for the new Medicare prescription drug benefits would offset much of this premium increase, so the net effect to GM’s bottom line would be far less than $900 million. Under this simple equation, all other things being equal, General Motors should still be well on the way to earning $3 billion in this fiscal year. Of course, GM posted a $1.1 billion loss in the first quarter. So something else is obviously eating at their profits.

Daimler lost about the same amount of money during that period, but I have yet to see anyone claiming that Mercedes could possibly go out of business. No, in the American press, possible Armageddon scenarios are published daily only because Kirk Kerkorian offered to buy 28 million shares of GM’s outstanding stock. But, when Daimler CDO Bodo Uebber admitted a week ago Saturday that outside and possibly unfriendly hedge fund operators have managed to acquire up to 15% of Daimler’s outstanding shares, not a word was said, no punditry quoted.



Magic Numbers
Now, let’s talk reality. Many of the Japanese importers of automobiles have sold their cars for years without ever once posting a profit on their North American operations. In Mitsubishi’s case, for the period of 1982 to 1997, the company accumulated losses from North American operations totaling $1.7 billion for having had the pleasure of selling their automobiles to you and your neighbors. Acura went over a decade with once turning a net profit here. In fairness, neither of these two firms had but few legacy costs — such as employment benefits — factored into their bottom line. And certainly both companies had huge automotive hits during this period; but selling in North America didn’t make them any money.

So, why did Japanese and Korean automakers decide to enter our market, in many cases knowing that business would be done at a loss for years? It’s the magic of volume production. Because the more cars and trucks any company manufactures, the less each vehicle costs. Last year, when General Motors was running its large SUV plants on overtime, theoretically the cost to produce each vehicle was less than it’s been this year; many SUV plants have been on extended downtime, forcing GM to pay primary earnings to workers while no production was being done. That seriously hurts the gross profit on each vehicle produced.

Additionally, we continue to hear that GM’s costs for health insurance and pension plans are in the neighborhood of $1,500 per car. Again, that figure varies, based on how many cars and trucks GM manufactures in one year. Obviously, if General Motors came up with four new solid-hit vehicles (with volumes in the 250,000 range) in the next couple of years, then GM could amortize its legacy costs over another million units annually, reducing the cost per vehicle dramatically. So, the Japanese in many cases were willing to lose money selling cars here because it increased their overall production, lowering the cost of each vehicle built, which improves the corporation’s bottom line in the long run.



A Million Missing Customers
Also hurting automakers are a couple of other factors, which have apparently escaped those discussing Detroit’s current financial problems. One is the loss of America’s blue-collar middle class; the other is the wage structure of entry-level jobs against the price of new cars today. Over the last 25 years, the United Autoworkers have lost right at one million well-paid members. It’s no stretch of the imagination to believe that most of those members purchased GM, Ford or Chrysler products, which today likely loses those companies at least 200,000 – 250,000 sales a year.

Throw in the loss of jobs in the American parts industry, and in steel or glass manufacturing, and one could easily claim that Detroit, while saving billions in labor costs, has also intentionally eliminated the careers of well over a million former loyal customers.

Finally, for those of us in the Baby Boom generation, let’s take a walk back to 1969, when we were listening to KFJZ’s Larry Shannon spinning the Youngbloods’ “Get Together,” while our younger siblings were driving us nuts with “Sugar, Sugar” by the Archies. We worked at local businesses after school at minimum-wage jobs that earned us $3,380 that year. If that sounds horrible today, one should also remember that a brand-new 1969 Ford Mustang convertible listed for just $2,832. Yes, with no overtime whatsoever, if you worked at a minimum-wage job for 12 months in 1969, you could pay cash for a brand-new car — a Mustang convertible, no less.

Today, working the same 40-hour week at minimum wage, one would earn $10,712 — or about $13,853 short of what you’d need to cruise Camp Bowie in your new ragtop Mustang. (As a point of reference, in 1969 a minimum-wage job amounted to 34.02% of the average family’s income; today a minimum-wage job is just 20.6%.) This alone explains the success of low-cost imports such as Hyundai and Kia.

Get Real, Rush
No one disputes that health care and the costs of the pending Baby Boom retirement are a huge drag on every corporation’s bottom line. But they’re no more costly to GM, Ford and Chrysler than to any other large and long term American corporation who employs people with decent wages and a pre-defined retirement package.

Most assuredly, no one working today would agree that being compensated makes you a welfare recipient. Nevertheless, Detroit’s automakers have lost millions of their former customers, some of whom were their own employees, as our blue-collar middle class has shrunk. Meanwhile, the foreign automakers who own factories here have watched their customer bases expand with their own American employees.

At the same time, no one has considered the fact that as minimum-wage workers in the sixties, our purchasing power was infinitely better than that of those bottom wage earners today, which was the biggest incentive for us to become another generation of car lovers. In the end, we still purchase more cars and trucks today, per family, than we have at any time in American history, save the period of 1973 – 1977. So, all is not lost. Detroit simply needs to create more new product that appeals to the new and more upscale demographic of today’s car buyer.

As for Rush: I admire his accomplishments; and if I made $20 million a year, I wouldn’t need health insurance or Social Security either. But most of those reading this column today do.

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, given by the Anderson School of Business at UCLA. He reviews new cars every Friday morning at 7:15 on Fox Four’s Good Day and hosts the talk show Wheels Saturdays from 8:00 to 1:00 on 570 KLIF. E-mail: ed-wallace@charter.net

[tigermission1]

As I said before, there are a few reasons why GM and Ford are struggling.

First, let me start with GM:

1) Health benefits to its employees/ex-employees are killing their profits, literally.

2) They used to make the majority of their profits selling big, reliable SUVs/Trucks that the public trusted, until oil prices skyrocketed and made the operating cost of these vehicles too prohibitive to most Americans.

3) They are still recovering from an era of low-quality products, and they are yet to shed their old rep, despite recieving awards/being ranked among the top in the world in brand quality.

4) Perhaps most important, they haven't really come out with a "must-have" vehicle in quiet sometime, which hurts them. They barely update their old product, and that means they fall behind the competition in many aspects. The Cavalier didn't die until this model year, and the Cobalt (a good vehicle by the way) isn't receiving the kind of reception from the public GM has expected. The Solastice is really the first car that might come even close to a "must-have" status for GM, and it's doubtful that it will be that big a seller, at least it won't be enough to solve GM's problems.

As for Ford, it is more simple:

1) The whole Explorer "roll-over" and Firestone tires flap really, really hurt their rep and their image. It was a PR disaster that they may never fully recover from. Reputation is everything in this business.

2) Bad, bad product lineup that doesn't really appeal to anyone. Only consistent winner has been the F-150, from which they derive most of their profit. The new Mustang looks like a big winner as well, but it just came out, and that means it will take some time to jolt the whole company with some momentum.

3) same problem as GM in the health-benefits department.

Chrysler, on the other hand, is doing better than the other two, primarily because of their new product lineup (the 300C and the Magnum, to name two) that have become image cars for the company, and brought a lot of customers into their showrooms. They have been selling most of these cars not just at, but above their sticker prices (I know because I paid above the sticker for a 300). Also, may be their partnership with Mercedes-Benz improved their image a bit.

On the other hand, anyone that calls Japanese products (with exception of Nissans/Infinities and Mazdas) "fun" or "beautifully designed" is smoking something. There is NOTHING more dull than a Toyota/Lexus, but they are reliable/high quality vehicles for sure. If you call a Toyota "fun" or good looking, then you must be a middle-aged man:rolleyes:

Nissan is not nearly as high quality as Toyota or Honda, but I would buy a Nissan over either one any day of the week.

As to the high-mileage comparison people were talking about, please pray tell how many people EVER keep their newly purchased vehicles beyond 5 years or 100k miles? Not many at all, and even a Kia will last you up to 100k on most occasions. If you are driving a car past 100-150k miles, then you are either dead broke or just too damn attached to your car.

[TL]

Originally posted by tigermission1
As I said before, there are a few reasons why GM and Ford are struggling.


You are right, but you ordered everything wrong. Seriously. It would be idiotic to pretend like the legacy health care costs aren't hurting the company, but as someone who has seen detailed financial information of these companies (as well as their competitors), the problem is not primarily the union issues. Take a closer look at the balance sheet of these companies. Look at the funded portion of the pension obligations. Look at what they have sacrificed in order to increase volumes. If they could get their head out of their asses, they would produce cars that their consumers want. Unfortunately, (at least until last August) they really thought cars like the H2 would be a key to the turnaround. It's easy to blame other people for your problems, but when you can't figure out your own consumer, that's your real problem.

If GM and Ford go down, they will go down because they don;t truly understand the consumer. The union costs are a problem, but obsucre the real issue.

[Deckard]

Detroit's executives can fail, recieve huge "golden parachutes" as a reward for their failure, deliberately not fund retirement benefits promised to their workers, who worked for their retirement in good faith... hanging those employees and their families out to dry, and somehow it's the "fault" of the employees and not the failed management of the corporations?

Bull****. The crap being pushed by the extremists in control of the Republican Party is as fine an example of the disease afflicting our country as you could find. It's a sickness that's gripped our government from the top, starting with the fool in the Oval Office, down through Congress and into far too many of state governments... the Texas Legislature being as good an example of the rot of extremism and corruption on that level as one could find inthe United States.

Take the blinders off and look around.


Keep D&D Civil!!

[Saint Louis]

http://classiccars.kfunk.net/fave/73amc_gremlin_back.jpg


Who says America can't build a small car!:D

[glynch]

It is really a side issue. However, notice the bitterness at which the conservatives attack auto workers for having health benefits. They aren't supposed to have national health care like virtually all other advanced econonomies; nor are they supposed to get it through their jobs. Let them be uninsured or pay for health insurance with their near minimum wage jobs once their unions are busted.

This is really so deeply elitist and UnChristian at its core. Show me the Bible quote that says only the wealthy or well educated should have access to health care. Show me where Limbaugh and the other elitists give up their own corporate health care plans.

Of course, the auto industries health care woes do show that we need national health care so that our industries aren't burdened by trying to fund our wasteful health care system for their employees.

[pirc1]

Originally posted by Saint Louis
http://classiccars.kfunk.net/fave/73amc_gremlin_back.jpg


Who says America can't build a small car!:D

What kind of ugly ass car is that?:D

[insane man]

Originally posted by tigermission1
If you are driving a car past 100-150k miles, then you are either dead broke or just too damn attached to your car.

or you are fairly happy with the quality of your car and dont feel the commercially implanted urge to get a new car every 3 years.

[SamFisher]

Originally posted by bigtexxx
Unions and their effects cannot be overlooked as easily as SamFisher is trying to play them off. GM has about 2.5 retired pensioners per active employee. Those pensioners' health care costs amount to about $1,500 PER VEHICLE sold by GM today. That, my friends, is a problem. The Japanese manufacturers do not have this issue to deal with. This problem is to blame for GM's financial woes, which together with their missing of the boat on consumer car preferences has led to major issues at the world's largest auto maker.

Wow, I did not realize that health care for Mexican autoworkers was so costly. I guess that's a lot of tequila and band-aids.

The "PER VEHICLE" thing that you helpfully capitalized should be a clue in that you're being spun - I wonder why they didn't say "per worker"? I'm guessing that the number wouldn't be quite iimpressive - since their vehicle sales & productions were WAY down this year due to flagging demand and in many cases due to the fact that they discontinued product lines (e.g, the Cavalier) in order to switch over to newer ones - which has the effect of exaggerating this statistic greatly

http://www.businessweek.com/magazine/content/05_24/b3937071_mz058.htm

But until GM & Ford realize their dream of a national health care system, I guess they' and their overpaid mexican work force will just have to compete with "cheap" japanese and german labor which is keeping them from selling Pontiac Sunbirds.

[SamFisher]

delete

[TL]

A good article that discusses some of the problems with the NA auto industry.

http://www.detnews.com/2005/editorial/0503/27/A15-129850.htm

[tigermission1]

I think there is too much panicking going on here, GM and Ford are going nowhere, it is not like they will disapprear in the thin air. They still have good operations going on globally, their problems are mainly in the NA market, which obviously is where they sell most of their vehicles.

Volume wise, they don't have problems in selling cars, they just need to figure out a way to be more profitable selling their cars, not SUVs/Trucks, in this age of expensive fossil fuel adn rising Chinese and Indian consumer markets.

[pirc1]

Originally posted by TL
A good article that discusses some of the problems with the NA auto industry.

http://www.detnews.com/2005/editorial/0503/27/A15-129850.htm

Seems like GM will have trouble for years to come according to this article. Their design philosophy is flawed I guess.

[Supermac34]

Originally posted by SamFisher
Wow, I did not realize that health care for Mexican autoworkers was so costly. I guess that's a lot of tequila and band-aids.



The problem is that GM has a HUGE legacy workforce in America of people who receive big pension benefits, but no longer work for the company.

Their pension payouts are killing them.

It doesn't have much to do with current employees.

[SamFisher]

Originally posted by Supermac34
The problem is that GM has a HUGE legacy workforce in America of people who receive big pension benefits, but no longer work for the company.s.

The problem is that GM doesn't sell enough cars, but if the big 3 are lobbying for a nationalized health care & pension system like Germany and Japan have, those ideas might be worth exploring.

[SamFisher]

Originally posted by SamFisher
The problem is that GM doesn't sell enough cars, despite having the advantage of a weak dollar & cheaper labor overall, but if the big 3 are lobbying for a nationalized health care & pension system like Germany and Japan have, those ideas might be worth exploring.

[SamFisher]

delete

was there some button rearrangement upstairs? I keep accidentlly hitting reply and not edit..

[4chuckie]

I'd agree with many on here that the Unions certainly don't help.

I wonder if the internet (easier to get quotes from several dealers without being hassled too much) has cut down on the margins much? I know sales are down, and I could be dead wrong but I'm betting all the companies have lost some (potential) revenues just by customers having easier access to prices.

[Baqui99]

Anytime I drive off the Hertz lot, I'm laughing at the cheapness of the interior. Last week, I rented a Chrysler Sebring while on vacation. The thing was an absolute POS. The dashboard had a fake metallic silver finish that was nothing more than a piece of plastic.

Recently, I had a Pontiac Grand Am as a rental. The knob on the radio fell off, and interior panels were peeling off. What a piece of junk. The fit and finish on these cars is absolutely horrible. Why on earth anyone would take a Pontiac or Malibu over a similarly priced Accord or Camry is beyond me.

[tigermission1]

Originally posted by Baqui99
Anytime I drive off the Hertz lot, I'm laughing at the cheapness of the interior. Last week, I rented a Chrysler Sebring while on vacation. The thing was an absolute POS. The dashboard had a fake metallic silver finish that was nothing more than a piece of plastic.

Recently, I had a Pontiac Grand Am as a rental. The knob on the radio fell off, and interior panels were peeling off. What a piece of junk. The fit and finish on these cars is absolutely horrible. Why on earth anyone would take a Pontiac or Malibu over a similarly priced Accord or Camry is beyond me.


Because they are NOT the same price (don't be fooled by the MSRP, most of the times you can get those cars for $3000-$4000 below the sticker price, not true with Hondas and Toyotas), and because American cars are usually backed up with better, longer-term warranties (My younger brother had a crappy Cavalier with 5 yrs/60000 miles bump2bumper warranty). The max I ever got for a Jap car is 3 yrs/36000 miles. I think Mitsu is the only Jap company that provides a long term warranty now that matches what GM offers.

Also, some of the newer vehicles from GM (Cobalt, G6) have a cleaner look on the inside and use higher quality material. I think GM/Ford should start adapting the same Japanese strategy for making cars: copy everything the Germans make, and try to do it better.

But overall, yes, you are right, American companies have for far too long ignored their mid-size/smaller sedans and have fallen behind the Japanese competition.

I think they need to pay more attention to their cars and less attention to gaz-guzzling SUVs.

The future of the automobile industry in NA seems to be more geared towards car-based SUVs and sedans. I just don't think large truck-based SUVs will make a strong comeback to the market, because I don't believe we will EVER see low gas prices again in this country; if anything we will likely see prices higher than these for the next few years.

[steddinotayto]

Originally posted by tigermission1
Because they are NOT the same price (don't be fooled by the MSRP, most of the times you can get those cars for $3000-$4000 below the sticker price, not true with Hondas and Toyotas), and because American cars are usually backed up with better, longer-term warranties (My younger brother had a crappy Cavalier with 5 yrs/60000 miles bump2bumper warranty). The max I ever got for a Jap car is 3 yrs/36000 miles. I think Mitsu is the only Jap company that provides a long term warranty now that matches what GM offers.

Also, some of the newer vehicles from GM (Cobalt, G6) have a cleaner look on the inside and use higher quality material. I think GM/Ford should start adapting the same Japanese strategy for making cars: copy everything the Germans make, and try to do it better.



Well there's an obvious reason why they are 3-4 k cheaper than their Japanese counterparts and, of course you already stated it, it's because of the reliability and the quality of the product. Why do US automakers start giving out longer warranties just recently (they NEVER had long warranties like they did now)? Because not only were they losing customers to Toyota and Honda on the "quality and reliability" factor, but then some customers went to the "bang for your buck" factor in Hyundais and Kias (the original automakers with 10 year/100k warranties). So they were in a bind and had to do something.

Americans invent the car > Japanese improves on the car > Germans perfects the car. JUST MY OWN OPINION.

[No Worries]

I own an American built car that I expect to get 200K miles on, spending very little on maintenance. Its styling is middle of the road but what the heck. All in all, I am very glad I bought my Camry.

[MadMax]

Originally posted by No Worries
I own an American built car that I expect to get 200K miles on, spending very little on maintenance. Its styling is middle of the road but what the heck. All in all, I am very glad I bought my Camry.

excellent point. nissans are made in smyrna, tennessee. not a very large asian population there, as i understand it.

[pirc1]

Originally posted by No Worries
I own an American built car that I expect to get 200K miles on, spending very little on maintenance. Its styling is middle of the road but what the heck. All in all, I am very glad I bought my Camry.

Haha, good one. The manufacturing culture in Toyota and other Japanese plants in USA is very different from those in the American auto plants. I am not sure why American plants cannot copy the Japnanese plants, I bet in 20 years when Korean and Chinese cars surpass US cars in quality, we would still have the same debate as we have today.

[Invisible Fan]

Originally posted by pirc1
I am not sure why American plants cannot copy the Japnanese plants, I bet in 20 years when Korean and Chinese cars surpass US cars in quality, we would still have the same debate as we have today.

They have. I don't remember the specifics, but GM and Toyota co-own an American plant and spit out the same model of cars but rebadge them with different names. American consumers still prefer the Toyota name.

GM and other American companies have to win back the perception of quality with their sedans and smaller vehicles.

[TechLabor]

Many Japanese cars are manufactured in the U.S. and Canada, but have better qualities than the American cars. Why?

Possible reasons: 1. The parts may be made in Japan. 2. The Japanese designs are better. 3. The Japanese managment is better.

[No Worries]

Originally posted by TechLabor
Many Japanese cars are manufactured in the U.S. and Canada, but have better qualities than the American cars. Why?

Possible reasons: 1. The parts may be made in Japan. 2. The Japanese designs are better. 3. The Japanese managment is better.
This is my take as well. American workers can build a quality car. But those workers do not decide the manufacturing process, automotive design, acceptable quality levels, etc.

[Ottomaton]

German manufacturers are actually having a worse time of it than American manufacturers. I know a couple of auto plants either shut down or were threatening shutdown because the workers wouldn't even talk with managment about concessions.

The problem with the auto industry is a mirror of the Airlines. Durring "The Golden Age" they negotiated a number of deals which were based on the economics of that time. Only now does the cost of the relevant pension plans come due. The auto companies failed in forsight by defering funding until they couldn't afford to do so.

People use the failure as an excuse to blame labor unions, but these were the result of negotiations between labor and management that management agreed to at the time, and could have funded at the time. Instead, they were more interested in what could boost the bottom line at the moment, and how it would look in the 10k if they acutally payed their bills instead of creating false increases in the per share profit margin.

The trend of allowing companies to foist these costs at a later date on the US Government because they failed to properly prepare for predictably forcastable costs is sad, in that suggests that you can make future agreements and simply ignore them. The fact these companies are then using their own failures as an excuse to pile on unions is something that just makes me annoyed at these crass people and the dupes who help them spread their false blame.

[pirc1]

Originally posted by Ottomaton
German manufacturers are actually having a worse time of it than American manufacturers. I know a couple of auto plants either shut down or were threatening shutdown because the workers wouldn't even talk with managment about concessions.

The problem with the auto industry is a mirror of the Airlines. Durring "The Golden Age" they negotiated a number of deals which were based on the economics of that time. Only now does the cost of the relevant pension plans come due. The auto companies failed in forsight by defering funding until they couldn't afford to do so.

People use the failure as an excuse to blame labor unions, but these were the result of negotiations between labor and management that management agreed to at the time, and could have funded at the time. Instead, they were more interested in what could boost the bottom line at the moment, and how it would look in the 10k if they acutally payed their bills instead of creating false increases in the per share profit margin.

The trend of allowing companies to foist these costs at a later date on the US Government because they failed to properly prepare for predictably forcastable costs is sad, in that suggests that you can make future agreements and simply ignore them. The fact these companies are then using their own failures as an excuse to pile on unions is something that just makes me annoyed at these crass people and the dupes who help them spread their false blame.

Good points, but do you belive if American auto industry made better cars than the Japanese they would still be in this situation?

[rhadamanthus]

Originally posted by tigermission1
As to the high-mileage comparison people were talking about, please pray tell how many people EVER keep their newly purchased vehicles beyond 5 years or 100k miles? Not many at all, and even a Kia will last you up to 100k on most occasions. If you are driving a car past 100-150k miles, then you are either dead broke or just too damn attached to your car.

This the dumbest thing I have ever read. Ever wonder why the average American can make so much money compared to the rest of the world and still have so much debt?

Consume for the sake of consuming, I guess.

Me? I'll drive my old yet reliable vehicles, and not pay a car payment.

[111chase111]

Originally posted by tigermission1
As to the high-mileage comparison people were talking about, please pray tell how many people EVER keep their newly purchased vehicles beyond 5 years or 100k miles? Not many at all, and even a Kia will last you up to 100k on most occasions. If you are driving a car past 100-150k miles, then you are either dead broke or just too damn attached to your car.

Actually many people keep their cars for longer than five years. As a matter of fact, according to the book "The Millionaire Next Door" buing a reasonable car (the book says most "next-door millionaire's drive Ford F-150's) and keeping it for 10 years is something next-door millionaires have in common (i.e. don't spend too much on your car and keep it longer to avoid constant car payments).

My wife and I are both planning on keeping our cars for at least 10 years before we purchas replacements. She has an 8 year old Saturn and I have a 5 yeard old Dodge Dakota.

We aren't keeping our cars because we especially like them or because we are broke (when we buy my wife's next car in a couple of years we can afford to pay $20,000 in cash). We keep them because buying a new car every 5 years doesn't make economic sense.

[pirc1]

The cure to all is to cut jobs as always.

Link (http://news.yahoo.com/s/ap/20050607/ap_on_bi_ge/general_motors_outlook;_ylt=AibofZy6_jofONq8uGf2l9is0NUE;_ylu=X3oDMTA2amdibDI5BHNlYwNicw--)

GM Plans to Cut 25,000 U.S. Jobs by 2008 By JOHN PORRETTO, AP Auto Writer
6 minutes ago



WILMINGTON, Del. - General Motors Corp. plans to eliminate 25,000 manufacturing jobs in the United States by 2008 and close plants as part of a strategy to revive North American business at the world's largest automaker, its chairman said on Tuesday.

ADVERTISEMENT

Speaking to shareholders at GM's 97th annual shareholder meeting in Delaware, Chairman and Chief Executive Rick Wagoner said the capacity and job cuts should generate annual savings of roughly $2.5 billion. GM now employs 110,000 hourly workers in the United States.

Wagoner revealed the cutbacks as he laid out a four-step strategy to invigorate GM's North American operations, its biggest and most troubling part. Already this year, GM's U.S. market share has fallen from 27 percent a year ago to 25.4 percent, much of the loss at the expense of Asian automakers such as Toyota Motor Corp. and Nissan Motor Co.

Wagoner focused on four priorities: increasing spending on new cars and trucks; clarifying the role of each of GM's eight brands; intensifying efforts to reduce costs and improve quality; and continuing to search for ways to reduce skyrocketing health care expenses.

He noted that health-care expenses add $1,500 to the cost of each GM vehicle. This puts GM at a "significant disadvantage versus foreign-based competitors," Wagoner said.

General Motors shares rose 53 cents, or 1.7 percent, to $30.95 in late morning trading on the New York Stock Exchange. GM's shares have tumbled to their lowest price in more than a decade, and Fitch Ratings and Standard and Poor's Ratings Services both reduced the company's bond rating to "junk" status last month.

Billionaire investor Kirk Kerkorian's offer to purchase 28 million GM shares at $31 apiece, boosting his stake to about 9 percent from 4 percent, expires later today.

Wagoner said it was vital for the company to cut costs by improving efficiency at its manufacturing plants. He said plant closings and idlings in recent months will reduce assembly capacity in North America from 6 million in 2002 to 5 million by the end of this year.

GM spokesman Edd Snyder said the company wouldn't release further details Tuesday about which plants might be closed.

"What was contained in the speech is what we have right now," Snyder said.

Messages were left Tuesday morning with the United Auto Workers.

GM already has closed or discontinued production at several facilities this year. The company shut a factory in Linden, N.J., in April and a factory in Baltimore in May, affecting around 2,000 employees. The company also closed two plants in Lansing, Mich., last month, although those 3,500 employees are expected to find work at other GM facilities in the city.

"Let me say up front that our absolute top priority is to get our largest business unit back to profitability as soon as possible," Wagoner said.

Part of that bid involves negotiating with the UAW and other unions, discussions that are ongoing.

Wagoner said the talks, which he described as intense, have focused on a cooperative approach to significantly reduce GM's health care costs. GM's health care tab for its 1.1 million current and former workers and their families is more than $5 billion a year and rising.

"We have not reached an agreement at this time, and to be honest, I'm not 100 percent that we will," Wagoner said of the ongoing talks with its unions. "But all parties are working hard on it, in the spirit of addressing a huge risk to our collective futures while providing greater security and good benefits for our employees."

To date, the UAW has indicated it won't reopen its contract, which expires in 2007, and agree to pick up a larger share of soaring health care costs.

What happens if GM can't reach an agreement with the UAW promptly?

"I don't believe it serves a useful purpose to speculate on that," said Wagoner, the CEO since 2000 and chairman since 2003.

"Let me just emphasize our very strongly preferred approach is to do this in cooperation with the UAW because we're convinced that's the best way for our employees, stockholders and all our constituents," he said.

Aside from growing health care and pension costs, GM has had lackluster sales lately of its highly profitable trucks and sport utility vehicles, which have been hurt by high fuel prices.

GM's sales were down 5 percent in the first five months of the year, and the automaker reported a $1.1 billion loss in the first quarter.


Why don't they just fire all the CEOS and VPS.

[A-Train]

Originally posted by pirc1

He noted that health-care expenses add $1,500 to the cost of each GM vehicle. This puts GM at a "significant disadvantage versus foreign-based competitors," Wagoner said.



So...foreign automakers don't offer health benefits?

I wonder how much Mr. Wagoner's golden parachute is...

[rockbox]

I love how they spend a whole article about health care cost when the real issue is in the last line.

"GM's sales were down 5 percent in the first five months of the year, and the automaker reported a $1.1 billion loss in the first quarter."

[deepblue]

Originally posted by A-Train
So...foreign automakers don't offer health benefits?

I wonder how much Mr. Wagoner's golden parachute is...

I think he meant GM has to pay health benefits for current and former workers (plus their family).

[Rockets2K]

Originally posted by pirc1
What kind of ugly ass car is that?:D

That was a AMC Gremlin.

My first car was a banged up old Gremlin....had dang near 200K on it...still ran good the day I got rid of it.

While it was true in past years that US automakers were downright pathetic...they are getting better and better....I know my 2000 Monte Carlo SS is a fine machine that has 89K and I have had to do nothing to it...it has a very nice interior(leather) and still looks as solid inside as it did the day I got it.

you guys can keep all your little foreign designed cars...Ill continue to find and buy the best American car I can afford

[moomoo]

Japanese cars have been more reliable than American (and European) cars, due at least in part to (intriguing) contrasts in design and manufacturing philosophies:


-------------------------------
http://www.designnews.com/article/CA6262124.html
The Quest for Imperfection

Can North American and European automakers build vehicles as reliable as a Lexus or Honda? If they use a concept called “functional build,” they can.

Charles J. Murray
Senior Technical Editor
Design News, October 10, 2005

While studying automotive door assemblies a few years ago, researcher Jay Baron made an amazing discovery: One automaker's door assemblies, made from near-perfect parts, were getting low marks from customers who complained that the doors were leaky. So Baron, who has spent half a lifetime studying such matters, marched down to the domestic automaker's engineering facility to deliver the bad news.

Instead of being showered with thanks, however, Baron was greeted with derision. "They laughed because all their data told them that they were making great doors," says Baron, president of the Center for Automotive Research (CAR), a Michigan-based automotive think tank. "The problem was, they were gathering their data from measurements, not from customers."

Indeed, the engineers had measured and re-measured their door assemblies thousands of times, but didn't know that during everyday use, water was leaking through them. Still, Baron says, those engineers weren't the first, nor the last, to assume that their measurements were the recipe for quality and reliability.

Today, Baron has a message for such engineering teams: If you assume you'll get better quality by demanding excruciatingly tight part tolerances, then you're destined for second-class performance. High reliability, he says, isn't achieved by building perfect components. For proof, he cites Asian automakers. According to surveys done by the Consumers Union and J.D. Power and Associates, Asian automakers have been building the most reliable vehicles for nearly three decades. This year, J.D. Power named Japan's Lexus as the most dependable nameplate, while Consumer Reports magazine cited 46 Asian vehicles among its top 54 "good bets" for used cars. Consumer Reports, which placed no Asian vehicles on its list of 34 "bad bets," said its surveys even revealed that an eight-year-old Lexus had fewer problems per hundred than a six-month-old BMW 7 Series. The reason for that quality dominance, Baron says, is that Japanese automakers make fewer measurements and have more imperfect parts. Whoa, did we say imperfect parts? Indeed, we did. Baron's studies have shown that, incredibly, his studies have shown that stories about Japanese attention to detail on every component are more folklore than reality. The manufacturing methods that have provided such reliability for Asian vehicles have more to do with consistency and good practice than with perfection, say Baron and his colleagues at CAR.

"It's counter-intuitive," notes David Cole, chairman of CAR and a former professor of automotive engineering at the University of Michigan. "It doesn't appear to make rational sense, but if you can build repeatable, imperfect parts, you can solve a lot of quality problems at the system level."

No Micro-Managing

Baron originally learned those counter-intuitive truths while working on his Ph.D. thesis during the late 1980s. His thesis, funded by American automakers and steel companies, took him to manufacturing plants in the U.S., Europe and Asia. During the course of his travels, Baron stumbled on a surprising fact: In Japanese plants, engineers weren't monitoring their processes as closely as their North American and European counterparts.

"We asked, 'How can they be getting high quality when they're hardly ever measuring their parts?'" Baron recalls.

What he and other researchers found was that the Japanese ran stable processes.

"If you know you have a stable process, then you don't have to measure it as often," he says.

Surprisingly, he also found that roughly 20 percent of the parts in those plants were out of "spec." How, he wondered, could system quality be so high when component quality was so low? The answer was hidden in the process, he learned. Instead of focusing on individual part quality, Japanese engineers attended to system quality. By doing so, they could take a conglomeration of imperfect components and assemble them into a reliable system.

Baron compares their process to that of a carpenter nailing baseboard into a sheet of drywall. Instead of cutting several pieces to tight specs, the carpenter could simply lay all the pieces together, then cut the last one to fit. The result could still be a high-quality assembly, Baron says.

"All the carpenter would have to do is make an adjustment to the last board, and then the entire assembly would be perfect," he says.

"There's a misperception about Japanese quality," Baron explains. "People believe that Japanese automakers build all their parts very precisely, and it just isn't true. "We found they don't care about making each part to a precise spec. They just want the assembly to be in spec. And they don't micro-manage the process."

To be sure, none of the proponents of this technique are saying that perfect parts are bad. Rather, they believe that the pursuit of perfection can be elusive at best, and can end up draining too much time and money.

"Personally, I have no problem with perfect parts," Baron says. "But if making perfect parts is prohibitively expensive, then it doesn't make sense."

Expressed in conventional quality terms, Baron's thesis says that the Asian method focuses on the so-called "Cp," a measure of one's ability to produce consistent results from lot to lot. Americans and Europeans, meanwhile, focus on the so-called "Cpk," which tells how well a particular part fits within an absolute measurement value.

"The Japanese want low variation from part to part, and then they deal with out-of-spec measurements as they go along," Baron says.

The Essence of Reliability

Dubbed "functional build," the method has started to gain traction among U.S. automakers.

"General Motors has been using these practices for the last few years and Chrysler has begun to move in that direction," Cole says. "Ford has been a little slower, but they've started using it, too." Still, Baron says that U.S. and European adoption of the technique is spotty, while Asian adoption, particularly by Honda and Toyota, is commonplace.

Automakers were reticent to talk about their use of the process on their manufacturing lines for this article, citing competitive issues. North American tool makers, however, say that the technique offers advantages for them, as well as their customers, the automakers.

"It's the best way to do things, but obviously we can only use it if the customer wants it," notes Mark Schmidt, president of Detroit-area-based Atlas Tool, Inc., which makes stamping dies for automakers.

Schmidt says functional build saves money for die manufacturers and automakers alike. He cites an example of an automaker that employed functional build during the creation of a vehicle roof, during which eight points on the roof were found to be outside the specification. Instead of having to fix all eight, however, the automaker asked Atlas to fix only three. Using functional build, automotive engineers decided that the assembly would fit better, and the dies would be finished sooner and would cost less, if they fixed only the three critical areas.

"If they didn't use functional build, the automaker wouldn't have known which tolerances were important and which weren't," he says. "But because they focused on the quality of the end product, and not just the part, they ended up with a better product for less cost."

Atlas and other manufacturers say that they've used the technique on vehicle roofs, hoods, trunks, doors, cross members, and frame parts. Baron adds that the method can also be applied to plastic and electronic assemblies, such as instrument panels.

Those who use functional build contend that it makes more sense than the traditional Cpk-based methods. Manufacturers who try to make perfect components are trying to do the impossible, they argue.

"A body-side (assembly) can never be 100 percent to spec, at any stage of production," says Schmidt of Atlas Tools. "It just can't be done."

Yet, many domestic automakers continue to push the concept of perfect parts, despite their knowledge that parts made from sheet metal and other materials often get distorted during manufacturing. Worse, compensating for such distortion may cause parts to fall out of spec elsewhere.

Baron recalls one project on which an automaker called for 1,400 check points on a door die. "Most designers think they're defining good quality when they call out 1,400 check points on a mold," Baron says. "But no one can track 1,400 check points. They say they're trying to make a perfect part, but what they're really doing is driving up the price of the tool."

Beyond Conventional Wisdom

Proponents of functional build argue that the concept's proof lies in its success with Asian automakers. By virtually all objective measures, Japanese automakers have exhibited high quality for at least a quarter-century. Consumer Reports, which tears down vehicles and surveys more than 600,000 owners every year, has repeatedly given high marks to vehicles made by Honda, Toyota, Nissan, Mazda and Subaru. No Asian vehicles made Consumer Reports "bad bets" list this year, and some of the lowest-priced Japanese models outclassed luxury vehicles in reliability. The $14,000 Honda Civic, for example, fared better this year than the Audi A6, and the BMW 7 Series, as well as Mercedes-Benz's C-Class, CLK, M-Class and S-Class vehicles.

"In most cases, the most reliable vehicles came from Honda and Toyota," says David Champion, director of testing at Consumer Union's automotive test facility. "And their vehicles are just as complicated, and have just as many electronic features, as a Mercedes or a BMW, yet they seem to get it right."

To be sure, Champion and other experts don't question the first-class performance- of many German vehicles. But the reliability race, they say, is another matter.

"Reliability was what originally put Japanese cars on the map," Champion says. "Their first cars—Corollas, Stanzas, and Accords—were not particularly dynamic. But consumers knew they would work."

Still, North American and European automakers have been slow to adopt their techniques, for reasons ranging from fear of change to corporate politics.

"It's hard to change conventional wisdom," says Cole of CAR. "And conventional wisdom has always said that perfect parts make perfect systems."

Design Experience Needed

Functional build proponents do acknowledge that adoption of the methodology can be very difficult. Today's conventional practices are easier to keep in place, they say, because they don't call on anyone to take risks. Such methods give designers a solid, quantitative reason for rejecting a part.

"Nobody will ever get in trouble for saying that a die is not perfect," Baron says. "It's easier to pretend you're going to make perfect parts, and then make decisions based on that."

Schmidt of Atlas Tools adds that functional build calls for real design expertise. "It takes an experienced designer to say, 'Don't worry about that tolerance, it's meaningless for this part,'" he says. "But an inexperienced designer won't know which tolerances to forgive, so he'll forgive nothing. He needs everything to be perfect."

Schmidt believes that the key to functional build is at atmosphere of cooperation between OEMs and vendors. Both sides, he says, must be willing to work together and forego the finger-pointing that often takes place between the two groups. Moreover, engineering departments must be willing to invest more time and effort in the manufacturing process, with the knowledge that manufacturing costs will drop dramatically as a result. Only then, he says, will engineers be willing to back away from the idea that perfect parts make perfect systems.

"It's not that perfect parts are bad," Cole concludes. "It's just that they're awfully hard to build."

Reach Senior Technical Editor Chuck Murray at charles.murray@reedbusiness.com.


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Web Resources
To view CAR's recent Delphi study of automotive product design and development, go to:
http://rbi.ims.ca/4398-570
From the Design News Archives
To find out how automakers tackle reliability issues, go to:
http://rbi.ims.ca/4398-571 To learn how Maytag designs for product reliability, see the following two links:
http://rbi.ims.ca/4398-572
http://rbi.ims.ca/4398-573

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Most Dependable
Out of the 54 vehicle models named to Consumer Reports "good bets" list of the most dependable used cars in 2005, an astounding 46 models were built by Asian companies. (Number of models individually named to the list is in parentheses next to the company name.)
Acura (5)
Buick (1)
Chevrolet (1)
Chrysler (1)
Ford (2)
Honda (6)
Infiniti (4)
Lexus (5)
Lincoln (1)
Mazda (4)
Mercury (2)
Mitsubishi (1)
Nissan (3)
Suburu (4)
Toyota (14)


Least Dependable
Out of the 34 models named to Consumer Reports "bad bets" list of 2005's least dependable used cars, 21 models are from North America and 13 are from Europe. None are from Asia. (Number of individual models named to the list is in parentheses next to thecompany name.)
Audi (1)
BMW (1)
Chevrolet (5)
Chrysler (1)
Dodge (2)
Ford (1)
GMC (5)
Jaguar (2)
Jeep (1)
Land Rover (1)
Lincoln (1)
Mercedes-Benz (4)
Oldsmobile (2)
Plymouth (1)
Pontiac (1)
Saturn (1)
Volkswagen (3)
Volvo (1)

A 'functional build' primer for designers
Jay Baron, president of the Center for Automotive Research (CAR), believes that design engineers can boost system reliability by employing a concept called functional build. To make that happen, he advises designers to change their thinking in two key ways:

Don't assume tighter tolerance and more check points will boost quality. Baron argues that adding unnecessary check points to molds and stampings will only drive up costs and cause 11th hour panic. "Some poor guy in a shop somewhere will end up trying tomake those points meet spec, and it won't help quality at all," he says. "It will just add more time to the process."
Be familiar with die-making and assembly processes for the part you're designing. Baron argues that lack of manufacturing knowledge causes designers to adhere to unrealistic specs. It's easier—but not necessarily better—to hold the line on all out-of-spec tolerances. Says Baron: "If you know how a system is assembled, then you'll know how that assembly process affects your costs."

[bigtexxx]

This thread was dug up to post a month old article?

[snowmt01]

Unions and their effects cannot be overlooked as easily as SamFisher is trying to play them off. GM has about 2.5 retired pensioners per active employee. Those pensioners' health care costs amount to about $1,500 PER VEHICLE sold by GM today. That, my friends, is a problem. The Japanese manufacturers do not have this issue to deal with. This problem is to blame for GM's financial woes, which together with their missing of the boat on consumer car preferences has led to major issues at the world's largest auto maker.

US Cars in general are cheaper than corresponding Foreign models.
Also checking the consumer report, GM models are often ranked on top and
comparable to Japan cars.

The biggest problems are marketing and design.

[snowmt01]

I think he meant GM has to pay health benefits for current and former workers (plus their family).

So Toyota/Honda dont have to pay health benefits for current and former workers (plus their family)?

[DaDakota]

Unions are the biggest problem.......by far.

DD

[tigermission1]

So Toyota/Honda dont have to pay health benefits for current and former workers (plus their family)?

If I am not mistaken, Japan has national healthcare? I could be wrong.

[rhadamanthus]

Delete. I thought this was a new thread. :o

[pirc1]

Delete. I thought this was a new thread. :o

Had me do a double take when I saw this thread this morning. ;)