America is just a small economic hiccup from bankruptcy. The share of the national debt for every man woman and child in America exceeds the median income for America. That means over half of America owes more debt than they make per year. Spending cuts alone will not solve the problem. Income has to be raised and that comes from raising taxes unfortunately. Having been through a bankruptcy during which I spent four months living in a Ford Econoline van with everything I owned. Having had to migrate south for the winter for both work and to keep from freezing to death. I understand the impact of losing it all. It is something you eventually get over and get back to work but it takes sacrifices. A male, single and middle aged has no chance of getting help from the system. The winter in Florida taught me why so many divorced males lived there. Florida at that time did not garnish wages for child support. One of the few states that did not force the single male to live on bologna sandwiches.
The recent unemployment and housing market collapse are mirroring the financial slowdown of the early eighties. The problem is that the government no longer has the means or the will to solve the problems facing America. While I agree with the Republicans that program and spending cuts equal to the amount that the debt ceiling is raised. I disagree that taxes should not be raised. Someone has to pay for the excessive spending that has gone on over the years and the present two party system is not willing to do that. The only solution is a viable third party that not only demands an amendment to the Constitution making a balanced budget mandatory but also freezes spending and seriously looks at cutting government spending and waste.
Cutting the budget in essence will perpetuate the unemployment problem. The people who are making the products the government buys may be laid off and that only adds to the problem. While the banking industry needs to be reined in and regulated as does Wall Street, so does government. The credit default programs that forced the collapse were the equivalent of, as I heard one commentator say, "Selling cars with no brakes and then insuring against your having an accident." The Federal governments allowing the medical bill to pass and retricting the Federal Government from using its buying power to get a discount is absurd and a major cost to the tax payers of America and the only ones who benefit are the drug and legal industries. My prescriptions through the VA cost more than buying the drugs through my own health insurance program.
Another example of incompetence is the United States Postal Service. They should be dilivering mail and not packages. Junk mail, catalogs and flyers should be distributed by private carriers. The fact the Post Office "gives" their customers packing materials and then gives a major discount on shipping is an example of the pure business incompetence that is running that system. For almost a hundred years from the 1860's to the late 1950's the cost of mailing a letter was 3 cents. It only got on a runaway train when the government agreed to allow the Postal Service employees to unionize. At the same time the government decided to take America off the Gold standard and the living standard in America for the average American has been on a down hill slide every since. Yet the wealthy and big business have grown more and more wealthy buy paying politicians to pass tax breaks for their business that stick it to the taxpayer.
Lobbying needs to be banned on capitol hill and the committee system in Congress needs to be done away with and all spending needs to be above board and voted on by all members of Congress the present system of committees allows the members of Congress to submit, pass and push through legislation in their area of specialization. It is how lobbyist use the sytem to push legislation they want. It is time to go back to passing all bills on the floor and in the open. The only way that will happen is with a viable third party to block the manipulation and nonaccountability that is now going on.
Monday, May 16, 2011
Why America is Losing the Industrial and Marketing Battle
A popular movie of a few years back called “The Field of Dreams” had a key line that said, “Build it, they will come” The auto industry needs to take a hard look at that movie and realize in their case the saying is. “Build it, they will buy it.” The auto industry has lost sight of its roots. Henry Ford is supposed to have said. “They can have any color car they want. As long as it is black!” Ford’s philosophy of building cars was to build them as quickly and cheaply as possible. It is a philosophy that is still working. It is the philosophy of Wal-Mart, the largest retailer in America.
Wal-Mart is expanding around the whole world with that simple philosophy. Why am I talking about Wal-Mart when this article is about the big three? Really it is pretty simple. It is all about competition. All business is about competition and winning is about knowing how to play the game. Wal-Mart has entered the Chinese market and many others. Yet other American companies are on the verge of collapse. As a retired trucker I have delivered goods to both Wal-Mart and some of their chief competitors. There is no comparison between them and say K-Mart. I know this from my experiences. To make my point a couple quick examples will show what I am talking about.
One time delivering to a distribution center for K-Mart in the Detroit area a question arose about the product on my truck. First they felt they may not want the product as they might have too much in stock already. The person in charge sent a runner to check and see if they had the product in stock. Twenty minutes later the runner came back. He told the person in charge they had x number of cases of the product. The person in charge then asked if the product was red or blue. The runner left again and after about thirty minutes came back and said they had blue. Fortunately for me, I had red, and they took my load. That killed the better part of hour.
At a Wal-Mart distribution center it would have been done by radio and maybe took two to three minutes. K-Mart is a union warehouse. Wal-Mart is not a union warehouse. Is it a union problem? I do not think so. It is a management problem. Radios cost but then again they are cost effective. Wal-Mart could improve in some areas also. I spent my years in the Army working in aerial supply. We supplied by parachute to troops in the field. Making things happen when and how they are supposed to takes team work. Management and labor need to understand they are teammates not competitors. Good managers are into motivation and innovation. They are not into confrontation and elimination.
Getting back on track the problems in the automotive industry from my perspective are mainly a management problem. Management makes the leadership decisions and labor is supposed to follow. There is one small problem with the system. Sometimes people working in the industry cannot see the forest for the trees. The focus tends to be on the problems and not on the solutions. Before I started hauling for the automotive industry I wondered how the automotive industry could justify selling their products for so much. However by the time I finished hauling automotive parts I wondered how they could sell them so cheap.
What changed was my perspective. Originally I was on the outside. After becoming involved with the system, some of the problems were a lot easier to see. One of the first things I noticed was that Labor had an attitude that Management’s goal was to get rid of them or at a minimum cut their paychecks and benefits. They did not see management as leaders trying to compete in a very competitive market, but as a threat to their personal security and well being. Management’s attitude seemed to be that labor is a cost to be controlled and eliminated if possible. However without each other nothing gets done and both will become part of the rank and file unemployed.
With the history behind the automotive industry it is easy to understand some of the points of view. Yet in today’s markets the attitudes need to change or Labor will not be the only ones without a job. It will be the whole industry and supporting industries. You can not manage or work for a company that ceases to exist. History shows us plainly that companies that do not learn to compete cease to exist. It is the nature of industry.
Just as the livery stables, of the past, ceased to exist. So have many car makers. Studebaker, Packard, Hudson and American Motors are just a few examples that have disappeared in my own life time. They could not keep up with the competition. Even the makers who survived have dumped models that either were no longer competitive or did not meet changing market demands. Most people have heard of the Pinto, Vega, Chevette or Maverick just to name a few. Millions of these cars were made but when is the last time you saw one? These last cars were made to meet a market demand created by the Arab Oil Embargo of 1973. They fell apart about as fast as Arab hopes of controlling the worlds oil markets.
When the crisis of the moment was past attitudes and markets changed back. The demand for the pony cars and barges, my children’s nickname for cars made in the fifties and sixties, resumed. People adapted to the higher fuel prices after the embargo. American production followed what they perceived market demand to be. When another Energy Crisis hit in the late 90’s the foreign manufacturers changed their product lines. American manufacturers felt it was a glitch and that Americans would pay any price for fuel and continued to slop the market with the gas hogs they produced.
Little did anyone perceive the perfect financial storm brewing just over the horizon. The fact that not one of the major manufacturers understood where the market was headed says a lot about the lack of leadership. Both the American industrial and the financial markets in general missed the boat. To say they were blindsided would be a major understatement. The blinders worn by American automotive management were as effective as the ones worn by horses before the advent of the automobile.
The arrival in Washington, DC on their private jets, with their hands out, underscored the complete oblivion of management to the reality of the situation. The real sad part is that no one seemed to realize that it was too little to late. Dealerships were and still are flooded with inventory they can not move. They have no alternatives to offer the buying public. A long and perhaps terminal slump is not only possible it is inevitable.
Why is it inevitable? It is because the manufacturers and the financial institutions failed to realize there is one key ingredient in the financial markets they do not understand. The leadership got sidetracked from the idea of making money from the manufacturing part of their industry. The financial arms were the part of the company generating the income and they were not interested in the adage about keeping the customer happy. They were more interested in keeping them fleeced with extended terms and upside down loans.
They failed to understand the little guy. They do not understand what greases the wheels of commerce. It is not big business. It is not the bottom line. It is also not slick advertising. It is demand. What they do not understand is that the little guy when it comes to protecting what he has is very conservative, regardless of how liberal of a society we live in.
When the average little guy feels threatened he is going to hold on to what he has at all costs. So you can proclaim your rosy scenario all you want. Till the little guy feels he has room to breathe he is holding on to what he has. The wheels of commerce will not get greased. Things will slowly grind to a halt. You can talk till your blue in the face. The more you talk the tighter his grip will get. When he sees everybody getting laid off, do not tell him sunny days are just ahead. All anyone can do is wait till the little guy feels secure enough to loosen his grip.
There is one other factor that the big three do not seem to get. The days of “Buy American” are over. Even some communities are buying foreign cars these days. The attitude moving the market is to buy the best value you can get for your dollar. I was always a “Buy American” person. I spent ten years overseas serving this country and was and am proud to be an American. However I also realize I live in a global market place and that some of the best stuff out there is not American. I have purchased two new cars in my lifetime. A 1992 Dodge Colt which had over 200,000 miles on it when I gave it to my niece. It got awesome mileage and was stone dependable. Many friends and family had purchased and bragged on them. So why did I buy a 2008 Honda? For the very same reason I bought the Colt. Good feedback and research that showed 200,000+ was the norm and not the exception. Yet I still consider myself a Ford person and my second car is a Ford. So why didn’t I buy a Ford. The people I know and trust and the research I did told me the longest lasting and most economical, hence the best value, was what I bought. Not necessarily what I wanted. I might like how I look in a tuxedo and it might make me feel good but it is not very practical for a work outfit.
So what can be done to save the American automotive industry? Well the status quo definitely is not the answer to the problem. At the start of this article I made a statement of fact. It may have sounded strange but it took working for or with the automotive industry to say it with all honesty. Before I hauled automotive parts I could not see how they could justify charging so much for their cars. However after hauling parts I could not see how they can sell them so cheap. The next couple paragraphs will give people who are not familiar with the industry a little insight that may help them see what I am trying to say.
My introduction to the automotive industry was hauling brake rotors. It would seem like a very simple part to make. That should be the case but we are dealing with the automotive industry. Therefore nothing is as simple as it should be. My experience started in Danville, Illinois. This is actually the second or third step for the rotor. It depends on how you count steps. The raw materials had to be bought to the facility where I picked up the fresh castings. Step two or three depending how you count handling the raw materials
After several hours of sitting and waiting I backed into the loading dock and the parts were loaded on my truck. Once loaded I had about six hours to get the parts to the next step in the process which was a heat treatment plant in Lansing, Michigan. At this point I should explain a concept created by American industry which could be amazing if it worked properly all the time. The concept is “Just in Time” delivery. I would not explain it except to understand the solution you need to know what needs to be fixed.
Basically it is a concept that inventory should not sit around on shelves or in storage bins. The item should arrive just in time to be processed or utilized. This is based on the concept that inventory is money. Money not being utilized is money wasted. A fine concept until you start moving almost empty trucks to meet unrealistic deadlines. Suddenly you are using three, four or five trucks to do the job one truck could have done. Each truck used adds to the cost because each one costs for its use. This concept is not limited to the automotive industry unfortunately.
Time to get back on track, upon arrival the parts are unloaded and sent thru a heat treating process which takes several hours. At this point the truck either returns to Danville or moves parts to the next step in processing. To keep me moving they load parts, that have already been processed, onto my truck from a previous delivery. Then I head to Dayton, Ohio to a machining plant. As the point here is to show what happens in the car building process and not what I did I will just explain the process. In Dayton the parts are machined. The rotors then go to another plant in central Ohio where the machining process is finished. The next step is to go to a plant where parts are added to the rotors to make them ready for assembly. The process nears an end on arrival at the plant where they are mounted on a hub or axle assembly. Next they are hauled to the plant where they are actually built into a hub or axle assembly. The assembled parts are hauled to a final auto assembly plant. Finally all the components come together in the form of a finished car, it is then hauled to a dealership. Each rotor may have one thousand to three thousand miles of travel by the time the process is finished and it reaches a dealership.
Multiply this by the multitude of parts on a car and it could easily have over a hundred thousand miles on it before the dealer gives you the keys. So what is this whole process about? Well principally it is about busting the unions. The whole process could be done at the final assembly plant. That was how Henry Ford intended it to be. The idea of outsourcing the work was definitely not his idea. How do I know this? From studying the issue. When Ford started his company he gave up a ten per cent interest in his company to a couple brothers who ran a machine shop. For two thousand shares he received seven thousand dollars in parts and three thousand dollars in cash. The brothers who helped him get started were known as the Dodge brothers.
Several years later Ford paid twelve thousand five hundred dollars a share to regain control of that ten percent of his company. Shares he originally gave up for five dollars each. The reason he wanted the control back was that he had built his own machining plant and no longer needed the service of the Dodge brothers. His goal was to cut cost doing everything in house. Of course it is not hard to guess what the Dodge bothers did with their windfall profit. One other point to note is that Ford paid his employees well enough that they would be able to purchase a car of their own. He understood the concept of marketing and what drives it. Something the present leadership has lost sight of.
It is already effecting people outside the automotive industry. The scrap industry has tanked as the demand for steel and aluminum has dried up. Soda pop cans that were recycling for sixty eight cents a pound are now down to twenty cents a pound. That means the homeless person who takes his bag of cans to turn in and uses the money to buy a five dollar meal at a fast food restaurant is really hurting. Where he had to get seven pounds to eat which is about one hundred and forty cans. Now he has to get twenty five pounds of cans. What makes that worse is that the people who used to pitch their cans are now saving them
The problem is not all managements fault. Labor, unions in particular, have short comings also. In the course of my life I held two union jobs. One job in construction and the other in trucking, however my goal was to be self employed, so maybe I have a biased point of view. Fortunately I worked for two smaller union companies with good management who operated with the team concept. Most of the people I worked with had a good American work ethic. Unfortunately the ones who didn’t were usually the most active union supporters. At the construction job I watched a young worker give up an almost twenty dollar an hour job over seventy five cents. The union said he should get twenty five cents more and hour. He stood on his principals. I probably would not remember it except I lived near him and saw the suffering his wife and children went through. Everybody on the job liked the kid including the employer. It was early April and the employer told the kid he had a job all season if he wanted it, but the employer failed to pay him an extra twenty five cents and hour for three hours of running a jack hammer. The kid filed a grievance and got his seventy five cents, but he lost the job. The employer’s attitude was that labor was labor and as a laborer it did not matter what you did as long as you did it. About twenty of us with less principals worked continually till early December. Who was right?
Living in close proximity to a foreign car plant and knowing many people who have worked there I understand they have their share of problems also. The foreign companies have an anti labor attitude also. However theirs could better be described as a pro company attitude. It is almost a kamikaze attitude toward winning. The congressman who noted that most of the foreign car companies are in the south and the civil war is still going on by different means was not far off the mark. Actually the foreign makers target economically depressed areas with large labor pools. The foreign companies are still at war with us, we beat them militarily but the war is being continued economically and that is the weapon they have chosen to continue the battle. Divide and conquer is one of the oldest rules of warfare. Goliath did not lose to David because he lacked the ability to defeat him. He lost because he did not appreciate the skills of his enemy. Another way of saying it is, “It is not about the size of the dog in the fight, but about the size of the fight in the dog.”
Economic wars are won by beating your enemy at their own game and taking over the best markets. The absolute best market battlefield in the world is the United States. The proof that it is warfare is the present market situation. If the foreign companies wanted they could buy up the American companies for pennies on the dollar. They do not want them though for two reasons. One is their perception of the problems with the union labor and the other is they would rather put the competition out of business.
So if the American automobile manufacturers want to survive they had better rethink their game. Building cars with longer tailpipes is not the solution. In France a company is building an air powered car that runs seventy miles per hour with a range of one hundred and twenty miles. It uses no fuel. The power source is compressed air. If that compressor is run buy a bank of batteries, which in turn are charged by solar panels or windmills a true green machine would is possible.
All the necessary technology is already available and America could break its dependence on foreign oil and fight global warming at the same time. Of course it will take a complete change in attitude of the entire American automotive industry. They will need to rethink the process from building a better product for the money and at a better price. That will take true leadership and insight and a step away from the status quo. The only question is does America have the will to win the fight. If the present attitudes remain the same maybe we will have a chance to discuss it while we are in the soup lines.
Wal-Mart is expanding around the whole world with that simple philosophy. Why am I talking about Wal-Mart when this article is about the big three? Really it is pretty simple. It is all about competition. All business is about competition and winning is about knowing how to play the game. Wal-Mart has entered the Chinese market and many others. Yet other American companies are on the verge of collapse. As a retired trucker I have delivered goods to both Wal-Mart and some of their chief competitors. There is no comparison between them and say K-Mart. I know this from my experiences. To make my point a couple quick examples will show what I am talking about.
One time delivering to a distribution center for K-Mart in the Detroit area a question arose about the product on my truck. First they felt they may not want the product as they might have too much in stock already. The person in charge sent a runner to check and see if they had the product in stock. Twenty minutes later the runner came back. He told the person in charge they had x number of cases of the product. The person in charge then asked if the product was red or blue. The runner left again and after about thirty minutes came back and said they had blue. Fortunately for me, I had red, and they took my load. That killed the better part of hour.
At a Wal-Mart distribution center it would have been done by radio and maybe took two to three minutes. K-Mart is a union warehouse. Wal-Mart is not a union warehouse. Is it a union problem? I do not think so. It is a management problem. Radios cost but then again they are cost effective. Wal-Mart could improve in some areas also. I spent my years in the Army working in aerial supply. We supplied by parachute to troops in the field. Making things happen when and how they are supposed to takes team work. Management and labor need to understand they are teammates not competitors. Good managers are into motivation and innovation. They are not into confrontation and elimination.
Getting back on track the problems in the automotive industry from my perspective are mainly a management problem. Management makes the leadership decisions and labor is supposed to follow. There is one small problem with the system. Sometimes people working in the industry cannot see the forest for the trees. The focus tends to be on the problems and not on the solutions. Before I started hauling for the automotive industry I wondered how the automotive industry could justify selling their products for so much. However by the time I finished hauling automotive parts I wondered how they could sell them so cheap.
What changed was my perspective. Originally I was on the outside. After becoming involved with the system, some of the problems were a lot easier to see. One of the first things I noticed was that Labor had an attitude that Management’s goal was to get rid of them or at a minimum cut their paychecks and benefits. They did not see management as leaders trying to compete in a very competitive market, but as a threat to their personal security and well being. Management’s attitude seemed to be that labor is a cost to be controlled and eliminated if possible. However without each other nothing gets done and both will become part of the rank and file unemployed.
With the history behind the automotive industry it is easy to understand some of the points of view. Yet in today’s markets the attitudes need to change or Labor will not be the only ones without a job. It will be the whole industry and supporting industries. You can not manage or work for a company that ceases to exist. History shows us plainly that companies that do not learn to compete cease to exist. It is the nature of industry.
Just as the livery stables, of the past, ceased to exist. So have many car makers. Studebaker, Packard, Hudson and American Motors are just a few examples that have disappeared in my own life time. They could not keep up with the competition. Even the makers who survived have dumped models that either were no longer competitive or did not meet changing market demands. Most people have heard of the Pinto, Vega, Chevette or Maverick just to name a few. Millions of these cars were made but when is the last time you saw one? These last cars were made to meet a market demand created by the Arab Oil Embargo of 1973. They fell apart about as fast as Arab hopes of controlling the worlds oil markets.
When the crisis of the moment was past attitudes and markets changed back. The demand for the pony cars and barges, my children’s nickname for cars made in the fifties and sixties, resumed. People adapted to the higher fuel prices after the embargo. American production followed what they perceived market demand to be. When another Energy Crisis hit in the late 90’s the foreign manufacturers changed their product lines. American manufacturers felt it was a glitch and that Americans would pay any price for fuel and continued to slop the market with the gas hogs they produced.
Little did anyone perceive the perfect financial storm brewing just over the horizon. The fact that not one of the major manufacturers understood where the market was headed says a lot about the lack of leadership. Both the American industrial and the financial markets in general missed the boat. To say they were blindsided would be a major understatement. The blinders worn by American automotive management were as effective as the ones worn by horses before the advent of the automobile.
The arrival in Washington, DC on their private jets, with their hands out, underscored the complete oblivion of management to the reality of the situation. The real sad part is that no one seemed to realize that it was too little to late. Dealerships were and still are flooded with inventory they can not move. They have no alternatives to offer the buying public. A long and perhaps terminal slump is not only possible it is inevitable.
Why is it inevitable? It is because the manufacturers and the financial institutions failed to realize there is one key ingredient in the financial markets they do not understand. The leadership got sidetracked from the idea of making money from the manufacturing part of their industry. The financial arms were the part of the company generating the income and they were not interested in the adage about keeping the customer happy. They were more interested in keeping them fleeced with extended terms and upside down loans.
They failed to understand the little guy. They do not understand what greases the wheels of commerce. It is not big business. It is not the bottom line. It is also not slick advertising. It is demand. What they do not understand is that the little guy when it comes to protecting what he has is very conservative, regardless of how liberal of a society we live in.
When the average little guy feels threatened he is going to hold on to what he has at all costs. So you can proclaim your rosy scenario all you want. Till the little guy feels he has room to breathe he is holding on to what he has. The wheels of commerce will not get greased. Things will slowly grind to a halt. You can talk till your blue in the face. The more you talk the tighter his grip will get. When he sees everybody getting laid off, do not tell him sunny days are just ahead. All anyone can do is wait till the little guy feels secure enough to loosen his grip.
There is one other factor that the big three do not seem to get. The days of “Buy American” are over. Even some communities are buying foreign cars these days. The attitude moving the market is to buy the best value you can get for your dollar. I was always a “Buy American” person. I spent ten years overseas serving this country and was and am proud to be an American. However I also realize I live in a global market place and that some of the best stuff out there is not American. I have purchased two new cars in my lifetime. A 1992 Dodge Colt which had over 200,000 miles on it when I gave it to my niece. It got awesome mileage and was stone dependable. Many friends and family had purchased and bragged on them. So why did I buy a 2008 Honda? For the very same reason I bought the Colt. Good feedback and research that showed 200,000+ was the norm and not the exception. Yet I still consider myself a Ford person and my second car is a Ford. So why didn’t I buy a Ford. The people I know and trust and the research I did told me the longest lasting and most economical, hence the best value, was what I bought. Not necessarily what I wanted. I might like how I look in a tuxedo and it might make me feel good but it is not very practical for a work outfit.
So what can be done to save the American automotive industry? Well the status quo definitely is not the answer to the problem. At the start of this article I made a statement of fact. It may have sounded strange but it took working for or with the automotive industry to say it with all honesty. Before I hauled automotive parts I could not see how they could justify charging so much for their cars. However after hauling parts I could not see how they can sell them so cheap. The next couple paragraphs will give people who are not familiar with the industry a little insight that may help them see what I am trying to say.
My introduction to the automotive industry was hauling brake rotors. It would seem like a very simple part to make. That should be the case but we are dealing with the automotive industry. Therefore nothing is as simple as it should be. My experience started in Danville, Illinois. This is actually the second or third step for the rotor. It depends on how you count steps. The raw materials had to be bought to the facility where I picked up the fresh castings. Step two or three depending how you count handling the raw materials
After several hours of sitting and waiting I backed into the loading dock and the parts were loaded on my truck. Once loaded I had about six hours to get the parts to the next step in the process which was a heat treatment plant in Lansing, Michigan. At this point I should explain a concept created by American industry which could be amazing if it worked properly all the time. The concept is “Just in Time” delivery. I would not explain it except to understand the solution you need to know what needs to be fixed.
Basically it is a concept that inventory should not sit around on shelves or in storage bins. The item should arrive just in time to be processed or utilized. This is based on the concept that inventory is money. Money not being utilized is money wasted. A fine concept until you start moving almost empty trucks to meet unrealistic deadlines. Suddenly you are using three, four or five trucks to do the job one truck could have done. Each truck used adds to the cost because each one costs for its use. This concept is not limited to the automotive industry unfortunately.
Time to get back on track, upon arrival the parts are unloaded and sent thru a heat treating process which takes several hours. At this point the truck either returns to Danville or moves parts to the next step in processing. To keep me moving they load parts, that have already been processed, onto my truck from a previous delivery. Then I head to Dayton, Ohio to a machining plant. As the point here is to show what happens in the car building process and not what I did I will just explain the process. In Dayton the parts are machined. The rotors then go to another plant in central Ohio where the machining process is finished. The next step is to go to a plant where parts are added to the rotors to make them ready for assembly. The process nears an end on arrival at the plant where they are mounted on a hub or axle assembly. Next they are hauled to the plant where they are actually built into a hub or axle assembly. The assembled parts are hauled to a final auto assembly plant. Finally all the components come together in the form of a finished car, it is then hauled to a dealership. Each rotor may have one thousand to three thousand miles of travel by the time the process is finished and it reaches a dealership.
Multiply this by the multitude of parts on a car and it could easily have over a hundred thousand miles on it before the dealer gives you the keys. So what is this whole process about? Well principally it is about busting the unions. The whole process could be done at the final assembly plant. That was how Henry Ford intended it to be. The idea of outsourcing the work was definitely not his idea. How do I know this? From studying the issue. When Ford started his company he gave up a ten per cent interest in his company to a couple brothers who ran a machine shop. For two thousand shares he received seven thousand dollars in parts and three thousand dollars in cash. The brothers who helped him get started were known as the Dodge brothers.
Several years later Ford paid twelve thousand five hundred dollars a share to regain control of that ten percent of his company. Shares he originally gave up for five dollars each. The reason he wanted the control back was that he had built his own machining plant and no longer needed the service of the Dodge brothers. His goal was to cut cost doing everything in house. Of course it is not hard to guess what the Dodge bothers did with their windfall profit. One other point to note is that Ford paid his employees well enough that they would be able to purchase a car of their own. He understood the concept of marketing and what drives it. Something the present leadership has lost sight of.
It is already effecting people outside the automotive industry. The scrap industry has tanked as the demand for steel and aluminum has dried up. Soda pop cans that were recycling for sixty eight cents a pound are now down to twenty cents a pound. That means the homeless person who takes his bag of cans to turn in and uses the money to buy a five dollar meal at a fast food restaurant is really hurting. Where he had to get seven pounds to eat which is about one hundred and forty cans. Now he has to get twenty five pounds of cans. What makes that worse is that the people who used to pitch their cans are now saving them
The problem is not all managements fault. Labor, unions in particular, have short comings also. In the course of my life I held two union jobs. One job in construction and the other in trucking, however my goal was to be self employed, so maybe I have a biased point of view. Fortunately I worked for two smaller union companies with good management who operated with the team concept. Most of the people I worked with had a good American work ethic. Unfortunately the ones who didn’t were usually the most active union supporters. At the construction job I watched a young worker give up an almost twenty dollar an hour job over seventy five cents. The union said he should get twenty five cents more and hour. He stood on his principals. I probably would not remember it except I lived near him and saw the suffering his wife and children went through. Everybody on the job liked the kid including the employer. It was early April and the employer told the kid he had a job all season if he wanted it, but the employer failed to pay him an extra twenty five cents and hour for three hours of running a jack hammer. The kid filed a grievance and got his seventy five cents, but he lost the job. The employer’s attitude was that labor was labor and as a laborer it did not matter what you did as long as you did it. About twenty of us with less principals worked continually till early December. Who was right?
Living in close proximity to a foreign car plant and knowing many people who have worked there I understand they have their share of problems also. The foreign companies have an anti labor attitude also. However theirs could better be described as a pro company attitude. It is almost a kamikaze attitude toward winning. The congressman who noted that most of the foreign car companies are in the south and the civil war is still going on by different means was not far off the mark. Actually the foreign makers target economically depressed areas with large labor pools. The foreign companies are still at war with us, we beat them militarily but the war is being continued economically and that is the weapon they have chosen to continue the battle. Divide and conquer is one of the oldest rules of warfare. Goliath did not lose to David because he lacked the ability to defeat him. He lost because he did not appreciate the skills of his enemy. Another way of saying it is, “It is not about the size of the dog in the fight, but about the size of the fight in the dog.”
Economic wars are won by beating your enemy at their own game and taking over the best markets. The absolute best market battlefield in the world is the United States. The proof that it is warfare is the present market situation. If the foreign companies wanted they could buy up the American companies for pennies on the dollar. They do not want them though for two reasons. One is their perception of the problems with the union labor and the other is they would rather put the competition out of business.
So if the American automobile manufacturers want to survive they had better rethink their game. Building cars with longer tailpipes is not the solution. In France a company is building an air powered car that runs seventy miles per hour with a range of one hundred and twenty miles. It uses no fuel. The power source is compressed air. If that compressor is run buy a bank of batteries, which in turn are charged by solar panels or windmills a true green machine would is possible.
All the necessary technology is already available and America could break its dependence on foreign oil and fight global warming at the same time. Of course it will take a complete change in attitude of the entire American automotive industry. They will need to rethink the process from building a better product for the money and at a better price. That will take true leadership and insight and a step away from the status quo. The only question is does America have the will to win the fight. If the present attitudes remain the same maybe we will have a chance to discuss it while we are in the soup lines.
Monday, May 9, 2011
The Constitutional Anti-federalist Reform Party
The Constitutional Anti-federalist Reform Party (CARP) The party focus is independence. Individual independence from government control and restrictions that violate the Constitution, Financial independence from government waste, spending and debt. We support a call for a Constitutional Amendment requiring the government to have not just a balanced budget, but a debt free balanced budget. Federal and State governments may not spend more than they collect in revenues. The Federal government must convert to a flat tax and get rid of all exemptions. All business and industry will be required to pay the same tax as every individual. The CARP also supports an energy independence program and the restoration of America's infrastructure. We support a long term energy tax, the funds of which are to be dedicated eighty percent to infrastructure development and renewal with the remaining twenty percent to be spent on renewable and energy conservation and development. Some method of ending America's dependence on foreign oil and fixing our infrastructure must be put in place. It is a need that will not go away or end and should be budgeted independent of the Federal Budget. The taxes collected should be spent in the states they are collected in and administered by each state government. The funds collected can not be used to balance state budgets or pay for state programs other than those that rebuild and maintain the infrastructure of the state. The Federal government has no part in the tax other than determining a national across the board and reasonable tax. The CARP also supports bringing home all American forces from overseas bases and the stationing them on American soil in the United States. No extended deployment overseas of any units on active duty. CARP supports the idea that Congress must approve all troop deployments to any foreign country. The President still has the right to react to acts of aggression toward America. His actions may be taken in defense of America and her citizens without congressional approval in the case of nuclear attack or hostile aggression on American soil.
The CARP believes America should be totally energy independent, America has compomised her morals and values to get along with and support governments that stand against every value and belief America stands for. As long as this country is dependent on another country it can be blackmailed into supporting regimes that deny their citizens the very rights America professes to believe in. Independence liberates America and allows us to stand up for and support the values worldwide that we profess to believe in. It is time to help other nations attain freedom and independence for all their citizens, regardless of race, creed, religion or ethnic background.
The CARP believes America should be totally energy independent, America has compomised her morals and values to get along with and support governments that stand against every value and belief America stands for. As long as this country is dependent on another country it can be blackmailed into supporting regimes that deny their citizens the very rights America professes to believe in. Independence liberates America and allows us to stand up for and support the values worldwide that we profess to believe in. It is time to help other nations attain freedom and independence for all their citizens, regardless of race, creed, religion or ethnic background.
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