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Okay, first of all this post does actually qualify as a rant. I’m not a guy who holds a grudge – I’m hoping you’re not either :)

Looks like the UAW has reached an agreement with Delphi and GM. A casual observer might look at what’s happened to the US automakers over the last 20 years and conclude unions have really hurt. And to some extent I’m sure there’s a little truth there. For example, years ago I spent a lot of time consulting for an appliance manufacturer who could not get its union employees to be flexible in their job – and we’re talking basic stuff here, like instead of driving a bolt in on the lower left of a washing machine, could you instead do something on the upper right. Beauracracy weighed down on the company’s ability to change. The best option to reform the manufacturing line and be more efficient was to shut the place down and pop it up in Mexico where the union couldn’t follow. What a pity & what a shame.

But the US automakers can’t blame their lousy cars and terrible track record on the unions. Instead, they can blame it on their ineffectual management. I have been exposed to GM and Ford’s practices first-hand, and the stories are incredible. Consider the supplier who reached out to one US automaker with a design improvement to the transmission that would have saved $75 on the “platform” (automaker-speak for each unit of a new car). The supplier said the design change would improve the reliability of the vehicle and save him a bunch of money. He offered to split the savings with the automaker. And at the volumes the platform was being produced at, this was a big deal – perhaps $15MM. The automaker yelled at the supplier for the suggestion, then assigned a 12-person team to study the change for the next 2 years. No, they didn’t make the change, and no, they never got another good idea from the supplier. Hmm, what does the tale of the tape say (note: trend still intact from ’05):

Beyond win-win design management, the US automakers have no idea how to manage their internal IT either. Back in the .com boom days GM and Ford pursued competing B2B hubs for e-commerce with suppliers – GM partnered with CommerceOne, while Ford was with Oracle. Neither company understood what they were doing, literally pouring hundreds upon hundreds of workers onto projects with no agenda or tasks. People were excited and directionless.

On more mundane systems management issues, IT projects would be staffed with 400 people when they could have been staffed with 10. It’s no wonder some US automakers have literally 30 or more disconnected Procurement systems from which they try to cobble together a global view. I remember meeting with BMW and enjoying their perspective on supply base management and procurement. They may not be the best company (my current view is Toyota is tops), but they understood the basics and seemed to have made smart decisions on managing their systems & their supply base.

I’m sorry to say it, but the US automakers need to begin effective management of their supply base or sell their assets off to someone who will. This isn’t about the competitiveness of the US worker – there are a lot of international automotive firms achieving good success with manufacturing presence in the US. This is about old, rusted out US automakers who are practicing poorly in a competitive market.

I might even have to sell my Ford F-150 Supercrew. The new Nissan Titan looks mighty tempting.

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Written by Dave Stephens

03/22/06 7:12 AM at 7:12 am

Posted in Opinion

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