GM bailout rant

And sometimes it's because our government gives tax breaks to US companies operating overseas...

Take This Job And Ship It

 

No question, everything in this country radiates out of washington DC today. Interesting quote form the book:
In 1970 the biggest U.S. corporation was G.M. - for most employees, it was a ticket to lifetime employment, and for all it provided good wages, pensions, and health care. Today it is Wal-Mart, with an average salary of $18,000, 70% turnover the first year, and large numbers without benefits. About three million have already lost their jobs to out-sourcing, and Alan Blinder, former vice chairman of the Federal Reserve Board estimates 42-56 million jobs could be sent abroad, while many of those remaining will be competing with those paid much less in foreign lands.

And we wonder why our standard of living is in trouble?

 

Yep, we've been sold out and stabbed in the back by our big corps and various flavors of gov

 

Let me add a counterpoint that it is not always that simple. I once had to do a set of campus interviews along with a director from Human Resources to Ohio State and Univ. of Cincinnati. I was interviewing electrical engineers for design jobs that payed pretty well. I'm a pretty brutal interviewer in that I ask very hard questions that require thinking and cannot be answered from memory or canned responses. The final result is that I had a technical rating list of the 30 candidates from 1 to 30. The top five were great. (#1 was a gal that could answer every question.) The bottom 10 were rather poor. (You would not want them designing aircraft flight control electronics.) The HR guy was very happy with my listing.

Well once we got back to the plant. I went to the various directors with my top 5 trying to get them hired. However the HR guy followed the "US industry culture" of putting the 30 into three groups. The bottom 10 was the prime set of candidates that he sent to the Manufacturing engineering department head as his only hiring options. Now how the US industry got into a position of having the HR department send the rejects as the "best" recruits for manufacturing engineering caused me deep heartburn. This stupidity is the fastest way for a company to have their manufacturing base self-destruct. It did.

This one snapshot hopefully makes it clear that "labor cost" may not be the real reason. Certainly there are industries and jobs that are entirely based on how cheap the labor can be, but not autos, electronics manufacturing, and many others we consider high tech.

 

This first hand look at real situations makes PC (and jhinton) worth reading. Thanks for the time spend writing this up.

 

No problem.

I'm curious about your hiring story. Did the HR guy tell you why his recommendations to management were directly opposite of what the two of you had agreed on?

 

This was my first off-site recruiting trip and I was treating it as serious business. Finding the best people is the best (and only) way to become the best business. For the HR guy, it was a typical travel boondongle.

My first clue that we were on different planets was when he mentioned that engineers were pure commodities and the best HR departments treated them as such. By the end of the trip, it was clear that he considered all engineers to be socially misfit geeks and the HR departments only task was to make sure all possible diversity, salary balance, regional balance, etc. check blocks were optimized. My list made his job easier since it identified which block of candidates would be easier to hire (the bottom of the list).

Once we got back, I realized that HR was aiding the slow destruction of a good company. I made it my mission to go to the various department heads and make it clear what the true candidate capabilities were. (This gal built her own radio. This guy kept getting current and voltage confused.)

As a postscript, many years later I changed companies and got a letter from the same HR guy. It stated that I could not use any information learned from my previous employer in any future work. (Glad I learned how to use a screwdriver prior to that.) ....and if you could sign this enclosed letter certifying you will never use this knowledge to our legal department, it would be greatly appreciated. What a hoot.

 

One of the arguments that was given for bailing out the big 3 was the tumbledown effect if one (or more) of the manufacturers went out of business. Employees of suppliers & dealers would also lose their jobs.

How much will a bailout for GM, Ford or Chrysler help the assembly line workers, suppliers, or dealers? If people don't buy cars, the dealers won't order cars from Chrysler, GM won't order tires or headlights from the supplier, and Ford won't have any work for the workers.

The bailout won't pay the car salesman's commission, keep the assembly lines moving, or help the parts suppliers.

A bailout might give one or more of the big 3 time to restructure for long term survival, but it probably won't help the related businesses in the short term.

Norm

 

I've had similar experiences with HR managers. The Japanese company I left two years ago had problems attracting top candidates. It was located in a small town that was still partially dry. (You could by liquor in a store, but not in restaurants and there were no bars) As such there was no nightlife and nothing to attract young professionals.

To compound this the HR manager (also a Sr. VP and on the board) had to approve all budgets and didn't have a very high opinion of engineers. He had the typical Japanese mindset that any good worker can be trained to do any job with on-the-job training. (This VP was a American BTW) As such he saw no reason to approve reasonable wages for the company's professional staff and preferred to bring people off the line and train them. He also thought that a professional should make no more than 50% more than a line worker. With these policies in place the company paid wages at about the 15 to 20th percentile.

The result of these was that we had massive turnover in the engineering department. We had budgets and openings for 3 product engineers that would interact with our customers and manage product lines. In the 3 years I was in that position we when through 4 product engineers and never had more than 2 at a time. We could never attract anyone but fresh college grads. They would come to work, get a year experience and then find another job that paid $5K to $10K more.

We were in a constant state of interviewing and sometimes the HR department would head out to interview candidates so that the engineering departments would only have to interview the cream of the crop. ALL of their candidates were useless. Some came to interview in sneakers, jeans, and a dirty T-shirt!

The last engineer they hired before I left was hilarious. We had a two people to choose from both from the same university and they had worked on the same senior design project.

The first candidate was dressed great, articulate, enthusiastic, and very knowledgeable about the design project. He could tell me exactly how it worked and the full project timeline. He had researched our company and asked very good questions. This is exactly the kind of person you want to interact with customers.

The second came in a wrinkled shirt with his tie undone. He didn't know anything about his design project and when asked what his role was he actually said: "Well I'm not really that ambitious, so I didn't do much. I just sort of filled if needed" HE REALLY SAID THAT!!!! When asked why he was interested in our company he said: "Well no one has given me a job and I thought you might, I need money." His accomplishment that he was most proud of was that he went to every football game and painted his entire body. He even had a clipping from the student newspaper to prove it.

Against the objections of the engineering department the company hired the second guy. The reasoning was that the first guy was too qualified and ambitious and would just leave for more money. However, the second guy was desperate and would work cheap. He also wasn't ambitious and wouldn't leave because he wouldn't be able to get a better job.

Two years later he is still there. He doesn't do anything without being directly told and requires constant oversight. Customers have called the engineering manager and complained that is isn't prepared and doesn't dress appropriately. He does still go to every football game with full body paint though.

 

Speaking in regard to engineers, I recall one HR manager saying "The cheapest cut of meat is brain." Makes you feel all warm and fuzzy inside.

Tom

 

That is STILL a rant against the unions. ALL union contracts, for that last decade, have incorporated ‘flexibility’ clauses, where other workers or crafts can help, or even do the jobs of other crafts. Union contracts, even through the 1980’s were as you describe. However, not modernly. Yes, there was a time when the vegetable worker couldn’t arrange the bologna or the steel worker couldn’t sweep. But lest we forget, those were the arrangements that U.S. auto manufacturers bought & signed up for. Again, as the O.P. states, it's a GM (bailout) rant. Had U.S. manufacturers negotiated away the "do not trespass on my job" union terms in the 1970's then GM wouldn't be holding out the tin cup. It's that simple. That's the beauty of hindsight, it's 20/20. My experience comes from both sides too, having worked for decades as both aerospace machinist & attorney.

I watched just today, as mechanics, engineers, and laborers all pitched in, to do the job of laborers, just because it was what what was called for, and what their union contracts allow for. Don't blame what happened in bygone days for what's going on now. GM's prior arrangements in bygone days with unions was offered up in part, out of lazyness ... which they are still paying the price for.

Semantics ... the business agent speaks for the union's higher ups.

 

In other parts of the world, engineers are respected.

I will never again directly contract for - or work for - a solidly American or Canadian company. There is very much a broken management system, where nice person-kissing is valued far more highly than proven skills

The beancounters and useless management have put us into this position. I could care less how many hundreds of billions of dollars are thrown at the mess we are now in, it will do nothing to resolve the problem

 

The assembly process that is described in the video is JIS (Just in Sequence) and is considered state of the art. The Mercedes plant in Vance, AL is similar though the supplier sourced subassemblies aren't built in the Mercedes plant. These subassemblies are built in supplier owned plants in an adjacent industrial park.

The UAW doesn't prevent Ford from building such a factory in the US but their labor contract makes it impractical. Ford (and the other detroit 3) have too many workers that they can't get rid of. To downsize the workforce they must either buy them out or put them in the jobs bank to collect 90% of their pay and full benefits for 3 years. Faced with those choices Ford has decided that investments in automation do not make sense.

This has also led to the Detroit 3 continuing to build more vehicles then demand calls for then heavily discounting them with rebates and 0% financing.

This is not always the case. When I was a engineering co-op back in school (1998) I designed automated assembly machinery for a small design firm. One machine I designed inserted two rubber bushings into a metal stamping to make engine mounts. When I visited the OEM to check on the machine the company was actually running the machine in manual mode and had a worker manually push the cycle button. I was paid $8/hr to design the machine and the worker was paid $26/hr plus benefits to push the cycle button.

 

I was 13 in 1990 so my work experience with unions doesn't come from the 80's

I was represented by the Teamsters in 1999 and 2000.
My first experience working with the UAW was in 1997
My last experience working with the UAW was 2007

What industry?

 

oi. i grew up and lived in bay city, MI. You know, the tri-city area of Saginaw, Midland,
and Bay City. Close to Flint and north of Detroit.

the stories about unions and car manufacturers are legendary for their stupidity and
absolute lack of a clue.

most sane people saw the writing on the wall long ago... and i for one moved away to
a sane state. I will be back this next week to visit family over the holidays and I not
very happy to have to listen to this whole nonsense.

let them go bankrupt and restructure. end of story. they are nothing special. no company
should be so big it cannot afford to fail and ruin the "economy" or our nation.

such nonsense.

 

It is the auto industry, which affects the steel industry, the rubber industry, the plastic industry, the carpet industry, the glass industry, the electronics industry etc. It along with other manufacturing is the economy of this nation, building things is the only thing where real wealth is generated. If toyota was in the same shape in Japan it would have the same cataclysmic effect. The difference is Tokyo would never let Toyota get into that shape.

 

You keep making this statement, but that's not entirely true. The extractive industries generate massive amounts of wealth. Intellectual property does pretty well too. Wealth comes from having something that others want or need. Whether the wanted item is manufactured, grown, or materialized from thin air is irrelevant, except for the details of cost and supply.

If a society already has enough manufactured goods, then there is little need for more. Since things break and wear out, there will always be some need for manufacturing, but the need varies with the demands of society. Our current post industrial revolution society needs less heavy manufacturing than during the peak of the industrial revolution. This may change again in the future, but probably won't increase dramatically unless we develop cheaper sources of energy.

Tom