Industrial Automation

This seems a little confusing to me. On one hand you say, "buy American/Canadian should indeed be part of the deal."

Then the next statement seems to contradict the first when you say, "Competitive bidding based on the best quality at the best price is the only way to get what is needed, protecting suppliers just tends to make them sloppy."

Buying American or Canadian may be the best value, but it isn't always the case.

The whole point of competition is to give the customer more choices and to encourage competing companies to improve their product and pricing while viaing for your business.

This was what went wrong with the Big Three in the 1970s when Detroit ran the game and told the customer what they wanted. They had been doing that for decades. Japan entered the market and started asking what the customer wanted and started delivering that product. Detroit was caught off-guard because they had been the only game in town, now a competitor was grabbing market share and Detroit was not prepared.

American iron in the 60s and 70s was stagnant and it wasn't until serious foreign competition threatened their market that the Big Three reinvented itself and delivered world-class cars (although the image of Detroit haunted them for a long time afterward and still does today). If Japan had not entered the market we would still be driving cars that would have a service life of 100,000 miles.

Any business should be free to choose their supplier based on the supplier's ability to deliver the best value (which is usually some combination of cost, quality, and delivery time). That supplier may be in North America, but it also may be half way around the world. That supplier in North America knows that their are other vendors after his market share and will adjust his product or service to keep his market share. Competition is good.

I agree with you about what you said concerning essentially replacement of key employees with government employees. This is a very bad situation.

"The whole point of competition is to give the customer more choices and to encourage competing companies to improve their product and pricing while vying for your business."

Sensible enough on all points, except one—shown above.

The whole point...is that pure competition (for the reasons supposed above) has not, does not, and will not exist in the auto (or just about any) manufacturing scenario. Such is clearly evidenced by the fact that each like class of cars across all of the major manufacturers lines includes cars that are essentially the same in all respects, both as pertains to base model features and as pertains to upgrade packages and options. (Vehicles, it seems, are become so alike that even the model names seem to be largely identical under the different makes.)

Whether Ford or the others, one of the surest reasons that a dominant US manufacturer (or two or three) will remain, is that the (excuse my work choice here) competition in Asia and Europe will (and must) see it in their best interest that the American domestic vehicle manufacturing industry does not fail.

"Such is clearly evidenced by the fact that each like class of cars across all of the major manufacturers lines includes cars that are essentially the same in all respects..."

Could that be due to marketeers chasing each other's markets? Marketing is as much an art as science. It is not easy to find where the market is at, so if you see a competitor gaining market share you could see that as a barometer that says there is something of value in that market segment, so you compete with a like product.

On the other side you can also try to influence the market and that is one of the key elements and psychology of marketing to your customers by trying to instill a sense of "goosebumps" with your product line.

I think that one of the surest reasons the American auto industry is being propped up has a lot to do with unions and where they funnel their campaign dollars.

I don't see foreign automakers' hands anywhere in this bailout, but maybe you have a point.

I would like to add that America being pioneer in Auto Industry could not sustain the market demands. Japanese offered good cars at cheaper price and snatched the market share. American mfrs continued to produce most expensive cars which ordinary customer could not afford.

Now Tatas in India have introduced Nano cars as dirt cheap @$2000/- basic price applicable to local customers. They have booked 200,000 cars and customers have to wait for one year. Now they have offered Nano Houses to lower mid class families near Mumbai.These houses (Apartments) were offered @ $8000/-, off course these are small but they were sold out within few days.So conclusion is if you mfr something which market can afford and buy then you are successfull.

Suresh Sharma

Actually, it was not affordability that drove the loss in market share for the Big Three, it was a very, very slow reaction time to respond to a changing market.

The change in the 1970s was the gas crises. Japan's inroad into the US market was not making much headway until gas prices spiked and supplies could not meet demand.

Japan was already building fuel efficient cars and they were in the right place at the right time. More and more people began to migrate to the smaller cars and Japan acted very rapidly to improve both quality and fit to the market demand.

Detroit's cycle time from concept to showroom floor in the 1970s and 1980s was about 8 years! Detroit saw the writing on the walls, but could not react fast enough to the shifting market. Detroit was always playing catch up and it cost them a huge loss.

Not only did Japan beat them to the shifting market, but they beat them to quality improvement. American cars were percieved as lack of innovation and quality and it was true.

It wasn't until the mid 1980s before Detroit caught up, but it was too late. The perception remained inspite of some world-class cars produced in the States. The US automakers still had their share of duds, too, but perception is reality.

Eight years to built new car! I think maximum two years should be enough. It seems Detroit is not geared up for faster change of models. If they could have changed faster then they would not have faced present crisis.

Suresh Sharma.

Right, but that was then.

Now the development time from concept to showroom is on the order of a few years. That's a huge improvement and it is because Detroit invested heavily in technology to be able to do that.

It was trying to conserve profits.

Development in the Big three is huge with tooling changes and such as that. And the costs only for tooling changes are probably the gross of other car company's.

What the Big three usually did was buy up competition or force them out of business

In a Japanese car plant, teams of workers assemble and inspect cars. If a defect is found, any member of the team can stop the assembly line and keep it down until the fault is fixed. This is not done in Detroit. The line continues and they pass the defect on to the dealer to resolve any problems. Changes are also easier to implement in a Japanese plant by the same shut-down procedure. I doubt that Detroit will ever adopt the Japanese way; could it be the American perception of "superiority over those "slant-eyed devils""? There is still a lot of prejudice over all things foreign and is kept alive through ignorance. People purposely mis-pronounce Japanese names (Tiyota for example) as a contemptuous response. You have heard the phrases, "crotch rocket" and "rice burner" in reference to Asian motor vehicles. This is the contemptuous view some Americans hold; that their products are inferior to our own. Unfortunately China, lately has made this a true statement. I know my response has been a little OT, but I don't want to open a new thread on the subject.

The problem with protectionism is that it usually hurts more than it helps. The periods of protectionism in history have produce reductions in economic activities as each country turned on itself but couldn't do everything.

Example: Buy American for automation equipment. Use Rockwell components? (American company) They are mostly assembled in Mexico. They could move the assembly in USA. This would easily double their cost and take a couple of years but lets assume it is feasible and that you can wait for it. Where are they going to get the microchips from? Intel and TI are US companies but manufacture almost all their chips in Asia. They could build local chips factories within 5 years. The cost of the chips would be multiply ed by x times and what do you do in the meantime? Then once you have the chip and the boards assembly infrastructure back in the USA, where do you get all the chemicals and the trained workers and all the little things that are needed to produce a complete produce? If a piece of software has a sub-routine written by a European or an Asian, can you use it?

The point is that protectionism was not viable in the 30's-40's when things were much simpler, it is even less now.

The other side of the coin is that the other countries will do the same. It is already happening. What will happen to the American worker at firms that export? They will loose their jobs because of the BUY AMERICAN policy.

If this calamity takes roots, be prepared to pay much more for everything. There will be shortage for everything. The TARP money will not buy much. You might as well use it to place the American workers on welfare.

The aim of the government intervention should be to produce as much infra-structure as possible out of each dollar spent, not simply to waste it. The quality of the infra-structure produced is the investment that will be useful to the next generation that will be paying for it.

Don't be fooled. TARP used your children's piggy bank to pay for the mistakes of the present generation. Don't you want to buy the best with it? Or do you just want to waste it on inefficient make work projects?

As always, when the government comes to help you, run the other way.

We do find ourselves in interesting times, and there are many issues to be addressed.

The initial idea of adding Mexico to the free trade treaty was to help lift Mexico out of a third world status. Did it work, not really, some prospered, hundreds of thousands didn't. Crime has been raising since the treaty was signed, movement across the southern US open border hasn't slowed a bit.

We find ourselves with two major problem with this, American Companies send manufacturing south where the cost is low, and 100,000+ marginal people head north to do the dirty work no one else will, but end up costing the country far more than they save in labor costs.

Then we have the North American middle class workers who have a sense of entitlement and demand full health care and a $25.00 /hr pay. Why should they not, the management of the companies make obscene salaries and get bonuses even if the company loses huge money.

This is really not about Buy American/Canadian this is more about we have to fix this system.

To make products that people can afford the cost has to come down, and everyone from the top down has to take a cut in pay to bring society back to a more realistic and sustainable level, no one is worth 10 million a year just to lead a company.

The current situation is similar to death by a thousand cuts, with the real unemployment nearing 20%, the statistics only count those who receive unemployment payment, when they stop paying, the recipient is no longer counted. The GDP has sunk like a rock in a pool and manufacturing has all but stopped.

I applaud the media and the government for not using the real term, Depression, because that is self fulfilling and will only accelerate the crash. Getting a bit off topic, but when it comes down to the crunch at this time where you buy really makes no difference at all, the bottom has no been reached and until it is rebuilding North American manufacturing, if it can be rebuilt, will have to wait.

I think I will stop rambling on about here and wait to see what the rest of you have to say.

have a great weekend.

"no one is worth 10 million a year just to lead a company."

I take issue with that.

1. Would you risk your multi-billion dollar business to someone that has meager credentials? You do get what you pay for and 10 million per year for a billion in profit is small change.

2. You are citing high-profile cases that do not represent the norm on a normal distribution curve. More than 90% of the GDP this nation creates is created by small business with less than 100 employees. I can tell you as a fact, being one such business owner, that we do not make 10 million dollars a year, and we work our dog-gone arse off to be here.

I work every day and sometimes well into the night. Statistically, the American worker is the hardest working individual and puts in the longest hours compared to the rest of the world.

Additionally, this is not a depression. You and I never saw a depression, although my gran parents had. Economically we are now bottoming out in this recession and we will see it turn around before the end of the year. Incidentally, funny how the economy is turning around with virtually none of the stimulus money being yet spent.

Lastly, unemployment numbers are the last indicator to respond to economic turnaround. Employment figures typically lag by 2 to 4 months, so they can not be used to indicate the current economic status.

While the economy will rebound by the end of the year, the dark clouds are still on the horizon. We have yet to see the cost of the financial mess the US Government has created with huge massive debt and meddling in the private sector. That action will come crashing down on us in a few short years with high inflation rates and taxes. The last 9 years have been financially insane with reckless spending. However, the reckless spending has jumped geometrically in the last 4 months with no end in sight.

We are not just talking about passing this debt to our children. That debt will not wait that long. We will have to deal with the repercussions in far less time than that.

Nope, i think it would be better to have a reasonable pay and get a bonus if the company is performing well, a CEO's pay should reflect the companies performance.

and Detroit caught up in the 80's? they are still making to big gaz guzzling cars. Only last year i saw a small American box car here in japan (a Chevrolet or Chrysler maybe) for the rest it is all big cars, even the prowler is a heavy car, i see a lot of European cars here in japan but the few American are all big cars.

A short while ago I had an engineer friend of mine visit from the UK, he had rented what he had hoped to be a North American Luxury car from Chrysler. When he went on and on about how badly they were built, he even claimed they made Land Rover look good. I had to agree with him on that since I have several, and the Land Rover build quality is horrible. The joke is plus or minus one inch tolerance, and it is not far off.

While it may seem logical to have a reasonable pay (and bonus based on company's performance) for a CEO, it's up to the CEO's boss (share holders/board of directors) and what the CEO can negotiate. If the company is looking at a $2b loss and a potential CEO says hire me and I can reduce that to a $5m loss, but I want to be paid $2m/year + 10% of the amount I save the company, then he may be hired. But what the outsiders (press, general public, and even employees) see is a company with a $5m loss and a CEO who gets $152m ($2m + 0.1*$1.5b). It doesn't look too good, but the alternative was loosing $2b. But hire a guy for a reasonable salary ($500k) and 1% of profilt, he may not know how to save the company $1.5b.

I don't think it's the government's place to put restriction on what company's can pay their employees.

What is disheartening is that many corporations (as well as the government) are so short sighted. They are looking at only next quarter's numbers, not long term growth. Long term to many means 3-5 years......not 10-20 (or more). This permeates deep in our culture (USA - I can't really speak for other countries, but I expect it's not too different for many).

I recall a project in college HVAC class (design of an HVAC system for an elementary school in Florida). One of the things we had to consider and evaluate was the feasibility of using solar heating for the cafeteria's hot water. The payback on the system ended up being 7 years which seemed to be to be worthwhile. I was shocked when our professor told us if it's more than 3 years then the state of Florida would not allow it (this was back in the mid '80s). Here is an elementary school with a design life of 50 years and they require a 3 year breakeven for a hot water system. I don't know if Florida's approach as changed or not, but that's just sad.

Well said!

As a general rule in industry, if something pays for itself in less that one year, then you must buy it. If not, then it is not considered an important investment. That doesn't mean that it will not be considered, but the savings it generates is of less interest than something that has a much faster return on investment, so it gets put on the budget's back burner.

7 years seems like a long payback time. For the average home owner, 7 years is way too long. Most people sell their houses before that time and will never realize the payback. That is why there are government tax breaks for buying solar assisted utilities in Florida; the payback is too long for home owners to have an incentive to convert to solar if they only had to rely on electricity or natuaral gas savings alone.

Most people actually don't sell their homes every seven years, although you are not the first to use that argument. Some groups based on pay scale do change homes on a regular basis, and the home sales people have latched onto those numbers to help them do what they do. Statistics are wonderful things and can be bent and twisted to fit just about any situation. Truth be told, across all earning scales, people keep their homes for quite some time, much longer than seven years.

Now that the sub-prime thing has crashed those that have managed to keep their house and live in areas where solar makes sense may indeed have a second look.

According to NAR, the average length of ownership time is roughly 6 years or so. Do you have data that states otherwise. Could you post it, please?

However, you are right, seven years isn't a magic number that everyone sells their home, but the statistical norm tells us that six or seven years is about the average.

I have heard from realtors that investing in solar (among other things) tends to have diminished returns on resale. However, kitchens and fireplaces have a greater rate of return when selling a house.

My gut says that most people do not analyze utility costs for a prospect home to any great extent. The reason I cite that is because I have loked at a lot of housing in the US (I move quite a bit) and it is rare to get that type of financial information or have it readily available when viewing a house. In every instance I have inquired it has been "I'll see if I can get that information from the owners." If the question was a common concern, then that data would be readily available when you ask for it. Conversely, every home I have sold no one has asked for utility costs.

I think home ownership is a little more emotional for most of us than pure accounting.

I have to agree with that, utilities are just a part of owning a home, just like insurance, just another cost. Until there are more brown outs and black outs due to over loaded electrical grids no one will really care. With all the silly electric cars coming on the market, the black out may be a regular thing.

I wish I could remember where I read the stats on home ownership, it was broken down nicely by age and area which may explaine the number you found, a case of cherry picking to suite someones statistical needs.

That is exactly the problem, too short sighted, and not learning from their mistakes.

The automotive designers and engineers should be responsible for their work/designs from conception to grave rather than the current as soon as it's out the door.

Another issue is the guarantee coverage across North America, yes it is different from the US to Canada. An example; a buddy of mine had the front axle brake on his new Jeep and because it broke on an unmaintained road allowance Chrysler Canada will not cover the repair. this same thing has happened several times in the US and it is completely covered. With the internet and all the forums the news spreads like a fire in California and guess what Chrysler looses sales, because of some silly number cruncher. Not looking at the big picture.

I agree with your assessment of the market. I have heard the US President say twice that the Big 3 were not making the small high-mileage cars that the public demanded - my thought is that is revisionist history at best and a lack of understanding of the common American at worst.

The big three have been selling small cars for decades - often Japanese and Korean models with slight styling changes. The consumer did not rush out to buy these, rather they sought out the larger models (much to the dismay of leaders who nevertheless preferred the bigger models also!).

When I lived in California in the 1970s and 1980s I noticed that almost all friends I had that preferred small cars would never even consider an American car, no matter how good - that was just not hip in their circles.

"When I lived in California in the 1970s and 1980s I noticed that almost all friends I had that preferred small cars would never even consider an American car, no matter how good - that was just not hip in their circles."

That's the stigma that Detroit lives with to this day and the price for making the error they did decades ago.

I did not catch that statement buy our President about not making the small high-mileage cars that the public demanded. That is even more troublsome to hear because if the government is so out of touch with the market, then running the US automakers will become a disaster.

Then again, I think it really is a case where government is trying to tell us what we should be driving. Goodbye free choice?

I both of the speeches he also said that Detroit did not make reliable cars. This makes the president seem really out of touch as JD Powers showed that that is not true and has not been for years - in fact, IIRC Buick!!! came out ahead of Toyota in long term reliability.

I cannot judge whether he really believes what he says or whether he is being untruthful for political reasons. Either alternative is not very encouraging to me and undoubtedly the Big 3.

Unfortunately Buick is thought of as an old mans car, and has suffered from bad motors over the last few years and word spreads just too fast these days.

The new version of the Mustang is an example of a well marketed car, selling like hot cakes, Dodge tried and failed because they let their 'styling' department have at it and they made it look just wrong. Chevy has been delaying the Camero for too long, it was ready three years ago, and it still isn't out. It looks good too, another case of too little too late, and another company not run by someone with any feel for the car people.

Cars are very important to people in North America, the car culture was started here and it still thrives, until the not so big three catch on they will never succeed.

I thought oldsmobile was your parents car.....er wait...... it was not your parents car. Now its no more

The second argument falls apart when you consider that there are buyers for the big gas guzzlers. Remember, the free world is a market driven society and the reason these vehicles are being produced is because there are people who will buy them.

I do not completely agree with that one a free market is a myth (just like democracy) How many products are sold well not because of what the customer wants but what the customer thinks (is told) he needs, the media is filled with suggestive commercials and misleading information, also the common buyer is very gullible

Maybe stereo type rapper thinks a hummer is cool but i believe for a long time the public was told by the American car producers that buying big was good (and then came the Japanese with their dinky toys).

A lot of products these days are so over-hyped like the next Hollywood movie (E.g Iphone)

I think you make a valid point about marketing driving market trends, but I also think that the power to dictate what a customer will buy has its limits. This industry, like everything else, is market driven.

Auto purchases are primarily done on an emotional basis. Once again, that is a generalization, but the typical buyer makes a decision based on emotional desires and justifies it with logic. Hell, even I do that, but at least I know it before hand.

I am sure that the automakers take full advantage of this, knowing what propels customers into the dealer's showroom.

However, in the end it is the buyer's choice and I, for one, do not advocate that some government agency be created to protect the buyer from himself. Personally, I think the people need to be responsible for their actions and if they expect to make a good buying decision, then it is up to them to do their homework first. Caveat emptor.

And why not? After all, there is no government agency to protect the voter from making a bad choice at the polls, so why should they expect the same buying a car?

Sorry but how much is market driven if the company owns more then 80% of the market share then they dictate what the customer wants (Microsoft for example)

Most buyers are not "highly" informed engineers who know what they want, what i have seen in the years that the consumer is easily horded into buying the next hyped thing. Marketing is seems has become more important than the product these days.

VCC was better the VHS (Sony undercut the prices), and consortium's make decision is blu-ray better Toshiba's HD?(Sony payed a lot of money to the movie industry)

not everything is market driven, it is not about what the consumer wants but about what the shareholder wants

I hope some of those small companies are still around by the end of the year.

With the impending closure of a couple thousand auto dealers the small town economies are about to take another big hit.

With the shutdown of the automakers, and they will not be back soon, hundreds of the suppliers are going to be having a very hard time of it, as well as the steel makers and the associated supply chain, millions more are going to be on the government ticket very soon.

Delphi who has been about the emerge from Chapter 11 has postponed with court permission the emergence, and they have said that even then keeping in business is very slight with GM shut down for an extended period.

Not a great future and it's going to be a long time to get out of this one. Some days I almost wish I had fewer news and industrial statistics feeds, ignorance is bliss sometimes.

Several reasons the big cars/suv/trucks sell is safety, ride comfort, room for the family and there stuff, status in traffic towering over a small/sub compact auto.

Years ago when the mfg/industrial base started to shift to other countries for cheaper labor and to make parts cheaper was part of this mess. In the mid to late 80's the economy started to shift to a service related economy.

Not to mention the laws and tax laws that have been changed and added over the years has not helped.

Charles

metalSmith's

I would agree with everything but the safety issue. SUVs and trucks do not have to meet the safety standards that cars do and with the instability issues inherit with SUVs and trucks, their safety has a poorer record than what you may have been led to believe.

Here is one link that shows that the incidence of rollover offsets any gain of mass and size.

Gains have been made in the issue of rollover, but compounding the problem is that these vehicles are many times driven as if they were a car, which they are not.

Yes I agree with you on the rollover factor. What I was referring to was size and mass of the larger vehicle to the smaller vehicle. As to rollover factor seem to lead back to under inflated tires and higher center of gravity did not help and people not understanding the actions the vehicles react.

Charles

metalSmith's

In Florida I have seen a number of vehicles exit flat, level, straight highways. Many of these accidents are suspected due to sudden loss of tire pressure and they get very serious.

Under inflation may be one cause, but we also have a high population of nails on the road (ask me how I know).

Actually, I think that the big three should Pay their american suppliers for the parts they have taken and not yet paid for .

http://www.americanmachinist.com/304/News/Article/False/84294/

milo