"Ed Huntress" wrote in message
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"J. R. Carroll" wrote in message
om...
"Ed Huntress" wrote in message
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"J. R. Carroll" wrote in message
om...
"Ed Huntress" wrote in message
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"J. R. Carroll" wrote in message
. com...
"F. George McDuffee" wrote in message
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If Detroit or Windsor can't stay busy or if GM files it won't be
because
they couldn't get the answer right. It will be because they kept
asking
the
wrong damned question.
And are you talking about a solution for 10% of the market, or are you
claiming you have a general question and a general solution for it?
It isn't a claim Ed, it is a proven philosophy and business model. It
will
work wherever you choose to run it if the infrastructure is in place.
Proven for what percentage of the economy? Are you suggesting this is a
general model that will sustain our economy as a whole? If so, how would
you
apply it to, say, the manufacturing of shirts? What philosophy and
business
model will let you make shirts at a price/quality tradeoff that competes
with rural China or Bangladesh? Child labor could help, I suppose...
Because we can always make a positive anecdote of the virtues of 10%,
if
we
neglect the fact that an economy is all 100%, and that the
consequences
of
what happens to the other 90% eventually catches up with all of us.
Sooner or later, you have to answer the question of how you compete
with
80
cents/hour wages, when technology and business expertise can be
packaged
into shipping containers and sent to Bangalore or Shanghai just as
easily
as
to Cleveland, and that clever ideas, hard work, and insight are
distributed
quite evenly around the world.
Focusing on wages is exactly the wrong thing to do. I paid the tool room
guys a five dollar premium to the market, provided excellent medical
benefits, paid time off, and contributed the legal maximum to our 401K
for
every employee at the time that was 4 to 1.
You are closer to the mark with the clever ideas part however and I
agree
that no one group has a lock on that.
Your $5 premium probably was around 20% of 40% of your costs: as a round
approximation, perhaps 8% of your cost of production, based on
tooling-industry rules of thumb.
When you're up against 80 cents/hour, how do you account for the 96%
disadvantage? Do you think that improved efficiencies in general (not just
yours, but those of the economy as a whole) can cover 96% differences? Any
model that I know of, that points in that possible direction, is based on
getting rid of all of those people you employ and adopting the values and
standards of the Third World.
And then business in general winds up hoist on its own petard.
If you think that GM is tanking because of their labor contracts or
pension
obligations you are just plain wrong. They suck hind tit because their
business model if for ****.
So you're saying they can absorb $1,500/car just by having a better
business
model than Toyota or Hyundai?
No, they can do that by properly understanding and then delivering to their
market. This is what they are utterly failing to do.
The difference in price between a Hyundai built in Arkansas and a GM product
built anywhere is much more than 1,500 dollars.
As a percentage it's about half.
And then, after gaining a $1,500/car advantage
over them simply through smarter organization, that they can maintain that
advantage in a viciously competitive global market?
They do not gain any advantage with a reduced price and shouldn't try. Good
value is critical in purchasing but you are talking about racing to the
bottom and that is the stupidest thing I have seen in recent times. It does
not work.
These are all fine assertions, John, but I'd like to see the specifics.
Frankly, I don't believe you can "business-model" your way to success when
you have the kind of legacy overhead that GM has. That is, unless your
business model is based on moving all of your manufacturing offshore and
abandoning your legacy entitlements to the federal government.
Just the opposite in most respects. You are smarter than this Ed.
Ed,
I am unable to continue this for the rest of today but I will.
I read what you have written about global markets and manufacturing. The
questions and their answer are largely contained in your own work and the
underlying research behind it. The need to present fresh facts doesn't
exist. There aren't really many fresh facts regardless. A fresh perspective
is the key, as I said. You answered, intelligently I might add, the wrong
question. Your work revolves around looking like a top notch vendor. This is
certainly necessary but it is also the WRONG WRONG WRONG perspective.
I get paid big bucks for this Ed and have yet to see anyone who will truly
embrace what I provide as a service fail to flourish . I also have enough
confidence in the results that I only take equity. I also, except once and
not directly, don't do "turn arounds". My advice under the turn around
scenario has consistently been "Get Out and do it Now".
The five dollar ratio to costs was 6 percent and we knew that percentage
very precisely.
--
John R. Carroll
Machining Solution Software, Inc.
Los Angeles San Francisco
www.machiningsolution.com