Professor Mark J. Perry's Blog for Economics and Finance
1. The number of vehicles per workers are as follows:
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
11 Comments:
You are comparing apples and oranges here. GM still does a lot more work in-house than Toyota.
For example, GM still pays their employees to mow lawns, clean bathrooms, paint buildings. . . . Toyota pays to have these services completed--they are not free, but they are invisible in this comparison. Accordingly, any money Toyota pays out to subcontractors should be equated back into employees for a fair direct GM to Toyota comparison.
GM probably is not as efficient as Toyota; however, Toyota should not have a methodology advantage because of how they decide to pay for necessary work performed in their manufacturing processes. Let’s compare ALL employees and their ensuing costs and not just payroll employees for a fair comparison.
What rubbish. GM & Toyota also buy in car parts, tyres, & a host of other things. Do we add in the employees of these other firms as well? Obviously it's far cheaper to buy in services. GM & other US car firms survive only because their non-US competitors, who produce abroad, are taxed heavily by the US govt. I.e., all other Americans subsidise American car firms & their employees.
I'm just saying that you can't directly compare companies where one decides to contract out non-core operations and the other does not. If the cost is there in one company and not the other, that needs to be accounted for in the equation. To answer your question, you attempt to make equal comparisons. So, yes you count tires in one company if you count them in the other company. Can you see anything wrong with this logic?
If you compare the number of hours to assemble a vehicle, (apples to apples), GM and Ford workers are much less efficient than Toyota's or Honda's (see Harbour Report, and earlier posts on my blog re Harbour).
I was in a GM plant that made transmissions. I got to walk all around that plant. What I saw was eye opening (eye popping?)
None of the UAW workers in that plant looked to be younger than 45. I took two things away from that.
As GM automates - why I was there - they limit the expansion of their workforce or actually decrease numbers. Union rules have them keeping the oldest workers.
The effect of this is that the union guys' kids have been shut out of their fathers' good paying union jobs. I don't know where the twenty something sons and daughters are working but, I know they will never work for GM.
This is a problem. Following WWII this country created an industrial based middle class that is now going away.
Anonymous,
You say "this is a problem", but what do you suggest GM do - not streamline, not automate, not become more productive, guarantee a specific number of jobs?
I can't speak for assembly, but Harbour includes indirect labor costs in his sheet metal stamping report So, more indirect labor would result in more hours per vehicle in his "History of Stamping Labor Productivity--Hours per Vehicle" June 2, 2005 report. It’s still apples and oranges. Our committee gives a presentation when Ron Harbour visits; I have his complete and latest report.
I think the real story of the latest Harbour Report is not talked about often enough. GM’s vast improvement from 1998 to 2004 in “North American History of Total Hours Per Unit – (Assembly, Stamping, Powertrain)” is phenomenal. In 1998, GM required 46.52 hours per vehicle of labor. In 2004, GM required 34.33 hours per vehicle of labor. That’s a 12.19 hour improvement. In 1998, Toyota required 30.25 hours per vehicle of labor. In 2004, Toyota required 27.90 hours per vehicle of labor. That’s a 2.35 hour improvement. Percentage-wise GM improved 26.2% while Toyota improved 7.8%--that’s 3 times more than Toyota. GM might not be the best yet, but in an industry where continuous improvement is paramount, they are rapidly narrowing the gap and will pass Toyota if the historical trend of that 6-year span continues. I think it’s still a little early to count GM out of the game. Anyone have any thoughts about this?
I agree with you Walt G. GM IS making tremendous strides in quality and productivity.
It seems to me the question is: can GM stay alive long enough to get over the hump?
Approximately 1 out of 4 vehicles sold in the U.S. is a GM product, and yet they still have $10B losses. What other company in any other industry in the U.S. has this kind of market dominance and yet fails to be profitable?
Right now, they're selling the furniture to save the house [GMAC].
It's difficult to for a 100-year-old company that has massive obligations to past generations of workers to compete with companies that only owe allegiance to their current workforce. Why don’t these companies receive more recognition for enabling a middle-class lifestyle for the masses?
I agree that Toyota is currently providing good jobs for young American workers, but I don’t think they’ve done much for our older “baby boomer” generation. How many Toyota retirees are spending their money down at your corner store?
I want to address your comments on how the new assembly lines are not as you describe but they are so high tech and efficient that the entire stretch of assembly is totally computerized requiring very few skilled workers to oversee its production.
When you mention skilled worker I think of men who know how to fix two story high machine presses, machine repair, electricians etc. Not bathroom cleaners or painters who should be subcontracted definitely. These are not the employees who ensure quality parts. When you what a trade’s person to calibrate your machine to make sure the parts are not out specification for the customer you want skilled men to do this. All in all the skilled tradesmen are a dying breed. In Flint Delphi, I don’t know the exact number but maybe 80% or more of the trades retired or transferred to get a few more years in so they could retire. These men’s children do not want to work for the auto industry and most likely are graduating college or grad school because their fathers could afford to send them there. And probably plan to move out of state and take there education with them. When I walk through the plant it is more than half empty and all the trades are gone along with many of the production areas. Pretty soon there will be nothing left there to compare or complain about.
We don't have any problems with applicants for skilled trades' positions at GM's Flint Metal Center. We are able to set the bar high and still refuse applicants for the few openings.
We could probably require bachelor degrees for apprenticeships and still fill the few openings. I've taught GM apprentices and regular vocational school at the skill center and Baker College and can attest that GM's apprentices are the cream-of-the-crop.
We've had two problems of late: 1) Few openings, and 2) a very high failure rate of a stringent pre-hire drug test.
With the high retirement rate we’ve experienced lately, we project a few openings in the near future. I would suggest a two-year college degree in a technical field and a drug-free lifestyle if anyone is interested.
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