Japanese Parts Fallout Hits GM Plant In Louisiana

by Bertel Schmitt

Published: March 17th, 2011

japanese parts fallout hits gm plant in louisiana

We had predicted early on that “the disaster in Japan could have a major impact” not just on the Japanese auto industry, but on the auto industry worldwide. If anyone had silently hoped (you can’t say these things aloud) that the disaster over there would provide breathing room for the car industry over here, then get ready for a disappointment. First automaker to be affected over here by the Japan syndrome is GM.

Reuters has it that GM will suspend production at its Shreveport Assembly plant in Louisiana next week. The reason: Parts missing due to the crisis in Japan.

In Shreveport, nearly 1,000 workers build the Chevrolet Colorado and GMC Canyon trucks.

GM says it has enough units in stock and hopes to resume production ASAP. According to Reuters, “all the automaker’s other North American plants are operating.” So far.

The Shreveport GM plant is scheduled to shutdown permanently by June of 2012. GM says the current closure is not permanent.

Marketwatch says that GM’s suspension of its Louisiana plant “could be just the beginning, considering the intricate web of shared components in the car business.”

Each year, Japan exports 2.5 million engines and 8.5 million transmissions, say Marketwatch. “But even more troublesome could be the electronics front. Japan accounts for a sizeable chunk of the technology in cars, including 20% of worldwide semiconductor production.”

According to the Houston Chronicle, GM won’t say which parts it’s short on, “but both pickups use a five-speed manual transmission made by Japanese supplier Aisin Seiki Co.” writes the paper.

#BertelSchmitt #Earthquake #GM #Japan

Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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8 of 44 comments

VanillaDude on Mar 18, 2011

Do you think as Rome burned, Niro asked his slaves if the fire would effect the availability of grapes?

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- Friedclams on Mar 18, 2011
  
  I don't think De Niro was in Rome. That was a good show though.
  
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- APaGttH on Mar 18, 2011
  
  The popular image of Nero fiddling while Rome burned is actually very incorrect (never mind the fiddle didn't exist). Historically speaking, Nero's actions probably saved Rome from larger disaster and countless lives. He was actually not in Rome when the fires broke out, but at a mountain villa outside of Rome. His advisors begged him not to return to the city, but he did to personally coordinate fire fighting efforts. He opened up the royal gardens and other facilites not typically open to commoners to get them into fire breaks (as we would call them in modern times) and green spaces to escape the flames. He coordinated the razing of sections of Rome to create fire breaks to stop the spread of the fires. Post Rome fire, Nero was as big a hero as George W. Bush was in the days and months after the 9/11 attacks (not meant to be a political statement - just a modern historical reference). Where Nero failed was in his rebuilding plan for Rome. His vision was so grand the treasury could not afford it. With the concept of a federal reserve, paper money, and national deficit having not been created yet by modern society, he basically bankrupted Rome in his attempts to create his vision. When he sacked the temples of their sacred materials for the value of the gold and jewels within, it became too much for the common people. The rest is as they say, history. Had Rome been on paper currency and Nero could have financed his vision, he could have potentially gone done as one of the greatest leaders in world history - and Italy would still be paying the interest and principal on his vision.
  
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Psarhjinian on Mar 18, 2011
Reality can indeed be humorous! But what makes this so awkward is that GM, along with Ford and Chrysler, has found it more advantageous to produce parts (et al) outside of the US, just to get away from the UAW That's not the case here. These parts are sourced in Japan because only the Japanese companies seem to able to make them. Many members of management, some time ago, decided that it wasn't worth it to have a manufacturing or R&D base (generally because they didn't want to commit to it) and just offshored, sold off or outsourced production and R&D. And did made out handsomely, in the short term, I might add . And we're not talking union jobs, here, but things like microprocessor and electronics design that have never been unionized tasks. The kind of management wunderkind that decided to do this kind of thing is probably wondering why we don't have much of a middle class any longer, and why no one can afford to buy their good anymore, except on increasingly stretched lines of credit. Hey, here's an idea, let's just offshore production somewhere even cheaper! Yeah, that's the ticket! Sustainability be damned, where's my bonus? I assume Japan has strong unions, relatively high wages, excellent work conditions – this proves that a union can work when it realizes that there is a real world and has to work with management and has to spend less time on class warfare. I would point out that it really does take two to tango in management/labour relations, and that management very often gets the union it deserves. Japanese and European executives don't automatically treat their own workforce as the enemy, and don't engage in their own form of class warfare, squeezing and attacking on every front. This is a real problem in the US; the situation in Wisconsin highlights it. The government probably could have gotten away with cutting benefits, wages and staff under the auspices of "austerity" without too much issue, and they would have been within their rights to do it. But they had to play union-busting hardball and went after the right to collectively bargain, which, really, isn't fair** let alone necessary, unless you have some sort of hang-up about people having the gumption to negotiate in groups. I see this attitude with some frequency---in both the private and public sector---and I think it has to do with American B-school and working management culture. Management and labour are opposing teams, and play a game where there's only one winner. You see this with principals and board admins versus teachers, even, and it's why American teachers unions are so militant. They have to be, because their bosses treat them like absolute crap otherwise. Eventually the situation snowballs such that you have teachers, line-workers or whatever with a terrible attitude and some pretty good benefits that they've had to fight outrageously hard for, whereas in Europe or Japan there's a far less combative attitude***, but workers know that management doesn't actively despise them. By the way, did you know that worker salary in western nations doesn't really vary much country to country, but that, towards the end, Rick Wagoner made more money than the top twenty seven executives at Toyota? Do you think Mr. Wagoner is worth twenty-seven Toyota executives? Do you still think labour is the problem? Obviously you couldn’t produce competitively with a Jobs bank and a system that protects bad workers from work. GM had lower costs from than Toyota did either in Japan or in America. Cost was never the problem. Productivity was never the problem (GM Oshawa won internatrional-friggin'-awards for it). The problem was quality, desirable product and, as a result, the need to sell product (trucks excepted) for a transaction price well below the competition. When the bottom fell out of the truck cash cow, it fell out of the company as well. That's not labour's fault, not by a country mile. It's all well and good the lambaste labour because it plays so well into, well, the class-warfare narrative that the well-to-do are spinning, but it wasn't the reason these companies imploded. ** Why would it be illegal for working-class people to bargain collectively? Numbers are really the only equalizing factor they have. If you want to do that because collectivism is bad, fine, but we get to revoke corporate charters for the same reason. *** Until you break the unwritten rules of the social contract, which is what happened vis a vis austerity measures in Greece. Working people are understandably upset that they're being made to pay for the risk-taking of the financial sector's B&B.

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- Zackman on Mar 18, 2011
  "That’s not the case here. These parts are sourced in Japan because only the Japanese companies seem to able to make them." Psar: That's very interesting. Your account reminds me of a case when one of my friends worked for Carter Carburetor in the 1970's. A German company wanted to know the smallest diameter hole Carter could drill and manufacture a drill bit to drill it. Carter made what they thought was the tiniest possible bit and they sent it to this potential customer. A couple of weeks later, the bit was returned with a hole bored all the through Carter's bit, significantly smaller (can't remember how small) than the bit they sent in the first place. Lost the customer, too!
  
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- Jimmy2x on Mar 19, 2011
  
  psarhjinian - that is one of the best rants I've read here or anywhere for that matter. The collapse of the implied social contract between the middle class and the upper classes is THE most important story of our time. It is appalling how many members of the middle and lower income classes fall for the Rush storyline.
  
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ChuckR on Mar 18, 2011
Governor Walker, facing a $3.6 billion dollar shortfall, pushed through legislation requiring most state workers to kick in 5.8% of wages for pensions and pay 12.6% of the cost of health insurance. Compared to private sector workers, those are great terms. The new law limits collective bargaining to wages, prohibits bargaining on pensions and health insurance, limits the collection of dues through paychecks and requires unions to submit to annual recertification elections. From thestreet.com Few in the private sector would quibble with the pension and health insurance contributions. Maybe annual recertification is too frequent - how about every two years instead like our elected representatives? I'd be glad to hear alternatives to some of these provisions that stop the cycle of corruption wherein the union political contributions go to the party predisposed to give the unions even more benefits and higher wages. It is a positive feedback loop - repeat and cycle. This is the first indication that the rest of the population has realized that it is unaffordable. I don't see why any political contribution - corporate or union - should be expensible come tax time. Also, I don't see why 'education' should be expensible either - that's just lobbying. Further, I don't see why Beck rights aren't vigorously enforced and the default union dues set at only the amount necessary to fund negotiations with management. Here's a link to a NY Times opinion with some interesting observations from FDR and George Meany on collective bargaining by public employees. http://tinyurl.com/47u53dq

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Eldard on Mar 19, 2011

UAW: we have fat workers.

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