Daily Podcast: Outsource This
Now that The Big 2.8 have paid the mother of all bribes (a.k.a. a $29.9b health care VEBA) to the United Auto Workers, now that the automakers can pay their workers lower rates, they're supposedly going to start "insourcing" parts production. The Freep takes one example– Ford's decision to produce instrument panels for the Taurus and Lincoln MKS in-house in Chicago– and calls it a trend. Yes, well, Sarah Webster says the move to take back parts production will hurt suppliers; The Big 2.8 use it as [another] stick to beat them up on price. And even if Webster's wrong about insourcing, outsourcing will continue– to Mexico, China, India, Ant frickin' Arctica. This. Is. Madness. The relationship between a manufacturer and its suppliers must be one of friendship, good will and mutual profit. To hammer down your suppliers on price to the point of bankruptcy and then move your business elsewhere is to cut off your nose to spite your shareholders. Wait, here's the key bit… eventually. At 4pm today, a federal judge will rule whether Chrysler can remove mission critical tooling from its supplier. No matter which way this goes, the chickens are coming home to roost.
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"This. Is. Madness." You are, of course, correct. My question would be: is it accidental madness, such as contracting a disease, or intentional, like, oh, I don't know, suicide?
Judge ruled in favor of Plastech: http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSN1930465520080219
Many of you may not know about TS16949:2002 but all automotive suppliers are expected to be audited to it yearly or semi-annually. It is very time consuming and expensive. I was lead auditor at a 2nd tier supplier for a number of years. It is a full time job to keep up with quality standards set by the big 3. I had a team of twelve auditors which had to be trained and certified. Having worked for Ford for a number of years I just know that they could never pass an audit to the standards that they required of their suppliers. The costs for the 3rd party audit or our plant alone was around $25,000 per year, and that is just for the 5 day visit by the outside auditing company. It has nothing to do with internal audits and layered audits mandated by the big 3. Now that my plant has closed due to the pressures of cheaper labor in 3rd world countries I wonder if Ford or GM would be interested in hiring me to bring their standards up to that of the suppliers that they beat the crap out of over the last 20 years. I can hardly wait to do a surveillance audit in a Ford plant and make them produce to the standards they have set up for their suppliers. My real world experiance says they would have to shut themselves down.
daro - Let's do a little clarification here. And correct me if I'm wrong (although I don't think I am). First, TS16949:2002 is a standard developed by many manufacturers around the world to certify potential suppliers. It has little to do with the motor companies' own manufacturing facilities because it evaluates the ability to integrate with the main purchaser's supply chain (design, production scheduling, shipping, maintenance, etc). One would hope the parent company could do that with itself. So, the Big 3 are not just willing these standards onto suppliers to make suppliers' lives miserable, it is an international standard - with most manufacturers participate - that suppliers meet to win business. The only reason Toyota might not participate is that it is an EU/US standard - not a Japanese-derived standard. However, all EU/US car companies that I can think of participate and back the standards, not just the evil Big 3. Second: http://media.ford.com/newsroom/release_display.cfm?release=321 Most Ford facilities were certified ISO 14001 back in 1999, and as far as I know, from their annual report and other sources, their facilities remain ISO 14001 certified. I would say that's some pretty good work on their part.