Thursday, Dec 28, 2006 at 23:55
Where do you think Toyota leart the so called "Toyoya Way" from companys like Ford who Pioneered automotive production and manufacturing techniques, Toyota just copied it, and that’s one thing the Jap’s do
well.
Both Ford and GM have made Mistakes at management level that has cost them but in fairness to their management the structural problems go back about 50+ years.
The issues with the pension plans and heath fund costs date back to the economic rush that marked the post World War II US economy, when their government froze the wages that companies could pay employees.
Large corporations like Ford, GM and Chrysler, desperate to attract and retain employees, struck deals with the unions that provided for generous fringe benefits, payable even when an employee retired. These pension and health care costs have become the albatross around
the neck of much traditional US industry.
Ford and GM now find themselves in the position of being unable to adequately fund local car development because the contracted payments to former employees are bleeding them dry. It comes down to not being able to spend an extra $20 per car on better interior plastics and fabrics because they have to pay $20 health care to an employee who retired in 1985. Crazy stuff.
In fact its worse than that, the deals struck with the large US corporations in the late 40's and early 50's generally provided that even when the retired employee died, benefits would continue to be paid to his dependant spouse for the term of her life.
The difficulties for reform of these arrangements are, of course, aggravated by the US's near third-world approach to funding social security and health care. When the large corporations try to negotiate their way out of these deals, the unions quite justifably get upset, aware that there is no effective safety net to catch the former employees who suddenly lose their benefits.
There are other historical structural problems shared by Ford and GM. For instance, both have duplication of product ranges across their respective brands, e.g. Ford/Mercury and Chevrolet/Buick/Saturn. The various differentiations to trim etc needed to maintain these individual brands is very expensive. However, neither Ford nor GM can readily rationalise these brands because of their contracted arrangements with their distribution networks. Attempting to rationalise these networks by eliminating a brand or two would basically embroil them in massive litigation and compensation costs.
It is for these reasons that I suggest that the deep, deep, problems that both Ford and GM find themselves embroiled are pretty much unsolveable without external intervention. Chrysler was lucky enough to find a white knight in the form of Daimler-Chrysler after the near fatal collapse of Chrysler forced the unions to renegotiate the health care and pension deals. Unfortunately for Ford and GM, white knights are thin on the ground these days.
Cheers.
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