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Too Funny!

Tracy Merriman — Tue, 18 Nov 2008 15:46:45 -0500

Brian,

Thanks for the laughs, that was great! I was born and raised in Northern New Jersey, so I have an accent that is very distinct and well a bit, umm, loud. My accent always catches the attention of the New England natives. They either find it annoying (in a whinning Brooklyn/Jewish lady kinda' way) or cute (in a "I am talking to a real live Jersey Girl kinda' way)

In Jersey we eat hot dawgs (not chili dogs but rather, how dawgs 'all the way') and we drink cawfee. It's a sub not a grinder or hero. No evening out at the bar is complete without a trip to the 24-hour diner for fries with cheese an' gravy. Breakfast on the run is always a hard roll with butta or Taylor Ham, egg and cheese on a hard roll. We have bagels, the real ones! When we hang outside, we sit on a stoop (not a step or a porch). We watch footbawl and basebawl. More importantly we don't understand....we capiche!

We do tend to curse a bit, can handle a roundabout with only one hand on the wheel, we know what a jug handle is on the highway, and the state bird is the middle finger, no doubtaboudit! But us Jersey folk aren't as rude and crude as people claim. We are actually just 'too funny'!

You capiche?

~Tracy M

The auto business sucks

Terri Oberg — Wed, 12 Nov 2008 13:10:56 -0500

"If they can't make products that people want, then they shouldn't be in the business"...sounds like he gets it to me. Isn't that just plain ole common sense in the world of business?

I get your point, Bill, and I am certainly not liking that my tax dollars will be used to bail out yet another industry that isn't smart in how they've done business, especially when the people in charge usually end up being "taken care of". Personally, I think these engineers and CEOs who ran the business into the ground and planned poorly should start right back at the bottom a la "Welcome to Burger King; may I take your order please?"

That being said, I spent a fair amount of time working in this industry. It is an industry that is extremely sensitive to consumer demands and a huge contributor to our country's economy and work force, I can understand why the government feels it is important to keep these companies from going belly up, but like any company they feel the need to bail out, there needs to be conditions that come with that bailout. I wouldn't "bail out" one of my own children without expecting some conditions be met to ensure the bail out was productive. It's our money bailing out these companies, we need to be sure we have a say in how that money is spent, even how the company is run.

I will also say that I don't think it's entirely fair to blame the companies for putting so much into the SUV craze. This is what the consumers demanded and demanded in a big way. I worked for Volvo 10 years ago when they weren't making SUVs yet. Everyday we were fielding questions about when Volvo would start making an SUV. Volvo took their time jumping into the SUV business because they wanted to design it to Volvo standards and they wanted to be sure this wasn't something that would fizzle out after only a couple of years. Volvo eventually produced their very first vehicle that wasn't a sedan (not including their commercial truck and heavy equipment lines of course) after all the other major car companies had already been raking in huge profits on this new craze for several months. Even with gas prices what they are today, trucks and SUVs are still selling well.

My S.O. still works in this industry and we worry, bail out or not.

PRE-CRASH OF THE AUTO INDUSTRY STORY.......Michael J. Evans

Bill Bunker — Tue, 11 Nov 2008 00:12:28 -0500

More facts used in the blog post from Bloomberg......I think that is a pretty good source???

Japanese Earned $2,400 More Per Car Than U.S. Rivals (Updated)

By John Lippert and Barbara Powell

Oct. 2 (Bloomberg) -- The biggest Japanese automakers earned an average $2,400 more per vehicle sold in North America than U.S.-based rivals in 2005 by charging more and spending less on labor and health care, according to a study released today.

Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. persuaded buyers to pay an average $24,289 per vehicle, 12 percent more than U.S. automakers, the Harbour-Felax Group study said. The Japanese paid $1,400 less per vehicle on health care, and their workers spent more time on the job.

The study highlights topics that will be raised as General Motors Corp., Ford Motor Co. and Chrysler prepare to negotiate a four-year contract with the United Auto Workers. Ford and GM are working to revive profit after first-half losses, and Chrysler expects a $1.5 billion deficit in the third quarter.

``It's time for the Detroit Three and the UAW to get together and resolve these problems,'' Jim Harbour, the study's co-author, said in a statement.

This year's first half showed some improvement for GM's per- vehicle earnings. In the first six months of 2006, GM lost $326 for each vehicle it made, compared with $1,271 last year. GM reduced its reliance on rebates and other incentives and cut back on low-profit sales to rental-car companies and other fleet operators, Harbour-Felax said.

Ford's First Half

Ford, by contrast, lost ground. In this year's first half, Ford's per-vehicle loss rose to $738 from $451 in 2005. The study didn't give information on Chrysler's first-half performance.

``I believe you're going to see another strong quarter for General Motors,'' Laurie Harbour-Felax, who wrote the study with her father Jim, said in an interview. ``They really have gone the furthest in engineering efficiencies and lowering labor costs.''

Under current contracts, GM, Ford and Chrysler must continue to pay union employees in ``jobs bank'' programs even when there's no work for them, the study said. By comparison, workers at Toyota, Honda and other Asia-based automakers take less vacation and get shorter breaks.

Sales and market-share declines at GM, Ford and Chrysler ``over the last year have substantially increased the leverage they will have in bargaining with the union,'' said Michael Robinet, an analyst with CSM Worldwide, an automotive consulting company in Farmington Hills, Michigan. ``There's no doubt that jobs banks will be on the negotiating table.''

Market Share

Further contributing to U.S. automakers' problems is their loss of market share in the U.S. Through August of this year, GM's sales have fallen 12 percent, Ford's are down 9.9 percent and Chrysler's are down 9.7 percent. Consumers are buying smaller, more fuel-efficient vehicles from Toyota and Honda, and avoiding the large trucks and sport-utility vehicles that the U.S. automakers rely on for profit.

Quality problems add to the U.S. automakers' competitive disadvantage, Royal Oak, Michigan-based Harbour-Felax Group said. Toyota spends $348 per vehicle on warranty costs, compared with more than $500 each at Detroit-based GM, Dearborn, Michigan-based Ford and DaimlerChrysler AG's Chrysler unit.

U.S. automakers spend as much as $138 more per vehicle on longer vacations and holidays and up to $70 per vehicle on unscheduled absenteeism, Harbour-Felax said.

Japanese automakers provide workers with an average of 30 minutes of break time each day, costing $133 per vehicle, while GM, Chrysler and Ford provide 46 minutes at a cost of $203 per vehicle, she said.

Retiree Costs

Toyota spent $215 per vehicle on health care for active workers and has only a handful of retirees at its North American factories, which it began building in 1986. Last year, GM had to make pension payments to 337,588 retirees and surviving spouses. GM spent $1,120 per vehicle for retiree health costs last year and $515 for active workers.

James Harbour is a former vice president of manufacturing engineering at Chrysler Corp. and the founder a separate company called Harbour Consulting.

James Harbour said discounts and sales to car-rental companies reduced the average selling price for U.S. automakers' vehicles. ``GM gave away a ton of money last year,'' Harbour said today at a press conference.

Ford had a $1.44 billion first-half loss, while GM posted a $2.93 billion first-half deficit. Auburn Hills, Michigan-based Chrysler expects a net loss in the third quarter because of slowing sales of its pickup trucks and SUVs.

Union Talks

Union contracts at GM, Ford and Chrysler expire in September 2007, and the automakers are preparing to negotiate a new four- year accord.

Troy Clarke, head of GM's North America unit, said in an interview last week that he has begun preliminary talks with the UAW on the new contract.

``We got where we are together and we'll get to the future together,'' Clarke said. ``That's the spirit we enter into this with.''

UAW spokeswoman Christine Moroski didn't immediately return a call seeking comment.

Toyota, Nissan and Honda also are helped by exchange rates. ``The Japanese yen is an absolute major problem'' for U.S. automakers, James Harbour said. A weak yen makes the export of Japanese vehicles into the U.S. less expensive.

Of the 1.47 million Toyota models sold in the U.S. through July, 45 percent were imports, 34 percent more than a year earlier. If that pace continues, Toyota will this year top the previous high of 1.02 million vehicles imported in 1986, surpassing a million for the first time since Toyota made its first Corolla in the U.S. late that year.

Currency Advantage

Today's yen-dollar exchange rate widens Toyota's advantage over domestic automakers by $1,054 per vehicle, Harbour said.

Toyota saved $1,000 per vehicle over the last five years by designing components such as hinges and air bags so they can be used on a wide variety of cars and trucks, Harbour-Felax said. In an August speech, she said one U.S. automaker, which she didn't name, offers 81 varieties of side-view mirrors, compared to two for its more efficient Japanese rival.

Of the U.S. car companies, Ford is least adept at using ``common'' components among its vehicles, Jim Harbour said. ``Chrysler is approaching it. GM's whole focus is `common.'''

Here's a Bone

Bill Bunker — Tue, 11 Nov 2008 00:01:24 -0500

This excerpt was in the American Prospect a liberal publication and it speaks to their wages:

Auto Worker Wages

"Articles on the wage costs of automakers routinely reported that autoworkers were paid in the neighborhoods of $75 an hour. This figure was obtained by averaging the cost of contributions for retiree' benefits over the hours worked by the current workforce.

If we looked at direct compensation for current workers, this would likely be in the range of $40 an hour.

--Dean Baker

Now, Baker was making a point that they really do not make $75 per hour they make $40 per hour; both facts in my original post.

Be a big boy, do the research and be informed. Conservatives don't spoon feed people with propaganda. You should do the research and realize that your own closed minded ideas are not the only ones in the world.

No Links

Michael Evans — Mon, 10 Nov 2008 16:31:01 -0500

Again, no links. If you want people to believe your rants then you should provide documentation to support them.

Capitalism = Privatize the profit; Socialize the risk.

Why should we be bailing out banks, and insurance companies, and automobile manufactureres? If they can't make products that people want, then they shouldn't be in the business. Let them go belly up, right Bill?

To Your Other Poins Judy

Bill Bunker — Sun, 9 Nov 2008 11:39:31 -0500

I too hope that we have nowhere to go but up. But not government created jobs, let the private sector take care of itself. If Obama can not do that then he will be a one term president. My guess is that they will find a way.

If we bail out the auto industry we need to require a complete management change, identifying those living in the past and recruiting those who have a vision. In fact, let's hire the execs over at Toyota to run the Big Three. They seem to know how to do it!

CEO pay, yes require them to take a 25% cut or enough to make their salaries reasonable or no bailout money.

The Big Three work out of beautiful glass palaces in Detroit so let's require them to sell that property for pennies on the dollar if they accept a bailout and the property belongs to the taxpayers!

Next, stop all foreign aid. Period. Spending billions in Africa on AIDS while we suffer is just dumb.

Next deal with the unions and make union demands and wages REASONABLE. It will take all in the auto industry to get this thing straightened out!

That is America

Bill Bunker — Sun, 9 Nov 2008 11:26:51 -0500

No offense intended, Judy, if you are happy with Chrysler, then drive away! That is America.

However, if you look at the overall track record of Chrysler, fit and finish, reliability, overall life of the vehicle and especially resale it speaks volume.

You might pay $3000-$4000 more for a foreign car but most retain their value and offer more on a trade in. Few would agree that a Chrysler is the quality of a Honda.

Yes, we tend to hold on to stuff as well. Obviously guns and religion.

When will we hit bottom?

Jehardy — Sun, 9 Nov 2008 10:31:20 -0500

My only hope right now is to hear "We've no where to go but up." Not feeling real warm and fuzzy about that, however.

Firstly, I don't want to bail out any industry.. but what is the ripple effect if we don't? CEO pay is a good start - and the vast difference between John Q worker and CEO/CFO's etc. is beyond appalling. Talk about wealth re-distribution, let's start there.

Secondly, the Big 3 don't just do business in North America (yet they want the USA to bail them out). Shame on them all. Hey, we started with the airline industry and now EVERY industry is going to expect a bailout.

Now it's trickling down to everyone. Who's going to bail us all out when no one has jobs anymore?

America can't bail out the world - yet it appears this horrible, misdirected country is being asked to do so.

My husband and I are already very much effected by the ills of the auto industry and we're bracing ourselves, expecting it to get a lot worse before it gets better.

A forced career change is likely in the future for him - a bit of a scary prospect after 25+ years in this business.

Bill, I do take a little offense at your "Chrysler is garbage" comment. As proud owners of 3 of them... (2 of them being 1997 and 1999's with over 100K miles on them and still going strong) - I think I might tend to disagree. There are lemons, but then there's lemonade.

Yeah, we tend to hold onto stuff. Along with our guns and religion. ;)

All, enjoy your Sunday! -J

Michael, A Couple Of Other Things

Bill Bunker — Sun, 9 Nov 2008 09:25:12 -0500

1) Executive wages will have to be reduced as well. There is no question about that.

2) In October of 2007 the UAW struck a deal with GM which allowed those $70 per hour employees to retire and bring in employees at a lower compensation. The issue is not that steps have not been taken to reduce this but it was a too little too late.

If you read the blog, Michael, you will see that it is not all about unions and wages; it is a combination of things. Stop being so political....you were the first to complain about the previous bailout...why not this one????

Just The Facts

Bill Bunker — Sun, 9 Nov 2008 09:01:49 -0500

Just the facts, Micheal and it has little to do with wages of the workers. As usual, once something like a "union" or high wages are mentioned, you go on the attack.

Try Forbes, the Wall Street Journal, The Detroit Free Press, New York Times, Newsweek and Time.

Two points:

This "crisis" in the auto industry has been caused by three things:

1) Unwillingness and inability to compete with foreign automakers.

2) Substandard engineering leading to poor mechanical performance, poor fit and finish, no durability, expensive repairs and poor ride.

3) Out of control wages. Michael, when a person makes $40+ per hour to place a nut on a bolt and receives the cadillac (no pun intended) of health coupled with lavish perks, that adds so much cost to a car.

At one point unions made a difference. Unions have now gone too far. I make far less than the average auto worker, if that is anyone's business as you bring up here.

The issue is that the unions, in order to keep ALL auto workers from winding up in the unemployment line will need to yield. If not, there will be chaos.

"You and yours". I guess that means that you support 'card check' for unions which completely overrides the right of workers to a secret ballot?

Your rant....

Michael Evans — Sun, 9 Nov 2008 07:19:24 -0500

has lots of numbers, Bill, but no documentation for those numbers, as usual. Site your sources so we can take a look ourselves. Being a regressive, you would be opposed to people making a standard of living similar to your own, thus you and yours would negate what unions have done for American workers in the last 100 plus years.

I never much cared for

Michael Evans — Sun, 28 Sep 2008 16:29:18 -0400

I never much cared for Boston Market (similar to Cracker Barrel) where the food never tastes freshly cooked, and there was zip for service. I know what you mean about JC Penneys. They upgraded their products or at least the prices and downgraded the service. It's now a self-service upper middle class store, with Walmart type of service. I guess that's the way things are today.

Thanks Ken

Bill Bunker — Sun, 14 Sep 2008 21:47:20 -0400

Another great example of sacrificing service is JC Penney. I had to purchase a suit recently for an interview with my new employer. I needed a new suit as I had not purchased one since 2000.

When I used to go into JC Penney the sales people swarmed all over you. It was almost overkill. This time.......I could hardly find anyone on staff and when I did ask a question, no one had the answers. So, I walked over to Sears....same story.

Unfortunately, MBA's as you happen to mention ARE the issue. MBA's are not customer service oriented they are generally financially oriented. In the food industry, there are some MBA's at the top of the ladder with certain companies but strangely enough, those are the companies that 'manage down' the business.

A couple of examples would be YUM Brands! who promotes on education over experience. College counts but operationally, education is not a substitute for experience and instinct.

There are also many up and coming companies that do not have MBA's at the top. Many have CEO's who started working for the company as a sandwich maker at 15 and worked their way through college working there Summers and then became a manager upon graduation and have worked their way to the top. Those companies are the inspirational ones and they are the successful ones as well.

If companies just realized that cutting labor and cutting portions when things look bleak will just take you down faster, then they should close up shop. If they are not forward looking enough to realize that they are headed for trouble the same applies.

Once a company starts to analyze numbers and focus too much on same store growth over guest service and product excellence, they are doomed to fail.

Companies that take this approach, I believe will be successful and survive everything:

1) Focus on your staff and catch them doing things "right". Build and reward your team and they will do right by you.

2) Never, but never sacrifice product quality, reduce portions leading to a perception of loss of value. Make the last product that you serve the same quality as the first one that you serve.

3) Run a clean, well maintained facility that is inviting and that stands head and shoulders above the competition. Have everything in it's place and be able to accommodate everyone's needs.

4) Guest service should be second to NONE. Treat EVERY guest as if they are your ONLY guest.

5) Focus on the numbers by all means, but have the policy, procedures, measures, systems and growth plans in place, trained and flawlessly executed.

It is not rocket science....it is common sense and just doing the right things!

One more thing: There is no substitute for training and many companies use the excuse that turnover makes training difficult and almost not worthwhile.

I will end this rant with this thought for any company, large or small.

Owners and managers may ask: "What if I spend time training my staff to be the best and they leave or quit?" Think about this: "What if you do not spend time training your staff and they stay?"

Done!

Good job, Bill

Ken Braiterman — Sun, 14 Sep 2008 16:10:06 -0400

Boston Market used to be on my list of places to go, but then I stopped. Thanks, Bill, for telling me why. It's like you said when I wrote about Pizzaria Uno.

No indurstry that I know of has ever come out of a jam by sacrificing product or service quality. But they keep trying. Do they really think people won't notice? Are any MBA programs teaching good ways of managing a contraction, or just the easy job of managing growth and expansion?

Excellent blog.

just once says it all...

Scott Ives — Sat, 13 Sep 2008 12:42:58 -0400

Hi All,

I was a one timer as well. Food was good but the experience obviously just didn't impress any of us enough to make a return trip. Let's face it cheerful service and a friendly smile go a long way towards luring us back. Sure it's about the food, but a pleasant memory of a good time with an enjoyable meal gets me back every time!

Scott