It was interesting to hear yesterday that Chrysler and Nissan are working together on some new vehicles. It was not surprising to hear that Chrysler will manufacture a pickup truck for Nissan in
In addition, Chrysler and new partner Getrag will build an innovative fuel-efficient dual wet clutch (whatever that is) at a plant going up near
Chrysler would never make these moves based on labor costs alone. It has to be that executives are seeing the effects of excellent plants and total system cost that makes manufacturing in the
Yet good manufacturing results may not be the only reason for the move to
And it’s an ill wind that blows nobody good. A factor in production decisions is the soft dollar.
Not all the automotive employment news is rosy, however. Striking workers at American Axle have raised the ire of Richard Dauch, once regarded as a friend of labor. Dauch made $10 million in 2007, but he wants the same two-tier wage concessions as companies like Dana have gotten that would pay new workers about $14 an hour. He’s been a holdout in current union negotiations, despite the fact that he’s idling his customers’ plants by starving them of parts.
Dauch has punished unions before by shifting production out of the country. An earlier conflict between Dauch and the UAW, says an article this week in Crain’s Detroit Business, hurt the Buffalo Gear, Axle & Linkage plant in Buffalo, N.Y. Workers there were slated to build axles for the next-generation 2009 Chevrolet Camaro muscle car. But after the union local declined to agree to contract concessions,
According to Crain’s, the UAW suspects the work will go to
In lean terms, that adds up to the wastes of time, flexibility, and resources. With longer distance and lead time, production plans need to be frozen sooner (not really a factor if other parts have the same lead time, however). Fuel for trucks and trains is costing more and more which has to add to the final cost of the parts to GM, burning it creates CO2 and particulate emissions and depletes finite stocks of oil. But as most readers know, hourly wages - no longer a dominating cost of production - distracts executives from considering total system cost of a product.