Dec 15, 2008

Do autoworkers get paid $70/hour?

“Mathematically and intellectually dishonest” says Keith Olbermann Nov. 24 on MSNBC about the figure of $70/hour allegedly made by autoworker. He quotes the Center for Automotive Research’s figure of $28/hour, and adds $10 for benefits for a fully loaded $38/hour.

He says the $70/hour includes pensions of currently employed workers, plus pensions and benefits being paid to retirees and surviving spouses. If you divide that by all the hours worked in the time period under consideration, you get something like $70. This falls in Mark Twain’s category of statistics he called “damned lies.”

I didn’t check out Olbermann's math, but I’m sure MSNBC has some sort of fact checking process. Portraying autoworkers as greedy and overpaid is propaganda, pure and simple. Millions of Americans getting by on $10-15/hour would develop a lot of animosity to automotive workers hearing that figure, not to mention managers imagining having to carry a payroll like that.

Yes, the union has gotten generous pay for their members. Maybe more than they ought to get, by some standards, though not the millions paid to higher-ups.)

This is as ridiculous as calculating labor cost as a percentage of a vehicle’s cost. Wouldn’t the figure go up and down as fewer or more vehicles are made? Labor is a step variable cost, not an infinitely variable cost. You don’t add or subtract workers one-by-one according to demand.

As far as I know, and I’ve looked, the auto industry does not reveal the proportions of various categories of total cost of producing vehicles. I have a sneaking suspicion that, though legacy costs are higher than the transplants, things like logistics and warehousing cost far more than direct labor. My guess is that white collar and managerial costs are likely to dwarf the cost of hourly labor. We hear that parts cost different percentages of a total vehicle’s cost, but not what purchased parts, hid as inventory “assets,” make up in the overall consumers of cash. There’s a heck of a lot of waste in the system outside the cost of the workforce that builds cars.

I got this from the UAW’s website. Partisan of course, but Keith Olbermann is probably not being paid by the union to investigate claims of extravagant pay for autoworkers. You can watch the video of his report at:
MSNBC's Keith Olbermann on autoworker pay

Dec 14, 2008

I Promise America

My friend AJ O'Neil, proprietor of AJ's Music Cafe and famed for his Danny Boy Marathon, impulsively started a campaign called "I Promise America to Buy American," (and we'll give you coffee.) with the offer of a free cup of coffee if you take the pledge. From a handwritten sign-up sheet on the coffee counter to a TV news item, he's gotten attention. You can sign on at I Promise America.

To my international readers - you should understand that layoffs here in the Detroit area are getting to the point of being devastating. And we should understand that job losses are worldwide.

The lesson to learn is that AJ's gesture has helped to brighten the gloom and add some hope for anxious people in our community. At least they feel some support. You might ask what gesture you could make in your community to make a scary economic situation feel safer for your neighbors.

Dec 1, 2008

Barriers, real and symbolic

It's been almost a year since I started work on my article about DTE Energy's continuous improvement and lean journey, but it's been worth the wait. Jason Schulist, Director of Continuous Improvement, and Tia Umfress arranged interviews for me with three high-level leaders at the company. Their enthusiasm about the company's new initiatives was sincere and genuine. They shared stories about what they had been seeing and doing in the field where they had been leading classroom training and hands-on improvement events. Here's one about real and symbolic barriers that can be removed almost instantly--

Vince Dow, VP, Distribution Ops, in the electric side of the company, worked with a team of front-line people tackling a service center truck flow problem. He told me, “It was stop and go. Everybody waited at one point and it became congested. One of the people said, ‘The problem is this big metal stanchion.’ It was holding material, blocking part of the aisle. They said, ‘That’s our problem, but we can’t do anything about it because that’s not our area.’”

Dow asked them, “Why can’t you just take it down?” They started to say, “There’s this permit and that permit…” and Dow asked, “Well, who said?” They went through all of the reasons why until they got to the end. “By the end of the fourth day, the stanchion was gone,” he says. “They disassembled it themselves. Took all the material to other positions throughout the yard. Created a traffic flow pattern and the next day, all the congestion disappeared.

“Everyone said it was symbolic,” says Dow. “It not only freed the trucks up, it freed their minds and their hearts. Everybody became engaged after that thing was moved. They were saying, ‘You guys actually moved something that we all knew was in the way, but we never thought we could do anything about it, and now we know we can.’”

Dow talks about what he learns when he works with the teams, saying, “What’s always enlightening is finding what the roadblock is and trying to figure out how a decision, even one I made, filters down and comes out causing a problem. You made a decision but you never even thought about all the impacts. So you find these things and get them fixed.”

There's a humility about Vince Dow's recognition that good decisions can have bad side effects. We've seen a lot of examples lately of irresponsible executives remaining blissfully oblivious of the havoc wrought by their decisions. I can't help but feel encouraged about what I heard from DTE in the last few months -- sorely needed light in the gray landscape of Detroit in 2008.

And, yes, Dow and his fellow leaders are going back to the sites where they have led these improvement events, and going back repeatedly.

--The courses taught include C1-C4 principles elucidated in Chasing the Rabbit by Steve Spear, reviewed in a previous Lean Reflections post.
Copyright @ 2005-2014 by Karen Wilhelm