Business Corner
STRATEGIES & ANALYSIS
BY PHIL PHILLIPS
CONTRIBUTING EDITOR
PHILLIPS@CHEMARKCONSULTING.NET
Bailout: another opinion & comments
In the October edition of this column: “No one is
immune…we’re all in the boat together,” we discussed the influence the automotive, electronics,
appliance, housing and construction markets have on
the well being of the national economy. Together these
industries account for 23% of the total GDP.
An up close,
personal
look at the
automotive
mess the
U.S. is in.
This month I want to address the situation in the
automotive industry and provide some anecdotal
comments that magnify my feelings about why a
bailout, loan or whatever you want to call it, without specific stair step performance milestone objectives to be achieved will only aggravate the situation, especially with the buying public.
I lived in Detroit for 14 years and loved every
minute of it. From 1980 to 1994 the town was
booming and exiting with all our neighbors seemingly involved either directly or indirectly in the
industry. During those years in Detroit I either
supplied paints, coatings, adhesives and sealants
or consulted for companies who did. So I have
always been involved in this business. However,
from extremes of these neighborhoods to direct car
and truck plant administration exposure, I
observed an undertow of events that caused me
concern even back then.
I headed up marketing for companies selling
products to the automotive industry. I made a good
salary, or so I thought. All my neighbors were so-called blue-collar UAW laborers. In 1990 they
brought home approximately $83,200 at $32/hour
plus benefits of $8/hour ($40/hour total), not
including overtime. With overtime, which most
were enjoying, their annual take home was averaging over $100,000. I was so-called upper management making a total, including bonuses, less
than my average neighbor. You need to understand, my neighbors were great people with kids
who would be going or were enrolled or graduated
from college. However, the dichotomy was real and
very apparent.
My neighbors boasted that the UAW gave them
as much power in their respective plants as management possessed, if not more. They could walk off
the line for practically any reason the local foreman
felt was appropriate.
One of my personal experiences involved the
Chrysler Windsor, Canada mini-van plant trial
runs of an airless spray gun. This spray equipment
was designed to reduce the amount of paint (
overspray) that does not go directly onto the vehicle in
production but remains in the air in the spray
booth, therefore, eliminating the overspray making
it healthier for the UAW worker in the spray booth
and additionally save the plant more than $5 million dollars per year in paint savings.
The trial had been underway for four days with
all the savings numbers coming in on target. One
could also clearly see that the amount of residual
paint in the air and around the workers was
diminished greatly as a result of the equipment
performance.
On the fifth day, in an act that was clearly
planned and orchestrated to the surprise of myself
as well as to Chrysler management, one sprayer
walked over to the spray booth glass partition, gestured to the spray gun then smashed it into pieces
on the steel subfloor grating. He then pushed the
production line STOP button and walked out of the
building taking along with 1,500 other workers.
It seemed that the UAW had negotiated their
last contract to include a “health break” that
included 15 minutes in the first and 15 minutes in
the second half of each shift. The assumption on
the part of the UAW, without asking management
for clarification, was that if this new spray equipment would eliminate paint clouds in the spray
booth, their 15-minute breaks would also be eliminated automatically. The walk out cost Chrysler
thousands of dollars in lost production over four
days and an estimated $5 million annualized savings by not utilizing the new spray equipment.
Another interesting story occurred in 1990 and
involved my wife, who owned a paint and wallpaper store in Birmingham, MI. A woman who
worked for my wife had a husband who was furloughed from GM for almost a year. He collected
+90% of his hourly GM salary plus benefits while
personally building their new house during his
time off. He was making approximately
$76.6K/year including benefits. Multiply his
income by thousands that were furloughed during
this time and that is what GM was “carrying” for-
