[UPDATE: Automotive News [sub] reports that Linc workers voted “overwhelmingly” to authorize a strike, noting
With the strike authorization, the local can send notice to LINC that workers could strike after five business days if progress isn’t made toward a contract.
Ninety-eight percent of the 88 workers who voted yesterday agreed to authorize a strike, a representative at the union hall said this morning.
We’ve been watching the drama at GM’s Lake Orion plant unfold for some time now, as an “innovative labor practices” agreement between the UAW, GM and the government has already drawn UAW protests and NLRB complaints, as well as increased backlash against the union’s two-tier wage structure. Thus far GM had been able to prevent Tier One workers from being forced into the second tier, by shuffling them off to the Flint HD pickup plant. But with GM’s truck inventory soaring to “Old GM” levels, Flint is being idled, and those “Tier One Gypsies” are once again facing the choice between moving to some other plant or accepting a 50% paycut to return to Orion. And now, another labor issue is raising its ugly head, as Crainsdetroit reports that
About 125 workers for a critical supplier [Linc Logistics] inside the General Motors Co. Orion Assembly Plant are taking a strike authorization vote today as a means of accelerating contract talks.
Foreign suppliers could produce the final nail in the coffin of struggling Saab, the head of a European supplier association fears. “I think that the patience has more or less run out,” Lars Holmqvist, CEO of CLEPA, the European Association of Automotive Suppliers, said to Swedish news agency TT [via The Local]
Foreign suppliers “probably have less feeling for Saab than many Swedish companies which have grown up with Saab in a different way. Many also have a personal connection to Saab because they might have driven one at some point in their life. But the foreign suppliers are tougher,” Holmqvist, himself a Swede, told TT. (Read More…)
When I stopped working for Volkswagen in 2005, they had some 400,000 parts, or “numbers” as they are called in industry parlance, in their central warehouse in Kassel. With each car, the number climbed higher. On the other hand, some 5 percent were usually out of stock. The launch of each car caused raw nerves in the parts department. When a part was faulty, dealers and production manager were at war for parts. The production managers usually won, and blamed the dealers for shoddy service.
It’s tough enough to keep the hungry beasts at assembly lines and in workshops supplied with parts during peacetime. If a volcano over Iceland blows ash, or if a huge tsunami wipes out a good deal of Japan, it turns into parts paranoia. Now, Japan’s formerly powerful METI, the Ministry of Economy, Trade and Industry, is using the Tohoku disaster to force the Japanese car industry to standardize a lot of the parts it uses. (Read More…)
Saab was supposed to reach 100% production speed sometime in the middle of last week after enduring a nearly two-month shutdown. But now it seems that more “material shortages” have brought the Trollhättan plant to its knees again, as Steve Wade of inside.saab.com reports
Yesterday, production at Saab Automobile stopped at lunchtime due to material shortages. We have now stopped again today for the same reasons…
The liquidity situation is still tense, and depends on several different financing solutions falling into place, long-term as well as short-term. Some milestones have been achieved, such as the letter of intent signed with Pang Da and the additional funding that their order of Saab cars means. An example of things that still await a solution is the sale and leaseback of Saab AB Property, which we have addressed in previous communications. Representatives from Spyker and Saab will continue to work with these solutions, while the dialogue between Saab and suppliers progresses.
A report by UNEP [PDF here], the UN’s environmental body, finds that recycling rates for some of the key ingredients in EV and Hybrid cars are woefully low. The chart above shows “functional recycling rates” for 60 metals, and the rate for such key elements in the production of EV and Hybrid batteries and magnets as Lithium, Vanadium, Lanthanum, Neodymium, Dysprosium, all have recycling rates of 1% or lower. Not only do many of these elements have the potential for creating ecological damage, but many (especially the so-called “rare earth elements”) are considered relatively scarce…. and not recycling exacerbates both of these issues. But, notes the report, the complex fusion of elements used in both batteries and EV magnets could present huge challenges in ever improving these rates of recycling.
Where relatively high EOL-RR [End Of Life Rates of Recycling] are derived, the impression might be given that the metals in question are being used more efficiently than those with lower rates. In reality, rates tend to reflect the degree to which materials are used in large amounts in easily recoverable applications (e. g., lead in batteries, steel in auto- mobiles), or where high value is present (e. g., gold in electronics). In contrast, where materials are used in small quantities in complex products (e. g., tantalum in electronics), or where the economic value is at present not very high, recycling is technically much more challenging.
With new compact and subcompact models from Ford and GM enjoying respectable sales, the mainstream media has been indulging in some “feel-good” headlines, like the New York Times’s Detroit’s Rebound Is Built on Smaller Cars, or CBS’s more equivocal Can small cars rebound U.S. auto industry? It’s an understandable instinct, as the media has long battered Detroit’s inability to build competitive compact and subcompact cars, and in the post-bailout atmosphere of redemption, these headlines definitely help reassure Americans about the value of their “investment.” Unfortunately (if unsurprisingly), however, these pieces gloss over the full truth of the situation. Yes, Ford and GM are enjoying improved sales success with small cars. The “U.S. auto industry,” on the other hand, isn’t actually getting all that much out of the situation, beyond some fluffily positive press. Here’s why:
We still have not heard from Saab and there have been six weeks without production. It eventually reaches a point when you have to make a decision
Johan Andersson of the Swedish unit of supplier giant Lear in the WSJ, on why his employers just laid off all 160 workers of its Trollhättan-based Saab workforce. Apparently Mr Andersson and Lear aren’t any more encouraged by Saab’s PangDa deal than TTAC. And considering that the Chinese dealer group is telling Gasgoo that “production has already restarted” at Saab, the fleeing suppliers who haven’t even heard from Saab yet create some credibility problems for the PangDa-Saab alliance (even if PangDa was referencing GM production of the 9-4X at Ramos Arizpe). Which makes the dire rumors that the deal has not, nor will be, blessed by the Chinese government a little more worrying. Sounds like the rotund lady is warming up her vocal cords…
Saab has received wire transfers of around €30m from both Gemini Investments and the Chinese dealer group PangDa, reports Aftonbladet, and it will be using that money to pay off its supplier debts which could use up most of that cash (Saab’s supplier debts are estimated by DI.se at between two hundred and four hundred million kroner, or as much as €44m). Leaving aside the issue of how that money was able to be transferred from China to Sweden in a matter of two days (more on that from Bertel here, the short version: the deal should need Chinese government approval), there are serious questions about Saab’s ability to restart production. After all, the €30m from Gemini is debt, while Saab owes PengDa for an undisclosed number of vehicles that it bought with its investment. Unless those cars are sitting somewhere waiting to be shipped, Saab will have to pay off its suppliers and then build the cars on what is essentially credit from PengDa. Meanwhile, that’s not the only demand on Saab’s finances and attention, as CEO Victor Muller is planning on taking a bonus of over half a million dollars, a decision that is creating fresh problems of its own.
TTAC has always taken pride in its outsider status, and we’ve taken pains to cover the industry from a safe distance in order to continually bring a fresh perspective to developments. As a result, we’re not always on the same page as trends in the industry at large, which tends to be far more given to wild optimism than the average TTAC analysis. But, based on a new study by Booz & Company [PDF], it seems that the “carpocalypse” of recent years has driven the industry to a more TTAC-esque pessimism. According to responses by executives at both OEMs and suppliers, the industry generally feels that the bailout was either a missed opportunity or it didn’t do enough to address fundamental weaknesses… and as a result, executives see challenges ahead.
When we worked on the Phaeton launch in 2001, we said it had “more computers than a small company.” It had 56. Today’s cars have anywhere between 30 and 100 computers on board. They are small microcontrollers that typically chat with each other via a CAN bus. You don’t take just any microcontroller for the job. They need to hold up to the harsh environment inside of a car. Their makers need to hold up to the harsh environment presented by the purchasing departments of automakers that squeeze them for every penny. As a result of both, there are only a few players in this field. This is the story of one of them. (Read More…)
As galling as the auto bailout was for many Americans, the hidden “stealth bailouts” that occurred during the government-led industry reorganization are often even more galling. Today the final chapter of one of those “stealth bailouts” has taken place, as GM has sold its stake in its spun-off supplier Delphi for $3.8b, booking a $1.6b gain on the deal. So, how is GM divorcing its former in-house supplier a stealth bailout? Back in the dark Summer of 2009, the government organized a GM-led rescue of Delphi, which had been languishing in bankruptcy since 2005 (after GM. By buying a chunk of Delphi for $2.5b of the government’s money and selling it back for a profit, GM’s helped itself to a little extra bump of public money. Oh, and did we mention that GM dropped all kind of pensions in Delphi’s lap when it spun the supplier, including workers who had never been employed by Delphi.
But that’s not the worst part: any guesses as to why GM’s stake in Delphi is suddenly worth so much more? A recovering industry, perhaps? Wrong. Shortly after GM bought back its stake in Delphi, the supplier dumped $6.5b worth of pensions onto the government’s Pension Benefit Guarantee Company, causing huge benefit cuts and hidden government costs. What did the PBGC’s stake, given as “partial compensation” for that pension dump, yield it? A cool $594m. Meanwhile, thanks to the government ‘s arguments, GM still had to top-up UAW retiree pensions, leaving non-union retirees and members of other unions out in the cold [read all about it in a just-released GAO report in PDF here]. A shell game inside of a political payoff inside of another shell game, in other words. There’s nothing to not love here…
Our (not quite) daily run-down of delays, shut-downs, shortages, and postponements, triggered by the March 11 tsunami in Japan.
Toyota will have lost production of 200,000 vehicles by Friday. The Nikkei [sub]
Toyota says that 300 dealerships out of a total of 810 in North Japan have been damaged by the earthquake. The Nikkei [sub]
Nissan figures its Chinese output will be about 10 lower than planned in April as supply chain disruptions hinder operations. The Dongfeng Nissan joint venture will idle plants on weekends until mid-April, but will continue doing overtime on weekdays. Dongfeng Nissan has trouble getting parts from Hitachi. The Nikkei [sub] (Read More…)
“Production at a Nissan Motor plant in China dwindled dramatically two weeks after Japan’s earthquake and tsunami disrupted the supply of key auto parts,” reports China’s People’s Daily, citing “sources with the company.”
In a land where alleged spokespeople of a company get a heart attack and hang up when a reporter calls, those sources turned out to be workers at the Dongfeng Nissan joint venture in central China’s Hubei Province. “We used to assemble 304 cars a day, but today our plan is set at 82,” said a worker. (Read More…)
So far, it had been clear that the March 11 earthquake and tsunami would create big problems for the auto industry in Japan in particular and worldwide in general. When asked when, where, and how much, all we received were shrugging shoulders when taking to a westernized counterpart, or an “eeeh” or the customary sucking of air through the teeth when talking to an old school Japanese. Now finally, the first facts emerge. (Read More…)
Our daily run-down of delays, shut-downs, shortages, and postponements, triggered by the March 11 tsunami in Japan.
Toyota informed its U.S. dealers and workers to expect production slowdowns due to parts shortages. “Today, we communicated to team members, associates and dealers here that some production interruptions in North America are likely. It’s too early to predict location or duration,” Toyota said in a statement. Most, but not all of the parts for vehicles built in North America are sourced here. Wall Street Journal
Toyota expects to idle its pickup truck assembly plant south of San Antonio. “We are informing our team members that, with the situation over in Japan, it is likely that we will see some nonproduction days coming,” Craig Mullenbach, spokesman for Toyota’s San Antonio plant, said. Mullenbach added that parts needed to build the full-sized Tundra and mid-sized Tacoma pickup truck in San Antonio are running out. Reuters
Honda will suspend car production at its Japanese factories until at least April 3. Honda will temporarily transfer some functions such as car development and procurement out of its badly damaged R&D center in Tochigi. Reuters
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