Wednesday, June 24, 2009
Despite more than a year of bad news as the manufacturing sector continues to contract, a new annual index released today by Deloitte LLP and The Manufacturing Institute shows that Americans view manufacturing as the most important industry for a strong national economy. There is a wide perception gap, however, between the public's highly positive views of manufacturing's contributions to America's economic success and their negative views about pursuing a career in manufacturing.
The study goes on to observe
While Americans view manufacturing as the most important industry for a strong national economy, the index shows that they are not pursuing careers in manufacturing.
Even more alarming, These are jobs Americans want for their friends and neighbors - but not for themselves or their family members
So clearly there is some work to be done in improving the image of manufacturing.
The US government will loan 5.9 billion dollars to Ford Motor Co. and 1.6 billion dollars to Japanese automaker Nissan to invest in improving the fuel economy of their US-built vehicles, officials said Tuesday.
The loans are the first awarded out of a 25-billion-dollar program to help automakers meet upcoming fuel efficiency standards, Energy Secretary Steven Chu said at a press conference.
"These loans will help the auto industry meet and even exceed the president's tough new fuel standards while creating jobs, reducing our dependency on foreign oil and ensuring America's competitiveness."
Another 465 million dollars will be loaned to electric sports car maker Telsa.
Additional loans will be awarded to "large and small automobile manufacturers and parts suppliers up and down the production chain" over the coming months, said Chu
Ford will use the 5.9 billion dollars retool plants in five states and boost the fuel efficiency of close to two million new vehicles annually.
Nissan will use the loans to modify its Tennessee plant to produce zero-emissions electric vehicles and the lithium-ion battery packs to power them.
As I mentioned above the quotes, there is an interesting tie-in for this blog. A lot of metal stamping dies, and the original production of them, have gone off-shore.
There are a determined bunch of people in Detroit (and no doubt in other places too, but I only know about the Detroit bunch) who want to play catchup and bring their toolmaking lead time and costs down, in line with off-shore toolers, in order to keep that work onshore. I've kept in loose touch with a few of them, belong to some of their groups on LinkedIn and other places, and in general applaud what they're doing. I did, however, question their belief that they could bring 50% of the diemaking that went offshore back. I don't think those dies are coming back unless and until they need to be retooled.
This may be the retooling opportunity they're looking for/need. Retooling for greater efficiency means making better use of steel components, smarter brackets with stiffening ribs instead of using thickness to get the strength needed, use of aluminum where possible, etc. These things mean new dies, and therefore, a chance to start over again on-continent.
So this may well be a very good thing.
Thursday, June 18, 2009
From Yahoo! Canada Finance
The Conference Board of Canada says auto parts makers will cut 37,000 jobs, or about one third of their workforce in Canada, as the North American industry undergoes massive restructuring.
The sector has been shedding jobs for years, but this year's losses are expected to top the total of the last four years combined.
Ontario will be hard hit by the job losses since the province has most of the parts companies.
Chrysler Group LLC will start cranking out vehicles at seven of its North American assembly plants on June 29, but some Canadian dealers say they will be unable to restock their dealerships with new vehicles because they can't get the financing they need.
Inventories have fallen to minimal levels [...but many ...] can't order new cars and trucks because they are still waiting for financing approval from GMAC LLC
This is another example of cascade failure I spoke about earlier. Seemingly unrelated things combine to topple systems that should continue to work. If it were easy to get credit another way, these dealerships would not be having a problem. They might pay a little more for credit from someone else, but at the moment, all other sources are choked off, and this one is slow.
This is another bottleneck on the road to a recovery for stampers.
Fiat [which now controls Chrysler] announced plans to resume production at its Brampton and Windsor plants and five other North American factories at the end of June.
In addition, parts stamping, engine and transmission factories that feed those plants also will restart June 29, Chrysler said in a statement.
Thursday, June 11, 2009
Canada is launching a full court press in the U.S. Congress today against the Buy American provisions in the federal stimulus spending law.
The action is part of the ongoing campaign by our federal government to get the U.S. government to drop Buy America provisions that force U.S. municipalities and states to use American steel and manufacturing exclusively for projects paid by U.S. taxpayers.
The provisions are believed not to contravene international trade agreements because states and municipalities are sub-national jurisdictions and not subject to trade deals.
Sounds pretty weasily, doesn't it? Sure we have these NAFTA provisions, and they apply to you, but they don't apply to our states and municipalities. One wonders how Free Trade can have so many different meanings to different people.
U.S. Steel bought Stelco and made record profits last year. Then the Americans ruined the world economy and U.S. Steel shut down the Hamilton and Lake Erie works, moved all our orders -- including Canadian orders -- to Pittsburgh, Alabama and Indiana
[...] what follows is some discussion of how US Steel got around NAFTA rules. But the sting is in the tail
What really hurts is our Canadian-born USWA president Leo Gerard not only backs this "Buy American" approach, but used union dues to lobby Congress to get the protectionist plan passed at the expense of Canadian workers.
If it were not for Gerard, we might be actually working, making steel at Stelco, rather than hoping our EI won't run out before we start up again.
I don't know about all of it, but at least part of it is true. Leo Gerard was born and raised in a mining family in Sudbury.
Saturday, June 06, 2009
From The Hamilton Spectator TheSpec.com
A single guideline in the Investment Canada Act is “probably the crux” of the dispute between U.S. Steel and the Canadian government, says Industry Minister Tony Clement.
The guideline excuses foreign buyers who are unable to fulfil their commitments under the act due to “factors beyond the control of the investor.”
The question is whether the current economic meltdown qualifies as such a factor in U.S. Steel’s shutdown of the former Stelco.
Clement sent a demand letter to U.S. Steel earlier this month after determining that the temporary closure of its plants in Hamilton and Nanticoke violates promises made under the act. He is now reviewing a response from the Pittsburgh steelmaker that is “about 87 pages in total.”
But he was tight-lipped about the contents of that document today.
“You’ll be hearing from us very shortly,” he said.
And then, again, the sounds of silence.
Tuesday, June 02, 2009
From the Detroit Free Press
A fragile automotive supply base will be tested even more as suppliers wait to see if they will be part of General Motors Corp.'s future after the company's historic bankruptcy filing.
Last week, local suppliers Visteon Corp. and Metaldyne Corp. filed for Chapter 11 protection. More are expected to follow [...]
[...] analysts say GM seemed as prepared as possible to deal with strains in the supplier industry as it headed into bankruptcy.
That includes paying suppliers last Thursday instead of today, when payments for parts shipped in April could have been caught up in the court process.
The Detroit News has also been writing about the economic impact. Under the headline
Michigan feels brunt of GM's bankruptcy, they write
Michigan's share of the total job loss: 42 percent. And that doesn't count the trickle-down impact on suppliers, stores, real estate and other segments of the state's economy.
The impact of GM's Chapter 11 filing has already started rippling through the supply network. Several companies, including Lear Corp., Johnson Controls Inc., TRW Automotive Holdings Corp. and Magna International Inc., are among GM's largest creditors. Lear, which makes seats, is owed $45-million and Monday said it won't make a semi-annual interest payment of $38-million that was due June 1.
From further down in the article:
The parts industry has been reeling for months. Canadian parts suppliers have seen their production fall an average of 40 per cent in the past year or so and roughly 10,000 jobs have vanished.
Last week alone two major U.S. parts makers, Visteon Corp. and Metaldyne Corp., filed for bankruptcy protection, joining five others this year.
Yesterday I reproduced a list of suppliers owed money by GM. The conclusion is that these people will lose much, if not all, of that money. There are roughly $400 million (US) owed to parts suppliers. I thought that number was low, but today's Globe article claims that, in advance of the court proceedings, many parts suppliers were paid up until the end of April (very rare for automotive, it would be more usual to have 75 to 90 days outstanding).
So we are left to ponder cascade effects. Another quote from the article
JPMorgan Chase & Co. analyst Peter Acciavatti said in a recent note that based on debt-trading levels, Lear, American Axle & Manufacturing Holdings Inc., Cooper-Standard Automotive Inc., and at least one other company “appear to be on the verge of bankruptcy.
Monday, June 01, 2009
From Yahoo Finance, originally from AP
General Motors Corp. filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration's plan to shrink the automaker to a sustainable size and give a majority ownership stake to the U.S. government.
GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has US$172.81 billion in debt and $82.29 billion in assets.
They owed more than twice what their assets were. The big question now is, how much of that debt was tooling owed to metal stampers and other outsources? How many upstream businesses will fail now because of the defaults? How many jobs will be lost? Is there protection for the supplier chain as part of this deal? I know it was a slow, negotiated slide into bankruptcy, but was saving the supply chain a part of the negotiations? I've heard lip service paid to this idea in the press in the last month, but see nothing in todays headlines that is on point.
From the same article:
the automaker will permanently close nine more plants and idle three others
and the article contains unconfirmed speculation on where those dozen plants likely are.
The downsized GM's brands will be limited to Chevrolet, Cadillac, GMC and Buick. Its Pontiac, Saturn, Hummer and Saab operations will be either sold or closed.
I never got the point of Hummer. Not as a car, not as a part of GM.
It's a shame about Pontiac. We had one when I was a kid. Everyone did.
Saturns are good cars. Everyone I know with one loves it. I don't understand why they'd sell it.
It's a shame what they did to Saab. It was a good brand. My boss in Germany had one 20 years ago, and it was a wonderful car. But it became the Commodore Amiga of the auto world. They bought it and had no idea what to do with it.
The Globe had an interesting list of who the creditors are (or should we already speak of them in the past tense?)
Name of GM creditor and amount of claim.
- Starcom Mediavest Group $121.54-million (U.S.). Not a parts supplier, as far as I can see.
- Delphi Corp. $110.88-million. parts supplier
- Robert Bosch $66.25-million. parts supplier
- Lear Corp. $44.81-million. parts supplier
- Renco Group $37.33-million. not sure
- Enterprise Rent A Car $33.10-million. not a parts supplier
- Johnson Controls Inc. $32.83-million. parts supplier
- Denso Corp. $29.23-million. I believe these are the rust proofers
- TRW Automotive Holdings Corp. $27.52-million. parts supplier
- Magna International Inc. $26.75-million. parts supplier
- American Axle & Manufacturing Holdings Inc. $26.74-million. parts supplier
- Maritz Inc. $25.65-million. ? there are several companies named Maritz
- Publicis Groupe SA $25.28-million. Advertiser, I think
- Hewlett Packard Co. $17.01-million. computer maker
- Interpublic Group of Cos Inc. $16-million. marketer