Wow B-Man.......

No disrespect to 01 XLT, but that has to be the most intelligent thing I've read here sine 1999

 

B-Man:

Excellent post and what I have told people at my work before when they ask why is the company sending some of the work to China to be done. I tell them we or most of us are all responsible, that most of us DEMAND for American companies to send work overseas because we want the best possible price.

We want to walk into Wal-mart and buy a socket set for $15.00 instead of a Craftsman set for $40.00. I buy Craftsmen because it last, and if something breaks I take it back and get another for no cost. However most people don’t think of that they will buy the cheap foreign made one for $15.00 and figure they can buy another to replace the one they have if it craps out (and it will that is guaranteed) and figure they are still ahead.

Are they? Maybe in the short run, but not if they plan on having it for 5 years, 10 years or 20 years or longer. I am ahead by spending a little extra because I will never pay another dime to replace my set. First because it will out last any foreign brand by far, but if I abuse it and break something I get a free replacement, so in 15 years Joe cheap *** spends like $100 on the same socket set I have that I only paid for once.

There is also another side to the “why is foreign products made cheaper” Labor is VERY cheap, in China they make 60 cents an hour, there are basically no labor laws and most important LAWYERS are far and few between. Big business spends a HUGE amount of cash on STUPID people and slimy lawyers. Take for example a story I read years ago about how bicycles come with some kind of warning about it might be unsafe to ride at night with no light. Some MORON riding his little bicycle was riding, didn’t have a stupid light and rode in front of a car and got hit (good he was a moron) anyway he sues the drive of the car and the bicycle manufacture because “they should have warned him it was unsafe to ride at night with no lights” WTF is that all about, the guy should have been beat with a branch off a tree for being so STUPID. Anyway he wins his case from the driver and the bicycle manufacture.

So, if your in business and already have a high overhead and KNOW your going to get sued by some morons for millions of dollars it kind of makes sense to import your bicycles say from China for $10 a bike, sale them for $60 and put some cash aside for morons instead of it costing you $45 to manufacture here in America.

With the way things are going now if Fast food could figure a way to have there food cooked and prepared overseas and arrive here when you order it hot, they would do so since they are looking at possible lawsuits again from the morons in society.

I don’t like spending more money then I have too, but I know from experience that when you buy foreign made CRAP, that in the long run it cost a lot more money then what you save the “first” time you buy it.

For those hell bent on buying foreign all the time to save money it would be wise for them to go to work tomorrow and demand a 60% pay cut so maybe they will have a job next month.

 

 

Excellent point about the unions. There are some good ones out there, but most are worthless and ARE costing a lot of jobs. Honestly if someone pushing a broom is making $20 an hour means there is someone that will not have a job there. Company has a budget and if they are forced to pay some ******** $20 for pushing a broom then one of two things happens, there is one less spot for another employee or they pass that extra cost on, thus making foreign prices look even better.

 

 

I knew what you were talking about, there are some good ones out there, just few and far between.

 

My high school economics teacher used to tell us that the Toyota Camry is the most American-made car out there. This was according to a few years ago though. Apparently, it had the highest percentage of American-made parts and was also assembled in the US.

 

I am in a union myself, Plumbers/Pipefitters out of Indy. I am just starting out, but I can already say that Unions are one of the most American-made oriented groups in the US. I go to work, and see '0' foreign cars out of about '100' in the parking lot. The whole philosophy of union labor is "Buy American for America". The company you work for cannot bring in immigrant workers for $5 and hour because there are set wages that every position must make. If the discussion here is that we should buy American made goods, I think that union workers are the one group of people that abide by that more than anyone.

To MikeF150: College isn't for everyone man. I made good grades all through K-12, went a year to college and made good grades there too. But you know what, ABSOLUTELY HATED IT. Anymore, college is almost forced on kids without helping them realize the other opportunities out there. I went to college just thinking that was the only way to go, never even considered working construction. If I had only thought about learning a trade and joining an apprenticeship, then I would be ahead of where I am (and maybe even have an L ) One of the good things about our country is we DO have an opportunity to go to college and further our education, but that path is not the only way to go and shouldn't be forced upon your kids.

 

Fast Gator & 01 XLT -

Thanks for the kind words.

For what it's worth, I am really getting concerned over 2 trends I am seeing become more prevalent everyday. I challenge all of you to observe and take mental notes to see if it is just me, or is it for real. Please do follow up and rebuke me or confirm what I am saying.

Trend 1 - 0% financing. When all the long-term dollar debts of the Big 3 manufacturers start coming due, something will have to give. It is impossible for a business to run without profit. Sorry, but a banks' main source of profit is interest charged for money lent. Somebody is paying for that free financing, even if it isn't directly you. The credit companies lend Ford, GM, etc. money, directly or indirectly. They have to post profits, just like smaller companies. What is happening is we are trying to trade tomorrow's profits for today, in the hopes that tomorrow's payments will somehow be made without pain. It is a dangerous way to run a business.

Reduced profits mean smaller raises, no bonuses, etc. Pay people less - they will spend less. People spend less - the economy slows down. It is a vicious cycle that can / will destroy the economic viability of the US if we don't mend our ways and educate our people on the basics of economics.

I'm not trying to be a doomsday person; rather I am gravely concerned over our economic health.

Trend 2 - Companies are short selling themselves in order to stimulate business. A few years ago, this practice was simply putting something "On Sale" at a price that was usually reduced to within a few % of it's real cost. MANY times, the suppliers of the "Sale" product themselves contributed to the cost reduction for the retailer, so the net effect was the retailer only received a small net "Loss" compared to the original profit margin. It attracted people to the retailer, and usually they would buy other things to boost business.

Now, we are seeing significant cuts, and a large percentage of them are not being subsidized by the manufacturer. If you have ever worked with retailers, you know they typically work on small margins, offset by larger volumes. Grocery stores work on fractions of a % of profit on high volume items.

Wal-Mart is notorious for beating the crap out of vendors to get the absolute bottom line prices. On the surface, this looks good for the consumer: low prices. However, what is the net effect:

The quality of products typically goes down, because a quality item is more expensive to make and will not sell in a Wal-Mart (Craftsman tools for example). The manufacturer has to compete to get a substantially reduced price approved by a company that has NO LOYALTY at all to the vendor. Therefore, you price reduce yourself into oblivion and then they simply switch vendors, leaving you with:

A: Reduced workforce (you had to lay off to meet budget under the reduced pricing plan)

B: Scramble time for the sales force to try and find someone who wishes to sell your products at a margin you can survive with.

If this continues, our companies will have no choice but to take production offshore to save on the labor required to make the product. Like 01 XLT said, as long as scumbag lawyers and lazy a$$ people victimize companies through frivilous lawsuits, companies will have to pad pricing to cover legal expenses.

People's greed and desires for massive short-term gains via the stock market is destroying American business. When shareholders all demand a return every single quarter, the companies have no choice but to cut costs. When they cut costs, we all lose.

There is a big difference between healthy competition and destructive economics. When you shop on price alone, you are feeding the destructive economic monster.

01 XLT probably posts the most common sense economic advice I've seen to date. It isn't just the ramblings of a madman , it is a "wake up and smell the coffee" call to all of us as consumers.

Sorry for the rant...

 

And ALL the profits go back to Japan, where YOU (or your company) are probably NOT allowed to sell the products you make because of import restrictions.

I agree, it's nice they employ Americans and whatnot, but it truly benefits them way more than us.

Notice how they have not been forced to jump on the 0% financing kick? Wonder why...

I saw a bumper sticker a few years ago:

Hungry ?
Unemployed ?
Eat your foreign car !!!

May be a little extreme, but the point is right on, IMHO...

 

 

B-Man:

I agree with to a large aspect to your post but would offer the following thoughts and/or practices I have seen in the business climate I work in.

In the past few years, due to a slow and sluggish economy the customer has been king, more so then in the 15 years proceeding the economic downturn. In this regard I refer to the customer as the people we sale our electric motors to, which is another business where they use it in all kinds of different applications.

We have been forced to reduce the price of many of our motors and at the same time to maintain or exceed the quality of product we sale. Sounds impossible, does it not? On the surface yes, but it is actually practical and helps to force a company to become more profitable while cutting prices.

It is basically working smarter, cutting the fat, the bureaucracy out of the company to the very minimum. I want to try and explain the best that I can and I hope I don’t go to long with this post.

We have restructured the way we manufacture our electric motors. We use to have lead times of 8 – 16 weeks upon receiving an order. We use to have approx. 30% of our companies overall yearly profits tied up on inventory. Without going into a lot of detail with all the improvements I will try to summarize. First we have reduced inventory to about 5 – 10% of yearly profits this has saved the company a nice amount of money that was paid out in interest on the inventory and greatly reduced the risk of being stuck with inventory if a customer had left. That money in turn was used, in part, to reduce the overall effect of having to reduce prices to our customers.

Second, on the actually production floor we have refined manufacturing techniques that have greatly helped to reduce lead time. For an example what use to take say 40 hours of labor to build a motor now takes approx 10 – 15 hours of time. Again a cost savings to the company. Many changes are still ongoing but one big change in reducing man hours to manufacture a motor was instead of doing most things in lots for example:

You would wind 100 motors and put them into stock to be kitted later, or to be used to build the complete motor. In another area you would machine 200 end caps and put them into stock to be later kitted to build the complete motor. Now you would check these parts to see that they met the print specs, but you could still have a problem later when you went and actually assembled the lot of 100 motors.

Now we manufacture in a cell type of environment which has someone winding a motor, someone is machining an end cap, and then someone is taking the wound motor and end caps and assembling them. If there is a problem found, a defect the process is stopped and the problem corrected. Now instead of having 100 motors or 200 end caps to rework (big overhead cost for rework) you may only have 5 along with this you are correcting the problem and finding the root cause on the spot as it happens and not going back to try and figure out what actually happen.

Again, this reduces overhead cost of rework, and puts well thought out corrections in place so as to prevent it at a later date. Some quality checks have been taking out because they were not needed in a cell type of manufacturing. However, the motors are manufactured with better quality because of the cell and the quality checks put into place that actually make sense.

In manufacturing there is a saying, which is very true:

You can not inspect quality into a product.

You have to insure the methods in place will insure a quality product rather then inspecting things later to find a problem when it is too late.

Ok, I’ll wrap this up. We have basically been able to meet our customers demand of reducing the cost of our motor, maintained and in a lot of causes increased the quality of the product, while reducing our inventory levels and are now beginning to see our profits go up. Still not much because it has just recently began to pick up for us, but we are a leaner more productive company then we were just 3 years ago. All this and we have not really lost any employees. I say that as in we didn’t just get rid of people when the process became leaner. Most those that are gone were part of the paperwork and bureaucracy of the office. What they did is as people left they would either move people or just not refill the open slot. No one was just let go to cut cost.

So it is very possible for companies to reduce cost, and increase quality and maintain or raise there profit margin.

Our lead times of 8 - 16 weeks is now down to 2 - 6 weeks.

 

Building and seling a vehicle in the US generates a lot of money in our economy. Okay, maybe the $1000 profit goes back to the HQ, but how many people have jobs at the plant that get paid how much money? Same with dealership employees and local marketing. Most of the foreign car companies have US R&D offices too. They (foreign car companies) make a lot of money for the US economy.

 

Sorry I took what you were saying wrong. It is nice to have the opportunity in this country. I was also lucky enough to have parents to pay my way through school. I went a year for a computer technology major through Purdue University, had a 3.4 out of 4.0 GPA and an academic scholarship, but I just wasnt enjoying myself. I know college doesn't always have to be fun, but there was just something about college that I absolutely hated. I'm to the point now where I just want to work and come home and take it easy, no stress or homework to worry about. Every week I get my check and think of ways to blow it on the truck. I like the setup of the apprenticeship that I am joining. Get paid every week, only cost I have is books, get a huge raise every year for 5 years until I am making around $30/hr minimum + benefits. Joining the union is just appealing to me right now. I am also going to learn Autocad and Pipe Designer 3D so I will be able to do the design part, and not the labor and make an income way over scale of what the labor part makes.

Well this post is a little off subject, so I guess we should start talking about 0 APR.

I think the manufacturers are just jacking up the MSRP and giving 0 APR to make up the difference.

 

01 XLT Sport -

Funny you bring this up. I am currently preparing to travel to Boston for my 4th week of 6 Sigma Black Belt Training - Manufacturing.

What you described sounds a lot like the end result of a Six Sigma project implementation / process design change. I highly recommend anyone who is interested in understanding QUALITY to read a Six Sigma book.

You are right, you can't inspect quality into anything; you have to build it into the product every step of the way. Sounds easy, but in reality it is quite challenging.

I wasn't insinuating that competitve issues that result in better efficiencies and products are bad. Rather, I was pointing out that there are a lot of folks who shop PRICE without considering QUALITY. While everything quality doesn't necessarily have a high price, high quality usually costs more than low quality. Your socket set example is a perfect description of this in the real world.


Something I have learned in this training (and from reading other books on the subject as well) is this:

In Japan, their "JD Power" award for best quality is named after an American.

This guy (and a large engineering / design staff) went to Japan right after WWII to help re-build their industrial sector. The programs they put into place (similiar to today's Six Sigma) were called "Lean Manufacturing" and are still in use today.

Toyota's entire design, manufacture and assembly processes (Called the "Toyota TPS") were heavily based on this teams' original implementations.

In a nutshell, multiple AMERICANS are directly responsible (and acknowledged by the Japanese as being so) for the quality of manufacture technology you see today in Japan.

I don't have my book here, but I will post his name, if anyone is interested, after I get home.

BTW, Ford Motor Company has a fairly large Six Sigma program in place. They are charged with no tasks other than designing their products and processes for Six Sigma-level performance. BTW, Six Sigma is defined as 3.54 defects per 1,000,000 opportunites.