The Epic American Credit and Bond Bubble Laboratory Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: TH	11/24/2008 8:49:39 PM
	24 Recommendations Read Replies (2) of 110194

Tales from the Darkside of Automotive Land. I'm amazed at the past three weeks in Detroit automotive. A major tier one that I would rank as number 2 in technology and maybe number 3 in sales has just laid off a huge number of people. They are disappearing everyday. All but ONE team member from a major OE launch from July are now gone. I have signed NDA's with two technology managers for very specific advanced engineering developments, and now it appears that both are gone. When they start firing the advanced engineering guys, it is a sign that the ship isn't going to float. These guys are the future and the only innovation that will be available is that which you purchase. About four years ago when C&A was imploding they fired this super talented PHD researcher. This guy was an innovation driver and understood how to identify projects with practical value from those that were just dreams. I knew when they they fired him to save 140K/year it was game over. Had a meeting last week with a well respected purchasing manager. He was five years away from retirement. We did our business and then he did something completely out of character. He went on a rant about Paulson and what a fraud the bailouts were for a good 20 minutes. He said that the contract with American workers and Wall Street was voided and everyone who bought into the racket would be working another 10 or more years before retirement. Frankly I was pretty impressed with this rant, as he sounded very much like a well-informed SI member. Two hours later I had a meeting with the primary buyer and the director of supplier quality. To my surprise they too went on a mini-rant about the very same thing. It appears that those suffering the most are starting to gain some understanding of what is really happening. Today I met with five engineers to discuss a 2011 program. Someone joked about a final tuning phase in 2010 and said, "but it really won't matter, for I won't be here". The other four all just nodded and for just a moment I think everyone realized that the odds were high that no one at the table would ever see what we were designing on paper ever in production. Either the project would get canceled because of the up-front costs required to capture the savings or all of us would be out of work or working for someone else. It was a sobering moment. In that same meeting I was reminded why the Japanese really do it better. There was a part out of the control of everyone in that room, and we had one OE engineer there. You would think the OE engineer could just act like god and make the supplier of this uncontrolled part conform, but it is not so easy. In this case that supplier quoted at X price, and somehow managed to gain a tolerance that was really not meaningful in terms of achieving the best quality. If the OE engineer tried to force them to tighten, the supplier would simply go to purchasing and demand a cost increase to offset any yield reduction resulting from the new tighter tolerance. The Japanese approach the problem differently. They make it clear that the supplier needs to find a way to achieve the end objective, and in doing so, that supplier will insure that the next program is absolutely going to be awarded to them. It just does not work that way in Detroit, but it did at one time long ago. My life the past three weeks has been focused on risk reduction. I have had to slash credit lines and arrange short release times and quantities. I actually told a customer last week that we would NOT supply a fairly large increase on a GM program. I had to say NO to an increase that was about 3% of annual sales. There is just no way that my upper management will allow anyone to front-load inventory in the event of a GM BK. More to come as the destruction continues. GT TH

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next