Get Your Boots On!

The Toyota Philosophy has some many facets that you could, umm, write books about it.

Here is one facet that makes sense, but somehow the natural inclination is to discuss things in the conference room and not on the shop floor. From my old friend Wiki:

Genchi Genbutsu (現地現物) means "go and see for yourself" and it is an integral part of the Toyota Production System. It refers to the fact that any information about a process will be simplified and abstracted from its context when reported. This has often been one of the key reasons why solutions designed away from the process seem inappropriate.

Some stories about Toyota methods coming out of a conference in Kentucky:

At the Printing Industries of America Lean Conference in Lexington, Ky., a couple of weeks ago, I learned a new saying: “Get your boots on!” According to Mike Hoseus, co-author of “The Toyota Culture” and a former manager at Toyota Motor Manufacturing in Georgetown, Ky. (TMMK), this is how “genchi genbutsu” is affectionately known by the team members at TMMK.

We Knew This

No surprise here, the Bureau of Economic Analysis released the first quarter GDP data with some analysis:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 6.1 percent in the first quarter of 2009, (that is, from the fourth quarter to the first quarter), according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP decreased 6.3 percent.
The decrease in real GDP in the first quarter primarily reflected negative contributions from exports, private inventory investment, equipment and software, nonresidential structures, and residential fixed investment that were partly offset by a positive contribution from personal consumption expenditures (PCE). Imports, which are a subtraction in the calculation of GDP, decreased.

So, PCE was up?

Real personal consumption expenditures increased 2.2 percent in the first quarter, in contrast to a decrease of 4.3 percent in the fourth. Durable goods increased 9.4 percent, in contrast to a decrease of22.1 percent.
Non durable goods increased 1.3 percent, in contrast to a decrease of 9.4 percent. Services increased 1.5 percent, the same increase as in the fourth.

We are all waiting for the bottom to arrive. The slight increase in PCE was more than overwhelmed by real estate.

One interesting note, it looks like Federal expenditures have decreased in the first quarter as well?

Real federal government consumption expenditures and gross investment decreased 4.0 percent in the first quarter, in contrast to an increase of 7.0 percent in the fourth. National defense decreased 6.4percent, in contrast to an increase of 3.4 percent. Non defense increased 1.3 percent, compared with an increase of 15.3 percent. Real state and local government consumption expenditures and gross investment decreased 3.9 percent, compared with a decrease of 2.0 percent.

From Window Plant to EnergyEfficientWindow Plant

Remember the Republic Window factory near Chicago that was the site of a worker sit-in when they were told the plant would close immediately? Just before Christmas. The Chicago Tribune reports, "The new owner, Serious Materials, has started rehiring some of the more than 200 laid-off workers to make energy-efficient windows at the plant. "

Serious Materials CEO Kevin Surace said his company is creating the green-collar jobs the nation needs to pull itself out of recession. "Highly skilled manufacturing work like this is a triple win. It will save families money by helping reduce their energy use, protect our environment by reducing carbon emissions and create new paths for economic growth and energy independence," he said.

Oh yeah, and Vice President Biden showed up for the reopening. which is cool.
Good luck on the venture.

Outsourcing

The trend takes its ultimate conclusion


More American Workers Outsourcing Own Jobs Overseas

Plant Closing #22

An automotive supplier closes a plant in Wisconsin.

Thursday, TRW announced it will permanently close its manufacturing plant in the Village of Ettrick in Trempealeau County. Around 75 people work at the plant, which makes auto parts. The village president says the plant once employed around 300 people, which is more than half of Ettrick's population.

Spread across the U.S. and Canada are many small factories that were spawned in the manufacturing growth spurt following WWII. This recession is taking them out at a consistently high pace. AFTER the recession what will the landscape be like? Will all components be imported? Will only large corporations survive with central manufacturing? will there be room for new plants started by entrepreneurs?

In the New Economy is US Manufacturing More Competitive?

This article from the San Francisco Chronicle looks at the question.

About 18 months ago, a plastics factory in Santa Rosa started getting inquiries from small U.S. companies looking to bring some manufacturing back from China.
The inquiries to Wright Engineered Plastics started amid soaring oil prices. Even after oil went down, the interest continued as raw plastic became more expensive in China while the local firm's material costs dropped, helping offset the advantage of lower overseas labor.
"We're actually winning bids based on quoting prices, which is extraordinary," said Barbara Roberts, chief executive of Wright.

To what is the ability to win new business attributed?

Though still lower than in the United States, the Chinese advantage has been eroded by other costs like communications and transportation.

If you go to Japan you find large companies contract the tiered supplier work to many smaller local companies. The relationship and proximity count for a lot. Some benefits are quick reaction time, long term relationship and trust, and smaller focused suppliers.

I know from where I work that on the other side of this economy we will be leaner and quicker.

Not Official, but.... GM Closing Plants for 9 Weeks

This cannot be good. Rumors are circulating that GM will close their manufacturing plants for 9 weeks sometime this summer.

The reason? A combination of excess inventory and the pending bankruptcy.

What is already announced is severe enough:

ASSEMBLY - U.S.

• Arlington (Full Size SUV)
  Add down weeks of 5/11, 5/18, 5/25, 6/01, 6/08, 6/15, 6/22 and 7/6
• Bowling Green(Cadillac XLR / Chevy Corvette)
  Add down week of 7/13
• Detroit / Hamtramck (Buick Lucerne, Cadillac DTS)
  Add down weeks of 6/01, 6/08, 6/15 and 6/22
• Fairfax (Saturn Aura, Chevy Malibu)
  Add production week of 7/6 (2nd week of shutdown)
• Flint Assembly (Chevy Silverado, GMC Sierra) (HD Reg and Crew)
  Add down weeks of 5/11, 5/18, 5/25, 6/01, 6/08, 6/15, 6/22 and 7/6
• Ft. Wayne(Chevy Silverado, GMC Sierra) (LD Reg and Ext)
  Retime down week from 4/27 to 5/4
  Add down weeks 5/11, 5/18, 5/25, 6/01, 6/08, 6/15, 6/22, 7/6 and 7/13
• Lansing Grand River (Cadillac STS & CTS)
  Add down weeks of 5/4, 5/11, 6/1 and 6/22
• Lordstown(Chevy Cobalt, Pontiac G5)
  Add down weeks of 6/01, 6/08 and 6/15
• Pontiac Assembly (Chevy Silverado, GMC Sierra) (HD Ext.)
  Add down weeks of 6/1, 6/8, 6/15, 6/22, 7/6 and 7/13
• Shreveport (Chevy Colorado, GMC Canyon, H3 and H3T)
  Add down weeks of 6/15, 6/22 and 7/13
• Spring Hill (Chevy Traverse)
  Add down weeks of 6/8, 6/15 and 6/22
• Wilmington (Pontiac Solstice, Saturn Sky, Opel GT)
  Add down weeks of 6/15 and 6/22
• Wentzville (GMC Savana, Chevy Express)
  Add down weeks of 6/8, 6/15 and 6/22
  

Video

An Old Plant

This short video reminds me of the plant I first worked in. It was located in the "old" part of Warren, Ohio. And I was able to visit some old brick factories in New Hampshire and Pennsylvania. As manufacturing in the US winds down it seems there are fewer of these places. Companies sometimes abandon older building for new steel frame technology park buildings. I remember one time when a company left their old building for a newer, better building, the old VP of Logisitics basically had a nervous breakdown and didn't make the move. He just retired. He had been there for ages and the old plant was his home.


The Factory from Core on Vimeo.

Map of Job Loses

Slate.com has a slick interactive map of the USA showing job loses by county over time.
You can scroll from January 2007 to February 2009 and see the gains and loses your own county and state have experienced.

Using the Labor Department's local area unemployment statistics, Slate presents the recession as told by unemployment numbers for each county in America. Because the data are not seasonally adjusted for natural employment cycles throughout the year, the numbers you see show the change in the number of people employed compared with the same month in the previous year. Blue dots represent a net increase in jobs, while red dots indicate a decrease. The larger the dot, the greater the number of jobs gained or lost. Click the arrows or calendar at the bottom to see each month of data. Click the green play button to see an animation of the data.

You can see the map here.

The "Unreal" Economy

I read an interesting blog today by Hilzoy about a New York Magazine article entitled, "The Wail of the 1%". Both the article and Hilzoy's commentary (on Political Animal) are a must read.

Here is a quote from the article that got me. (italics are mine)

"We're in a hypercapitalistic society. No one complains when Julia Roberts pulls down $25 million per movie or A-Rod has a $300 million guarantee. We have ex-presidents who cash in on their presidencies. Our whole moral compass has shifted about what's acceptable or not acceptable. Honestly, you can pick on Wall Street all you want, I don't think it's fair. It's fair to say you ran your companies into the ground, your risk management is flawed -- that is perfectly legitimate. You can lay criticism on GM or others. But I don't think it's fair to say Wall Street is paid too much."

Wow... I need to chew on this for a while. Or maybe I am swallowing my bile.
Hilzoy's comments are appropriate, as usual.

Training Benefit For Those Whole Lost Their Job

Many of you who have lost your job during this recession qualify for TAA benefits.
For the Dept of Labor:

Trade Adjustment Assistance (TAA) and Alternative Trade Adjustment
Assistance (ATAA) help trade-affected workers who have lost their jobs as a
result of increased imports or shifts in production out of the United
States.

Here are some of the benefits:

Reemployment Services - offer workers assistance in finding a new job. Many TAA-eligible workers will be able to return to employment through a combination of these services. For individuals who require retraining, these services will help identify appropriate training programs, and help them obtain reemployment at the conclusion of the training program. To ensure workers are referred to appropriate job openings and placed in jobs that utilize their highest skills, the following services are generally provided through One-Stop Career Centers:
Employment counseling
Resume writing and Interview skills workshops
Career assessment
Job development
Job search programs
Job referrals

Job Search Allowances - may be payable to cover expenses incurred in seeking employment outside a certified worker's normal commuting area, if a suitable job is not available in the area. Job search allowances reimburse 90% of the total costs of allowable travel and subsistence, up to a total of $1,250.

Relocation Allowances - may reimburse approved expenses when certified workers must move to a new area of employment outside their normal commuting area.
Relocation allowances may include:
90% of the reasonable and necessary expenses of moving workers who have secured employment outside of their normal commuting area, their families and their household goods. The amount will be reduced if the worker is entitled to reimbursement from other sources.
A lump sum payment equal to three times the worker's average weekly wage (but no more than $1,250) to help them get settled.

Training - is provided to certified workers who do not have the skills to secure suitable employment in the existing labor market. Training is targeted to a specific occupation and provided to help certified workers secure employment at a skill level similar to or higher than their layoff employment, and sustain that employment at the best wage available. Based on the individual's existing skills and labor market conditions, training will be of the shortest duration necessary to return the individual to employment, with a maximum duration of 104 weeks.

Income Support - Trade Readjustment Allowances (TRA) - are available to provide income support to individuals while they are participating in full time training.

Health Coverage Tax Credit (HCTC) - Workers who are eligible to receive income support under the TAA program may be eligible to receive tax credits for 65% of the monthly health insurance premium they pay.

Because this is a Federal program there is A LOT more detail on the website about who qualifies and what the benefits are. You should check with your own state's applicable office. Google it.

An article from the Wall Street Journal highlights some of the aspects of TAA:

When workers at a wholesale unit of Saunders Brothers lost their jobs in recent months, they qualified for Maine's standard state unemployment benefits of up to 26 weeks. Those laid off from a different Saunders plant qualified for a richer package -- two years of unemployment checks, health-care subsidies, free college and other perks.

Chrysler and GM will soon run out of time. Both companies need to wring more concessions from debt holders and contract labor. Both companies have suffered from continuous pressure from foreign companies subsidized by national governments. The UAW has been blamed for much of the trouble. John R. MacArthur at Harper's Magazine has an opinion. Read the whole essay.

But the UAW’s critics needn’t worry. Whether Obama eases GM into Chapter 11 bankruptcy— that wonderful system of corporate protectionism— no doubt favored by Austen Goolsbee and Lawrence Summers, or whether he forces the UAW to destroy itself with givebacks, we’re headed for the end of the line for middle-class unionism.

Bankruptcy would make it easier to break union contracts, but the UAW, relentlessly attacked for being too successful for its members and so far unable to organize Japanese car plants in the United States, will probably cave in for PR reasons before it comes to Chapter 11. If that happens, it won’t be a union anymore.

Meanwhile, autoworkers (and automakers) in Japan will continue to benefit from government-funded national health insurance unavailable to American employees of non-union Japanese plants in the U.S. And Steven Rattner can go on throwing benefits for Democrats at his home on Fifth Avenue.

More Job Losses - California

Via the LA Times, data from California,

California's unemployment rate hit 11.2% with the loss of 62,100 jobs last
month, reaching its highest level since the government began keeping systematic
records in 1976, the state reported today.
The state economy, which has been shedding jobs for more than a year in
nearly all industries, posted the nation's fourth-worst jobs picture, behind
Michigan, Oregon and South Carolina. The national unemployment rate for March
was 8.5%.California's dismal performance is worse than the nation's because of
the state's "greater exposure to the housing downturn and related job losses in
construction and finance," said Stephen Levy, chief economist at the Center for
the Continuing Study of the California Economy in Palo Alto.

Plant Closing #21

Michelin North America announces the closing of their BF Goodrich tire plant in Opalika Alabama.

Michelin North America announced today a restructuring plan for its
manufacturing operations in response to the unprecedented drop in market demand.
The company will close its BFGoodrich Tire Manufacturing plant in Opelika, Ala.
by Oct. 31, 2009.
The BFGoodrich Tire Manufacturing facility in Opelika, Ala. produces
BFGoodrich and Uniroyal brand passenger car tires. It currently employs
approximately 1,000 wage and salaried workers. Michelin will consolidate
production at the BFGoodrich Tire Manufacturing facilities in Tuscaloosa, Ala.
and Ft. Wayne, Ind.

When the recession is all over the capacities of all of the OEM and supplier companies will be better aligned with reality. I assume they all will make more money, but I don't expect to see much of an uptick in employee pay.

Show us your bottom

We all are desperately looking for the bottom. We know the rise out will take some time. But. at least let us hit bottom. There seem to be some glimmers of hope, but I think they are still just noise in the data. Here is some good (good?) news from the Philadelphia Fed.

The contraction in manufacturing in the U.S. Mid-Atlantic area slowed in
April as as result of a less severe deterioration in new orders and labor
conditions, a regional Federal Reserve survey released on Thursday showed.

Job losses continue....

New Industry - Solar Panels

One of the targets of the stimulus program is to promote green technologies, or new "high tech" industry. Through federal, state, and sometimes local incentives solar technology is becoming practical. I think the demand volume does not support low enough cost spread, so prices/costs are too high without support. But once demand is high enough, and manufacturing technology improves, the industry could/might be sustainable.

Colorado solar panel manufacturer Abound Solar Inc. opened its first, full-scale manufacturing plant Tuesday.

Abound Solar, started in 2007 as a spinoff from Colorado State University and formerly known as AVA Solar, expects to create more than 300 jobs at the new plant in Longmont. At capacity, the plant is expected to produce enough panels to generate about 200 megawatts of power per year.


The company makes “thin-film” photovoltaic panels and believes its proprietary manufacturing process will reduce production costs of its panels compared to other companies. Abound Solar said its process uses continuous, in-line, semiconductor equipment to convert sheets of glass to solar panels in less than two hours.

Anyway, here is a possible 300 job offset to last month's 600,000+ job loss.

Some people work in a manufacturing plant, some work....

We can sometimes be as creative in our factories as artists. Maybe not frequently, but once in a while some little project gets close to being "Art"



Creative Crossroads from Barefoot Workshops on Vimeo.

Plant Closing #20

Pilgrim's Pride has appeared a few times in this blog. For some reason I keep reading about their travails. Now, after filing for bankruptcy in December, Pilgrim's Pride is closing a plant and letting 280 people go. Read more here. Can someone explain why this company is in so much trouble? Has chicken demand dropped so much in the recession?

Pilgrim's Pride has announced plans to shut down their chicken processing
plant in Dalton within 60 days.
President Don Jackson says the move is aimed at reducing costs and operating more efficiently.

New Battery Assembly Plants in US?

Hybrid and electric automobiles need batteries. These automotive batteries are new to the world components and need new factories. The recession and the stimulus money combined with the push for fossil fuel usage reductions and Green technology incentives have led several states to push to be the new "center of battery production in the world" (my quotes)

Via Kentucky.com

FRANKFORT — A consortium of more than 50 companies wants to build an advanced car battery manufacturing plant in Kentucky that would cost more than $600 million and employ as many as 2,000 people.
Kentucky taxpayers would invest about $200 million in the plant and surrounding area, Gov. Steve Beshear said.

Beshear said the not-for-profit National Alliance for Advanced Transportation Batteries has chosen a 1,551-acre site near Glendale as the location for the first-of-its-kind manufacturing plant of advanced lithium-ion batteries for vehicles.
The plant will make the batteries at cost for consortium members, paying its workers an average salary of more than $40,000.
However, the project depends on the alliance receiving an unspecified amount of funding from the recent federal stimulus package.

And from Michigan

Michigan's hopes of becoming the nation's leader in advanced battery production got a major jolt today as officials announced investments in four new operations that would employ several thousand workers.
The four projects, collectively worth about $1.7 billion, illustrate the state's burgeoning hold on the vehicle battery production market as the world's top automakers invest billions in electric vehicles and lithium-ion batteries.
The announced investments come after Gov. Jennifer Granholm last week signed two additional tax credits into law for battery cell R&D and manufacturing, increasing the credits available to companies to $555 million. The incentives stipulate that battery manufacturers can qualify for up to $25 million in incentives a year for four years, or $300 million altogether, provided they open a plant and create at least 300 jobs in the state.

This is technology that the US needs.

Time To Take The CQE Exam

Well, it is time for me to take the CQE exam. I have the experience, I have the knowledge. I have just lacked the motivation. Nothing like a collapse of the economy to make you think about upgrading your marketability.

I am taking a CQE refresher course offered by ASQ to help me prepare. I feel the investment has been well worth it. The classes meet for four hours on Saturdays. The teachers help to focus into important details of the body of knowledge.

I will keep you apprised about progress.

The Pain Over There

News from overseas.... It seems that labor activism is a little more prevalent in Europe. Plants have been taken over by disgruntled workers in France and in Britain. This news comes from a former Ford plant in Belfast.

In the last 7 or 8 years Ford has deliberately rundown its Visteon plant,
encouraging workers to take full pensions, early retirement or a severance deal.
From almost 600 workers in 2000 there were 210 people employed in Belfast at the
time of the attempted plant closure on Financial Fools day (April 1st 2009). Now
that Visteon has been put into administration, neither Ford nor Visteon will
have to pay those pensions. According to legislation the government (tax-payer
money) is expected to fill the pensions gap. Even so some of the pensioners
(4000 total in uk) would have a pension reduction by 10%. Many of the workers
are asking each other, was this a deliberate Ford strategy from 2000, to offer
full pensions because they knew they would never pay, they knew pension costs
would be off-loaded to the public taxpayer!

This makes you wonder if anyone with a defined benefit plan (traditional pension) can really count on it. Actually, what I want to say is that any employee with a defined benefit pension is living on borrowed time. In order for a company to be able to survive long into the future to continue to pay these pensions they need to have a competitive advantage over their competition. The fact that the company is burdened with the defined benefit for growing ranks of nonproductive retirees makes it almost impossible to fend off new companies with young workforces or foreign companies with state supported retirement systems.