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New Study - US automakers screwed themselves by ignoring fuel economy demand, higher mpg = higher profit

post #1 of 6
Thread Starter 
A new study out of the U of Michigan concludes
Quote:
 Increasing fuel economy 30% to 50% (35 MPG to 40.5 MPG) would increase the Detroit 3’s gross profits by roughly $3 billion per year, and increase sales by the equivalent of two large assembly plants. 
Quote:


In other words, they screwed up royally, but new requirements to increase fuel efficiency may help save the American automakers.
post #2 of 6
How true that is!  Something like economy, energy, water, housing, or here-and-now whatever; becomes tomorrows "oops".  It is very interesting to see how the over-consumption and over-doing will play out.  Interesting to see how certain problems are being worked out now!  I hope that these new requirements are more than a 'nudge nudge wink wink' solution.

Summer traffic is about the worst yet here today than it ever has been with "Woodies on the Wharf" a fleet of annoyingly noisy old Ford Mustang convertibles competing with unmuffled Harleys.  Eventually something will be done.  What- I don't know.
post #3 of 6
The auto companies senior management lost site of the goal - not at all uncommon after a company grows large over the years. Look at K-Mart, Sears, JC Pennys and countless others. Some manage to reinvent themselves while others just drop out.

The people who start companies, like Sam Walton, are one type. The ones who follow fifty years later are an entirely different type. More worried about comfort, CYA and bonus than in moving the company ahead.

They gave up the quality race before it even started. In the 70's when the Japanese cars came in strong price and quality were their strong points while the American companies tried to ignore both points.

The automakers had a tremendous helping hand from the UAW as well who only wanted more money, more benefits, less work, less thinking etc but change? Heavens NO!.

 
post #4 of 6
Japanese automakers, especially Toyota, created a systme of manufacturing which focused on one clear objective.  Every move they make they ask themselves one simple question:
"Does this add value for my customers?"  If the answer is not "yes", then it is a waste.  Their goal has been to eliminate all waste for the past 30+ years.  My company (a very large flavor/fragrance manufacturing) has been slowly trying to adopt this strategy (really slowly!).  It's such a simple concept, but you'd be surprised at how difficult it is to really achieve in practice.
A fine example is the robots my company invested millions to have installed about 5 years ago (prior to our current strategy).  The goal, once the robots were in place, was to have the robots working non-stop so as to completely utilize them and thus increase efficiency.  We were able to do this and managed to increase our productivity (which was measured by pours/hour) by approximately 30%.  That's a great figure to take back to the management board to show a return on investment.  The problem is this was a completely useless way of measuring progress.  We did not increase sales by 30%.  Our customers weren't 30% happier.  Hours (overtime) were not cut by 30%.  Wages didn't increase.  On-time shipments did not increase 30%.  There were no layoffs.  In fact, the only thing that happened was that the robots stayed busy.  We never asked ourselves what benefit the customer would see.  We just looked at our arbitrary measuring system and looked for ways to increase those figures.  What a waste. 

This is how manufacturing, especially in the US, has worked for generations.  The Japanese developed a new method and have been perfecting it for decades, never being satisfied, and simply passed by the US automakers. 
post #5 of 6
A big difference between working hard and working smart!

One way wins and one way loses - either sooner or later. 
post #6 of 6
Lets just hope the new corporate organization being put in place "gets it" and keeps on the better path for decades to come... hey, I can dream! 
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