Good News, Bad News on GM Doubling ‘Volt’ Production
I don’t often go back to write about GM, the first company I worked for out of college. Thanks to my dad who sent this article from the Detroit paper: “GM delays 2nd shift at Detroit-Hamtramck.” You might think, as a shareholder (directly or through the U.S. government’s holdings), that it’s bad news, that sales aren’t increasing.
The article tells the rest of the story — that GM still plans to produce more. Hopefully, this is because the vehicles will be sales to end customers (not “overproduction” that’s pushed on dealers). The good news, as a shareholder, is that GM is able to double production without adding the full second shift as originally planned. They followed the Lean mindset of “creativity before capital,” it seems. But this is bad for the Detroit area and the country because there are fewer jobs?
From the article:
GM had said in May it would add a total of 2,500 workers on two shifts at Detroit-Hamtramck, with the first of those shifts to start this fall. But during a four-week shutdown this summer, GM made its production line and body shop more efficient, allowing the company to make twice as many Volts in the same amount of time, the company said Friday. That will allow the factory to meet scheduled Volt production by adding only 300 workers by January.
As the GM spokesperson says, this is good for the company – they are saving money on labor and energy costs from only having to run the plant one shift. I guess there’s a “green” benefit for a green vehicle.
Good for GM, bad for the UAW. It’s an interesting dynamic, to say the least, since the UAW has an ownership stake in GM, post-bailout. The current administration certainly wants more jobs, but they also want GM to be successful as a business.
Create constancy of purpose for continual improvement of products and service to society, allocating resources to provide for long range needs rather than only short term profitability, with a plan to become competitive, to stay in business, and to provide jobs.
I agree that it’s an important function of any organization to provide jobs in the community, for the betterment of all. That’s one reason I think manufacturers need to take a long hard look at outsourcing and offshoring jobs. Chasing the cheapest labor possible might bring short-term profits, but what’s the impact on the community and country if people here aren’t making enough money to buy GM products? Think back to Henry Ford and the famous $5 workday – by boosting pay, he was also creating demand for his cars. As Ford historians look back, he was building a strong middle class. Many companies have been gutting the middle class as manufacturing jobs move overseas.
So, I’m in favor of creating jobs, but they can’t be “make work” jobs like the infamous “jobs bank” that the Detroit Three had, where unneeded workers were typically paid to sit and read the paper (as was the case when I worked there in the mid 1990s). But, sometimes, the best thing to do is to find other solutions than adding more people. For example, I know some hospital labs where they have been able to take on 50% more workload without adding people – thanks to the Lean improvement process. They are meeting patient needs while helping keep healthcare costs down… that’s as much of a good thing as “creating jobs” might have been.
I cringed when I read former President Clinton say the following, in FORTUNE Magazine:
If you’re in the private sector, your first obligation to your investors, to your customers, and to your employees is to provide a product or a service at a sufficient profit to keep the enterprise going. But when a company does have extra money, I think it’s a good idea to invest in the community, because I think it’s not only the morally right thing to do, it’s good for the companies involved.
He doesn’t elaborate on the points of what “extra” means and how hiring people when they aren’t needed would be good for the companies involved.
Jobs aren’t charity. If we look at the Deming chain reaction cycle, the best way to create jobs is to have a successful business, for the long-term:
“… improved quality leads to lower costs and improved productivity, allowing companies to capture the market, stay in business, and provide ‘jobs and more jobs.’
Factories provide jobs. Hospitals provide jobs. But we have to keep in mind that, without happy customers, none of those jobs exist. Instead of “creating jobs,” maybe we need to think more about “creating value.” Where is the President’s council on customer value?