I just read an article that appeared in the New York Times on Saturday, 4/25/09, about the latest quarterly financial results posted by Ford Motor Co.
Ford lost $1.4 billion and new car sales fell by 43% in the 1st quarter of 2009 and it burned through $3.7 billion of its cash. Even though Ford lost money, investors took the latest quarterly report as a good sign since Ford now appears unlikely to need government financial assistance. Unlike GM and Chrysler which are under close government supervision and may file for bankruptcy in a few weeks, Ford has started to distance itself through better financial management.
I must admit I was very skeptical when, 2 years ago right after he joined Ford as their new CEO, Allan Mulally leveraged all the factory assets of Ford. Through this action Ford obtained the cash that may help them survive through at least 2010 according to Patrick Archambault of Goldman Sachs. This has so far saved Ford from approaching the government for a bailout.
The rate at which Ford is burning through its cash is now less than half what it was a year ago. Ford management is counting on its new products to help pull it through the current situation.
Even though Ford may avoid bankruptcy, a possible chapter 11 filing at GM or Chrysler will have a hugh ripple effect on the automotive supply base. Ford relies on many of the same suppliers as GM and Chrysler. If these suppliers are forced into bankruptcy them they could hurt production at Ford if they fail to ship parts. Ford management is working with their supply base to track the situation and source parts to alternate suppliers if this becomes necessary. The government has already offered to step in and fund suppliers in order to keep them running. One concern I have is that even though $5 billion in aid funds have been promised this may not be enough to keep all the suppliers running until sales stabilize.
Another issue that threatens Ford is that GM and Chrysler will have to shutdown dealerships as they eliminate brands and downsize. As dealers close they will hold "fire" sales in order to clear inventory prior to liquidation. These sales will depress prices and will hurt Ford's sales. Some analysts are concerned that Ford may not have enough cash to withstand this slump in new car sales.
Despite these issues I remain bullish on Ford and expect them to weather this storm and emerge as a leaner company with some great fuel efficient vehicles.
Monday, April 27, 2009
Wednesday, April 22, 2009
2009 SAE World Congress
I just spent the last two days visiting the 2009 SAE World Congress at Cobo Hall in Detroit, Michigan. Overall it was a very enriching experience for my professional development.
The first day that I attended (4/21) I spent most of the time talking to the recruiters at the career fair. I talked to four local recruiters that were looking for people (aerotek, delta staffing, GTA and superior staffing). I also talked to recruiters from BAE Systems, TATA Motors and Maruti. It was interesting that both TATA and Maruti were looking for automotive professionals to work in Pune and New Delhi in India. SAE had also set aside a small area for people to post their resumes so that recruiters and employers could review them at their leisure.
Separate to the career fair, there are several presentations that were running at the same time on job searching and professional development. I caught two of these presentations. The first was on becoming a consultant by Ralph Wilhelm and provided a lot of detailed information to help people get started. The next presentation was on enhancing your value while you are laid off by Masha Petrova. Masha's presentation provided 10 ways to increase professional value and I intend to follow her advice to beef up my job prospects. Their presentations will be available on SAE's website by the end of next week. One area that I intend to pursue is to become and instructor for SAE and teach development classes. I also intend to volunteer on their committee's to network with other industry professionals.
Today I attended the show again (4/22) and met solely with the companies that had come to exhibit their products. This is an excellent way to keep with the latest developments in my field and meet and talk to other automotive suppliers. I took the opportunity to discuss the state of industry and possible job openings with several suppliers.
The first day that I attended (4/21) I spent most of the time talking to the recruiters at the career fair. I talked to four local recruiters that were looking for people (aerotek, delta staffing, GTA and superior staffing). I also talked to recruiters from BAE Systems, TATA Motors and Maruti. It was interesting that both TATA and Maruti were looking for automotive professionals to work in Pune and New Delhi in India. SAE had also set aside a small area for people to post their resumes so that recruiters and employers could review them at their leisure.
Separate to the career fair, there are several presentations that were running at the same time on job searching and professional development. I caught two of these presentations. The first was on becoming a consultant by Ralph Wilhelm and provided a lot of detailed information to help people get started. The next presentation was on enhancing your value while you are laid off by Masha Petrova. Masha's presentation provided 10 ways to increase professional value and I intend to follow her advice to beef up my job prospects. Their presentations will be available on SAE's website by the end of next week. One area that I intend to pursue is to become and instructor for SAE and teach development classes. I also intend to volunteer on their committee's to network with other industry professionals.
Today I attended the show again (4/22) and met solely with the companies that had come to exhibit their products. This is an excellent way to keep with the latest developments in my field and meet and talk to other automotive suppliers. I took the opportunity to discuss the state of industry and possible job openings with several suppliers.
Thursday, April 16, 2009
What is the "No Worker Left Behind Program"?
Yesterday I took the initial orientation for the "No Worker Left Behind Program" or NWLB. This is a great program that I was told about by a friend who is already enrolled.
This program was initiated by the Michigan's Governor Jennifer Granholm in her 2007 State of the State Address. The purpose of the program is to train and place unemployed workers, in Michigan, so that they can get jobs in high demand occupations. The eligibility criteria seems to be very board. Any person who is currently unemployed or has received notice of termination from employment is eligible. Additionally any employed person with a family income of $40K is also eligible.
Participants in this program can receive free tuition in any Michigan community college, university, or other approved training program. The Michigan Works Agency assigns councillors to work with each participant to identify "high demand" occupations in which to pursue training and jobs. Participants have three years to sign up for this program starting August 1st, 2007 and need to complete the training within 4 years of enrollment. Tuition of up to $5000 per year is paid for two years and covers costs including books, materials and fees (such as application and registration costs). The program is offered on a first come first served basis and is a one time offer.
I began the application process to join the program yesterday. I attended a mandatory orientation at the Michigan Works office in Livonia. The orientation included an introduction to the program and an assessment test to ensure that all the candidates had high school level math and reading skills. After this we filled out several forms to determine our eligibility and were asked to return for a followup meeting on May 16th.
My goals in joining this program are as follows:
1. Work with a councillor to find a full time job in the renewable energy field within the state of Michigan.
2. Join the U.S. green building council and get my LEED AP energy audit certification. I understand that this is a "high demand" field. If there are other programs offered that will help my career I will also pursue those.
This is an excellent program that can help those of you who are displaced and need additional skills to get jobs in "high demand" occupations. Additionally I welcome the opportunity to work with a councillor in finding a full time job. If anyone needs additional information they should contact their local Michigan Works office. For those of you from out of state, don't fear, the NWLB is a federal program (so I was told) and is available in all states. I would check with your state's employment agency.
I will keep everyone posted on what happens at my next meeting and what courses I elect to pursue.
This program was initiated by the Michigan's Governor Jennifer Granholm in her 2007 State of the State Address. The purpose of the program is to train and place unemployed workers, in Michigan, so that they can get jobs in high demand occupations. The eligibility criteria seems to be very board. Any person who is currently unemployed or has received notice of termination from employment is eligible. Additionally any employed person with a family income of $40K is also eligible.
Participants in this program can receive free tuition in any Michigan community college, university, or other approved training program. The Michigan Works Agency assigns councillors to work with each participant to identify "high demand" occupations in which to pursue training and jobs. Participants have three years to sign up for this program starting August 1st, 2007 and need to complete the training within 4 years of enrollment. Tuition of up to $5000 per year is paid for two years and covers costs including books, materials and fees (such as application and registration costs). The program is offered on a first come first served basis and is a one time offer.
I began the application process to join the program yesterday. I attended a mandatory orientation at the Michigan Works office in Livonia. The orientation included an introduction to the program and an assessment test to ensure that all the candidates had high school level math and reading skills. After this we filled out several forms to determine our eligibility and were asked to return for a followup meeting on May 16th.
My goals in joining this program are as follows:
1. Work with a councillor to find a full time job in the renewable energy field within the state of Michigan.
2. Join the U.S. green building council and get my LEED AP energy audit certification. I understand that this is a "high demand" field. If there are other programs offered that will help my career I will also pursue those.
This is an excellent program that can help those of you who are displaced and need additional skills to get jobs in "high demand" occupations. Additionally I welcome the opportunity to work with a councillor in finding a full time job. If anyone needs additional information they should contact their local Michigan Works office. For those of you from out of state, don't fear, the NWLB is a federal program (so I was told) and is available in all states. I would check with your state's employment agency.
I will keep everyone posted on what happens at my next meeting and what courses I elect to pursue.
Friday, April 10, 2009
Is there a 100% American Made Car?
Welcome! This is my first installment to this blog. As the comments in the introductory section of this blog state, my name is Dan Kulkarni. I have lived and worked in the metro Detroit area for the last 17 years. I am a degreed Mechanical Engineer with experience in design, product launch, sales and project management. I have worked for tier 1 automotive suppliers and the OEM's. I have started this blog to share my views and opinions on developments the U.S. automotive industry. Your feedback is always appreciated.
This first blog is on the subject of "is there a 100% American made car?". I decided to review this subject due to an incident that happened to me recently. I had pulled in to get gas at my local Meijer supermarket, when an older gentlemen at the next pump asked how I liked my car. I was driving my five year old Toyota Camry SE at the time. I told him that I liked my car and it performed just fine. He then proceeded to tell me that driving my "foreign" made vehicle was costing people in Detroit jobs. Now, being currently unemployed myself, I don't need to be lectured by anyone on the issues plaguing the auto industry and Detroit in particular. So I decided to look into this issue in greater detail.
As many of you are probably aware, in order to remain competitive automotive OEM's and their suppliers have been cutting costs. This relentless pressure to squeeze every last penny out of each part and out of every vehicle, without compromising quality, safety or comfort, has already driven many suppliers bankrupt. The surviving suppliers have sourced the manufacturing of their parts globally in order to remain competitive. The passage of the North American Free Trade Agreement (NAFTA), by the Clinton administration, has also eased the barriers to free trade in North America.
In order to chase the cheapest labor costs, automotive suppliers and the OEMs have sourced parts manufacturing and vehicle assembly overseas. In North America, this has meant that the supply base and the OEMs have established manufacturing plants in Mexico and Canada to build vehicles for the U.S. market.
I did a very rough survey to check this out. I looked at the U.S. versus foreign content on three vehicles. These are the Toyota Camry LS, the Ford Fusion SE and the Chevy Malibu LS. These vehicles are all comparable in pricing and features and are 2009 model year vehicles. I choose the Toyota Camry LE as that is the most popular vehicle in terms of sales in the U.S. at this time. I visited three dealerships in the Canton and Westland area in Detroit and found the following information:
(a.) Toyota Camry - Manufactured in the U.S. at Georgetown (KY) and Lafayette (IN). The car is built with 75% U.S. made parts and 25% Japanese made parts.
(b.) Ford Fusion - Manufactured in Hermsillo, Mexico. The vehicle is made with 55% U.S. made parts and 40% Mexican made parts.
(c.) Chevy Malibu - Manufactured in Kansas City, KS. The vehicle has 80% U.S. content.
As you can see, the U.S. versus foreign content varies on each vehicle. Of the three OEM's, the Chevy Malibu came closest to being 100% U.S. made. Toyota, even though a Japanese OEM, assembles its vehicles in the US and has higher domestic content that the comparable vehicle from Ford. Tier 1 suppliers are also themselves multi-nationals who will supply an OEM in one country and manufacture the parts in another country.
In my view there is no such thing as a 100% U.S. made vehicle. The decision on how and where to build a vehicle is an operations management decision that will be driven by cost competitiveness and logistics amongst many other factors. The globalization of the automotive industry has made it more cost effective to base manufacturing and assembly operations overseas rather than within the U.S. Prior to the current recession this had been credited with creating jobs and expanding trade. This means that we need to revise our views of what constitutes a U.S. made vehicle.
This first blog is on the subject of "is there a 100% American made car?". I decided to review this subject due to an incident that happened to me recently. I had pulled in to get gas at my local Meijer supermarket, when an older gentlemen at the next pump asked how I liked my car. I was driving my five year old Toyota Camry SE at the time. I told him that I liked my car and it performed just fine. He then proceeded to tell me that driving my "foreign" made vehicle was costing people in Detroit jobs. Now, being currently unemployed myself, I don't need to be lectured by anyone on the issues plaguing the auto industry and Detroit in particular. So I decided to look into this issue in greater detail.
As many of you are probably aware, in order to remain competitive automotive OEM's and their suppliers have been cutting costs. This relentless pressure to squeeze every last penny out of each part and out of every vehicle, without compromising quality, safety or comfort, has already driven many suppliers bankrupt. The surviving suppliers have sourced the manufacturing of their parts globally in order to remain competitive. The passage of the North American Free Trade Agreement (NAFTA), by the Clinton administration, has also eased the barriers to free trade in North America.
In order to chase the cheapest labor costs, automotive suppliers and the OEMs have sourced parts manufacturing and vehicle assembly overseas. In North America, this has meant that the supply base and the OEMs have established manufacturing plants in Mexico and Canada to build vehicles for the U.S. market.
I did a very rough survey to check this out. I looked at the U.S. versus foreign content on three vehicles. These are the Toyota Camry LS, the Ford Fusion SE and the Chevy Malibu LS. These vehicles are all comparable in pricing and features and are 2009 model year vehicles. I choose the Toyota Camry LE as that is the most popular vehicle in terms of sales in the U.S. at this time. I visited three dealerships in the Canton and Westland area in Detroit and found the following information:
(a.) Toyota Camry - Manufactured in the U.S. at Georgetown (KY) and Lafayette (IN). The car is built with 75% U.S. made parts and 25% Japanese made parts.
(b.) Ford Fusion - Manufactured in Hermsillo, Mexico. The vehicle is made with 55% U.S. made parts and 40% Mexican made parts.
(c.) Chevy Malibu - Manufactured in Kansas City, KS. The vehicle has 80% U.S. content.
As you can see, the U.S. versus foreign content varies on each vehicle. Of the three OEM's, the Chevy Malibu came closest to being 100% U.S. made. Toyota, even though a Japanese OEM, assembles its vehicles in the US and has higher domestic content that the comparable vehicle from Ford. Tier 1 suppliers are also themselves multi-nationals who will supply an OEM in one country and manufacture the parts in another country.
In my view there is no such thing as a 100% U.S. made vehicle. The decision on how and where to build a vehicle is an operations management decision that will be driven by cost competitiveness and logistics amongst many other factors. The globalization of the automotive industry has made it more cost effective to base manufacturing and assembly operations overseas rather than within the U.S. Prior to the current recession this had been credited with creating jobs and expanding trade. This means that we need to revise our views of what constitutes a U.S. made vehicle.
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