Automotive Engineering - September 2021 - 40

Q&
A
Labor cost, OEM complexities pressure suppliers
Fast-food restaurants are paying hourly wages similar to
starting rates at automotive assembly plants, and the accelerating
shift to electric vehicles (EVs) promises a wholesale restructuring
of automotive manufacturing. These and other
trends are affecting every level of the supply chain, says
Laurie Harbour, president of manufacturing consultants
Harbour Results Inc. Editorial director Bill Visnic spoke with
Harbour at the Center for Automotive Research (CAR) 2021
Management Briefing Seminars about the pressures she's projecting
for the manufacturing sector (the full text of this interview
can be found at: https://www.sae.org/news/2021/08/
labor-costs-crunch-suppliers).
There's intense competition for workers.
What's the outlook for what are perceived
to be more physically demanding
jobs in manufacturing?
If I'm paying $15 per hour at GM, what
am I paying at the Tier 1? In Southeast
Michigan, I have Tier 1 clients paying
$19-20 an hour starting wage. It's absolutely
going to be a long-term issue.
People got comfortable being home.
They've left the workplace and said,
'You know what? It's not worth it. We
learned how to live on the different lifestyle.'
Labor is going to be a long-term
issue, which means automation and
technology are going to be huge. We're
already seeing significant investments
made by companies to bring in not only
full-scale robotic cells for assembly, but
hand automation - the whole gamut of
automation - to eliminate labor.
There's no doubt wage increases are
going up with suppliers. All that means
to me is that your price [to the customer]
is not getting better. Which
means you had better get better!
Are recent market trends conspiring
against efficiency, too?
That's the other piece of this. The business
of automotive and anything - appliances,
RVs, boats - we're becoming a
very high-mix, low-volume market. So,
plants are now starting to figure out that
they've got to be efficient. The data we
have show that in this 11-year expansion
from '09 to 2020, we lost tremendous
efficiency and profitability. Although we
were growing, we'd gotten wasteful.
We got inefficient because we had
40 September 2021
profit. We're becoming inefficient again, because somebody's
giving us a [purchase order] to make 10,000 a year, or to make
5,000 a year. Now, all those things we got fat on - poor
changeovers in the plant, poor scheduling, poor planning, poor
inventory levels - they're all going the wrong direction. We're
teaching companies, but nobody's mastered it. If you watched
the Olympic swimming, they put all the fast swimmers in the
middle and they put the slower swimmers on the end.
The fast swimmers are advantaged from the start.
It's the same idea if you're in a molding shop or stamping
plant. Schedule your presses full, with
all those high [-volume] runners and
run nonstop. Then pick a handful of
machines that you have to get really
good at changeover. You have to teach
your people to be really flexible. Then
you can drive what we call 'swim lanes':
two business models under one roof.
The company that masters that will be
wildly profitable.
Laurie Harbour,
president and CEO,
Harbour Results.
We're becoming
inefficient again,
because somebody's
giving us a [purchase
order] to make 10,000
a year or to make
5,000 a year.
Is this similar to previous cycles when
big inefficiencies were attacked?
Yes, except there was a low number of
models and very high volume; 500,000
units a year of [Ford] Taurus and Sable,
300,000 [Chevrolet] Malibus. Those
sedans sold 200,000 or 300,000 units.
Now, we have [just] 10 models that sell
better than 100,000 units; Ford F-150,
the T1XX [GM full-size pickups]. We
have, what, 550 models in play by
2025? It was 300 models ten years ago!
Great for people who make injection
molds and stamping dies, because the
complexity is huge, but horrible for the
[company] trying to run all those things.
Is over-stimulation with trim proliferations
uniquely an Americanautomaker
thing?
No, Toyota actually has gotten bad with
some lines. They've commonized platforms,
but they've gotten bad with trim.
Nissan's horrible. And the Germans are
even worse - you can go to Germany
and put your grandmother's drapes on
your seats, if that's what you want. The
industry's caught up in it because of the
generational shift. Our children want
customization; they don't want their car
like the next person's.
AUTOMOTIVE ENGINEERING
HARBOUR RESULTS
https://www.sae.org/news/2021/08/labor-costs-crunch-suppliers
Automotive Engineering - September 2021

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