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In March General Motors market share fell to about 20%. Ford and Chrysler are in deep trouble.   We remember GM at 63% market share and in fear of being broken up by anti-trust laws. Globalization, Asian investment, NAFTA, amalgamation and outsourcing are confused and debilitating.  Other issues are at work reducing Canada and the USA's ability to compete in the manufacturing business.  

The effects of all this are now seeping into Canada with the Big Three closing plants here and offshore companies taking profits with them from car sales and plants that they start in the US and Canada. North America is in danger of being a second class manufacturing source in the future. Certain skilled trades are diminished and some nearly gone.  Even Computer Science is being pushed offshore. 

The mould and die industry has disappeared from the Windsor and Detroit area.  This was the key industry because it is the gold standard of high volume manufacturing  So what the heck happened to manufacturing?  How did Toyota capture the market?  Will this influence the Saugeen area in the future? 

It's not what the competition did so much as it is what management of NA manufacturing ignored.

Here are some snippets from the time line:

• 1960's ... GM scoffs at Japan's toy cars like the Honda Civic. Japan made baubles and bangles.
• The Big Three ignores W. Edwards Deming the Guru of Quality.
• GM, Ford and Chrysler have an on-going battle with trade unions over technology.  The unions are better educated on the impact than the management of the Big 3..  No agreements are reached and technology implementation is curtailed.
• 1967 -- Ed Cole is made president of GM and is a hands on engineer, self trained, Cole loves cars.  He understands, but is at the end of his career and pushed by the financial people.
• 1960s -- GM Research is the leader in computer aided design and manufacturing.  They are 20 years ahead of others.  Ford and Chrysler have their own systems implementing what they can glean about the new and  secret GM systems.
• 1968 IBM does a year's study on the Asian auto industry and its impact on the US and Canada..  They report danger to the Big 3.  They are ignored as not knowing what they are doing ... smirks again.
• 1960s after starting in Japan in the 1950s teaching them manufacturing, statistical quality control and just in time manufacturing, W. Edwards Deming (pictured above) becomes a Japanese icon and hero.  His 6 sigma quality and techniques are ignored in NA
• The Big 3 with the exception of Lee Iacocca (The Mustang) promote money men to head their companies. The Boards become rubber stamps.  The years of the MBA are upon the auto industry and the leaders who love cars and manufacturing fade away.
• 1980s -- Iacocca moves to Chrysler (The Mini-Van) and saves a very unsteady company.  He loves cars.
• 1980s Roger Smith takes over GM and reorganizes it drastically.  He combines divisions for economy of scale.  Amalgamation and elimination of duplication are his passwords.  He uses outside consulting firms and accounting consultants to drive the company in a direction he can understand.  The company organization is devastated and fractured. Jobs are lost and never regained.
• Mid-1980s -- Chief Engineer of Sumitomo metals boasts that "Japan wants to own the creation of moulds and dies."  They don't care where the stamping plants are placed.  North America is fine for those low skilled jobs.  The strategy is working and in place now.
• Slowly GM, Ford and Chrysler drop CAD/CAM  R&D and farm it out to research companies like CATIA (French) and UGS (now German based Siemens) and others creating an entire multi-billion dollar business.  The R&D people leave and start outside high technology companies in Silicon Valley and beyond selling their expertise world-wide.
• 1984 Roger Smith of GM buys the small profitable Electronic Data Systems for $2.5 billion.  EDS specializes in health care accounting systems and Smith puts them in charge of ALL computer and automation technology in the at that time world's largest corporation.  The technical people are shocked at the incompetence.  Ross Perot of EDS becomes an outspoken critic and  enemy.  Smith buys him out for an additional $700,000,000.
• 1980s GM, an early leader in Robotics, joins forces with the Japanese company FANUC to form GM-FANUC.  They hope to automate their plants. The head of Robotics Research at GM becomes the president of GM-FANUC
• EDS is an utter failure in helping GM and is a huge cost drag and is spun off.
• GM divests themselves of the new robotics venture and FANUC goes on to be highly successful. GM becomes a buyer of technology that is driven by the Japanese and aimed at Japan's needs.

(next column)

• 1990s and into the 2000s.  GM, Ford and Chrysler continue to divest themselves of certain key industries. The list is huge... Detroit Diesel, Allison, Hughes....  They buy smaller auto companies, but fail to integrate them properly and then try to sell them off .  Sad examples emerge like when the highly profitable parts division of GM is spun off while retaining the cost of health care and pensions. That is, they got rid of the profit and kept the pension and health care obligation! Cash strapped Big 3 sells assets for cash to save themselves.  Layoffs are never deep enough to move the bottom line.   The finance division GMAC is cut up to get some cash into the business at General Motors.  A cash cow is cut up for feed.  It has eager buyers because it is profitable.  GM loses half of it and it gets involved in questionable loaning practices.
• Chrysler is sold to Daimler-Benz and the German company sees that it has purchased a lemon and then dumps it at a loss to a financial company.
• The financial company  hires Bob Nardelli former head of Home Depot after he goes through a stockholder rebellion at the Big Box Store taking out huge salary and bonus money, while delivering little.  A Big Box Store is not an auto company..
• Having resisted Universal Health Care for 50 years the Big 3 is faced with a load of $1500 per car of Health Care obligations.  Spreading that load over a population of 300,000,000 has not pushed them into political lobbying in support of Universal Health Care.  Therefore, the US operates at a manufacturing disadvantage with other developed countries and state supported industry in Europe and the Far East.  The lowering of the US dollar relative to the Canadian dollar forces more lost Canadian manufacturing jobs formerly exported by the US auto industry.

Will the Saugeen Area be influenced by the loss of manufacturing in North America?

We seem remote from all this because we have no heavy industry here, but wait....  We do have:

1. Power Generation
2. Tourism
3. Health Care.
4. Construction of new homes
5. Service
6. Farming, beef....
7. High Technology

Power Generation seems to be a nearly endless source of jobs, both short and long term..  It is not totally immune, however.  If somebody can come up with an economic way to clean coal fired plants, the atomic end of the business will be hurt deeply. There is a big push world-wide to find a way to do just that.

 Coal is so plentiful and the plants can be made very efficient.  It's a dirty little secret now, but that could change.  The economic impact of this would be staggering for the Saugeen area.  We are safe for the moment.  The push is to clean coal because China is putting in many high pollution coal fired plants per month and a way to clean them up is high priority.

Tourism is going to be hurt deeply because the people just won't spend as much money on holidays when they don't have high incomes from their jobs.  Manufacturing was at the heart of the movement to a stable and large middle class.  Tourism will be hurt by high gas prices and loss of manufacturing jobs.  There is no way around that.

Health Care jobs are big in the Saugeen Area.  If you include the nursing homes, Health Care is the second largest employer behind power.  Tourism would win in sheer numbers, but it is concentrated in small business.  Due to the aging of the population and its growth, health care is a demand industry.

Construction is tied tightly to how well the power industry is doing.  Workers at the Bruce need housing and they make a lot of money to buy it. 

The retirement end of the construction business can run dry due to the high taxes and costs that are part of the growth dilemma of the area. 

Every new employee at the Bruce brings costs for infrastructure and even recreation .  Infrastructure needs and the associated costs outstrip the ability of the tax base to support them.  The simmering worry about this comes to life in any senior conversation at the Post Office. Seniors are sensitive to increased taxes, while workers at the Bruce have a better chance to assimilate the load.

The service business is only as good as the amount of disposable income that can be brought here.   It will not grow as fast as it could with high paid manufacturing jobs being available in Ontario and in the nearby states.   Even the minimum wage jobs at Tim Horton's and Wal-Mart are not immune to the loss of manufacturing jobs elsewhere, although they are not diminished as fast as constructions jobs.  All you have to do is look at the Detroit area where almost 50% has been lost in housing values and in progress homes are not being finished.  Service jobs there are being lost as a result of lower population and high unemployment.

People need food and we can export it so farming seems like a bright spot.

Bruce Telecom is doing well and will continue to do so.  We did an article on how to attract Hi-Tech to the Saugeen Area.... it's a stretch to be sure, but Bruce Telecom is a key to any attempt to attract small high technology business.  CORA computer seems to be doing ok as a second tier supplier and repair depot employing a few people..

Where is the new Deming and is he in China or India?