August 4, 2008
My son and his girl friend were in town this past weekend and my wife and I took them to The Henry Ford to take the Ford Rouge Factory Tour. (Ford’s Rouge plant is the one that builds the F150 pickup. It’s a vertically integrated plant that even includes blast furnaces and a steel mill.) If you’ve never taken a tour of an auto assembly plant, it’s really an incredible experience. To see humans and robots working in unison on a state-of-the-art assembly line to turn piles of sheet metal and thousands of other parts into finished cars and trucks is simply amazing.
Unfortunately, that’s not what we saw. The plant was shut down due to lack of demand. By the time it restarts on September 22nd, it will have been down for two months. There wasn’t a soul in sight, not even a single maintenance worker taking the opportunity to make repairs. No re-tooling for new models. No capital improvements being made. The assembly line was completely empty – no in-process trucks and no stacks of parts. Everything was gone, leaving behind a spotlessly clean but utterly silent manufacturing facility.
The tour still included interesting displays, including movies about the plant’s history and the production process. So we could at least visualize what takes place there. But I think that anyone would be disturbed to see such a modern, efficient factory completely idled, and for such a long period of time. This speaks volumes about the state of our economy. Believe me, folks, this is no business-cycle downturn. All of our domestic auto manufacturers are on the brink of bankruptcy. If they go, they’ll take millions of jobs with them and the entire manufacturing sector of our economy will vanish, dragging down the other sectors with it. And if the manufacturing sector vanishes, there’ll be no getting it back any time soon as we will have lost all of our technical know-how.
The time has come to protect our domestic manufacturing capability. This isn’t just an economic issue. It’s a matter of national security.
July 24, 2008
I’m afraid that my prediction for the demise of either Ford or Chrysler in 2008 (see “2008 Predictions“) is on the cusp of becoming reality for both – Ford first, with Chrysler soon to follow. (GM may survive for a couple more years.) Ford was already 100% leveraged. They had nothing left to offer up as collateral for loans to survive any more losses, much less such enormous losses as the one just reported in this article.
It’s just terriby sad to witness the destruction of American manufacturing – companies that were pioneers in building America into what was once the wealthiest, most powerful, most envied nation on earth. Now we’ve become a hollowed-out shell, like the crust of a cicada left behind on a tree trunk, a ghostly reminder of the life that once was. Now we’ve become an object of pity, a down-and-out skid row bum at the end of our rope.
Isn’t globalization grand?
May 29, 2008
This artice details a plan released by Ford Motor yesterday to lay off 2,000 salaried workers. Ford actually acknowledges that this is an unexpected departure from their “turn-around” plan, necessitated by rapidly falling sales volume.
With U.S. auto sales expected to drop to around 15 million this year, down from 17 million as recently as 2005, Ford needs to cut costs to help pay for new technology and stay afloat until the market recovers, said Kevin Tynan, an auto analyst with Argus Research in New York. Ford and other automakers are investing in costly hybrid and electric vehicle technologies but won’t see the benefits for several years, he said.
Tynan said Ford wouldn’t be able to reach its layoff targets without involuntary layoffs. But he also noted the company and its U.S. competitors have weathered downturns in the past.
“If history is a guide, we’ve been through it before. You get to these points where you restructure, then you start to recover,” Tynan said. “It’s at least an industry and a group of companies that have proved they can get pretty creative when the back’s against the wall.”
It’s absolutely amazing to me that these executives just don’t get it. After decades of this slow downward spiral, they still cling to hope of a big turn-around. But without a dramatic shift in U.S. trade policy – the implementation of the tariff structure on manufactured goods, indexed to population density, which I outlined in Five Short Blasts – American auto manufacturers are doomed to continue their descent into bankruptcy and oblivion. Check out my “2008 predictions” in which, back in November of 2007, at a time when the “experts” were hailing Ford’s turn-around plan, I predicted the bankruptcy of either Ford or Chrysler in 2008. It’s an easy call when you understand the role of our misguided trade policies in destroying our economy.
It’s going to get worse instead of better as the U.S. sinks deeper into recession. The “experts” are now forecasting an early end to a shallow recession. Don’t believe it. This isn’t just a normal business cycle. Overpopulation and an idiotic trade policy that imports the effects of overpopulation even faster are all coming home to roost.