5 million cars lost...

[A Horse With No Name]

http://www.freep.com/article/20110324/BUSINESS01/110324019/Global-auto-industry-could-lose-5-million-vehicles-amid-Japan-disaster-expert-says?odyssey=tab

Fantastic read, interested in what anyone thinks.

[balthazar]

How soon before we find an online hand-wringer wondering if their honda washer bottle is radioactive?

RE the piece: I would never chose to term it "lose", as if we absolutely "need" circa 90 million vehicles/year (or 12 million-some here). Frankly, here in Jersey, we could stand to lose a million cars on the road tomorrow.

Tho some folk are obviously going to lose some employment hours, if I were that person @ GM calling this shot: I would look immediately to shifting production of said affected components here where possible vs. waiting. Of more significance is any long-term economic effect.

This is definitely one of those examples where globalism bit American makers in the a§§.

[loki]

you can't loose something you don't have yet.

hm. don't we wish we still had those C4C cars around?

i could believe the ~1/3 million that were actually on the line/already owned/@dealers.

[SAmadei]

This is definitely one of those examples where globalism bit American makers in the a§§.

Globalism or JIT inventory management? I would argue that Chrysler and Ford have handled this better by not running on the JIT razor's edge.

If anything globalism is the solution to this problem. Toyota, in a perfect world, would still be able to move much of their production to other plants, such as NUMMI.

Of course, with Toyota being in the middle of this disaster, I think its telling that they are already starting to ramp back up. It shows that they are in tune, so far, with their keiretsu.

GM should have spec'd out electronics parts that can be made in either Japan or Korea... this is good for the bottom line, as being locked into one vendor always results in the buyer paying more. But I fear that GM is probably hopelessly locked into one vendor and is stuck until they start producing again... or until some hack in engineering finds a suitable replacement.

Sure, this will affect all companies for some time, but when GM seems to be the first to be affected, it tells me that this is "old GM" still at work, thinking this is the '80s.

[A Horse With No Name]

This is definitely one of those examples where globalism bit American makers in the a§§.

Bingo!

[CSpec]

This is definitely one of those examples where globalism bit American makers in the a§§.

Bingo!

That is incredibly false. Globalized production reduces risk. SAmadei understands.

[balthazar]

If the Volt transmission was manufactured in NA, there would be no potential supply issues due to a tsunami in Japan, so no; it's not "incredibly false".

[Drew Dowdell]

If the Volt transmission was manufactured in NA, there would be no potential supply issues due to a tsunami in Japan, so no; it's not "incredibly false".

What CSpec is about to tell you is that globalization invites geographic diversity to production, and while that CAN be true in his 7th grade economics textbook, in the real world it is less so.

Even a part that shares a vast commonality among models like... say.. an electronically controlled gas pedal is still only manufactured in a few places. In that particular example, I believe there was production in North America and production in Japan, but when NA production was found to be faulty, Japanese production had trouble making up the difference which is why so many models went into "Sales Hold".

Something so model specific and specialized as the Volt transmission has little chance of being produced with geo-diversity.

Edited March 25, 2011 by Oldsmoboi
damnit! I can't type right when I'm hungry

[FUTURE_OF_GM]

I guess it depends on your definition of globalism.

MY definition would be producing product for a specific area IN a specific area which would safeguard the company from things like this.

THEIR definition of globalism is producing the product where it's cheapest to produce it. See the problem?

[CSpec]

If the Volt transmission was manufactured in NA, there would be no potential supply issues due to a tsunami in Japan, so no; it's not "incredibly false".

If the Volt transmission was manufactured in New Orleans in 2005, there would be a problem as well. What's your point? My point is that the system is highly distributed so a disaster in one locale only slightly affects global supply, not a catastrophic loss.

[Drew Dowdell]

If the Volt transmission was manufactured in NA, there would be no potential supply issues due to a tsunami in Japan, so no; it's not "incredibly false".

If the Volt transmission was manufactured in New Orleans in 2005, there would be a problem as well. What's your point? My point is that the system is highly distributed so a disaster in one locale only slightly affects global supply, not a catastrophic loss.

Which is actually proving to be false. Mazda just halted new vehicle orders from dealers. Lines all over the world are shutting down.

There are two issues at hand:

Globalism - which does not specifically address disaster recovery though it can if set up right.

and

Geo-Diverse Production - which is set up specifically to mitigate the effects of something like the Japan earthquakes.

You can have globalism without geo-diversity, as is being proven with the Colorado and Volt

You have have geo-diversity without globalism - an example would be GM plants of yore where multiple plants produced multiple versions of the same car.

They are two very different issues.

[CSpec]

If the Volt transmission was manufactured in NA, there would be no potential supply issues due to a tsunami in Japan, so no; it's not "incredibly false".

If the Volt transmission was manufactured in New Orleans in 2005, there would be a problem as well. What's your point? My point is that the system is highly distributed so a disaster in one locale only slightly affects global supply, not a catastrophic loss.

Which is actually proving to be false. Mazda just halted new vehicle orders from dealers. Lines all over the world are shutting down.

Last I checked there are plenty of other manufacturers you can choose from.

[Camino LS6]

If the Volt transmission was manufactured in NA, there would be no potential supply issues due to a tsunami in Japan, so no; it's not "incredibly false".

If the Volt transmission was manufactured in New Orleans in 2005, there would be a problem as well. What's your point? My point is that the system is highly distributed so a disaster in one locale only slightly affects global supply, not a catastrophic loss.

Which is actually proving to be false. Mazda just halted new vehicle orders from dealers. Lines all over the world are shutting down.

There are two issues at hand:

Globalism - which does not specifically address disaster recovery though it can if set up right.

and

Geo-Diverse Production - which is set up specifically to mitigate the effects of something like the Japan earthquakes.

You can have globalism without geo-diversity, as is being proven with the Colorado and Volt

You have have geo-diversity without globalism - an example would be GM plants of yore where multiple plants produced multiple versions of the same car.

They are two very different issues.

Spot on.

[Drew Dowdell]

If the Volt transmission was manufactured in NA, there would be no potential supply issues due to a tsunami in Japan, so no; it's not "incredibly false".

If the Volt transmission was manufactured in New Orleans in 2005, there would be a problem as well. What's your point? My point is that the system is highly distributed so a disaster in one locale only slightly affects global supply, not a catastrophic loss.

Which is actually proving to be false. Mazda just halted new vehicle orders from dealers. Lines all over the world are shutting down.

Last I checked there are plenty of other manufacturers you can choose from.

Which has NOTHING to do with globalism and everything to do with geo-diverse production.

As you apparently missed in my post, it is entirely possible to be geographically diverse WITHOUT globalism.

[CSpec]

If the Volt transmission was manufactured in NA, there would be no potential supply issues due to a tsunami in Japan, so no; it's not "incredibly false".

If the Volt transmission was manufactured in New Orleans in 2005, there would be a problem as well. What's your point? My point is that the system is highly distributed so a disaster in one locale only slightly affects global supply, not a catastrophic loss.

Which is actually proving to be false. Mazda just halted new vehicle orders from dealers. Lines all over the world are shutting down.

Last I checked there are plenty of other manufacturers you can choose from.

Which has NOTHING to do with globalism and everything to do with geo-diverse production.

As you apparently missed in my post, it is entirely possible to be geographically diverse WITHOUT globalism.

I don't understand what you're arguing--GM should be the only auto company in the world with many plants manufacturing the same exact car worldwide? Like Coca-Cola?

[Drew Dowdell]

I'm arguing that Geo-Diverse Production is the only way to mitigate against natural disaster and has nothing to do with globalism.

The early 1950's Cadillacs were normally equipped with Hydramatic transmissions. However in 1953 the General Motors Hydramatic Plant burned to the ground, leaving Cadillac without a source of transmissions. Buick Dynaflow transmissions were hastily adapted to Cadillac mount points, and some 19,000 1953 Model 62 Cadillacs, and some 28,000 Cadillacs of all models, were equipped with Dynaflow transmissions. Several thousand 1953 Oldsmobiles were also equipped with Dynaflow.

I'm not even sure what you're arguing with me about. They are two different concepts that are completely independent of each other.

If anything, I'm defending globalism in this case by not allowing it to be blamed for production outages when it is in fact the lack of geo-diverse that is at fault.

[SAmadei]

There are two issues at hand:

Globalism - which does not specifically address disaster recovery though it can if set up right.

and

Geo-Diverse Production - which is set up specifically to mitigate the effects of something like the Japan earthquakes.

You can have globalism without geo-diversity, as is being proven with the Colorado and Volt

You have have geo-diversity without globalism - an example would be GM plants of yore where multiple plants produced multiple versions of the same car.

They are two very different issues.

You cannot have true geo-diversity without globalism. Case in point... Sure GM used to build the same car are multiple plants... but since both are in the same country, a UAW strike could quickly stop the whole line at both plants. Now part of the problem here is that the term globalism can be warped several ways. I define it in its broadest sense... "refers to any description and explanation of a world which is characterized by networks of connection that span multi-continental distances". Granted, the US is large enough that many would consider different parts to be geographically diverse, but only from disasters of a certain size. People now have the power to create non-natural disasters that can be just as crippling to a particular business, which could affect the entire US.

Also getting lost in the shuffle here is that the problem is not always as simple as a car line. Every time you create parts in a particular location, that becomes a new point of failure. So building a complete car from scratch at plant A might have a risk of 1%... but now that GM is creating Engines at plant A and car bodys at plant B, the risk doubles to 2%... Now look at the diversity of parts in the typical domestic car today... many domestic cars struggle to contain 50% US content. So if each car has 50 parts that are each built in one plant somewhere, your risk soars to 50%... half the time, you are down due to at least one part.

Granted, things go more smoothly than this example, but the manufacturer owes it to the investors to have business continuity measures in place. In theory, GM can move around body production... but in practice, GM seems quite limited... needing to discontinue lines (1996 B-body, 2011ish G-body) in order to maintain factory capacity, while other factories remain underutilized. Also, the risks created by having parts made in 50 plants can be minimized by using more common commodity parts. But GM don't seem to like that... as it seems they like having a tight grip on replacement parts.

One last thing, is that people here might think I'm championing globalization. I'm not. But the genie has been left out of the bottle... its here and is not likely going anywhere. GM needs to leverage globalism to protect its production. You can't sell what you can't build.

[Drew Dowdell]

Final assembly will always be limited in it's geo-diversity, but component production doesn't need to be.

And there is a difference between a strike and a natural disaster. GM could build a whole shipload of Regals in China if the UAW strikes, but they couldn't get them to market because the Teamsters would likely refuse to carry them. (I believe a similar scenario has happened before)

[CSpec]

I like the cut of your jib, SAmadei.