Wednesday, July 25, 2012

Toyota Takes Top Slot from GM, Expands in Canada



Toyota is again the number-one automaker in the world, taking the title back from General Motors in the first half of 2012. The numbers don't lie. Toyota sold 4.97 million vehicles globally during the first six months of the year. GM sold 4.67 million.

What a classic story of manufacturing reinvention or better put, manufacturing renaissance. A few years ago we were all wondering where the company had gone wrong. Long seen as a symbol of efficiency and manufacturing excellence, Toyota was rocked by recall after recall, scandal after scandal.
Those days are gone.

The Japanese company plans to become even more of a force in North America, with Toyota Motor Manufacturing Canada Inc. (TMMC) announcing plans to invest more than $100 million and hire approximately 400 to increase Lexus production at its Cambridge, Ontario facility. Overall Lexus capacity will increase by 30,000 vehicles to 104,000 units, including 15,000 RX450h vehicles, the hybrid electric version of the popular Lexus.


Toyota is targeting early 2014 for expanded Lexus production. “This is a big and ambitious project with new technology, exacting standards and tight timelines,” said TMMC President, Brian Krinock. “Our team members have demonstrated time and time again that they thrive on these kinds of challenges.”

TMMC currently manufactures the Toyota Corolla, Matrix, RAV4, RAV4 EV models and the Lexus RX model in plants located in Cambridge, ON and Woodstock, ON. The company currently employs approximately 6,500. 

“The team members at TMMC have shown tremendous dedication to creating high-quality Lexus vehicles,” said Mark Templin, Lexus General Manager. “With rising demand for our RX 450h hybrids, moving that production to an award-winning North American plant is great news for Lexus. We look forward to partnering with TMMC to continue the tradition of manufacturing outstanding RX luxury utility vehicles.”

Today’s announcement is the latest in a string of Toyota North American production increase announcements since February at plants in Indiana, West Virginia, Kentucky, Alabama and the second in Canada. Cumulative investment total is approximately $745 million and more than 1,500 jobs are being added.

"This Lexus production increase, and the several announcements before it, reflects our growing optimism for an improving North American market and our intent to localize more production," said Steve St. Angelo, Executive Vice President of Toyota Motor Engineering & Manufacturing North America, Inc.

Europe Hurts Ford, North America Soars

Ford 2013 Red Tails Mustang and Plane


Dreary news from Dearborn. Ford Motor Co. had a tough second quarter. But for the first time in a long line of bad earnings reports from the Detroit Three, we can't blame this on North America. In fact, North America was one of the brightest spots in the second quarter report that Ford issued today.

Let's begin with the bad news. Europe gave Ford a lot of trouble in the past three months. That should not come as a surprise, but it still hurt.



Given the deteriorating external environment in Europe, Ford now expects its full year loss in Europe to exceed $1 billion. The magnitude of this loss will be affected by a number of factors, including the overall economic environment, competitive actions, and Ford’s response to these developments.

The company recognizes the seriousness of the situation in Europe, and views the challenges the industry faces as more structural than cyclical in nature. While Ford is affected significantly because of its strong presence in the region, the company understands what is needed to achieve profitability and to generate an appropriate return on investments.

“We have faced challenging situations in other parts of the business before, and successfully addressed them through our One Ford plan,” said Bob Shanks, Ford executive vice president and chief financial officer. “We will continue to use our plan as the guide to address challenges and opportunities in our valued European operations.

“We are reviewing all areas of our business to address the near-term challenges, while ensuring we build a strong foundation for our future,” said Shanks. “It is premature to discuss details of what our plans may be in response to the situation in Europe, but we will continue to communicate our plans at the appropriate times with all of our stakeholders.”

Now the good news:

Near-record profits in North America and continued strong performance from Ford Credit helped the Ford Motor Company [NYSE: F] deliver its 12th consecutive quarterly pre-tax operating profit as it reports second quarter 2012 results today.

The company reported a pre-tax operating profit of $1.8 billion, or 30 cents per share, and net income of $1 billion, or 26 cents per share. The company also continued to generate positive Automotive operating-related cash flow, and ended the period with a strong liquidity position of $33.9 billion, an increase of $1 billion during the quarter.

“The Ford team delivered another solid quarter driven by the strength of Ford North America and Ford Credit,” said Alan Mulally, Ford president and chief executive officer. “We remain absolutely committed to continuing to make progress on our One Ford plan, including dealing decisively with near-term challenges, investing for future growth, and developing outstanding products with segment-leading quality, fuel efficiency, safety, smart design and value.”

Second quarter 2012 net income was affected by lower operating results and the impact of higher tax expense compared to a year ago that resulted from the release of the tax valuation allowance in the fourth quarter of 2011.

Ford finished the second quarter with Automotive gross cash of $23.7 billion, an increase of $700 million during the quarter. Automotive debt of $14.2 billion at the end of the second quarter was up from $13.7 billion at the end of the first quarter, primarily reflecting additional drawdowns of low-cost loans for the development of advanced vehicle technologies. The company will make its last draw on these loans by August 2012, and repayment of the loans begins in September 2012.

Ford also made payments of $800 million to its worldwide funded pension plans, of which $500 million were discretionary payments to U.S. funded plans, in line with the company’s previously-disclosed long-term strategy to de-risk its funded pension plans. Dividends paid in the quarter totaled nearly $200 million.  Automotive gross cash exceeded debt by $9.5 billion at the end of the second quarter, a net cash increase of $200 million during the quarter.

Tuesday, July 24, 2012

Whirlpool Renaissance: Q2 Turnaround



Whirlpool didn't beat "The Street" but the southwest Michigan appliance maker, the world's largest, did beat year-ago. The Benton Harbor-based company turned a quarterly loss into a quarterly profit. And that, I think, qualifies as a "renaissance."


Whirlpool Corporation (NYSE: WHR) announced today second-quarter GAAP net earnings of $113 million, or $1.43 per diluted share, compared to a net loss of $(161) million, or $(2.10) per diluted share reported during the same period last year.  The year-over-year change in GAAP earnings included lower legacy expenses partially offset by lower tax credits.  On an adjusted basis, diluted earnings per share(1) almost doubled to $1.55 compared to $0.81 in the prior year driven by continued improvement in product price/mix and cost and capacity-reduction initiatives. 

Sales, in constant currencies, were up approximately 2 percent.  Excluding the impact of both foreign currency and lower Brazilian (BEFIEX) tax credits, net sales increased more than 3 percent driven primarily by strong product price/mix.  On a reported basis, sales in the quarter were $4.5 billion, compared to $4.7 billion in 2011.

"Our North America and Latin America businesses continue to perform extremely well and we are pleased with our financial performance through the first half of the year," said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation.  "Our ongoing business operating performance is well ahead of last year offsetting lower industry demand, volatile foreign currency and material inflation.  We remain positive regarding our underlying business performance and are optimistic on recent U.S. housing trends exiting the second quarter."

Here's what I believe is even better news and a true renaissance: product launches. This where creativity and market demand intersect.


The Whirlpool brand, in North America, launched several innovative cooking products during the quarter, including:
Double wall ovens with the industry-first innovative FIT system with adjustable feet and trim options that make replacing a wall oven easier with an existing cabinet configuration.
The TimeSavor Ultra pure convection feature in double wall ovens that offers a rear fan and a third heating element to distribute heated air in four directions, achieving better multi-rack cooking performance.

A gas range with Rapid Preheat option that saves time when single-rack baking with 25 percent faster preheating, compared to three-rack models without this option, and the brand's most energy-efficient self-cleaning cycle available with AquaLift self-clean technology.

An induction range that features an Induction Boost element to boil water in half the time and the AccuBake temperature management system that delivers uniform baking results every time.
A microwave hood combination with the industry's first silver metallic, non-stick interior, making cleaning splatters quick and easy.

Two Whirlpool brand ENERGY STAR® qualified dishwasher models featuring the Sensor Cycle that automatically selects the right wash and dry settings for each load, cleaning tough soils 35 percent better than previous wash systems while using just the right amount of time, energy and water.
Maytag brand wall ovens with the industry-first innovative FIT system of adjustable inserts and trim options allows homeowners to customize installation of select models to their existing cabinet, avoiding costly remodeling.

The first Amana brand ENERGY STAR® qualified high-efficiency top-load washer, which uses up to 73 percent less water and 84 percent less energy compared to pre-2004 traditional top-load washers using the normal cycle.
Whirlpool Latin America Region launched:

The Brastemp brand Inverse Maxi refrigerator with a LED touch screen and Internet connection that allows consumers to create shopping lists at their refrigerator and then transfer the lists to their cellular phones.

Whirlpool Europe, Middle East and Africa Region launched:

Bauknecht brand LUMiQ refrigerators with a ShockFreeze compartment featuring exclusive technology that prevents freezer burn.
The Bauknecht brand front-load laundry pair with ECO monitor for exceptional cleaning with less energy consumption. The washer is the only appliance certified by TUV (Technischer Uberwachungsverein) for high quality, durability and reliability. TUV independently tests product quality against rigorous international standards.
A Bauknecht brand dishwasher with PowerClean+, which provides exceptional cleaning without pretreating or rinsing.

Whirlpool Asia Region launched:

Whirlpool brand 4-door French-door refrigerator in China, featuring an external electronic control system and sunshine simulation by LED lighting for longer fruit and vegetable preservation.
Whirlpool brand Neo iChill frost-free energy-efficient refrigerators that chills bottles 40 percent faster than standard refrigerators. The products also retain cooling for 25 percent longer during power outages.

Whirlpool Corporation is the world's leading manufacturer and marketer of major home appliances, with annual sales of more than $19 billion in 2011, 68,000 employees, and 65 manufacturing and technology research centers around the world.  The company markets Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Brastemp, Consul, Bauknecht and other major brand names to consumers in nearly every country around the world.  Additional information about the company can be found at http://www.whirlpoolcorp.com.


Chrysler Group Renaissance





Chrysler Group LLC's Toledo Assembly Complex Third Facility to Achieve World Class Manufacturing Milestone; Ties Dundee as Highest Ranking Facility


The Toledo Assembly Complex (Ohio) is the third Chrysler Group LLC facility to be awarded bronze status for its efforts in implementing World Class Manufacturing (WCM) and is now one of the highest ranking of all the Company's North American manufacturing facilities. In April, the Dundee Engine Plant (Dundee, Mich.) and Windsor Assembly Plant (Ont.) achieved bronze status.

The Toledo facility received the bronze designation 27 months after adopting the WCM operating system following an audit on July 19 and 20, 2012. Bronze is awarded after earning a minimum of 50 points in 10 technical and 10 managerial pillars by demonstrating clear WCM know-how and competence through pillar presentations and shop-floor project reviews. The Toledo facility scored 52 points, which ties the score received by the Dundee plant earlier this year.

"The Toledo employees have dedicated themselves to accelerating the rate of improvement in their plant in order to achieve bronze. To equal or surpass two other exceptional facilities is a remarkable achievement and we are very proud of their hard work," said Scott Garberding, Senior Vice President and Head of Manufacturing/WCM, Chrysler Group LLC. "Together with our UAW partners, Chrysler Group is demonstrating its commitment to making our manufacturing facilities among the best in the world."

World Class Manufacturing is a methodology that focuses on reducing waste, increasing productivity, and improving quality and safety in a systematic and organized way. WCM engages the workforce to provide and implement suggestions on how to improve their jobs and their plants.

WCM was first implemented by Fiat in 2006 and introduced to Chrysler Group as part of the alliance between the two companies in June 2009.

WCM certified auditors from Fiat including the Head of WCM for Europe, Middle East and Africa, and the Plant Manager of Fiat's Sevel (Italy) Assembly Plant performed the audit. The Toledo plant will be officially recognized for their achievements at a WCM award ceremony in November in Europe.

The Toledo Assembly Complex, which employs over 1,900, produces the Jeep® Liberty, Jeep Wrangler and Jeep Wrangler Unlimited. In November 2011, Chrysler Group announced that it would invest $500 million in the facility for a 260,000-square-foot expansion of the existing body shop and upgrades to all other areas of the assembly plant. In addition, Chrysler will add a state-of-the-art, 26,000-square-foot Metrology Center, which will help improve vehicle quality by verifying key measurements to ensure accurate fit and finish. The Company also announced that it will add a second shift of production or about 1,100 jobs in the third quarter of 2013, bringing total employment at the complex to over 2,800.

Saturday, July 21, 2012

Manufacturing Technology Backlash



FIRST ROBOT HOMICIDE

Profile America — Saturday, July 21st. Science fiction turned into bizarre truth on this date 28 years ago, in the first known instance in the U.S. of a robot killing a human being. The accident occurred at a Jackson, Michigan plant when an automated piece of machinery turned and crushed a 34-year-old worker against a safety bar. He died five days later. The accident proved that in reality, there is no such thing as "law zero," as featured in Isaac Asimov's landmark novel, "I, Robot," which forbids robots from injuring human beings. Sometimes called "flexible manufacturing equipment," robots are parts of the more than $350 billion worth of manufacturing machinery sold each year in the U.S. You can find more facts about America from the U.S. Census Bureau, online at www.census.gov.

Friday, July 20, 2012

Renaissance of Auto Manufacturing



The KPMG Global Automotive Executive Survey 2012 tells a couple of great stories. You will find that it shows most auto execs are optimistic about the immediate future. That includes hiring. They do see the need to increase payrolls. Excellent analysis of that from our friends at Crain's Detroit Business.

Manufacturing is never going to be the huge employment wheel house that it was in the 20th century, but it is still critical for the future of our American communities. Here in Michigan, auto may have been knocked down, but the champion is getting back up.


On the other hand, the KPMG survey also shows that the auto industry is much more global that it was in the 20th century, and as I said to a 58-year old friend who still has his pony-tail, it is never going to be 1972 again.

This survey shows the need for reinvention. It also shows that is happening. Hopefully this will lead to the renaissance of manufacturing.  However, we have to realize that auto manufacturing is no longer just about Michigan. Auto manufacturing is global. We have to make sure Michigan has a place on that concentric circle around the globe.


Tuesday, July 17, 2012

Manufacturing In The Spotlight Again



Manufacturing is in the spotlight again. Finally.  I noticed a strong debate on manufacturing this morning on the MSNBC program, "Morning Joe."  When we found ourselves in the dot-com bubble, I think we forgot about manufacturing. Now, health care is seen as the industry of the future.
While that is examined and applauded in Last Chance Mile: The Reinvention of an American Community, the point is also made that manufacturing can't be ignored.

Without getting into the debate over outsourcing, and I do believe that has been oversimplified, this new survey seems to show the American voter agrees that manufacturing jobs are critical to the U.S. economy.


PITTSBURGH, July 16, 2012 /PRNewswire-USNewswire/ -- Leo W. Gerard, president of the United Steelworkers (USW) said a new national opinion poll released today highlights election year voter concerns over the need for concrete and comprehensive action on policies that support manufacturing jobs and fair trade.


"We've seen prior polls all showing strong support for manufacturing jobs policies, but this election year poll makes it clear that voters want more than talk," Gerard said. "Voters declare they are demanding aggressive action to help manufacturing as the 'irreplaceable core of a strong economy.'"

He said the poll should be used as a roadmap on priorities for creating jobs and improving the economy. "A majority of Americans correctly rate manufacturing as the industry most important to the overall strength of the nation."

Gerard said the poll confirms: "Support by voters is overwhelming for proposals to end policies that encourage outsourcing, to standup for tougher trade enforcement, Buy American, employment retraining, and incentives for investments in U.S. infrastructure."

A majority of voters – 56 percent – no longer see the U.S. as having the world's strongest economy, and fewer than 25 percent think anyone in Washington is doing a great deal to help enforce a level playing field for American manufacturing. However, 88 percent of voters believe that it's possible for America to have the strongest economy, and 92 percent believe that it is important for the U.S. to regain that position.

When it comes to trade with China, the poll found that voters emphatically support tough action on Beijing's cheating on currency and other trade obligations.

"American voters want trade laws to be fully enforced and dismiss those voicing claims of a trade war and other consequences of strong action fighting for fair trade," Gerard said of the poll findings.

The Alliance for American Manufacturing (AAM) commissioned the national poll for the third straight year, with each showing an increase in recognition of manufacturing as the "irreplaceable core of a strong economy."

The bipartisan survey of 1,200 likely general election voters was conducted Jun. 28 to Jul. 2 by the Mellman Group and North Star Opinion Research, firms that poll for Democratic and Republican candidates respectively. The findings include results from six focus groups held in Columbus, OH; Orlando, FL; and Phoenix, AZ, as well as two dial tests in St. Louis, MO and Vienna, VA of manufacturing messages frequently presented to voters by the national media.

In the focus groups, voters were stunned to learn that steel production for the Oakland-San Francisco Bay Bridge had been outsourced to China. When presented with proposals to enact strong Buy American provisions for such public works, overwhelming majorities of Republicans (87 percent), Democratic (91 percent), and Independent (87 percent) voters were in favor. Even when presented with arguments from critics of Buy American about allegedly higher costs and increased taxes, voters supported Buy American policies by a wide margin.

When it comes to outsourcing and China's cheating, more than two-thirds of respondents said that China's violations of international trade rules were costing the U.S. jobs, and nearly as many (62 percent) said Washington needs to get tougher on China's cheating.

Voters of all affiliations overwhelmingly support getting tough with China, even when posed with the argument that getting tougher on China's trade violations could "start a trade war." Fully 83 percent of those surveyed also had an unfavorable view of companies that outsource jobs to China. In contrast, voters maintain extremely favorable views of goods manufactured in the U.S. (97 percent).

Gerard points out: "The Chinese have been waging war on American workers through unfair and predatory trade practices for years. It's time policy makers listened and fought for their constituents' jobs and future."

The survey also explored the Obama Administration's decision to rescue the U.S. auto industry. A majority, 57 percent, thought the quality of cars produced by the U.S. auto industry has improved. On the decision to rescue the industry, when presented with arguments for and against saving the U.S. auto industry, a significant majority of those polled (61 percent) support the government's action. This support was found to be strong across the country, not just in the Midwest.

"This survey leaves little doubt that voters understand that U.S. manufacturing is the nation's most powerful engine of job growth and that they want more urgent action taken to address trade violations and halt outsourcing that is sapping our global standing and future security," said Scott Paul, Executive Director of the Alliance for American Manufacturing (AAM), the group that commissioned the poll.

A detailed presentation of the polling results is available on the AAM website at: http://americanmanufacturing.org/.

It is great to have manufacturing at the top of the agenda again, don't you think?