In the past few months, American cars have been enveloped in a gloomy atmosphere in the Detroit area. Since September 11th, in order to save the car market that may enter the frozen period, the US auto giants have resorted to a highly effective side-effect rescue drug—zero down payment. Although this has saved the North American auto market and maintained the huge automobile production line in the United States, it has maintained the existence of a huge supply chain on the surface, but it has caused serious internal injuries. When manufacturing profits have long been a problem, the source of financial business, the main source of profit, has been shrunk, and its operating profit has dropped sharply. Last year’s memorable full-price war forced the auto giants to scrape scraps of meat on poor tastemaking profits.
Over half of this year, we have also offered an "employee discount plan." This disguised price war has worsened, and the three giants can only retreat to the breakeven line to play seesaw, and they suddenly lose money, causing Wall Street to frequently issue a "bad" rating.
Many giant car suppliers in North America have also been dragged into this pool of operating losses. The old “long-standing company disease†of long-term vehicles and parts companies—the number of retired employees in the company's long-term accumulation is huge. The huge expenditures for retirement pensions and medical insurance must be paid as usual and become a permanent financial hole. This has become a double problem for businesses and society. It is nothing more than the reduction of salaries, layoffs, and closing of factories. The current three strokes of impossibility can not be sacrificed. Not long ago, General Motors CEO Wagner claimed at the internal management meeting that he would cut 24,000 jobs and close several OEMs by 2008. However, under the restraint of the U.S. Allied Motor Workers Union (UAW), vehicle manufacturers have so far Do not dare to act rashly. Many companies live like a year. At this time, the auto industry is calling for a “saver†for the company. The corporate board of directors, shareholders and Wall Street are also looking forward to the birth of the “savior†to stop the bleeding. Just like Chrysler was in trouble 20 years ago. Standing up and bucking, the achievement was a hero.
The Air Saver
Delphi Global Headquarters Yard
Before the “sweet spot†of the Big Three had been loosened, it was airborne by a giant in the US’s largest system component supplier, Delphi, a veteran who had been on the move—Steve Miller (Robert S.). Miller) became the chairman and CEO of Delphi from July 1st, and was also the chairman of the company's top decision-making body, the Delphi Corporation Strategy Committee. For a time, the nation’s mainstream car media focused on the public and tried to capture his rescue recipe from his words. As the 160th-largest company listed in the latest Fortune 500 companies, it ranks first in the mid- to long-term list of the top 150 automotive suppliers in the US, and Delphi employs a total of 186,500 employees around the world. Roads are for the entire industry to learn from.
Miller has a complicated history, from the vehicle company's Ford Motor Company to Chrysler Motor Company, especially during the Chrysler, as Chief Counselor CEO Ekoka's chief negotiator to effectively manage major financial and financial aspects with the federal government and all sectors of finance. Institutional negotiations, and finally the vice chairman and CFO. He was the CEO of the first-tier supplier "Federal-Mogul" and several other companies. Mainly engaged in the recovery plan of these companies, belonging to the "lifeguard" type of handling the enterprise business crisis of the recognized master. This Delphi move to this "Airborne Commander" clearly has high hopes for Miller, who has experienced such a large vehicle and large parts company. However, companies must also give him a high-paying check with an annual bonus of $3 million plus annual salary of $1.5 million. JT Battenberg III, who has long served as chairman of Delphi, was originally scheduled to retire this year. The successor is Miller, who is one year old. JT successor, who has already been appointed, is currently specializing. The period did not go straight to the CEO step by step, indicating that a special period required the use of special talents to turn the tide.
Ten days ago on July 28, Miller was appointed chairman of the board less than a month ago. A team of 11 auto professionals from China, South Korea, Japan and India visited Delphi's global headquarters in the Detroit area. Miller chairman specially set aside half a day in busy schedules to receive interviews and exchanges with professional automotive media in Asia in three batches. The writer happened to listen to JD, the former deputy chairman of Delphi, at the head office early this year at the beginning of the year. He gave an overview of Delphi's global business and an incisive account of the development of China's business. After a half year, he listened to the new chairman's explanation during the hot season. Although the Chinese market is extremely important to Delphi’s global strategy, it is unlikely that the new chairman will be able to chat with Asian four-nation journalists on the prospects of the Chinese market business at this moment. And the media is more willing to hear Miller respond to severe challenges.
Miller outlines several points for the media that are of interest to each other: First, Delphi should focus on the areas of high-yield products with high added value, promising market development, and high growth potential. The Asian market is very important, in line with the characteristics of high growth and high yields; second, the product line of Daluo's products must be gradually withdrawn, with emphasis placed on high-tech product lines. For example, the production of new products in the next 1/3 will focus on electronic products. . At the same time, the production lines of products should be moved to low-cost countries as far as possible to reverse the passive situation of North American operations, and efforts should be made to solve the problem of high labor costs in the shortest possible time and the losses caused by huge losses in the North American market and the resolution of the alliance with the national automobile industry. The problem of labor union contradictions; Third, attaches great importance to the strategic partnership of supply chain partners and achieve greater synergies; Fourth, highly praised the former chairman and founder of Delphi JT, who had been peeled off from GM for more than ten years at Delphi. Great efforts were made to straighten out the supporting relationship with GM, broaden the supporting market for global customers, and enable the volume of non-GM business volume to exceed 50%.
When answering the author's view on the perspective of Toyota-dominated supply chain management for Japanese auto companies, Miller replied frankly that he personally appreciates the success of Japan's supply chain system. As early as Chrysler, he Having studied Japan's production methods and supply chain methods, it also had many dealings with Japanese car companies when it was part of Federal-Mogul Corporation. However, differences in the country's national conditions system still have problems in adapting to other companies' local strengths. Miller also said in a humorous manner that he was unreasonably intent on being a rescue expert in the industry. He did not try to work hard in this direction from the beginning, and he has created a reputation in the industry after several wars. Miller went "airborne" to Delphi. He did not bring his own team from outside or clean the old team. This is also a habit he used to rely on the original senior management and employees to work together to restore the operating status of the company.
The root of the lesion
Delphi Electronics Test Line
So far, the industry has basically confirmed that General Motors had designated Delphi as a divisional stove to eat in accordance with the market operation mechanism. Dependence and Ford Motor Company's Visteon have also adopted the same method. They cannot negate the original separation due to the difficulty of the operation of these two domestic component giants. decision making. As a result, many employees who first fell into Delphi were members of UAW when they were at General Motors, and this buried the roots of the future. The treatment of UAW members is the highest in all industries in the United States. The reason is that the US auto industry has been thriving for more than 60 years. The auto companies have made a lot of money. At the beginning, UAW strongly tried to gain reasonable economic benefits for the union members. Whoever expects the stars to move, the automotive industry has experienced less success in the past two decades. The profits of vehicle companies have shrunk year by year, and UAW has continued to demand that its members pay increases year by year. At the same time, retirees as old companies have accumulated. Many, a large number of pensions and medical insurance benefits must be paid. Even though GM is still Delphi's largest customer, it is still in a passive disadvantage as an independent supplier. It is also under pressure from GM to reduce procurement costs. Delphi's UAW members are still facing high standards in terms of pay, pensions, and medical insurance. The GMs have tended to erode corporate profits.
From an external point of view, Japanese and South Korean companies have continued to erode the share and profits of the North American market in the past 30 years, making the market share of the Big Three in the United States shrink day by day, and the decline in production and sales volume of General Motors in the North American market has led to a decline in the number of plants, directly dragging down. Delphi and many other suppliers lost money. "Internal and external troubles" has gradually forced these suppliers, who were originally accompanied by the Big Three's glory and glory, into operating risks. In addition, from a professional point of view, when Delphi separated from General Motors, it took a large number of supporting companies to collect orders, and many professional supporting companies appeared to be weak in entering the open market competition and gradually became Delphi’s burden. Some internal business enterprises have been dragged down by many well-run businesses, and they can only obtain partial relief by constantly cleaning up and selling off some of the assets that are not competitive. The numerous internal and external disadvantages of history and reality prompted Delphi’s figure on the balance sheet to become increasingly ugly. However, from the case of Delphi’s well-run, market-competitive enterprise groups, some characteristics can be summarized. Enterprises that have left the United States to operate overseas, or those newly built and riddled with UAW, are basically doing well. Indicates the direction of Delphi's escape.
Governance remedies
Interpreting the brief points outlined by the chairman of Miller will clearly see where Delphi’s future lies. The top priority must be to negotiate with the UAW for a showdown to solve the problem of high labor costs. It turned out that in the enterprise's good times, there was no showdown with the UAW. Now that the company is in a difficult situation, Miller has a hand in hand. If UAW causes some companies to accumulate losses until the factory is shut down, why does the UAW explain to its members? Because the UAW protects the interests of its members, the major premise is that it will be possible only if the company survives. No skin, hair will be attached? In front of UAW, there is also a bottom line that cannot be surpassed - business survival. Second, Delphi wants to re-open negotiations with the old club GM and properly handle the old accounts of the split. As the North American's second-largest supplier, Visteon, which is in the same dilemma as Delphi, has recently made significant progress in negotiating the return of some loss-making companies to Ford. Whether Delphi did the same thing or made some kind of change would look at Miller's new move. Former chairman JT, who has served as vice president of General Motors for a long time, has a deep relationship with General Motors, and it is even more difficult to perform operations on the complicated relationship. However, foreign monk Miller did not have any historical connection with GM and could not back it up. Bauer opened the conversation with General Motors just like Ghosn was airborne to Nissan vehicles in the past few years, and drastic reforms such as finance and supply chain could achieve a good performance.
In any case, first deal with UAW and General Motors negotiations is Delphi's passive defense technology. In order to keep Delphi’s foundation evergreen, it must take a strategic attack. In fact, in this regard, the former chairman JT has done a lot of foreshadowing in his term of office, such as actively exploring China, India, these important global emerging markets. To date, Delphi has established 11 manufacturing companies in China and has contributed significantly to Delphi's global production, sales, and profitability. Actively developing in the emerging markets is one of the important measures to get rid of the difficulties of North America. This time, the Asian press team visited Delphi's three major manufacturing companies in Mexico. This is only a fraction of the 50 companies Delphi has set up in the country. In the “backyard†bordering the United States, large-scale investment production has avoided the nuisance of UAW, drastically reduced production costs, and has not excessively increased the logistics costs for North American automakers. Through the Mexican production base, several new vehicle customers in Alabama, located in the southern part of the United States, are more close to and highlight geographical advantages, such as the United States Hyundai, Mercedes-Benz and other OEMs. Of course, the assembly plant in Detroit is also Benefit. At the same time, Delphi's diversified customer group management strategy has also been realized, gradually reducing the proportion of GM's support, and avoiding the risk of supporting the proportion of a single unit.
Delphi is already implementing a more forward-looking "transcendental technique" in addition to the two major "tricks" of passive defense and active offense. This is not only to solve the problem that eggs in cars are not loaded in one basket, but also is a new topic that does not put eggs into the auto business basket. The reason is that the operational risks in the automotive sector are getting bigger and bigger. Delphi has invested heavily in technology that can only yield one benefit if it is used only in the automotive sector. However, if not only "adding" but "multiplying", the newly developed technology will be applied to non-automotive business areas, such as home appliances, computer products, medical equipment, etc., which can double economic effects. The technologies used in the automotive field are already extensive and universal, and other industries also need a large number of similar advanced application technologies. Delphi, for example, slightly adapts the thermal system technology of the car to the cooling system of a large desktop or vertical computer host. Some automotive wiring harness integration technologies can be applied to special medical devices.
During our visit to Delphi headquarters and the Mexican factory, we saw that new technologies have been developed in the car audio entertainment system. For example, satellite radios that began mass market entry have rapidly increased from 1 million units last year to 5 million units this year. The output and market prospects are getting better and better. This kind of new product not only can enter the OE market in large quantities, but also can enter a huge market of ordinary consumer goods like Walkman, and at the same time, a new generation of Internet radio is about to finish R&D. Delphi has put the research and development of these advanced technology products at the R&D center in Mexico. The production of new products has also been put into Mexico factory. The products will meet the OE market in North America and can also be used for OE markets and consumer products in the world. market. This "transcendence technique" is a good move for Delphi to get out of the difficulties of North America.
We can see through Delphi's recent reforms that any major international company will encounter the adversity and adversity as the market changes and the environment changes, and the key is how to emerge from adversity and rejuvenate. The renaissance of the Nissan Motors vehicle company has gloriously entered the history of automobile development, and now we can see how Miller's chairman and Ghosn CEO wrote the "Rejuvenating History" of component parts giants.
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