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Ford, GM Step Up Cost Cutting Efforts

Welding Engineers and Operators Produce 'Best Practice'

Ford, GM Step Up Cost Cutting Efforts

DETROIT, MI (4/08/2003) (AP). The world's two largest automakers have stepped up cost-cutting efforts as they adjust to sluggish sales and rising competition in the domestic market.

Ford Motor Co., in the midst of critical turnaround, is intensifying efforts to slash its $30 billion budget for costs not directly related to vehicles.

At the same time but under a bit less pressure, General Motors Corp., the industry's biggest manufacturer, has asked departments to eliminate costs such as nonessential travel and, in some cases, to trim budgets more than what was expected at the start of the year, spokeswoman Toni Simonetti said.

Simonetti said there were no specific goals in the latest push to reduce costs.

"I think the mandate is dig deep and see where you've got unnecessary costs and try to take that out of your budget," she said.

No. 2 Ford is working to reduce its nonproduct expenses--in marketing, sales and service and information technology, for example--by as much as 20% over the next two years.

Ford spokeswoman Marcey Evans said the effort is part of the automaker's ongoing revitalization plan and its goal to improve profits by $9 billion by mid-decade.

Ford already has trimmed $2.2 billion in so-called nonproduct spending in the past year or so, "and we've been talking since January that we need to accelerate our cost-cutting," Evans said.

"It's not necessarily about numbers," she said. "It's about strategy."

Ford, which has lost $6.4 billion in the past two years, is under increasing pressure from investors to speed up its turnaround plan at a time when the war with Iraq and a sluggish economy have slowed the U.S. auto market.

And costs continue to rise. Ford, for example, boosted its average vehicle incentive to $2,827 last month, 4% higher than February, according to Credit Suisse First Boston. At the same time, the automaker's sales fell 5%.

Still, Ford is sticking with its forecast to post earnings of about $1.2 billion, or 70 cents a share, for the year and increase its market share. Top company officials have maintained the revitalization plan launched in January 2002 is on track.

Ford reports first quarter financial results April 16.

In a research report last week, Goldman Sachs & Co. analyst Gary Lapidus said he expected Ford to beat Wall Street estimates of 21 cents a share for the first quarter but questioned whether the company could meet its year-end target.

At GM, after sales fell 19% in February, "we did take a hard look and say, 'Let's step up some cost reduction,'" Simonetti said.

"It's an extremely competitive environment," she said. "Volume is down."

GM's sales fell 3.3% in March, a month in which its average vehicle incentive fell 5.5% to $2,915. GM has beefed up its offerings in April.
Chief executive Rick Wagoner said earlier this year the company planned to cut its white-collar workforce by 3% to 7% in 2003. Through attrition and buyout agreements, GM has eliminated 10,755 such jobs in the past two years.

GM reports first-quarter financial results April 15.

 

Welding Engineers and Operators Produce

'Best Practice'

The U.S. Navy's Office of Naval Research conducts the Best Manufacturing Practices (BMP) program, a technology transfer effort that identifies best practices, documents them, and encourages industry and government to share information about them.

By fostering the sharing of information across industry lines, BMP has become a resource for helping companies identify their weak areas and see how other companies have improved similar situations.

BMP conducts in-depth, voluntary surveys, such as the one carried out at the General Tool Company, Cincinnati, Ohio, during the week of October 7, 2002. Among the best practices cited in the final report was General Tool Company's welding education program.

The welding engineering staff at General Tool Company created a training and education curriculum to enhance the knowledge base, understanding, and skill level of the present manual weld operator staff. The program resulted in better dialogue between the engineering staff and weld operators, and led to an improvement of the weld operations' efficiency in excess of 30%.

As in many companies, welding operators were hired into General Tool Company (GTC) without the experience needed to perform effectively in the company, due in part to the declining numbers of highly skilled manual welding operators in the United States.

A lack of fundamental knowledge in blueprint reading and procedural welding specifications occasionally led to unnecessary rework and/or scrap, reducing the company's productivity, quality, and efficiency.

GTC decided to hire highly motivated individuals to train as qualified welders. GTC's definition of a qualified welder is an individual who can produce a radiographic-quality weld, free of unacceptable indications. GTC also expects welding operators to understand other aspects of the job, such as:

 


GTC's welding engineering staff created training modules encompassing general shop practices, standard weld symbols for blueprint reading, and visual inspection.

The general shop practices module addresses procedural specifications by defining the weld performance qualification record and the welding procedure specification. This training provides a standardized tool to help welding personnel identify the proper welding techniques, welding parameters, and requisite welding codes necessary to produce quality weldments.

The second module instructs the welder in the proper interpretation of standardized welding symbols as defined by the American Welding Society. These symbols are placed on blueprints to instruct the welder and the designer as to the type of welding process to be utilized, weld joint location, weld joint preparation, weld size/contour, and the weld filler alloy employed. With the knowledge of symbols, PQRs, and WPSs, weld personnel produce the required weldments, according to the design intent of the weld-fabricated assembly.

The third module, visual inspection, aids welding personnel by identifying important information about conformity to a specification. Different types of weld discontinuities are discussed and identified by sketches and/or photographs. Possible causes of these discontinuities are also discussed.

The training and education modules have been in use since March 2002. As a result of training, the present weld work force, with varying years of experience, have obtained an enhanced understanding of welding. The entire welding staff has been brought to the same level of knowledge and understanding.

The improved communication encouraged weld operators to promote their ideas on making weld joints better. Since the initial training classes, the welders have been better able to read weld symbols, and have even brought attention to inappropriate weld symbols specified by design engineers.

Important to the business side of the company, the welders' overall efficiency, defined as the percentage of actual time to complete the weld operation compared to the routed time standards, increased more than 30%.

Figure 1 depicts the change in weld operator efficiency over the first five months after the training and education modules was implemented. The level of efficiency began at 45% and has climbed to 70% during this short period. GTC proposes to use the created training and education modules when hiring new welding operators.

Figure 1
Figure 1: Weld Operator Efficiency



About GTC

General Tool Company is one of the few job shops in the United States that can perform a full range of metalworking to the exact standards of aerospace and defense customers, and continues to remain competitive within commercial markets. General Tool Company's policy is to manufacture, fabricate, assemble, and deliver products and services that meet the customers' specifications, drawings, and contractual requirements.

More information on the GTC survey and the BMP program can be found at http://www.bmpcoe.org.