I wrote an article for the Kalamazoo Gazette a few years back. My editorial was in response to the 750 striking UAW hourly workers at the American Axle factory in Three Rivers, MI. These hourly workers make around $65 per hour with benefits and management wants to cut their pay/benefits in half. These strikes have started to shutdown several suppliers and GM factories. You should be able to read this article objectively. One outcome of being college educated is your ability to ask questions, think objectively, and not be brainwashed.
Notice the section on ROI. Make sure you understand this. You are basically majoring in something that helps companies reduces costs, which widens margins and improves asset turnover. That in return makes ROI go up. Then you get promoted. There is a great opportunity to accomplish this when you are responsible for millions in total spend. Not many majors offer that opportunity. Supply chain does that for you.
Kalamazoo Gazette (MI)
Get trained and fast
Section: Letters To The Editor (I wrote this several years go)
BY SIME CURKOVIC
My heart goes out to the striking United Auto Workers at American Axle & Manufacturing’s Three River’s facility. My immigrant father was a UAW worker for General Motors and we lived the American dream because of it. Those days are unfortunately gone because the American manufacturing laborer is competing against non-Americans who will work for much less money. Free trade agreements (NAFTA, CAFTA, FTA, GATT, WTO, etc.) with underdeveloped countries have perpetuated this situation. There will be no end in sight because the global economy revolves around generating shareholder value.
The ability of American companies to invest abroad has benefited very large portions of our workforce, but it has also left several behind. This brings me to the real problem at companies such as AAM. You can blame what might be overpaid hourly workers, but mismanagement is at the heart of the problem on both the AAM and UAW side. For example, AAM stock is tanking because of its inability to generate a positive and large return on investment. Yes, the company made money last year, but its net income as a percentage of total sales was small and that turns investors away. The only way AAM can improve its return on investment is to widen margins and improve its asset turnover rate. Reducing AAM’s direct labor costs will widen margins and improve the return on investment. They could increase sales, but that is not going to happen in the saturated United States automotive industry (and GM is their largest customer).
I also realize that AAM is competing against companies that have much lower direct labor costs. However, where do most of AAM’s costs come from? Most of their costs come from direct material purchases and overhead (not direct labor). Another way to improve return on investment is to manage and reduce inventory because that would increase your asset turnover rate.
My point is that AAM and UAW management have let its shareholders down more so than its hourly workers. AAM management needs to more effectively reduce its direct material and overhead costs, and better manage its assets such as inventory. They should work with their hourly workforce to implement lean manufacturing techniques that are proven methods for reducing costs and improving performance. The UAW should also bend over backwards with open arms to help AAM management implement these techniques.
Let this situation be a warning to all American workers that you have to be good at something that cannot be outsourced. Most jobs that require a college degree (production control, inventory management, procurement, etc.) or a trade skill (electrician, plumber, welder, machinist, etc.) command good salaries because they are not competing against non-Americans. I know it is easier said than done, but let’s work harder to develop these skills so that we will not be as adversely affected by globalization.
My dad warned me 20 years ago that his factory job would not be around for me. He was right and we need to warn others because people like John McCain, Barack Obama, and Hillary Clinton will not fight the power — they are the power. Large and influential segments of our workforce benefit from globalization and they will make sure this trend does not reverse itself.
However, there is a way we can all move forward and prosper, and it begins with training and education (take it seriously and fast). In the meantime, let’s hope AAM management gets educated and trained as they embark on eroding the standard of living for several hundred of our neighbors.
Do you think the middle class in America is deteriorating. If so, why. Do you think your major has a role to play in this.
If you make more than $34,000 per year, then you are in the top 1% globally. Did you just catch that. You are part of the most productive workforce in the largest economy and the highest quality of life on the planet. However, the middle class in America appears to be slipping away. Some say it is mostly because people are making bad life choices. The answer is probably a combination of many things (i.e., greed, social injustice, unfair trade, etc.). You will be in the Top 10% because of the choices that you are making so please stay on track. Take a look though below as to what it takes to be in the Top 10% in America. It will not come easily for you, but it will come. Judgment is an ugly ugly trait, so refrain from doing so with people that have more than you and that also have less. Be a leader, personally and professionally. That means working your butt off while being nice (in my opinion).
|Top 1%||> $428,712|
|Top 5%||> $179,759|
|Top 10%||> $127,694 (you will be here by age 30)|
|Top 25%||> $74,954 (you will be here after graduation if you inlcude benefits)|
|Top 50%||> $36,840|
|Bottom 50%||< $36,840 (look at what most people make)|
|Income Category||Percent of All U.S. Income|
|Top 10%||45.9% (the top 10 make half the money!)|
|Income Category||Percent of Income Taxes Paid|
|Top 25%||86.3% (the top 25 pay almost all the taxes)|
|Bottom 50%||2.8% (half the workforce pays for almost none of our bills)|
Can Kalamazoo Lure New Factories?
Selling points include:
- Access to trade skills through a world class community college (KVCC).
- I-94 has been widened through Kalamazoo.
- Kzoo is equi-distant from the tool & die industry (South bend & GR, & also Detroit & Chicago, & a gateway to Canada). 131 to GR has been developed & there will be a bypass to South Bend. A factory would need quick & easy access to such tooling & equipment suppliers.
- A LACK of UAW/union presence & culture. Metro Detroit is close by but we are not Metro Detroit & we also have a much more diversified economy. We are a Right to Work state (2013).
- Good supply of homes all over the area for future employees & the Kalamazoo Promise (free college for their kids).
- Kalamazoo is routinely ranked as having the best quality of life & low cost of living balance.
- A conveniently located regional airport that has been expanded.
- An easily accessible railway system.
- The Midlink business park that could house logistics services (e.g., warehousing, distribution, transportation, etc.).
- An abundance of cheap real estate located closely to I-94, 131, railways, the Midlink, & the airport.
- Most suppliers would likely be located close by.
- A local & state government that is becoming more tax friendly.
Given the growth of several companies & need for future investment in the largest economy in the world (U.S.A.), could Kalamazoo lure some of that investment (e.g., a new car plant, like Rivian)? Western Michigan University has nationally & internationally recognized programs in world class manufacturing techniques. In fact, our Supply Chain & Engineering Mgmt majors build upon world class mfg techniques. Organizations could benefit greatly by recruiting our students for positions related to supply management (e.g., purchasing, operations, & logistics). Both the business & engineering colleges are accredited & serve employers with numerous fields of specialization (e.g., human resources, accounting, finance, sales, supply chain, engineering, etc.). We also have an accredited MBA program that is very convenient for full-time workers in the area from companies such as Stryker, Denso, Kellogg, Pfizer, Flowserve, Whirlpool, etc., and potentially a new company in town. They could benefit immensely from our students and faculty that specialize in what is likely their core competency (e.g., engineering and manufacturing). They would be hard pressed to find this sort of manufacturing, engineering, supply chain, and business talent pool any place else.
I hope our political and business leaders are courting companies, because Kalamazoo has a lot to offer. Rivian wants to build a new factory. Go get them!
Just in case you have not noticed, there is an economic building boom going on at WMU & downtown Kalamazoo.
Let’s restore the middle-class in Kzoo?
Yes, the WMU Haworth College of Business (HCoB) is one of the best business colleges in the world.
Thank you. Sime
“WMU Integrated Supply Management (ISM)…Nation’s best undergraduate SCM program (Gartner); 2nd in SCM technology (SoftwareAdvice); 2nd in top global SCM talent (SCM World)”