The Manufacturing Industry Blog

It has been interesting to watch the Automotive industry and how they are dealing with the economy.  Clearly “Cash for Clunkers” provided a big boost for car dealers in July and August.  Although speaking with a friend who manages automotive lending for a large bank, she saw the majority of sales were the class 2 economy cars, and dealers were not moving a lot of high end cars or trucks with their associated higher profit margins.  Luckily for them, the government did come through with the rebate checks.  However, now business is down again and many dealers are depending on manufacturer’s cash back programs, and some even resorting to their own rebate programs.

And what about brand loyalty?  One example, my brother, a loyal customer for one of the larger automotive brands for the past two decades was going to trade in his clunker truck for a new vehicle of the same brand.  However the dealer switched the agreement at the last second – so my brother went to a different dealer and ended up with a better deal, a similar vehicle, but a completely different brand.

Is this really the way to reach the consumer?  Is a “trade-in” or rebate marketing approach going to be effective long term and can this kind of approach be sustained?  Innovative companies are taking advantage of cross-media communications, and carefully engineering all the touch points with their clients – from email to personalized web-sites to direct mail, and even personalized videos.   They are not only effecting brand loyalty, but also opening new opportunities for after market sales and cross-selling.  Please comment and share with us if you have any ideas around this and how you are taking advantage of your customer data to improve your business.

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Hello!  I have been asked to take over this Manufacturing Blog from my colleague Lynette McTigue.  I have to say it is a very remarkable time to be discussing Manufacturing! There is so much in the news today. Who would have thought GM would ever declare bankruptcy or Chrysler would go to the Italians (Fiat).

Xerox is also facing some exciting times with Ursula Burns taking the helm from Anne Mulcahy next month. I actually started working with Xerox manufacturing not too long after Ursula did.   First in a selling role with Digital Equipment selling manufacturing systems, and then having actually joined the company to work as a production engineer and in operations.  I even had visions of becoming a plant manager at one point but then ended up on a different path.

It is also interesting how the focus from when I worked in the factory has evolved to many of the issues we discuss today.  One obvious example is sustainability – although we really didn’t use the word “sustainability” to describe this before – the environmental focus was clearly there.   Back in the early 90’s I was part of a team at Xerox that worked on improving our re-manufacturing process, meaning we re-used most parts from machines that were returned (when clients upgraded to newer models), so they did not end up in a land fill.   Today we not only continue our environmental focus in our factories, but have designed products that utilize less power, and generate significantly less waste from packaging throughout their life cycle, greatly reducing our customer’s environmental impact.

As an industry marketer for Xerox, focusing on the manufacturing industries, I work with our major manufacturing clients, consultants and sales teams and see first hand the challenges our clients are facing and what is working for them.   In this blog I look forward to exploring current manufacturing issues, trends, and challenges, sharing ideas and hearing from you.

General Motors, Ford Motor Company and Toyota Motor Corporation all posted their quarterly numbers this week, and GM and Ford remain underwater.  The American Auto industry continues to loose ground to Toyota and other foreign manufacturers, as the auto makers struggle with less than stellar turn around progess.

The PricewaterhouseCoopers Automotive Institute predicts in the Global Automotive Financial Review 2007 edition, that automotive vehicle assembly will increase 19.1 percent from 2006 to 2014, and most of this growth will come from China.  While American manufacturers focus internally on turn around plans and operational improvments, imagine what will Toyota be able to accomplish in the growth areas of the global market?  Lacking the stable business practices and successes that continue to push Toyota further and further ahead in the global market, GM and Ford it appears will continue to languish.  Without huge progress in 2008, the great strides that have been made with the UAW will be too little, too late.

After seeing the slick, new advertising campaign for Cadillac, where Kate Walsh depicts a woman who is excited by her car, I thought that I would take a look at some other arenas of car buying engagement to see if the client experience for women is consistent across all customer touch points.

The first stop was the web, as buyers attack car research there first. Women make up half of new vehicle buyers with web access. But the cool, thrilling experience you get in the commercial is no where to be found on the web. The car websites that I visited were targeted towards men, and specifically, men who know about cars. Sites use terms that females tend not to understand. Mechanical terms cause the biggest issue. Women I spoke with can “venture a guess,” but do not understand what terminology like “suspension,” “power train,” and “trim level” actually mean.

Current research from Forrester reinforces the importance of the customer experience at all levels.  In the article Female Car Buyers Are Lost in Translation, they report on issues women have with brand sites.  It is surprising to see the entire auto industry neglect such a large and growing segment of its customer base. If manufacturers want to own more of the customer experience, versus handing it over to dealers, then they will have to engage women, and other segments, more effectively. As clients expect more from automotive engagements, dealers are adapting with specialized dealerships with focus on specific groups, like minorities and women. Potentially, pitting dealers against each other and reducing margin.  Take a look at this helpful site: AskPatty.com.

To boost competitive position with consumers, brand site owners must do more to engage various segment site visitors. For example, what about virtual personal shoppers that guide women through the “build a car” function, or something as simple as a glossary of terminology available on the web? Wikipedia anybody?

In an article on Union Math, Union Myths, The Center for Union Facts has estimated that the number of Union Members has decreased signifcantly in the past three decades.  There are several causes cited, but the main reasons are the changing job market, poor union leadership, and the relevance of unions to business today.  With the 2007 UAW negotiations nearing completion, the continued strength of the union is questionable.

The New York Times recently reported on the UAW meeting in July.  For the first time in its history the UAW has more retired members than active working members.  This obviously presents huge issues on medical costs and funding for the large automotives.  Current data shows that across the Big Three, at least $1000 in cost is added to each car for the costs of medical coverage for the UAW workers.  Will the UAW finally come on board with the rest of
America in expecting workers and retirees to fund larger and larger portions of their medical costs?

As referenced in The Economist article, The Road to Recovery, the Big Three “are uncomfortably aware of the importance of reaching an agreement with the UAW in the coming weeks, and removing approximately $100 billion in health care obligations to more than 1 million retired workers.”

I believe the UAW will have to.  The competitive landscape of the automotive industry is becoming more and more complex, and with the rising costs of fuel, more economic cars will be required world wide. 
US auto manufacturers will have to make the move to offshoring the manufacturing and assembly of their cars, gaining the low cost advance of the Asian workforce.  The innovation and development of new cars will remain in the
US, but won’t require the UAW for the effort.

Ultimately, GM, Ford and Chrysler can’t afford the UAW anymore.  How will the UAW negotations conclude?