INITIAL QUALITY OF RECENT VEHICLE LAUNCHES DECLINES WESTLAKE VILLAGE, CA—After an improvement in the quality of newly launched models every year from 2007 to 2010, the initial quality of 2011 new model launches has declined considerably, according to the J.D. Power and Associates 2011 U.S. Initial Quality Study (IQS). The study has been conducted annually for the past 25 years. Overall initial quality improves to an average of 107 problems per 100 vehicles (PP100) in 2011 from 109 PP100 in 2010. However, the initial quality of launch models—those that are all-new or have had major redesigns—worsens by 10% to an average of 122 PP100 in 2011 from 111 PP100 in 2010. Conversely, carryover models—those that have had no significant redesign in the past year—have better initial quality than ever before. Owners of these vehicles report an average of just 103 PP100 in 2011, compared with 108 PP100 in 2010. Lower PP100 scores indicate a lower rate of problem incidences and therefore higher initial quality. “Exciting models with the latest features are crucial for winning over today’s demanding consumers,” says David Sargent, vice president of global vehicle research at J.D. Power and Associates. “However, automakers must not lose their focus on the importance of these models also achieving exceptional quality levels. Expected reliability continues to be the single-most-important reason why new-vehicle buyers choose one model over another, and no manufacturer can afford to give consumers any doubts regarding the quality of their latest products.” Only seven all-new or redesigned models rank among the top three of their respective award segments, compared with 17 models in 2010, and only one launch model receives a segment award this year vs. five launch models in 2010. Just one-fourth of redesigned models perform better than the outgoing previous-generation model did in 2010, and eight all-new models perform above their respective award segment average. The decline in vehicle launch quality is evident in a number of areas, most notably the engine/transmission and audio/entertainment/navigation categories. There are two primary causes for this quality decline: • With high fuel prices and more stringent government regulations, automakers are designing engine and transmission software to make their models as economical as possible. However, this sometimes leads to the engine or transmission “hesitating” when accelerating or changing gears, and consumers this year are reporting this as a problem more often than in past years. • Automakers also are accelerating the introduction of multimedia technology into their models, including hands-free and voice-activation systems. Many consumers are attracted by this type of technology, which is perceived to enhance convenience and safety, but some vehicle owners report that their system is not intuitive and/ or does not always function properly. “Clearly, consumers are interested in having new technology in their vehicles, but automakers must ensure that the technology is ready for prime time,” says Sargent. “Successful companies will be those that can take this incredibly complex technology and make it reliable, seamless and easy for owners to operate while they are driving. There is an understandable desire to bring these technologies to market quickly, but automakers must be careful to walk before they run.” While overall vehicle quality continues to improve, the introduction of new technology is expected to continue to pose challenges for automakers. Overall problem rates for audio/entertainment/ navigation systems in 2011 are 18% higher than in 2010 and 28% higher than in 2009. The Initial Quality Study serves as the industry benchmark for newvehicle quality measured at 90 days of ownership. The study is used extensively by manufacturers worldwide to help them design and build better vehicles and by consumers to help them in their vehicle purchase decisions. Initial quality has been shown throughout the years to be an excellent predictor of long-term durability, which directly impacts consumer purchase decisions. The study captures problems experienced by owners in two distinct categories: design-related problems and defects and malfunctions. Lexus leads the overall nameplate rankings with 73 PP100 on average. Following in the rankings are Honda (which improves to second rank position in 2011 from sixth in 2010), Acura, Mercedes-Benz and Mazda (which improves to fifth rank position in 2011 from 18th in 2010), respectively. Land Rover posts the largest improvement in 2011, reducing problems by 47 PP100 from 2010. Honda garners seven segment awards for the Accord, Accord Crosstour, Civic (in a tie), Element, Fit, Insight (in a tie) and Ridgeline. Lexus receives four segment awards for the ES, GS, GX and LS models. For a second consecutive year, the Lexus LS has the fewest quality problems in the industry with just 54 PP100. Chevrolet, Ford and Mercedes-Benz receive two awards each. Chevrolet receives awards for the HHR and the Tahoe; Ford for the F-150 and the Taurus; and Mercedes-Benz for the GLKClass and the E-Class cabriolet/coupe. Also receiving segment awards are the Cadillac Escalade; Chrysler Town & Country; Dodge Challenger; and Mazda MX-5 Miata. Among all-new and redesigned models, the Hyundai Equus and Dodge Durango are notably strong performers, each ranking second in their respective segment. The 2011 U.S. Initial Quality Study is based on responses from more than 73,000 purchasers and lessees of new 2011 model-year cars, trucks and multiactivity vehicles surveyed after 90 days of ownership. The study is based on a 228-question battery designed to provide manufacturers with information to facilitate identifying problems and drive product improvement. The study was fielded between February and May 2011. WHITE HOUSE INITIATIVES ADDRESS LACK OF SKILLED MANUFACTURING LABOR CLEVELAND—The National Tooling and Machining Association (NTMA) and the Precision Metalforming Association (PMA) salute a White House initiative to expand U.S. manufacturing by recruiting and educating more skilled workers. The initiative mirrors ongoing efforts by NTMA, PMA and other manufacturing groups to develop more qualified workers for the metalforming, tooling and machining industries through two main avenues: actively recruiting new workers and developing widely recognized credentials that signal their qualifications. “It is essential to the future of our industry that we find creative ways to attract the attention of new workers,” says NTMA President Dave Tilstone. “That’s why NTMA sponsors activities like the National Robotics League, which draws students to technical careers by partnering student teams with local manufacturers to build complex machines designed to do battle and test ingenuity—all while building high-tech skills.” PMA President Bill Gaskin says that alongside creative recruitment efforts, the key to developing more skilled workers in the United States is the use of uniform, widely-recognized and industry-driven credentials to demonstrate competency in the specific industry skills needed by employers. “PMA and NTMA have worked closely with the National Association of Manufacturers to devise a way to validate metalworking industry skills through the National Institute of Metalworking Skills (NIMS) machining and metalforming certifications,” Gaskin notes. “NIMS certifications offer a concrete path for students to acquire or increase specific skills, while in turn providing a set of credentials that signal employers that they’re able to perform to quality standards in a skilled machining or metalworking job. Both the worker and employer benefit as a result.” MEXICO’S MANUFACTURING CONTINUES TO GROW MEXICO CITY—Manufacturing in Mexico continues to grow in 2011 with both new and existing companies expanding operations across various sectors, most notably record-breaking numbers in auto production and vehicle exports. In May, more than 213,000 cars were manufactured in the country, 19.4% more than in the same period in 2010, representing the highest record, according to Eduardo Solis, president of the Mexican Association of the Automotive Industry (AMIA). In the same month, exports rose 21.3%. May capped a fivemonth growth period for the first part of 2011, increasing 17.1% over 2010 figures and 16.4% over 2008 rates. In addition, Mexico, as the ninth-biggest vehicle producer in the world, produced a record 2.261 million vehicles in 2010, up 50% from 2009, according to AMIA. Continuing the trend in increased vehicle production, Mazda announced that it will begin construction of a new plant in Guanajuato, Mexico, this fall, with vehicle production to start in the second half of 2013. The investment of $500 million will allow Mazda to produce at least 50,000 cars a year at the plant. In addition, the Daimler Trucks North America plant in Saltillo, Mexico, is including a third shift, adding 479 more manufacturing workers and 32 additional staff workers. This will help meet demand for Daimler Trucks North America’s its Freightliner and Western Star trucks. Carlos Guzman, ProMexico’s CEO, recently stated that “because of its manufacturing capacity, Mexico is a very competitive platform for several European and Asian economies that are looking to penetrate or increase their participation in the United States. Mexico is a remarkable manufacturing hub for the automotive industry, among others.” Automotive parts supplier Delphi is investing $11 million and generating 2,000 jobs for a new auto parts manufacturing facility in the state of Durango. This will be the first Delphi plant in that state. Additional manufacturing growth is illustrated by Hawker Beechcraft’s continued expansion in Chihuahua City. The company has opened two plants in the city in 2011, with plans to invest $108 million more in opening another new plant, which will create 600 new jobs assembling structural parts for King Air turboprop airplanes. In addition to auto and aircraft production, the steel industry also is growing in Mexico. President Felipe Calderon announced in June that Posco, a Korea-based company, is going to expand its steel plant in Altamira, Tamaulipas, with an investment of $300 million. According to the president, this expansion will create 300 direct jobs and more than 600 indirect positions. During the Posco expansion announcement event, Egidio Torre, Tamaulipas Governor, said that this investment shows that there is confidence to invest in the state. With such expansion continuing throughout Mexico, and in light of Mazda’s most recent announcement, Calderon promises that Mexico will continue to work to promote more investment in the automotive, aerospace, electronic and manufacturing sectors. This will continue to strengthen the country’s worldwide reputation and position as an international manufacturing leader. FORD PLANS TO DOUBLE CHINESE PRESENCE CHONGQING, CHINA—Ford Motor Co.’s passenger car joint venture in China, Changan Ford Mazda Automobile (CFMA), broke ground for a new engine plant in Chongqing. The $500 million investment will more than double CFMA’s annual engine production capacity in China to 750,000 units when it comes online in 2013. These engines will equip Fordbrand vehicles manufactured and sold in the country. The new engine plant represents one of several new investments that Ford has made to support its aggressive expansion plan in China. Last July, Ford’s commercial vehicle partner in China, Jiangling Motors Corp. (JMC), broke ground for a $300 million vehicle assembly plant in Nanchang. JMC produces the Ford Transit, a leader in China’s light bus segment. In April of this year, Ford announced that it will bring 15 new vehicles to China by 2015. These products will strengthen Ford’s position in existing segments while driving new growth in others. In addition, Ford signed a memorandum of understanding in May to build its first transmission plant in the country, also in Chongqing, with an initial annual capacity of up to 400,000 units. Early next year, Ford’s second passengercar assembly plant in Chongqing will begin production, starting with the new Ford Focus. Ford plans to double the number of employees and dealership outlets it has in China by mid-decade. MANUFACTURING CONFIDENCE IN U.S. ECONOMY DROPS CHICAGO–U.S. manufacturing leaders have turned pessimistic regarding the U.S. economy, according to Grant Thornton LLP’s most recent Business Optimism Index, a quarterly survey of U. S. manufacturing business leaders. Only 40% believe the U.S. economy will improve in the next six months, down from 60% three months earlier. At the same time, 26% believe the U.S. economy will get worse, up from 3%. “There are many factors causing concern amongst U.S. manufacturing leaders,” says Wally Gruenes, manufacturing practice leader at Grant Thornton LLP. “Soaring energy and raw material costs and Japanese manufacturing supply chain disruptions are weighing heavily, as are unresolved U.S. debt reduction issues and a corporate tax rate that still puts the United States at a global competitive disadvantage.” HYBRID, ELECTRIC CAR SALES SLUMP TO 16-MONTH LOW SANTA MONICA, CA—Sales of hybrid and plug-in electric vehicles fell to a 16-month low in May, dragged down by real and imagined supply constraints and increased competition from lowerpriced gas-powered small cars, reports Edmunds’ AutoObserver.com. May sales of hybrid and electric-drive vehicles were off 35.8% from a year earlier, lead by dramatic declines in sales of Toyota and Honda models. Overall, Toyota and Lexus hybrids dropped 45.1% for the month. Honda, the second-largest producer of hybrids, saw its sales in the segment fall 29% in May. “For those selling hybrids, it is incredibly bad luck that the Japanese earthquake and associated production disruptions occurred as gas prices were reaching their highest levels in three years,” says Edmunds.com Chief Economist Lacey Plache. “While Japanese automakers may well gain back their lost share on other vehicles, hybrids will face an even steeper climb back to previous levels, given the greater and growing competition from fuelefficient, nonhybrid vehicles.” Leading the slump was the decline in Toyota Prius sales, which traditionally accounts for about half of the hybrid market. A total of 6,924 Priuses were sold in May, down 51% from the same month last year. Low supply and higher prices have made the popular hybrid less palatable to consumers. A pricing analysis by Edmunds.com found that the effective cost of a new Prius was $2,500 more in May than just three months ago. NEW ANALYSIS ON BEST PLACES FOR MANUFACTURERS GREAT BARRINGTON, MA—Despite the conventional wisdom that the South is best place for manufacturing in the United States, eight of the top 10 states for cost-efficient manufacturing are located in the West and Northeast, according to new research by the American Institute for Economic Research (AIER). The research is discussed in the new AIER Economic Bulletin “Competitiveness and Business Costs.” AIER Research Fellow Lei Chen, Ph.D., says the “findings explain why manufacturing firms still may want to consider locating their businesses in the Northeast and on the West coast.” Using 2007 economic census data and a completely data-driven analysis method known as data envelopment analysis, Chen found that the most cost-efficient manufacturing took place in Oregon, Connecticut, Iowa, North Carolina, New York, Arizona, Massachusetts, Nevada, Colorado and Washington. His analysis examined, from an efficiency perspective, inputs including production labor, non-production labor, capital, energy and materials. The 10 states with the least cost-efficient manufacturing, his analysis showed, were Mississippi, North Dakota, Kentucky, Vermont, Alabama, Louisiana, Alaska, Montana, South Carolina and Idaho. “States that are the most costefficient have manufacturing bases that allocate their resources in such a way that relatively low cost inputs replace high cost ones and inputs are used in the most productive manner,” says Chen. “If all manufacturers allocated their resources this way, on average, U. S. manufacturers could reduce their total production costs by 15.6 % and still produce the same quantities of output.” Chen’s findings are consistent with those of an earlier study, also revealed in AIER’s Economic Bulletin. The earlier study, which Chen participated in while still on the Uconn faculty, provides a state-by-state comparison of the production cost per dollar output of manufactured goods—that is, how much it cost to produce one dollar value of goods in different states. That study identified Oregon as the state with the lowest unit production cost per dollar of output. Oregon was followed by North Carolina, Virginia, Arizona and New York. Wyoming, New Mexico, Connecticut, Missouri and South Dakota rounded out the top 10. The bottom 10, the states with the highest unit manufacturing cost per dollar output, included Vermont, New Hampshire, Rhode Island, West Virginia, Idaho, Nebraska, Alaska, Michigan, South Carolina and Kentucky. Arkansas, Louisiana, Mississippi, Tennessee and Alabama—all of which have become popular manufacturing hubs in recent years—all had costs in excess of the national average of 83.3 cents per dollar output. In addition to the top ten, Massachusetts, Pennsylvania, Delaware, Maryland, Colorado, Washington (state), Indiana, Iowa, Connecticut and Missouri all had costs below the national average. PEOPLE NEWS Applied Manufacturing Technologies (AMT, Orion, MI) , a supplier of factory automation design, engineering and process consulting services, has appointed RICHARD SARO to the role of automotive account manager. Saro will support and partner with new and existing customers to develop solutions for the company’s robotic automation customers in the automotive industry. Ford CEO ALAN MULALLY has been named 2011 Chief Executive of the Year by Chief Executive magazine. Peer CEOs voted in this 26th annual contest. The 10 most frequently cited nominations were evaluated and a winner voted on at a meeting of a peer selection committee, which took place earlier this year in New York City. Prior CEO of the Year winners include BILL GATES, JACK WELCH, MICHAEL DELL, A.G. LAFLEY, JOHN CHAMBERS, ANNE MULCAHY, LARRY BOSSIDY, ANDY GROVE and HERB KELLEHER. Mulally’s selection as 2011 CEO of the Year was celebrated at an invitation-only event hosted by NYSE Euronext and the Chief Executive Group at the New York Stock Exchange in July. Pelican Products Inc. (Los Angeles) announced that President and CEO LYNDON FAULKNER has won the 2011 Ernst & Young Entrepreneur of the Year Award in the manufacturing category. The award program recognizes entrepreneurs who demonstrate extraordinary success in the areas of innovation, financial performance and personal commitment to their businesses and communities. Faulkner was selected as a finalist with 21 other nominees by a panel of independent judges. ASSOCIATION NEWS THE AUTOMOTIVE INDUSTRY ACTION GROUP (AIAG, Southfield, MI), a not-for-profit, membersupported organization that works with manufacturing companies and service providers, is partnering with the SAE INTERNATIONAL to launch a joint global sourcing engineering certificate program. The courses will help teach engineers, quality professionals, purchasers and other specialists how to improve efficiencies and cut costs within the global design engineering community. SOCIETY OF MANUFACTURING ENGINEERS (SME, Dearborn, MI) local Chapter 5 in Chicago awarded two college students $2,000 scholarship awards from its Marshall Blu Scholarship Fund. The awards were approved by the board of directors after recommendation by Ken Croswell, scholarship director for SME locally. The award was made to Maria Katzarova of Chicago during a SME sponsored presentation and tour of the Navistar/International Truck Diesel Engine Plant in Melrose Park, IL. Katzarova is attending the Illinois Institute of Technology as a chemical engineering student. The presentation was made by Ken Croswell and Bob Iossi of SME Chapter 5 to Katzarova before the tour. The second award was to Denise Karabowicz of Bartlett, IL, who is attending the University of Southern California. Karabowicz is seeking a degree in mechanical engineering. BUSINESS NEWS PRODUCTIVITY QUALITY INC. (PQI, Plymouth, MN) and GDO PRECISION TECHNOLOGY (Norwood, NJ) have signed an agreement that names PQI as importer and exclusive North American distributor of GDO’s Nuremberg Stent Inspection-7 system. The NSI-7 system is the result of three years of research and development in close collaboration with stent manufacturers. Designed for 100% stent inspection, the modular NSI-7 performs geometry measurement of stent structure, 3-D inspection of both inner and outer surfaces, and noncontact wall thickness measurement. NSF INTERNATIONAL STRATEGIC REGISTRATIONS LTD. (Ann Arbor, MI) , a management systems registration company, has acquired accredited registration company AQA INTERNATIONAL LLC (Columbia, SC) and AQA’s current international operations. As a result, NSF-ISR and AQA-certified companies will benefit from a wider global footprint in China, Korea, India, Turkey and Malaysia; a larger North American presence and a broader array of service offerings. SIKORSKY AIRCRAFT CORP. (Stratford, CT) announced the completion of the first UH-60M Black Hawk helicopter cockpit produced in the Czech Republic by AERO VODOCHODY, a longtime Sikorsky supplier that has manufactured more than 300 S-76 commercial helicopter airframes since 2000. Sikorsky awarded Aero Vodochody a contract in January 2010 to begin producing the cockpits as a second source for the newest Black Hawk model. Sikorsky is a subsidiary of UNITED TECHNOLOGIES CORP. LABORATORY TESTING INC. (LTI, Hatfield, PA) continues to expand its line of materials testing services with the recent addition of FOURIER TRANSFORM INFRARED SPECTROSCOPY (FTIR) services. FTIR is an analytical technique used to identify organic, polymeric and in some cases, inorganic materials. LTI is performing the analyses with a hightech Thermo Scientific Nicolet iS10 FT-IR spectrometer. The U.S. Patent Office issued patent number 7,934,428 for the residual torque analysis technology used in ASI DATAMYTE’S (Plymouth, MN) LightStar line of torque and angle wrenches and measurement system. The technology empowers the application of a torque rate differentiation method known as angle restart. This approach was developed specifically to eliminate the false high and false low readings associated with peak measurement and to eliminate the error inducing guesswork associated with the capture angle methodology. DAIMLER TRUCKS NORTH AMERICA (Portland, OR) will hire more than 1,300 new employees at plants in North Carolina, Oregon and Mexico as it ramps up production to meet demand for its Freightliner and Western Star trucks. The new jobs are in addition to the 1,300 positions the company announced earlier this year. Daimler’s truck manufacturing plant in North Carolina will take on a second shift as it adds 535 manufacturing jobs and 37 administrative jobs. The plant in Portland, OR, plans to add 155 manufacturing positions between September and the end of the year. The plant in Saltillo, Mexico, will add a third shift as it hires 479 manufacturing workers and 32 staff workers.
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