Dauch: "Grinding stuff is not very popular and it certainly isn't very sexy. But our company wasn't built on popularity or sexiness. Our company was built on economic logic."
Why are other companies moving their manufacturing operations out of the United States when you've shown that a well-run manufacturing company can be successful here?
You'd have to ask them. I have made it public that America can compete with or beat anybody in the world on design, quality, productivity and management-labor relations. Therefore it comes down to cost. That's a structural issue. And that's probably scary to most folks. Maybe they don't even give it a thorough analysis. Maybe other companies aren't doing the in-depth detail reviews that we do. We constantly are laying down the facts of the business and how it equates to cost, economics and piece price.
I understand this stuff intimately. I am not sure that most chairmen and CEOs do. Most come up more through a general business process or staff type work instead of hard-line operating where you learn tooling, equipment, facility, people, labor, flexibility and logistics. Grinding stuff is not very popular and it certainly isn't very sexy. But our company wasn't built on popularity or sexiness. Our company was built on economic logic. All I can say is maybe there are some opportunities for other companies.
How do you view the U.S. business environment?
We know America has a cost structural problem in the manufacturing arena. In my other role as chairman of the National Association of Manufacturers, I have worked with our board members of NAM to sanction a cost structure book. It says we have something like a 22.5 percent cost structure problem being put on us because of public policy. This is not something that we in the manufacturing community can correct. That has to be corrected by public policy. I am talking about things such as taxes, energy policy, employee care, health care and retirement.
Does the Bush administration help or hinder American manufacturers?
It is certainly helping. But what we are looking at here in this cost structure issue has occurred over several decades. This is not something that has happened over the last two, four or eight years. I think for a long time the mentality of our legislative people, whether state or national, has been to put the cost burden on industrial manufacturers because they could afford it. Well, that was before globalization came in. Now that globalization is here, the reality is cost is becoming a discriminating differentiator.
Does the UAW help or hinder American manufacturers?
The UAW has been a great help to us. They have been very cooperative. Two parts were recently brought back to America - a driveshaft from China and an axle from Mexico went into a common plant, Three Rivers, Mich. Ten years ago that plant was on the bubble. General Motors was putting it up for sale and we bought it. It only made one part, a driveshaft. It was a commodity. I knew we could never compete against the world in America with union high labor costs on a commodity. So we started changing the culture and approach between management and union and worker at that plant. And now we have what we call integrated operating agreements. That has allowed two-tiering of labor costs and related benefits. In special cases, such as the China issue with driveshafts, there was an opportunity. Management took the issue, reviewed it and met with the union and our workers and we will share with them. We said we may need a third tier. So now we have third tier labor structure at that plant.
Are we talking about lower wages?
We are talking about lower labor costs. Wages are just a part of that.
Are you in the market for additional plants or companies?
I have nothing to announce. That doesn't mean that I don't have people in Europe and Asia and five miles from here looking at something we might purchase. We are interested in acquisitions. You don't see us divesting.