Dave Guilford is news editor of Automotive News.
As our guide, Gert Weixler, the assistant production manager, explained that Magna has upgraded the machine to perform several processes, one comment caught my attention.
"This is one of the things we have to do here, every year come up with new technology to stay a step or two ahead of our competitors in Eastern Europe, in China, in India," Weixler said.
That statement -- made on the bustling shop floor of a Canadian auto supplier's Austrian plant -- echoed in my head after I returned to Detroit. The industry has entered a stretch when global competition has intensified sharply. Long-established automotive centers have taken one hit after another.
As Delphi Corp. wended its torturous way to Chapter 11 protection from its creditors, it asked UAW workers to take pay cuts of as much as 63 percent. The union protested that its members wouldn't be able to buy the cars that use Delphi components, but Delphi has persisted in asking for severe cuts.
General Motors, Delphi's former owner, is probably on the hook for several billion dollars in the Delphi mess.
GM apparently has wrenched its own $1 billion annual cut in health care benefits from the UAW. GM CEO Rick Wagoner says the deal is merely one step in a recovery plan that will include plant closings and more price pressure on suppliers.
All around the world
After completing its restructuring deal with former parent Ford Motor Co., Visteon Corp. will seek to survive as a lean, mean competitor -- with many of its North American workers making about $3.25 an hour in Mexico. That leaves Ford with a bunch of Visteon's underperforming U.S. plants to sell or shut down.
Equally harsh events are playing out among smaller suppliers in Michigan, where I live. But my home state is not unique: The traditional manufacturing nations of Europe -- Germany, in particular -- look a lot like Michigan.
Dieter Zetsche has told Mercedes-Benz workers that the company must cut 8,500 jobs.
Union officials at Volkswagen's main plant in Wolfsburg cut pay and agreed to flexible scheduling to win production of a new SUV, which might otherwise have been built in Portugal.
GM's German subsidiary, Adam Opel AG, has been hacking jobs for several years, with one restructuring plan blending into another.
If Germany is Europe's version of Michigan, Eastern Europe is the counterpart of the American South, where most U.S. auto plants are built these days. In a tidy parallel, Hyundai, which has started building Sonatas in Montgomery, Ala., says it will build a plant in the Czech Republic.
There seems to be a crushing inevitability to all this. As the world opens up, the fat, happy regions become vulnerable to the lean, hungry ones.
No place to hide
And there's more to come. At the Frankfurt auto show, three Chinese automakers displayed vehicles. They were stuck in inconspicuous booths while BMW and DaimlerChrysler occupied palatial buildings.
But where will the Chinese automakers be in five years? Given the skill with which automakers benchmark one another and improve products, there's every reason to think Chinese companies will gain ground quickly.
There's no place to hide from global competition, but smart players can prosper. Even as Delphi filed for Chapter 11 bankruptcy protection, the Global Engine Manufacturing Alliance, a DaimlerChrysler-Mitsubishi-Hyundai partnership, opened a plant outside Detroit. It will open another plant on the same site next year.
Ponder that for a moment: Three automakers, two of them Asian, are building engines in Michigan with UAW workers. To make the deal work, the UAW accepted a single job classification and an unconventional work schedule.
About 20 miles to the south, the Chrysler group is building a new Jeep Wrangler plant in Toledo, Ohio. The UAW assented to extensive supplier work in the plant -- suppliers will run the chassis line, assemble bodies and paint finished bodies.
The survivors of global competition will be companies that understand on a shop-floor-level that, as Magna's Weixler said, they must out-innovate rivals in Eastern Europe, China and India.
And as soon as one innovation is in place, they must figure out what to do next to stay ahead of the pack.
You may e-mail Dave Guilford at [email protected]