Dyson abruptly scraps electric car project; ‘minimal’ disruption to S’pore workforce, operations

11 October, 2019

SINGAPORE — Barely a year after Dyson announced that it would build its electric car in Singapore, the British technology company announced on Thursday (Oct 10) that it plans to shut down its automotive project.

Singapore’s Economic Development Board (EDB) said the disruption to its operations and workforce in Singapore will be minimal, as Dyson’s decision not to pursue the electric vehicle business was taken at an early stage.

Dyson said it decided to close the project because although its automotive team has developed a “fantastic electric car”, it is not commercially viable.

Asia, SE Asia, East Asia - Two Scenarios over the next 20 years

Two reports on PM Lee's speech at the Nikkei Conference

STRAITS TIMES

 May 22, 2014

Two scenarios for Asia in 20 years' time: PM Lee

By Fiona Chan Senior Economics Correspondent in Tokyo

What will Asia look like in 20 years? The United States will continue to be the world's top superpower, while China's economy will be three to four times larger with commensurate growth in its political and military might, and Japan will remain a force in the region to be reckoned with, Prime Minister Lee Hsien Loong said on Thursday.

Getting paid without leaving home

5 Dec 2008

NEW YORK - FOR more than two decades, many auto workers who lose their jobs have been able to enjoy one of the best unemployment benefits in the nation: receiving nearly full paychecks without even leaving home.

Since the 1980s, the industry's 'jobs bank' has allowed thousands of laid-off workers to get paid for staying home or sitting in a union hall.

The practice began as a way to entice the United Auto Workers to accept robots on the assembly line.

Now it appears headed for the scrap heap as the union takes drastic steps to help automakers get a financial lifeline from Congress.

'I don't think they conceived of themselves as ever having to worry about this,' said Professor Gary Chaison, professor of industrial relations at Clark University.

'I think their view was that they could still produce sufficient capacity in the United States to satisfy the market need.'

In Washington, desperate automakers seeking a US$34 billion (S$52 billion) bailout renewed their pleas to lawmakers on Thursday, a day after the UAW offered concessions that included ending the jobs bank programme, which has become a much-maligned symbol of Detroit's largesse.

The programme started in 1984 as something both the United Auto Workers (UAW) and their employers supported to promote factory automation and innovation, according to labour and industry experts.

'It raises morale,' said Professor Harley Shaiken, a professor at the University of California at Berkeley who specialises in labour issues.

'You avoid losing experienced workers, and you ensure that workers have an incentive to improve productivity.'

The bank continues to compensate about 3,500 laid-off union employees with the hope that they can eventually be rehired.

The original intent was to allow factories to be modernised with robots and other improvements, so Detroit could better compete with overseas manufacturers without jeopardising employees' job security.

In the past, employees could stay in the program indefinitely. At its peak, as many as 7,000 to 8,000 workers at General Motors were in the jobs bank.

That figure is now down around 1,400, according to the UAW. After a new contract was approved last year, some strict limitations were put in place.

The terms and conditions vary by automaker, because each labor contract is different. But GM factory workers who get laid off start out at 'sub pay,' in which they receive unemployment benefits, and GM pays the difference, up to most of their salary, for 48 weeks.

After that, laid-off employees go into the jobs bank, where they have the option of taking 85 per cent of their base pay - which averages almost US$62,000 a year - plus benefits, without reporting to work. In the meantime, the company tries to find them jobs elsewhere.

Or workers can get 100 per cent of their pay by reporting to either the union hall or the plant, where they may be called upon to perform tasks around the factory or sometimes community service work.

But if there isn't anything to do, workers simply stay at the union hall or factory and find ways to pass the time.

Employees can sometimes turn down as many as three jobs at other company factories before they are kicked out with no more pay or benefits. The number of offers a worker can decline varies by company and by how far away the new job is. In some cases, it's none.

The irony is that the program was conceived as a way to improve productivity and morale among employees while automakers were trying to improve their factories.

'This was initiated at a period when GM in particular, but the whole domestic industry was investing heavily in new technology,' Prof Shaiken said.

'They wanted the union's support in bringing robots in and other automation. How do you do that? You say, 'Look, you're not going to get displaced. You're going to get reassigned.''

UAW President Ron Gettelfinger said Wednesday the union was willing to suspend the jobs bank in exchange for the US$34 billion in loans the Detroit Three are seeking.

But auto experts agree that the programme's cost is probably only a drop in the bucket for automakers, and its elimination is largely cosmetic.

'It's the union's private jet,' Prof Chaison said, referring to the harsh criticism endured by auto executives last month when they took corporate planes from Detroit to Washington to lobby for government loans.

'I don't think it's tremendously costly,' he added. 'It's certainly not as costly as the health care benefits or something like that. I think the union was in a position where they had to end it.'

But the image of thousands of auto workers getting paid to sit idly while their industry seeks a bailout from taxpayers risks a backlash.

'It's gotten incredible negative publicity,' Prof Chaison said.

'In bad times, it makes auto workers sound like they're living an extravagant life. It makes it sound like these are fat cat auto workers.'

To be fair, Toyota Motor also has paid workers whose plants were temporarily closed because of low demand. During the shutdown, employees were given additional training.

'In effect, Toyota doesn't have a jobs bank because the company culture is one giant jobs bank,' Prof Shaiken said.

'I'm sure there's a lot of people they could lay off tomorrow - given how poor the sales are - that they are training or retooling or doing something that is the absolute equivalent of the jobs bank.' -- AP

GM to cut 31,500 jobs

Dec 3, 2008

CHICAGO - GENERAL Motors said on Tuesday it will slash its US workforce by nearly a third and shed brands as it urged lawmakers to rescue it from total collapse with 18 billion dollars (S$27.5 billion) in loans.

GM warned that it could run out of cash as soon as January and that its failure would have a 'catastrophic' impact on the US economy as it joined Ford and Chrysler in asking Congress for billions in low-cost government-backed loans.

The Big Three were turned away empty handed last month and told to present plans showing they could achieve 'long-term viability' and repay the loans once the economy stabilizes.

GM submitted a plan to radically slash operating costs, increase the production of fuel-efficient vehicles and offered lawmakers several symbolic concessions including paying its chief executive officer a salary of just one dollar and getting rid of its corporate jets.

The company said it will reduce its US workforce from the current level of 96,537 people to between 65,000 and 75,000 salaried and unionised workers by 2012 and cut the number of US plants to 38 in 2012 from 47 in 2008.

'We believe that taking these tough actions will allow us to weather the current economic crisis and become a profitable, self-sustaining company if we are able to secure immediate financial assistance from the federal government,' GM chairman Rick Wagoner said in a conference call.

Wagoner said GM - and the broader US economy - would 'enter into a very uncertain and dangerous period' if Congress does not approve the loans.

'We hope that our case is compelling this time. We believe it is,' Wagoner said.

GM said it expects to be 'fully competitive' with rival Toyota on US labor costs for 'both current workers and new hires' by 2012 due to 'additional changes to be negotiated' with its main union, productivity improvements, turnover rates and the planned job cuts.

The largest US automaker said it would need 12 billion dollars (S$18.32 billion) to cover operating costs through the end of 2009 - including four billion this month - and also requested a revolving credit line of six billion dollars to 'provide liquidity should a severe market downturn persist'.

GM vowed to repay the 12 billion dollar loan by 2012 should overall US auto sales remain at or above 12 million vehicles a year.

US auto sales plunged to an annualized rate of 10.6 million vehicles in October and 10.2 million in November after averaging 17 million vehicles a year over the past seven years.

GM's plan calls for 'shared sacrifice, including further reduction in the number of executives and total compensation paid to senior leadership', the automaker said.

'The plan also requires further changes in existing labor agreements, including job security provisions, paid time-off, and post-retirement health-care obligations,' GM said.

Common stock dividends will remain suspended during the life of the loans.

The automaker will also 'review' the future of its Saab and Saturn brands as it focuses its product development and marketing efforts in the United States on four core brands - Chevrolet, Cadillac, Buick and GMC.

'As part of the plan, the company also will accelerate discussions with the Saturn retailers, consistent with their unique relationship, to explore alternatives for the Saturn brand,' GM said.

Pontiac will become a 'specialty brand with reduced product offerings', GM said, adding it will 'immediately undertake a global strategic review of the Saab brand' and has already begun exploring the sale of its hulking Hummer brand.

GM said it will cut the number of vehicle types it offers in the United States to 40 in 2012 from 51 in 2000 and also will slash its dealer network to 4,700 in 2012 from 8,138 in 2000.

GM currently sells 48 different vehicles at 6,450 dealers in the United States. -- AFP

Unions hamper US car industry

Nov 24, 2008

By Tion Kwa

SHOULD American taxpayers bail out their car industry? In different circumstances, the answer would be simple: No. But these aren't normal times. The United States has probably entered a punishing recession; job losses are already mounting. If any of the Big Three carmakers fail, the effect would ripple across the American economic landscape.

So despite the considerable forces arrayed against a bailout, it's likely that the car industry will receive a handout - eventually. Maybe next month - carmakers have been told to submit restructuring plans to Congress next week. Or it might happen in January, when a new Congress will convene and a new president sworn in.

But whenever the money comes, it would be useful if Congress applied its new-found leverage to wring concessions from the Big Three that would have been impossible to get in normal times. To prevent bankruptcy in the industry, Congress should want to write in changes that might have come out of any bankruptcy restructuring. Principally, the opportunity lies in unclasping organised labour's fingers from the throat of the US auto industry.

Conventional wisdom is that American carmakers are dinosaurs. This view is not just found overseas, but resonates with many Americans too, as they steadily gravitate towards Japanese, European and Korean brands. American lawmakers opposed to a bailout accuse Detroit of failing to invest in research to develop fuel-efficient engines that pollute less, and of failing to build better cars, plain and simple.

The Big Three - General Motors, Ford and Chrysler - make cars that are badly styled, poorly put together and use technology more appropriate to an earlier age.

True, true and true - but also not true.

At a car dealer's forecourt in the US, many prejudices against American cars are borne out. But at the Big Three's dealerships in Singapore, Europe and elsewhere, starkly different cars rarely seen in the US are on offer. For example, GM's European division has a long history of developing well-regarded cars under the Opel badge, which are sold internationally. The same goes for Ford in Europe. Meanwhile, Ford also owns Volvo cars, GM owns Saab and so on.

Either through wholly owned subsidiaries, partial ownership in other companies, joint-ventures or special arrangements, the Big Three either own or have access to some of the most innovative technology in modern carmaking. But little of that makes it into an American car.

The main reason is the car workers' union. With average hourly wages for a unionised worker as much as US$70 (S$107) after factoring in pension and other benefits, carmakers can't afford to produce only relatively inexpensive cars with complex engineering at home. Neither can they import more from foreign subsidiaries to replace domestic models. This will only lead to strife with protectionist labour groups.

Consequently, US domestic production has concentrated heavily on SUVs and pickup trucks - vehicles that sell on the strength of their size, not on the basis of innovations that would allow for smaller engines using less fuel to squeeze out more power. Big vehicles using old technology equal bigger margins.

Indeed, the difficulty of making money out of producing cars has pushed American carmakers to tweak their business model. They make money not just from selling cars, but more and more by lending money to dealers to maintain inventory and by competing with banks to finance car sales. Cars became a way to access a new line of business, the consumer lending market. Financial services increasingly have become a significant part of their business.

Put all this together and it is not hard to see why the auto industry has been so badly hit in the financial and economic crisis.

Car sales are down because of higher fuel prices earlier this year and consumer pessimism. At the same time, automakers' financing units have suffered the same squeeze as the rest of the financial industry. People are finding car loans and lease payments difficult to make. And cars returned at the end of lease periods pile up as the second-hand market is just as adversely affected as new car sales. So, not only are automakers being affected by the problem of selling cars, they are suffering at first hand the difficulties of the financial industry.

If Congress is serious about helping the US auto industry, it has to take a hard look at the one area that causes American domestic carmakers to lose their competitive edge: the car workers' union.

Without the union, Detroit's carmakers would be very different companies altogether. More cars developed overseas would be built domestically, such as Ford's Focus; or there would be more imports like GM's Astra, sold by its Saturn subsidiary.

If - more likely, when - a lifeline is extended to Detroit, it should come with the demand - and therefore the implicit backing and cover - for automakers to make big adjustments to existing union contracts covering hourly wages and benefits, like health-care costs and retirement expenses. Doing this would allow Detroit to take its business in the same direction within the US as it does overseas.

The question is whether Democrats - who have been most keen to bail out Detroit - are willing to take it one step further. This would bring the Republicans on board. Nevertheless, it would also alienate organised labour, with which Democrats have a longstanding, cosy relationship. But failing to do this, a chance arising from the current economic crisis to fundamentally turn around the US domestic car industry will be lost. And the circumstances giving rise to this opportunity are not something anyone wishes to see again.

tionkwa@sph.com.sg

[Comment: This is a time to bite the bullet and make the US auto industry competitive again. The costs is crippling the future of Detroit. The bosses need to show the numbers to the workers. And explain why it cannot go on. If they Union won't let go, the industry will be in its death grip and there will be no future.]

Too much heart, too little vision

July 14, 2008
GENERAL MOTORS' WOES

By Roger Lowenstein
WHO shot General Motors?

The company's stock is at its lowest level in 50 years, and its market valuation has plunged to US$5.9 billion (S$8 billion), less than that of the Hershey candy-bar company.

The American carmaker is weighing yet another round of layoffs - and maybe even a fire sale of venerable brands such as Buick and Pontiac. General Motors (GM) once manufactured half the cars on the American road, but now it sells barely two in 10 vehicles.

Bankruptcy is not unthinkable for Detroit's former king. The immediate cause of GM's distress, of course, is the surging price of oil, which has put a chill on the sale of petrol- guzzling sport utility vehicles and trucks. The company's failure to invest early enough in hybrids is another reason for its poor state of affairs. Years of poor car design is yet another.

But none of GM's management miscues was so damaging to its long-term fate as the rich pensions and health-care system that robbed it of its financial flexibility and, ultimately, of its cash.

GM established its pension in the 'treaty of Detroit', the five-year contract that it signed with the United Automobile Workers (UAW) in 1950 that also provided health insurance and other benefits for the company's workers.

Mr Walter Reuther, the union's captain, would have preferred that the government provide pensions and health care to all citizens. He urged the carmakers to 'go down to Washington and fight with us' for federal benefits.

But the carmakers wanted no part of socialised care. They seemed not to notice, as a union expert wrote, that if Washington didn't provide social insurance it would be 'sought from employers across the collective bargaining table'.

Detroit was too flush then to envision that it would ever face a financial strain. Ford and Chrysler signed identical pacts with labour, so all three carmakers were able to pass on their costs to customers. Besides, the industry's work force was so young that few workers would be collecting a pension any time soon.

But pension commitments last forever. They far outlived Detroit's prosperity.

GM got into the dubious habit of steadily increasing worker benefits. In 1961, GM was able to get away with a skimpy 2.5 per cent increase in wages by also guaranteeing a 12 per cent rise in pensions. Such promises significantly burdened the company's future. As workers lived longer, the cost of fulfilling pension commitments rose accordingly. And health-care costs exploded.

By the 1980s, it was clear that the Big Three carmakers faced a serious threat from Japan. But GM and UAW were locked in a mutually destructive embrace.

GM, fearing the short-term consequences of a strike, continued to grant large increases in benefits - creating an intolerable gap between its costs and those of its foreign competitors. Union officials feared to face the rank and file without a big contract.

In the 1990s, the consequences of maintaining a corporate welfare state became too obvious to ignore. In that decade, GM poured tens of billions of dollars into its pension fund - an irretrievable loss of opportunity.

What else might GM have accomplished with that money? It could have designed new cars or carried out research into alternative fuels. Or it could have acquired half of Toyota - a company that the stock market now values at close to US$150 billion.

GM acknowledged in its most recent annual report that, from 1993 to 2007, it spent US$103 billion 'to fund legacy pensions and retiree health care - an average of about US$7 billion a year - a dramatic competitive and cash-flow disadvantage'.

During those 15 years, GM paid only US$13 billion or so in shareholder dividends. The company has been sending far more money to its retirees than to its owners.

After falling US$20 billion behind on its pension plan earlier this decade, GM doggedly put money into its plan to catch up. It has also agreed to invest more than US$30 billion in a fund to cover future health-care expenses. But these efforts have starved its business.

The sorry decline of GM has proved Mr Reuther right: The government is the better provider of social insurance. Let industry worry about selling products.

Unhappily, however, the fate of many public-sector pension plans in the United States is even worse than GM's. Responding to the same temptation to offload expenses into the future, public employers have committed to trillions of dollars in future liabilities.

In New Jersey, a huge pension liability has created a budgetary nightmare for the state. The city of Vallejo, in California, burdened by police pensions, recently filed for bankruptcy.

Just as GM's shareholders bore the burdens of its pensions, states and cities will have to force taxpayers to sacrifice in the form of service cuts, tax increases or both.

It is too late to restore GM to its former grandeur. But if public officials do not show courage by quickly funding the pensions they have promised their workers, American taxpayers will soon find themselves in an even worse crisis than the one GM's shareholders are facing now.

The writer is the author of While America Aged: How Pension Debts Ruined General Motors.

This column first appeared in the International Herald Tribune on July 10.

[The company is not the best provider of social insurance. Neither is the govt. For retirement plans, the employee the individual is the one that has the most at stake and therefore the most incentive to plan for his retirement. The govt role is to protect the employee and ensure that the employer does not exploit the employee. In Singapore, the govt also has schemes in place to ensure that employees do not shortsightedly spend their savings away. So there is the CPF.

At the low end, there is Workfare incentives, where low wage workers will get govt contribution to their CPF. At the upper end, there is Supplementary Retirement Savings where the high-income earners can save more for their retirement.]