Crash Course

Domino effect to GM, Chrysler bankruptcies

For a snapshot of the whiplash felt throughout the automotive supply chain due to the recent bankruptcies of Chrysler and General Motors (GM), all you needed to do in the days following GM’s filing was to stop by the company’s suddenly outdated website.

In the "About GM" section, the company claimed to employ 244,500 people globally. On June 1, that number fell by at least 20,000 as GM announced the closing of 14 plants and three warehouses.1

That same section of GM’s website boasted the company sold 8.35 million cars in 2008 under an extensive brand portfolio that included Hummer, Pontiac, Saturn, Opel and Vauxhall. During the week following the bankruptcy filing, Hummer was acquired by a Chinese manufacturer, and Saturn was sold to auto-racing mainstay Roger Penske. Meanwhile, Pontiac is kaput, and the plan for the European brands is to say auf wiedersehen to Opel and goodbye to Vauxhall.

And those are just the in-house ramifications. According to estimates from consultant CSM Worldwide, the Big Three (which also includes Ford) share more than 50% of about 1,500 North American suppliers.2 That tangled web means one automaker faltering would be painful enough. But a majority of the triumvirate declaring bankruptcy in an already laboring economy has shaken an industry that saw 40 major suppliers join their biggest customers in Chapter 11 in 2009.3

Many of the smaller parts firms are also headed to bankruptcy or are considering shutting down. Because those suppliers partner with several automakers, other car companies’ production lines may be halted. Laura Marcero, a restructuring specialist at Grant Thornton, said, "It’s going to affect the Toyotas, Hondas and Fords of the world, because they’re going to have more unplanned downtime because of supplier shutdowns."4

On the dealership front, between GM and Chrysler, nearly 3,000 franchises will close their doors, forcing them to purge their lots, often at significant discounts, which is great news for new customers.5 Some of the existing customers, on the other hand, aren’t quite so happy.

In the days following Chrysler’s bankruptcy, checks issued in connection with California’s lemon law bounced, and lawsuits against the car company sat in judicial purgatory as consumers were told to enter the long line of the automaker’s creditors.6

Eventually, a group of state attorneys general hammered out a deal with Chrysler (and its new owner, Italian automaker Fiat) to honor lemon-law rights. But, under terms of a deal approved in bankruptcy court, the company won’t be responsible for injury and wrongful-death claims linked to defects.7

The situation at GM was still muddled as of early June, with the bankruptcy court putting all lemon-law claims on hold until it decided how they should be handled.8

—Brett Kryzkowski, assistant editor


  1. Steve Hargreaves, "GM plant closings: 20,000 job cuts," June 1, 2009, www.money.cnn.hu/2009/06/01/news/companies/gm_facilities/index.htm.
  2. Alex Ortolani, "GM Suppliers Face New Cash Threat as Bankruptcy Looms," Bloomberg, May 29, 2009, www.bloomberg.com/apps/news?pid=20601103&sid=ax1pfe7GMX6Y.
  3. Ibid.         
  4. Sharon Silke Carty, "Plan to save automaker has risks for economy," USA Today, June 3, 2009, www.usatoday.com/money/autos/2009-06-01-government-bankruptcy-gm_N.htm.
  5. Associated Press, "GM, Chrysler say slashing dealerships necessary," June 3, 2009, http://news.yahoo.com/s/ap/20090603/ap_on_go_co/us_auto_dealers.
  6. Martin Zimmerman, "Chrysler bankruptcy creates lemon law turmoil," Los Angeles Times, May 9, 2009, www.latimes.com/business/la-fi-lemonlaw9-2009may09,0,3217006.story.
  7. Jeff Gelles, "Two-time victims in Chrysler’s bankruptcy," Philadelphia Inquirer, June 7, 2009, www.philly.com/philly/business/47135652.html.
  8. Herb Weisbaum, "Hardest hit bankruptcy victims," MSNBC, June 4, 2009, www.msnbc.msn.com/id/31089301.


Most Customer Satisfaction Scores Keep Climbing

Customer satisfaction has climbed for the second straight quarter—this includes ratings from airline passengers, according to a recent American Customer Satisfaction Index (ACSI) study.

For the first quarter of 2009, the index was up 0.4% to 76 on ACSI’s 100-point scale. Passenger satisfaction with airlines improved for the first time since 2003, up 3% to an ACSI score of 64.

These scores are in sync with the Airline Quality Rating Report released earlier this year that reported airlines’ improved customer service performances.

The customer index is produced by the University of Michigan in partnership with ASQ.

For more details on the first-quarter ratings and related commentary about the ACSI study, visit www.theacsi.org/index.php.


Survey: Most Agencies Not Ready for Stimulus Cash

Three-quarters of federal and state agencies tasked to distribute funds from the $787 billion economic stimulus package admit they aren’t ready to manage those dollars, a recent survey found.

A survey conducted by APQC (formerly the American Productivity & Quality Center) revealed that 24% of respondents said they are "fully ready" to meet the requirements of managing the stimulus dollars. One-third of the respondents had goals and measures in place for the related activities, and 22% said they had the transparency actions in place.

APQC, an independent nonprofit research firm that specializes in performance analytics and benchmarking, called on the Office of Management and Budget "to develop appropriate measures of effectiveness and efficiency" to ensure the funds are distributed in an effective, timely manner.

When the new chief performance officer, Jeff Zients, is confirmed by Congress, he should create an initiative to develop standard measures to track agency performance over time, APQC recommended.

Other parts of APQC’s survey addressed government agencies’ perspectives on benchmarking and their plans around Web 2.0, social media, and hiring and training people. For full survey results and commentary, visit http://govsurvey.apqc.org/index.html.


ISO Group Reaches Consensus on Standard

Participants in the International Organization for Standardization Working Group on Social Responsibility (ISO/WG SR) reached consensus on the future ISO 26000 standard at its May meeting in Quebec City.

The meeting addressed issues stemming from the more than 3,000 comments submitted in a successful vote on the committee draft of the standard taken before the meeting. ISO 26000 is moving to the status of a draft international standard by October.

The next meeting of the ISO/WG SR will be held early next year. Publication is targeted for September 2010. For more information, visit www.iso.org/sr. The working documents are accessible at www.iso.org/wgsr.


Conference Board Reports on Quality’s Evolution

A new report by the Conference Board’s Quality Council sheds light on the continuing evolution of quality and the changing roles of quality professionals.

The report, "A Leadership Prescription for the Future of Quality," addresses how quality professionals can be catalysts for change, play key roles in understanding how an organization’s processes are related and enhance the connection between business planning and the bottom line.

"The role of the quality officer is evolving," said Mike Adams, vice president of quality at Allegheny Energy and a council member who helped prepare the report.

"A growing number (of quality professionals) view (themselves) as macro-leaders," connecting quality practices to top-line growth and business trends such as globalization, customer sophistication, talent management, environmental concerns and social responsibility, he said.

In the report, Paul Borawski, ASQ’s executive director and chief strategic officer, offers commentary on the council’s findings. To view the full report, visit www.conference-board.org/publications/describe.cfm?id=1635.

Capitol Q

ASQ representatives met with U.S. Secretary of Education Arne Duncan last month to present ASQ’s case for quality in education. Duncan was in Milwaukee to talk with public officials and educators. Laurel Nelson-Rowe, an ASQ managing director, presented Duncan with ASQ’s position paper on education and offered to assemble a panel of educators and Baldrige winners to brief the Department of Education about the benefits of quality … ASQ has connected with the Institute for Citizen-Centered Service (ICCS) of Canada to learn from ICCS’s public sector quality experiences and strengthen efforts to engage the Obama administration in discussions and encourage government agencies to use quality tools and become more efficient … ASQ’s Healthcare Division has produced a white paper for a forum ASQ is organizing for the House’s 21st Century Health Care Caucus. The division is also recruiting speakers to present at the forum. The caucus is meant to focus attention on deploying healthcare IT in hospitals, physician practices and other medical environments.

Capitol Q is a regular Keeping Current feature that highlights ASQ’s advocacy efforts with government leaders. More information about ASQ’s legislative activity and other issues and activities can be found at ASQ’s Advocacy Room at www.asq.org/advocacy/index.html.


HD Supply Team Wins Gold Award

HD Supply took home top honors, winning the gold award at the 24th International Team Excellence competition, which was held during ASQ’s annual World Conference on Quality and Improvement in Minneapolis in May.

The team from the wholesale distribution company in San Diego demonstrated its innovative approach of using voice of the customer data to drive customer loyalty, continuous improvement and operational excellence. The team showed how it reduced defects and saved the company
$3 million.

Littelfuse Phils Inc., a manufacturer of circuit protection products based in the Philippines, won the silver award for its work in reducing its operation’s use of hazardous material, improving product quality and increasing profitability. Bronze winners included Pershing LLC of Jersey City, NJ, and Boeing’s C-17 PWIT team of Long Beach, CA.

About 2,000 quality professionals attended the conference. Next year’s event will be held May 24-26 in St. Louis. Visit http://wcqi.asq.org for details.

ASQ News

FORMER PRESIDENT HONORED  Former ASQ President H.J. Harrington recently received the professional of the year award at the Quality Conference in Orlando, FL. Organizers lauded Harrington’s sustained, long-term outstanding contributions to improving organizational performance around the world.

SR MEDAL  ASQ has unveiled the Spencer Hutchens Jr. Medal for Social Responsibility to recognize members who are leaders in advocating the cause. Hutchens is a past president of ASQ. Eligibility information and nomination forms are available at www.asq.org/about-asq/awards/hutchens.html. All nominations are due Oct. 1.

NEW NEWSLETTER  Healthcare Update: Tools and Applications is a new, free electronic newsletter from ASQ that offers useful information for professionals in the healthcare industry. Each month, the newsletter, which is available to members as well as nonmembers, highlights one tool, application or case study and relevant additional resources, such as books, magazine and journal articles, and certification courses. To register for the newsletter and to view the most recent issue, visit www.asq.org/healthcare/update_info.html.

NETWORKS ADDED  ASQ has formed five new networks, or online communities, for members to connect, share information and perhaps help solve problems together. The new networks are categorized as follows: consultants, small business, leadership excellence, social responsibility and future of quality. For more information and to explore the other 18 networks, visit www.asq.org/communities.

SECTIONS DISSOLVED  The Western Colorado Section 1314, the Southern Oregon Section 624 and West Plains-Mountain Home Section 1315 (Missouri/Arkansas) have been dissolved at the request of members and the regional director. Members were transferred to other sections by request or based on their ZIP codes.


Celebration Features Paper Competition

The 2009 World Standards Day paper competition has been announced by the committee planning the U.S. celebration and the paper competition’s sponsor, the Standards Engineering Society (SES).

Cash prizes will be presented to winners during a banquet at the celebration Oct. 7 in Washington, D.C. In addition, the winning papers will be published in SES’s journal, Standards Engineering.

For details, go to www.ses-standards.org/displaycommon.cfm?an=1&subarticlenbr=77.


Quick Poll Results

Each month, QP visitors can take a short, informal survey, and we post the results.

Here are the numbers from the most recent Quick Poll:

"What quality method is most effective at cutting costs and increasing efficiency during difficult economic times?"

  • Lean Six Sigma 60.2%
  • Total quality management 20.5%
  • Lean 15.4%
  • Six Sigma 3.6%

Here’s the most recent poll question:

"What do you find most difficult to communicate to management?"

  • The value of quality—in monetary terms.
  • That quality is proactive as well as reactive.
  • The need for sustained resources dedicated to quality.
  • That quality must be an organization-wide effort.

Who’s Who in Q

Name: Larry Aft.

Residence: Norcross, GA.

Education: Master’s of science in industrial engineering degree from the University of Illinois.

Current Job: Director of continuing education and program development at the Institute of Industrial Engineers (IIE) in Norcross.

Previous Jobs In Quality: Aft taught industrial engineering and developed and managed the master’s of science in quality assurance program at Southern Polytechnic in Marietta, GA. The program was the first in the nation to be available entirely online.

Introduction To Quality: Aft was introduced to quality at his first job as a junior quality engineer at Automatic Electric Co. in suburban Chicago. He was also exposed to quality during his first statistics class taught by Frank Gryna at Bradley University in Peoria, IL.

ASQ Activities: Aft serves as the chair for the Greater Atlanta Section. He has volunteered for many activities and served as chair of the education board and chair of the research advisory council. He has also taken on many other roles with the Greater Atlanta Section.

Recent Honor: Aft recently received the 2008 ASQ Grant Medal. He is a fellow of ASQ and IIE, and he has received IIE’s Phil Carroll Award.

Published: Aft is the author of five books, and he has authored several handbook chapters and technical articles.

Quality Quote: Quality is working to continually come closer and closer to giving customers what they want every time.

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