Automotive Common Practice, or Fiskers?
Fisker has been having a rough time lately, troubles with their battery supplier A123, a significant number of cars lost in super storm Sandy, the departure of founder Henrik Fisker himself, to name a few. In this light it makes perfect sense to me to save expenses and reduce the cost spend at operating a factory that can not run for various reasons. If you can reduce the hours of your factory personel for a whole week, that sure helps keep the money in for a little longer. However, claiming it is 'Common Practice' in the automotive industry?
**Fisker furloughs workers for one week, says it's 'common practice' in industry**
This [furlough] is a common practice, particularly in the automotive industry, to manage costs and operations based on current activity levels and commercial requirements.
The recent of KPMG, the 'KPMG's Global Automotive Executive Summary 2013' states a different common practice on this matter:
Despite concerted attempts to address overcapacity, many markets around the world still have excess production capacity. Over half of respondents feelthat Japan, Germany, the US, South Korea, Spain and France all have a high risk over overcapacity, with Japan and Germany on top of the list.
Solutions to overcome global overcapacity in vehicle production is fought with various strategies (export to new markets for example), but only France is doing anything in the line of reducing hours worked at their factories:
Only the French automakers favor cutbacks in production. And despite the declining performance of the Japanese auto industry, automotive executives from this country are not recommending any cuts in output, which could hinder the industry's efforts to recover.
It is not exactly the same for Fisker, they are not fighting over production. Fisker is trying to financially survive the period in which it can not build and sell cars. Their solution is a move that could really help them do so (mind, I have no access to Fisker's balance sheets), but calling this approach 'Common Practice' is certainly not true.
Dark Clouds for Fisker?