Aluminum Parts Machining Differs from Steel Parts Machining. Aluminum can be used in many ways. However there are different ways on how you can work with it. Aluminum parts machining requires less power compared to steel parts or cast iron …
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Boeing — Not Taxpayers — Will Pay for Cost
Tony Capaccio of Bloomberg Business News reported last week that Boeing may end up spending $300 million more than is budgeted under its contract to develop a new Air Force aerial-refueling tanker.
Bad news for taxpayers, right?
Wrong — because the company will have to eat every cent of expenses above the ceiling on the development contract, which means if there actually is an “overrun,” taxpayers will be getting extra value at Boeing’s expense.
The story could be bad news for Boeing shareholders, but something tells me when the contract is completed Boeing will come in right at the ceiling.
Of course, that still could mean a zero rate of return, but the development contract leads to production of 179 planes, where the big aerospace company is likely to do just fine.
Thompson: Obama’s new acquisition practices “reward honesty and realism.”
What some observers don’t seem to get about the Bloomberg story is that the Obama administration really has tightened up on contracting practices, so if companies don’t stay within budgets, they lose money.
That’s a powerful incentive not to run up costs, and helps explain why the administration pushed for an early transition from cost-plus contracts to fixed-price arrangements on the F-35 fighter too.
In both cases, contractors will get the best results if they stay within budgets, which is exactly what policymakers were aiming to achieve.
There’s no advantage in bidding low to win and then trying to raise prices, because contract terms are too tight to allow recovery. So the new acquisition practices reward honesty and realism.
Government Got the Best Deal Possible
If you’re still stuck in the old way of thinking, then the fact that Boeing might have to eat some extra expenses suggests the company didn’t have a good handle on costs when it wrote its proposal.
Not so: It bid the price it needed to bid to beat rival Airbus. Both companies knew they would have to price their proposals aggressively to have any chance of winning, and as one senior Boeing executive put it to me, “We left a lot of shekels on the table.”
In other words, Boeing was willing to break even or maybe even lose money in the development phase in order to preserve its 50-year tanker franchise and keep Airbus out of its home market.
Thus, Tony Capaccio’s story doesn’t signal that anything has gone wrong with the tanker program. Quite the opposite — it shows government negotiators got the best deal possible from the winner.
Loren B. Thompson, Ph.D., is chief operating officer of the Arlington, Va.-based nonprofit Lexington Institute and chief executive officer of Source Associates, a for-profit consultancy. Prior to holding his present positions, he was deputy director of the Security Studies Program at Georgetown University and taught graduate-level courses in strategy, technology and media affairs at Georgetown. He also has taught at Harvard University’s Kennedy School of Government.
-Industryweek
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Chevron to Cut 2,000 Jobs
Chevron said on March 9 it would downsize its global refining and marketing activities to compete in “difficult” market conditions, cutting 2,000 jobs this year.
At a meeting with financial analysts in New York, Mike Wirth, executive vice president of Chevron’s Global Downstream, said downstream market conditions were “likely to be difficult for the next several years.”
Chevron will eliminate jobs in 2010 and 2011, including about 2,000 this year, and take 2010 first-quarter severance charges estimated at $150-200 million, he said.
The company also plans to sell some European activities, including the Pembroke refinery in Wales in Britain, and activities in Caribbean and some Central American markets.
Chevron will review operations in Hawaii and Africa, outside of South Africa, as it moves to further concentrate its downstream activities in North America and Asia-Pacific.
The company currently employs about 62,000 people, not including 5,000 who work in gasoline service stations.
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USA saving Clean Energy Manufacturing Jobs
The report, “Winning the Race: How America Can Lead the Global Clean Energy Economy,” released by the Apollo Alliance and Good Jobs First, stressed that this strategy would avoid indirectly subsidizing the growth of clean energy activities in low-wage countries such as China that are emerging as key competitors in the race to lead the global clean energy economy.
“The United States is currently importing about 70 percent of its renewable energy systems and components,” said Phil Angelides, chairman of the Apollo Alliance. “If that trend continues, we stand to lose out on estimated 100,000 clean energy manufacturing jobs by 2015, and nearly 250,000 by 2030. This country needs a comprehensive clean-energy economic development strategy so we can ensure that jobs being created in the clean energy sector stay in America.”
The report illustrates this risk by analyzing the recipients of the Recovery Act’s Advanced Energy Manufacturing Tax Credit (also known as 48C credits), which President Obama recently proposed expanding funding for by $5 billion due to the program’s success. The report finds that, of the 90 companies that received 48C credits for wind and solar manufacturing projects in the United States, 23 also have been investing in similar production in countries such as China, India, Mexico and Malaysia. The 23 companies, which include both U.S.-based and foreign firms, received a total of $458 million in 48C credits for their U.S. projects.
“A portion of this offshore investment is meant to serve foreign markets,” said Good Jobs First Research Director Philip Mattera, who analyzed the 48C recipient list for the report. “But these examples demonstrate that the U.S. share of the global clean energy economy – particularly in manufacturing – is far from guaranteed. 48C projects have helped stimulate the clean energy manufacturing sector, but some recipients are putting their primary emphasis on low-wage production for the entire global market.”
To address this risk, the report recommends a comprehensive strategy to create jobs in the clean energy economy through the entire supply chain. The first step is to ensure an expanded and consistent market for clean energy by passing comprehensive clean energy and climate legislation, and then to expand domestic clean energy manufacturing by:
* Increasing the Advanced Manufacturing Tax Credit by $5 billion, as the president proposed in his FY2011 budget, but adding “clawback” provisions that would enable the federal government to recoup the tax credits if 48C jobs end up being sent offshore.
* Enacting the “Investments for Manufacturing Progress and Clean Technologies (IMPACT) Act,” which would support small and mid-sized manufacturers by providing capital for investments in energy efficiency and for retooling and expanding into the clean energy supply chain.
* Investing in the creation of a well-trained work force that meets the needs of U.S. clean energy manufacturers and would make onshore investment more attractive.
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Toyota adds non-Japanese to Management
Toyota said on March 30 it will reshape its global operations as part of efforts to “regain consumer confidence” after its mass safety recall crisis. Stepping away from a traditional reluctance to involve foreigners in its highest decision-making bodies, it has included seven non-Japanese executives in a new team charged with “radically” improving global operations.
The committee, which will investigate defects that necessitate recalls and quality control issues, held its inaugural meeting on March 30, company president Akio Toyoda said at a press conference at the Toyota City headquarters.
Its focus will be on speeding up the recall decision-making process, boosting transparency and “listening carefully to the voice of the customer as a crucial key to regaining customer confidence,” he said.
He added that the firm would also enlist “third-party experts” in each region, including business leaders, academics, consumer group representatives, scientists and engineers. Their findings will be released in June.
Heavily criticized for being slow to react to initial reports of problems, Toyota was encumbered by the fact that “decisions on recalls can only be made at the headquarters in Japan,” said Mamoru Kato, senior analyst at Tokai Tokyo Research Center. “The committee on quality now has foreign members. This should help the company learn accurate information from customers and ground personnel and make decisions swiftly.”
Among other measures, Toyota said it will incorporate globally a “brake override” safety system from this year onwards that reduces engine power to prevent runaway car accidents.
In North America it will expand the use of event data recorders (EDRs), which can record information regarding vehicle condition and driver operation. It will also increase information-sharing between regions, boost onsite inspections and promote safer driving.
In an effort to demonstrate its new quest for transparency, Toyota gave journalists a tour of its testing facility where cars were put through their paces in simulated weather and road conditions and tested for defects.
Such an effort represents “a major change from the past,” said Kato. “It is unthinkable if you consider how things were years ago”.
Kato added that the recall crisis “might have served as a good opportunity for Toyota to become truly a global company in a speedy manner.” Auto Parts
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Siemens cuts 4,200 jobs worldwide
Siemens unveiled a broad restructuring of its SIS information technology division that includes the elimination of 4,200 jobs worldwide.
Around 2,000 of the cuts would come in Germany, where some 9,700 of the division’s staff are employed, according to the business daily Handelsblatt.
Siemens said it would simplify its Solutions and Services (SIS) division and establish two poles of activity — business information technology solutions and IT outsourcing.
More than 500 million euros ($US680 million) would be invested in the unit by 2012 in what Siemens called a “market-oriented organization based on two business units with sharp customer focus.” The SIS division previously comprised seven units, the group said.
It aimed to “build on the specific industry and software know-how of the Siemens sectors, which are world-leaders,” finance director Joe Kaeser said.
Siemens said in December it would revamp the labor-intensive IT division to make it more flexible and market-oriented. The unit is to be given “all the conditions necessary for a stand-alone operating business by the start of the new fiscal year on October 1, 2010” which suggests it could be spun off at some point.
SIS sales have fallen for several years and analysts say its technical staff is better paid than at rivals such as IBM, Hewlett Packard and Accenture.
Overall, Siemens has spent 500 million euros ($US690 million) to restructure its various divisions and has eliminated 23,000 jobs. At the end of last year, its workforce totaled 405,000 worldwide.
The group’s vast operations extend from the manufacture of light bulbs and washing machines to medical imaging equipment, wind turbines, nuclear reactors and high-speed trains.
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