Thursday, April 23, 2009

Behind the Visteon closures

Socialist Worker has a few interesting pieces on the background to the struggles at Visteon, not least of which is this from Simon Basketter:

Ford set up Visteon in 1997 and outsourced it in 2000. An internal Visteon UK document in the possession of Socialist Worker reveals the method underlying the outsourcing process.

The document, which was presented to bosses in 2005, is couched in management jargon with obscure formulas for calculating risk and costs.

It shows how outsourcing was meant to lower costs.

It starts by saying the benefits of outsourcing are “increased productivity” and “cost reductions”, though it notes that outsourcing doesn’t “improve quality” of products.

The document uses the example of the outsourcing of part of Visteon to India. In 2002 this part had a resource per hour cost of $80 in the UK and $25 in India.

In 2004 it had a resource per hour of $75 in the UK and $20 in India. In other words, outsourcing drives down wages in both countries.

The document argues that outsourcing requires directors to have “toughness” in increased proportion to the number of outsourced companies.

It says that there are three options for contractual agreements: “Negotiate” which is described as “expensive and time consuming”, “Ignore”, or “Remove liability insertion points”.