I see a problem with the standard operating procedure of the automobile industry. I ran ithis by a guy who is a dean emeritus of a US engineering school, and he was surprised if not shocked. Why is the conduct described below OK?
According to §5 of the Federal Trade Commission Act, an act or practice is unfair where it:
• causes or is likely to cause substantial injury to consumers;
• cannot be reasonably avoided by consumers; and
• is not outweighed by countervailing benefits to consumers or to competition.
There is a method of manufacture I have studied which to my knowledge has not been studied before. Since it has no name, I have named it “Parts Churn.” I have defined Parts Churn in regard to automobiles in the following manner.
Parts churn is the periodic but temporally random substitution of functionally identical yet physically non-interchangeable parts for a previous set of parts comprising a vehicle wherein the new parts provide no advantage to the consumer over the previous set of parts but does present an enhanced risk of possible injury and expense to the consumer due to an increased risk of random design or manufacturing error.
All automobile manufacturers use Parts Churn in manufacturing all of their vehicles. I have studied 12 Ford parts. My study leads me to believe that all parts above the level of nuts, bolts, and washers are subject to parts churn to one degree or another although it seems even nuts and bolts are coming into play.
As one example, during the 10 years from 2007 through 2016 Ford Motor Company produced at least 58 different horns. A table summarizing some characteristics of the horns is immediately below. Attached to this message is a spreadsheet showing data from all 58 horns.
• causes or is likely to cause substantial injury to consumers;
This sort of manufacture causes substantial injury to consumers. One way the consumer is injured is the increased cost. A concept well known to the engineering community and economists as well is “economies of scale.” Companies can achieve economies of scale by increasing production of a component which lowers costs per component. This happens because costs are spread over a larger number of units of production. Costs can be both fixed and variable. Thus, it is much cheaper to produce 1,000,036 horns of one design than it is to produce 17,242 horns of 58 different designs. Parts Churn destroys economies of scale. https://www.investopedia.com/terms/e/economiesofscale.asp
There are other ways costs are increased through Parts Churn. Parts become more expensive because of scarcity as vehicles age. Vehicles are prematurely scrapped because of part unavailability as they age. If parts were improved rather than churned with new non-interchangeable designs, customers could avail themselves of cheaper, improved parts for repairs.
Every time a new part is designed and manufactured, the process entails a probability of a defect in design or manufacture. This is confirmed by the constant recall of automobiles for defective parts. Whereas, if an already existing design is improved, the probability of a defect is decreased because an existing, already proven design is improved.
It should be noted that almost every part can be improved without making it physically non-interchangeable. For example, new LED light bulbs using an entirely different technology from the old incandescent light bulb have been made, nonetheless, interchangeable with 100 year old light bulbs. As will be shown infra, Parts Churn, can cause injury beyond monetary injury.
• cannot be reasonably avoided by consumers;
It is impossible for the consumer to avoid Parts Churn since every vehicle sold in the United States is manufactured this way. If just one manufacturer produced just one inexpensive model without churning parts, most of the harm stemming from Parts Churn would be eliminated because consumers would have a choice.
• and is not outweighed by countervailing benefits to consumers or to competition.
There is no benefit to consumers nor competition in manufacturing all vehicles using Parts Churn.
A table of the 58 different Ford horns can be found at this URL: https://goo.gl/HhD1Z4 There is no need for nor benefit from this cornucopia of horns.
Most troubling is that Parts Churn is applied to all safety components, not just horns which are also important safety devices. Below are tables showing data on the large portfolio of airbag inflator modules used by Ford during the years 2007 through 2016 in automobiles alone – excluding pickup trucks and SUVs.
Parts Churn was the real cause of the deadly airbag debacle. There was no existing defect in the Takata airbag inflators when manufactured. It was only after the passing of years that the Takata airbag inflators became defective. Had the automobile manufacturers not used Parts Churn in airbags, the defective units could have been quickly and inexpensively replaced with no loss of life and much less expense. Below is a summary of most if not all airbag inflator modules used by Ford during the years 2007 through 2016 in passenger cars alone.
A link to a spreadsheet showing the 210 airbag inflator modules can be found at the following URL: https://goo.gl/shjxwB
The average number of years an airbag inflator was used before being churned was just 3.2 years. Airbag inflators were churned much faster than horns. Almost 70% of the inflator modules were churned in 4 years or less. The difference in price between the cheapest inflator module and the most expensive inflator modules was over $500 or almost 300%. Including inflator modules for pickup trucks and SUVs would most likely raise the number of different airbag inflators to 500 during those 10 years.
Inflator modules are not complex devices. Inflator modules are not high tech devices. Indeed, they are crude, simple devices. Below are two links to two extreme slow motion videos each showing a different airbag deploying. There is no precision visible in either deployment. However, when used in a vehicle there is extreme precision in the timing of deployment. The timing of deployment has nothing to do with the inflators. The timing depends upon the circuitry and sensors that determine when to deploy the airbags. There is no need for the plethora of inflators. It was the excessive number of inflators that lead directly to the deaths of so many people and the tens of billions of dollars spent to replace inflators.
https://www.youtube.com/watch?v=A2fAgW_1nD0
https://www.youtube.com/watch?v=dCS9C6p9vB4
I have compiled spreadsheets showing similar results for 10 other automobile parts.
According to §5 of the Federal Trade Commission Act, an act or practice is unfair where it:
• causes or is likely to cause substantial injury to consumers;
• cannot be reasonably avoided by consumers; and
• is not outweighed by countervailing benefits to consumers or to competition.
There is a method of manufacture I have studied which to my knowledge has not been studied before. Since it has no name, I have named it “Parts Churn.” I have defined Parts Churn in regard to automobiles in the following manner.
Parts churn is the periodic but temporally random substitution of functionally identical yet physically non-interchangeable parts for a previous set of parts comprising a vehicle wherein the new parts provide no advantage to the consumer over the previous set of parts but does present an enhanced risk of possible injury and expense to the consumer due to an increased risk of random design or manufacturing error.
All automobile manufacturers use Parts Churn in manufacturing all of their vehicles. I have studied 12 Ford parts. My study leads me to believe that all parts above the level of nuts, bolts, and washers are subject to parts churn to one degree or another although it seems even nuts and bolts are coming into play.
As one example, during the 10 years from 2007 through 2016 Ford Motor Company produced at least 58 different horns. A table summarizing some characteristics of the horns is immediately below. Attached to this message is a spreadsheet showing data from all 58 horns.
| Number of Horns |
58
|
Number used 1 year |
1
|
|
| Average Years in Use |
4.8
|
Number used 2 years |
4
|
|
| Fewest years in use |
1
|
Number used 3 years |
3
|
|
| Most years in use |
11
|
Number used 4 years |
8
|
|
| Least Expensive |
$10.86
|
% used 1 year |
2.9%
|
|
| Most Expensive |
$60.16
|
% used 2 years or less |
14.7%
|
|
| Cheapest Fiesta Horn |
$29.02
|
% used 3 years or less |
23.5%
|
|
| Number of Fiesta Horns |
3
|
% used 4 years or less |
47.1%
|
|
| % unavailable after 10 Yrs. |
5.9%
|
|||
| No. unavail. after 10 Yrs. |
2
|
• causes or is likely to cause substantial injury to consumers;
This sort of manufacture causes substantial injury to consumers. One way the consumer is injured is the increased cost. A concept well known to the engineering community and economists as well is “economies of scale.” Companies can achieve economies of scale by increasing production of a component which lowers costs per component. This happens because costs are spread over a larger number of units of production. Costs can be both fixed and variable. Thus, it is much cheaper to produce 1,000,036 horns of one design than it is to produce 17,242 horns of 58 different designs. Parts Churn destroys economies of scale. https://www.investopedia.com/terms/e/economiesofscale.asp
There are other ways costs are increased through Parts Churn. Parts become more expensive because of scarcity as vehicles age. Vehicles are prematurely scrapped because of part unavailability as they age. If parts were improved rather than churned with new non-interchangeable designs, customers could avail themselves of cheaper, improved parts for repairs.
Every time a new part is designed and manufactured, the process entails a probability of a defect in design or manufacture. This is confirmed by the constant recall of automobiles for defective parts. Whereas, if an already existing design is improved, the probability of a defect is decreased because an existing, already proven design is improved.
It should be noted that almost every part can be improved without making it physically non-interchangeable. For example, new LED light bulbs using an entirely different technology from the old incandescent light bulb have been made, nonetheless, interchangeable with 100 year old light bulbs. As will be shown infra, Parts Churn, can cause injury beyond monetary injury.
• cannot be reasonably avoided by consumers;
It is impossible for the consumer to avoid Parts Churn since every vehicle sold in the United States is manufactured this way. If just one manufacturer produced just one inexpensive model without churning parts, most of the harm stemming from Parts Churn would be eliminated because consumers would have a choice.
• and is not outweighed by countervailing benefits to consumers or to competition.
There is no benefit to consumers nor competition in manufacturing all vehicles using Parts Churn.
A table of the 58 different Ford horns can be found at this URL: https://goo.gl/HhD1Z4 There is no need for nor benefit from this cornucopia of horns.
Most troubling is that Parts Churn is applied to all safety components, not just horns which are also important safety devices. Below are tables showing data on the large portfolio of airbag inflator modules used by Ford during the years 2007 through 2016 in automobiles alone – excluding pickup trucks and SUVs.
Parts Churn was the real cause of the deadly airbag debacle. There was no existing defect in the Takata airbag inflators when manufactured. It was only after the passing of years that the Takata airbag inflators became defective. Had the automobile manufacturers not used Parts Churn in airbags, the defective units could have been quickly and inexpensively replaced with no loss of life and much less expense. Below is a summary of most if not all airbag inflator modules used by Ford during the years 2007 through 2016 in passenger cars alone.
| Number of Airbag Modules |
210
|
Least Expensive |
$175.12
|
|
| Average Years in Use |
3.2
|
Most Expensive |
$697.51
|
|
| Fewest years in use |
1
|
Number unavailable 10 years |
11
|
|
| Most years in use |
8
|
% discontinued in 10 years |
5.2%
|
|
| Number used for 1 year |
19
|
% used 1 year |
9.0%
|
|
| Number used for 2 years |
35
|
% used 2 years |
25.7%
|
|
| Number used for 3 years |
41
|
% used 3 years |
45.2%
|
|
| Number used for 4 years |
49
|
% used 4 years |
68.6%
|
| Fiesta | Least Expensive | Most Expensive | |
| Driver Inflator Module |
$329.22
|
$233.45
|
$687.99
|
| Inflator Curtain |
$472.60
|
$351.35
|
$697.51
|
| Knee Inflator Module |
$242.08
|
$217.98
|
$318.60
|
| Passenger Inflator Module |
$369.19
|
$241.63
|
$662.22
|
| Side Impact Inflator |
$381.93
|
$175.12
|
$381.93
|
| Total |
$1,795.02
|
$1,219.53
|
$2,748.25
|
A link to a spreadsheet showing the 210 airbag inflator modules can be found at the following URL: https://goo.gl/shjxwB
The average number of years an airbag inflator was used before being churned was just 3.2 years. Airbag inflators were churned much faster than horns. Almost 70% of the inflator modules were churned in 4 years or less. The difference in price between the cheapest inflator module and the most expensive inflator modules was over $500 or almost 300%. Including inflator modules for pickup trucks and SUVs would most likely raise the number of different airbag inflators to 500 during those 10 years.
Inflator modules are not complex devices. Inflator modules are not high tech devices. Indeed, they are crude, simple devices. Below are two links to two extreme slow motion videos each showing a different airbag deploying. There is no precision visible in either deployment. However, when used in a vehicle there is extreme precision in the timing of deployment. The timing of deployment has nothing to do with the inflators. The timing depends upon the circuitry and sensors that determine when to deploy the airbags. There is no need for the plethora of inflators. It was the excessive number of inflators that lead directly to the deaths of so many people and the tens of billions of dollars spent to replace inflators.
https://www.youtube.com/watch?v=A2fAgW_1nD0
https://www.youtube.com/watch?v=dCS9C6p9vB4
I have compiled spreadsheets showing similar results for 10 other automobile parts.
Business Regulation: Sherman 1 / FTC §5 Automobile Design and Takata
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