COMMENTARY: Good News Turns Bad for Ford
10-29-2009, 10:38 PM
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COMMENTARY: Good News Turns Bad for Ford
Too much good news is turning out to be a bad thing for Ford Motor Co.
The good news apparently has convinced members of the United Auto Workers union that things are hunky- dory at Ford, and there's no reason for them to give the automaker the same concessions competitors General Motors and Chrysler got from bankruptcy proceedings.
As of day-end Tuesday, union members at half-dozen Ford plants had rejected -- in some cases resoundingly so -- the new contract that puts Ford at parity with union brothers and sisters at GM and Chrysler. Voting continues through Saturday, but the outlook is not good as only two plants with votes tallied so far have voted in favor of a new contract.
Ford Plants Voting No
UAW Local 249, Kansas City Assembly, Claycomo, Mo. (makes Ford Escape, Mercury Mariner and hybrid versions of both)
UAW Local 182, Livonia Transmission Plant, Livonia, Mich.
UAW Local 845, Sheldon Road Plant, Plymouth, Mich.
UAW Local 228, Sterling Axle Plant, Sterling Heights, Mich.
UAW Local 3000, AutoAlliance International, Flat Rock, Mich. (50-50 Ford-Mazda plant makesFord Mustang, Mazda6)
UAW Local 898, Rawsonville Plant in Ypsilanti
Ford Plants Voting Yes
UAW Local 900, Wayne Assembly Plant and Michigan Truck and Wayne, Mich. (makes Ford Focus; scheduled for upcoming Ford Fiesta)
UAW Local 1250, Cleveland Engine and Cleveland Casting, Brook Park, Ohio (Ecoboost engines)
Source: Detroit News
The proposed agreement, supported by top UAW leadership, contains a wage freeze for new hires and a six-year no-strike clause over wages and benefits - the same as the union gave GM and Chrysler. Plus Ford workers would get a $1,000 bonus to meet some quality and productivity targets.
Indeed, Ford has chalked up some wins. It is winning customers with its new products and is benefiting in public sentiment having not filed bankruptcy or taken taxpayer dollars as GM and Chrysler have. Ford shares have more than tripled this year. Even Tuesday, Consumer Reports magazine declared Ford as world-class in reliability with the likes of Toyota and Honda.
But Ford is far from out of the woods. Ford is NOT making money. Nor is it expected to turn a profit until 2011, and that's with a lot of good fortune. Competition from GM and other automakers will intensify. Further, Ford has a mountain of debt to repay, having borrowed roughly $30 billion over the past few years. At the same time, GM and Chrysler had much of their debt wiped out by their rushed-through bankruptcy proceedings.
"It's just a very difficult time and the concessions we gave in February were still fresh in people's minds," UAW Local 182 President Steve Zimmerla, who endorsed the latest deal at the Livonia, Mich., plant told Bloomberg News. "The fact that we weren't promised any additional work also weighed heavy on the membership."
What is promised is their jobs are even more at risk without a Ford contract patterned after those at GM and Chrysler. -- Michelle Krebs, Senior Analyst and Editor at Large
The good news apparently has convinced members of the United Auto Workers union that things are hunky- dory at Ford, and there's no reason for them to give the automaker the same concessions competitors General Motors and Chrysler got from bankruptcy proceedings.
As of day-end Tuesday, union members at half-dozen Ford plants had rejected -- in some cases resoundingly so -- the new contract that puts Ford at parity with union brothers and sisters at GM and Chrysler. Voting continues through Saturday, but the outlook is not good as only two plants with votes tallied so far have voted in favor of a new contract.
Ford Plants Voting No
UAW Local 249, Kansas City Assembly, Claycomo, Mo. (makes Ford Escape, Mercury Mariner and hybrid versions of both)
UAW Local 182, Livonia Transmission Plant, Livonia, Mich.
UAW Local 845, Sheldon Road Plant, Plymouth, Mich.
UAW Local 228, Sterling Axle Plant, Sterling Heights, Mich.
UAW Local 3000, AutoAlliance International, Flat Rock, Mich. (50-50 Ford-Mazda plant makesFord Mustang, Mazda6)
UAW Local 898, Rawsonville Plant in Ypsilanti
Ford Plants Voting Yes
UAW Local 900, Wayne Assembly Plant and Michigan Truck and Wayne, Mich. (makes Ford Focus; scheduled for upcoming Ford Fiesta)
UAW Local 1250, Cleveland Engine and Cleveland Casting, Brook Park, Ohio (Ecoboost engines)
Source: Detroit News
The proposed agreement, supported by top UAW leadership, contains a wage freeze for new hires and a six-year no-strike clause over wages and benefits - the same as the union gave GM and Chrysler. Plus Ford workers would get a $1,000 bonus to meet some quality and productivity targets.
Indeed, Ford has chalked up some wins. It is winning customers with its new products and is benefiting in public sentiment having not filed bankruptcy or taken taxpayer dollars as GM and Chrysler have. Ford shares have more than tripled this year. Even Tuesday, Consumer Reports magazine declared Ford as world-class in reliability with the likes of Toyota and Honda.
But Ford is far from out of the woods. Ford is NOT making money. Nor is it expected to turn a profit until 2011, and that's with a lot of good fortune. Competition from GM and other automakers will intensify. Further, Ford has a mountain of debt to repay, having borrowed roughly $30 billion over the past few years. At the same time, GM and Chrysler had much of their debt wiped out by their rushed-through bankruptcy proceedings.
"It's just a very difficult time and the concessions we gave in February were still fresh in people's minds," UAW Local 182 President Steve Zimmerla, who endorsed the latest deal at the Livonia, Mich., plant told Bloomberg News. "The fact that we weren't promised any additional work also weighed heavy on the membership."
What is promised is their jobs are even more at risk without a Ford contract patterned after those at GM and Chrysler. -- Michelle Krebs, Senior Analyst and Editor at Large
10-30-2009, 07:14 AM
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Surprise, the UAW is back to its short-term, me-first, screw-the-company thinking again. The deal with the big 3 was supposed to help reset the playing field for the long run and get them back on competitive ground with the foreign automakers. But I guess we can clearly see that the UAW is back to their old tricks, trying to stick it to any company which shows any signs of success. And it's not like Ford is even successful right now (the article pointing out they won't be profitable for another couple years), and the UAW is still out for blood. Unbelievable.
On a different topic, the article gets a couple of things wrong that I wish the media would stop repeating. Saying that Ford has not taken taxpayer dollars is wrong ... they took $6 billion in loans earlier this year. Yeah I know it wasn't classified as a bailout, rather a loan to retool its factories to build energy efficient vehicles. But $6 billion would pretty much retool every plant Ford owns. It was just a way for the Feds to loan Ford money just like they did GM and Chrysler. And the line about GM and Chrysler having much of their debt wiped out by bankruptcy, well, Ford also wiped out a ton of its dept, giving many bondholders pennies on the dollar. Sure it wasn't in bankruptcy court, but it basically used the threat of bankruptcy to make it happen. So while Ford has taken a very similar path to GM and Chrysler, they're just not getting the same bad rap out of the whole thing.
On a different topic, the article gets a couple of things wrong that I wish the media would stop repeating. Saying that Ford has not taken taxpayer dollars is wrong ... they took $6 billion in loans earlier this year. Yeah I know it wasn't classified as a bailout, rather a loan to retool its factories to build energy efficient vehicles. But $6 billion would pretty much retool every plant Ford owns. It was just a way for the Feds to loan Ford money just like they did GM and Chrysler. And the line about GM and Chrysler having much of their debt wiped out by bankruptcy, well, Ford also wiped out a ton of its dept, giving many bondholders pennies on the dollar. Sure it wasn't in bankruptcy court, but it basically used the threat of bankruptcy to make it happen. So while Ford has taken a very similar path to GM and Chrysler, they're just not getting the same bad rap out of the whole thing.
10-30-2009, 11:13 AM
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10-30-2009, 11:24 AM
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I was so hopeful that one of the benefits of our government taking the auto industry by the reins would be a complete elimination of auto labor unions.
They're an old outdated concept that does far more harm than good these days and basically just gives a bunch of untalented lazy the leverage to extort unreasonable salaries and benefits from their employer with minimal fear of repercussions for failing to do their job well.
They're an old outdated concept that does far more harm than good these days and basically just gives a bunch of untalented lazy the leverage to extort unreasonable salaries and benefits from their employer with minimal fear of repercussions for failing to do their job well.
Last edited by Threxx; 10-30-2009 at 12:24 PM.
10-30-2009, 11:29 AM
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No ****, my company is doing reasonably well and they still cut the medical benefits a bit and also cut a fraction off the 401k match.
10-30-2009, 11:44 AM
#15
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Posts: 9,710
Grandstanding. We went through the same thing a few months back and eventually the unions accepted minor wins in order to approve a contract. Ford will work through this if they stick to their guns.