The poker game known as the United Auto Workers' (UAW) contract negotiations officially begins on July 23rd. To hear the main participants, the cards have already been dealt. Ford and GM claim they're bust, or about to go bust. They say there's only way they can get back in the game: the UAW has to share some of the chips they stole won from their tablemates. The UAW is saying yeah right sure. Shut up and play. And Chryslerberus just sits at the table, wearing dark shades, saying nothing.
The stakes couldn't be higher. While much of the media conjecture leading up to the negotiations has centered on health care costs that make the word stratospheric seem pedestrian, there are other points that'll require agreement: plant closures, the infamous (and still unspecified) jobs bank, temporary hires and more.
Setting the tone for the upcoming negotiations, UAW President Ron Gettelfinger "strongly disagrees that we are part of the problem in the auto industry." He also declared that he considers reports that American auto companies "need" a $30 reduction in hourly wages and benefits as "nothing more than posturing." The UAW boss pooh-poohs this "supposed" gap between Detroit's union and the transplants' labor costs.
Meanwhile, The Detroit News reports that "sources inside Ford" state that unless the UAW agrees to lower their workers' $71 per hour wages and benefits down to $50 per hour, The Glass House Gang will go out of business. And the Wall Street Journal quoted "an unnamed Detroit executive" saying the domestics will move production overseas if the UAW doesn't help them compete with their ascendant competition.
Again, the battle lines are drawn, even before the game begins. Once they start, interested parties (and who isn't?) will have eight weeks to hammer out a new agreement before the old contract expires. And if they can't?
During a Q&A session with UAW members, a worker asked his president if a strike is an "option in the national negotiation." Gettelfinger responded with a simple "yes." In his address to the UAW Bargaining Convention in March, Gettelfinger stated the union would fight at the bargaining table and "if need be on the picket line" to protect their standard of living. In January, the union reported that their strike fund totaled $900m.
Would the UAW be stupid determined enough to launch a strike against GM or Ford? As noted in our Deathwatch series, both automakers' finances are in a precarious position (i.e. mortgaged up to their eyeballs). The UAW's 47-day strike against GM in 1998 reportedly cost the automaker $1.6b– roughly $34m a day. Given The General's and Ford's current cash reserves, a drain of that size or duration would have disastrous financial consequences.
If a strike stretched into months, it would force either– or both– automakers into Chapter 11. While bankruptcy doesn't automatically void the UAW's contracts, it certainly wouldn't help their bargaining position.
Back when Detroit owned the domestic auto market, the UAW called the shots. Now, the automakers are saddled with expenses they can't afford: high wages, the job bank, "cradle to grave" health care benefits and restrictive working practices. The golden days of huge union membership, enormous dues and unbridled power are gone.
In spite of the posturing, Gettelfinger knows someone has to give. He's already stated that the union's now willing to give Chrysler the same "concessions" they allowed Ford and GM in 2005. But will the UAW really be willing to surrender anything substantive?
That depends entirely on how you define the word "substantive." There's a high likelihood there will be some kind of deal on retiree health care provision. The most likely scenario: The Big 2.8 will divest themselves of retiree health care liabilities through a UAW-run VEBA similar to the health care deal and the recent agreement with Goodyear (i.e. they'll pay them now so they don't have to play them quite as much later).
You can also bank on the jobs bank cashing out– slowly. The automakers will want to kill it dead. But the UAW will negotiate a grandfather clause for current employees. In other words, old employees will live out their lives of leisure while new employees will not enjoy the protection of having a non-job job waiting for them when if their services be excess to requirements.
Temporary employees will be another hot topic. The Big 2.8 will want to use temps whenever and wherever they see fit, even in traditionally unionized jobs. The UAW will demand restrictions on their use or, at the least, require union dues. The union will concede on many job classifications. In return, they'll get their money.
Should the UAW and their employers reach an agreement, it's important to remember that there are– and always have been– suckers at the table. Truth be told, both the union and management are playing with someone else's money. Once upon a time, it was the American consumer's cash. Now it's the automakers' shareholders and union workers funding the game. No matter what happens, they're both bound to lose their shirts.
Cerberus will be playing with their own money of course.
And no sane UAW leader is ever going to say they won’t strike or they will end up being offered $14 an hour.
That doesn’t mean they will strike, nor do they have to get it done in 8 weeks (well Chrysler might as they aren’t trusted).
When you know you have 8 weeks to iron this out, how much will really be ironed out in the first 6? My guess is none. They’ll do it like every other contract and wait till the last minute and try and get as much media attention as possible.
UAW should say, sure, we will give you this when you come to Capitol Hill with us to lobby for health care reform. UAW is not the only one responsible for digging this hole down which automakers money is going.
Previously, the UAW would target one of the three companies to get the sweet deal during the negotiations, and the other two would fall in line afterwards. Frank, any idea if there’s a pecking order involved, if one of the 2.801’s contracts expires first?
I had a car with a broken seat belt adjuster that would extend to buckle but each time you moved, it would retract to snug the belt up and then lock in place. My passengers started off comfortable but by the end a short ride would be gasping for breath clawing at the release button. Funny how they didn’t notice it until they couldn’t breathe. The UAW is that adjuster.
andrewg: Bill Ford, Jr., and Rick Wagoner have already been quite vocal about the need for “something” to be done (i.e., have the government, or, more accurately, the taxpayers, take over their health care obligations through some sort of nationalized health care plan).
Of course, they could lobby to repeal the federal law that requires auto makers to offer one of the nation’s most lavish health care plans for employees and retirees.
Oh, wait, there is no such federal law…
As much as everyone is watching this poker game, I think it’s going to be huge anti-climax. Here’s my reasoning:
The UAW are flexing their muscles to show the (not so) big 2.8 that they mean business, much like the 2.8 are saying “concessions need to be made” to show the UAW they have a tangible agenda. But, we already have seen a precursor to this poker in the Delphi Vs UAW talks earlier this week. The UAW accepted a pay cut (quite a severe one) for job security. So for all their flexing they walked away defeated. So, I believe the UAW will make the necessary concession to the big 2.8. Like “Yasth” said the UAW have to shout “Strike” loud and proud to remind the big 2.8 about their loaded gun, but that doesn’t mean they’ll pull the trigger.
Now personally, I don’t believe the UAW should make any concessions to the big 2.8. I used to believe that the UAW was a parasite and will kill their hosts. But the more I read about the whole affair, the more I believe the UAW have done very little wrong. The real parasites are the big 2.8’s managements. They have done more to destroy their companies than anyone else. 1990’s, soaring sales, record profits and good expansion management get big bonuses. Fast forward 10 years to the the new millenium, falling sales, record losses and companies reduced to shadows of their former selves. Result? Management get big bonuses! (Which reminds me of another reason why I think the UAW will walk away slightly poorer from the poker game, because Delphi awarded their management bonuses shortly after Delphi filed, yet the UAW gave concessions!). Management have shown no commitment to the company. As much as I think Carlos Ghosn is an overrated CEO, I have to admit, that when he turned up at Nissan he wanted people to make concessions to help Nissan, but he, in turn, made the ultimate concession by threatening to put his job and all his teams’ jobs on the line if Nissan wasn’t profitable in a year. Even recently, Nissan missed a load of profit and sales targets, the result? Mr Ghosn told the senior management “You didn’t meet the sales and profit targets? Forget about your bonuses!”. Management was held responsible. Anyone care to cite examples of this kind of leadership at GM/Ford/Chryslerebus?
So in short, the UAW will make the concessions the big 2.8 need, but I personally don’t think they deserve them.
Each story is fascinating, and I would hope each company will get a few articles regarding these contract negotiations. Mullally at Ford should be entertaining since he came from Boeing. Boeing always offered a contract, the union(s) would turn it down, go on strike and a few weeks later would sign a contract that, at best, was the same as Boeing offered in the first place. Nothing like a company union… The UAW doesn’t like to think about itself as a company union, but if F dies, who do they go work for? There may be more US mfgs of cars than there are airplanes (i.e. >1), but not all that many. F may just go ahead and make that “drop dead” offer and see how it goes. Which puts the UAW in a tough position, if they take it, GM and Cerb wants the same, so they can’t. Right? OMG, this is going to make a great book……. I would suggest you bug those rooms Frank, you can have a heck of a story.
Though this is a good article, I’m questioning whether or not a strike would be beneficial. If the companies are “losing $34M per day”, how much are they making up by savings due to not having to pay wages and benefits to the striking workforce? I vaquely remember a TTAC article awhile back regarding not manufacturing cars in order to save money because they lose money on every car sold. Although satirical, it might prove a point. Also there are loads of 2006/2007 unsold “new” cars. Would there be opportunity to reduce that inventory to manageable levels while a strike was going on?
My proposition is that a strike might be beneficial to the domestic auto industry at this time. It would bring to light to the general public the conditions the union workers work under and I would be interested to see if they get any support from the general shlep who gets paid far less for much more work performed. It would also reveal that even though the Big 2.8 have made great strides in reducing their costs, they are still very big companies and have associated very big bureaucracies. So big in fact, that all the business processes they have invented to deal with issues are so contradictory and rigid that they cannot possibly respond to the changing market conditions their customers demand.
So I agree with you. Let the poker game begin.
starlightmica: Previously, the UAW would target one of the three companies to get the sweet deal during the negotiations, and the other two would fall in line afterwards. Frank, any idea if there’s a pecking order involved, if one of the 2.801’s contracts expires first? They start with GM on July 23. I haven't seen anything about when they'll start with the other two. KatiePuckrik: But, we already have seen a precursor to this poker in the Delphi Vs UAW talks earlier this week. The UAW accepted a pay cut (quite a severe one) for job security. So for all their flexing they walked away defeated. Not exactly. In 2004 there was a contract modification that allowed Delphi to start new hires at around $14/hour. The new contract drops others' salaries from the $24-27/hour they currently make to these lower levels. HOWEVER, the "more senior" employees (i.e. the ex-GM workers who are currently making the higher rate) will get a $35K lump sum cash payout per year for the next 3 years to make up the difference, funded by GM. So while the employees who were hired since 2004 and all new employees will get at the lower rate, the older employees will still be well compensated, in spite of what their "base" salary is.
By coincidence, I saw the Gettelfinger interview on Autoline Detroit last night. A few interesting tidbits:
Gettelfinger claimed he hadn’t seen the Goodyear deal and knew nothing about it. Odd.
Also, he saw no reason whatsoever for a ‘transformational’ agreement between the UAW and automakers, and expected only incremental change.
Gettelfinger repeatedly claimed that the productivity and quality from UAW plants was world class, and would NOT acknowledge that there was a significant pay gap between unionized plants and transplants.
Gettelfinger repeated ranted about outside issues, like a national healthcare (he sided with Hillary) and accusations of currency manipulation.
When asked about Ford’s shaky financial situation, Gettelfinger said that Ford made $7B in profits in 2000, and accused the domestic automakers of fudging their numbers to look bad in a contract year.
Finally, Gettelfinger dismissed all industry reports of the union needing to wake up and realize that change was needed, saying it was all spin from the automakers. Odd that he chose to appear on an auto new show just before contract negotiations — no intent to spin there, I’m sure.
Overall, I came away with the impression that this was not a visionary who could re-establish the contract between labor and management. I get the feeling that either the automakers will roll over (assuring their bankrupcy), or there will be a prolonged strike. Should be interesting.
Any chance that the UAW says to management, “We are willing to make a one-for-one financial sacrifice with our colleagues in management. An x% reduction in salaried compensation and benefits will be complemented by an x% reduction in hourly compensation and benefits. And oh, just for good measure, the CEO can’t earn more than 10 times the average hourly employee, and no individual can earn more than the CEO. Oh, and no more personal plane rides, either, Mark. You’re flying coach from now on!”
I’m definitely rooting for this to happen. And we should make a reality show out of it…and then webcast it on TTAC. $$$$$
Any eye for an eye…
The media would crucify GM and Ford for balking at a balanced expense cutting proposal like that. Public opinion would shift behind the UAW. Then who knows what could happen…
Good article.
After the initial period of partisan posturing at the start of the negotiations. Each side will be looking for a “level of comfort” that suits their side, and agenda.
One approach could be that “certain” benefits will be “grandfathered” but not carried forward, or carried forward in an altered format. It might become a game of where the “line is drawn” to grandfather.
MgoBLUE- yep and why not just implement other similar socialist agengas at GM and Ford because we know how successful those strategies are!?
Please explain exactly what value is added to Ford or Gm (shareholders) by having unions.
Sherborn Sean: re: Gettelfinger and Goodyear, didn’t you see that little smirk when he made that remark?
MgoBlue: The problem with your “eye for an eye” tactic is that the salaried staff at the 2.8 are being paid much closer to a true market rate than the represented folks. So, you end up losing the better performing salaried folks and keeping the less “marketable” ones.
…and there are oceans of cars appearing in parking lots all over the “Big D” these days. It will be interesting to review the inventory numbers this month. Looks like the 2.8 are ante’ing up…
26theone — I like your conservative tone. Putting myself in the hourly guys’ shoes, I can’t imagine signing up for a pay cut while management has been dishing out ‘retention’ bonuses. GM and Ford’s SG&A expenses (especially VP-level comp) are no longer invisible….they can no longer hide these ridiculous salaries among 6, 7, 8, 9 million units a year. Honda/Toyota aren’t paying their VP’s that much…and its starting to show on the bottom line.
Again — Toyota and GM are selling roughly the same number of units this year. One of these manufacturers is record-breakingly profitable. The other one can’t even turn a profit, let alone break a record doing so. Look at their SG&A lines on their income statements. Big difference.
“UAW value to shareholders”?! Ummm…its negative. It is and always has been a liability…not an asset…to the shareholder.
GM has the weakest management and the most money,or credit limit.That makes GM target, then the Dodge boys,
folowed by Ford.
The UAW will eat “core manufacturing”lots of what we call offline jobs will be outsourced,or insourced Its allready started in some plants and it will snowball.
Frank is right, the job bank will be grandfathered.
They will screw around with benifits for active and retired.
For the every day wages and benifits of active emplyees.
Take my word for it “THERE WILL BE NO! MAJOR CUTS.
The rank and file will tell Rick W and Ron G where to put it.
Katie Puckrik a few postings back said it all.
I’m not saying this is the right way to go for the rank and file.It could prove to be a disaster,Ford out of buisness?GM in chapter11?
Ron G is not gonna take a huge wage cut to the membership.It would be suicide.
Right or wrong the people on the floor do not buy into,the we have to give so GM can survive BS
Every day we see senior management, spend money like drunkin sailors.Cars, bonuses[for what] new offices,sons,daughters, girl friends get choice salary jobs or over promoted.
GM has not got the balls or mangement skills to take on the UAW they caved in 98 and they will cave 07.
I’m literally betting my job on it.
Any organization that would defend the Job Bank has absolutely no credibility whatsoever, in my opinion. The UAW is like a schoolyard bully finally pulled into the principal’s office. They’re still posturing and coming up with silly excuses for their high pay and lavish benefits (unmatched by any other job not requiring a college degree) but the axe is going to fall no matter how much they fuss and sneer.
After seeing the airlines go through bankruptcy with relative success (management managed to line their pockets yet again (surprise surprise)), I reckon the Big 2.8 are more willing than ever to declare bankruptcy, find a sympathetic judge, and get this UAW monkey off their backs. Bankruptcy is a nice card to hold, because the airlines have proven it to be effective and profitable for the decision makers.
Also, I hereby reiterate my disgust with the job banks.
Captain Tungsten: It’s probably a waste of time to debate whether or not the rank and file salaried folks are receiving ‘market rate’, as I’m betting neither of us are in either of their HR/Compensation departments (please correct me if I’m wrong).
But allow me to propose this: If they are paying “market” to salaried workers today, what’s the real risk of losing the “better performers”? 1. With 5,000 to 10,000 salaried jobs at each HQ, the individual contribution of any one person is miniscule. IMHO. And the director and VP-level folks aren’t going anywhere. There is NO WHERE to go for those folks, I’m sorry to say. (speaking as a native Detroiter)
2. What is the real risk of losing some salaried people…when your business is in such dire straits to begin with. The alternative is: Do nothing and die. Is there a scenario that is too aggressive when death is the alternative? Again, IMHO.
I would love to see a thread or editorial speaking to the potential of busting the UAW this time around. I don’t know nearly enough about the laws involved to even begin the conversation…but if the contract will expire this fall, is it totally ludicrous to think that the big 2 point nuthin could replace all of its hourly (UAW) folks with newbies? Not that I’m rooting for this…I don’t want to see anybody lose their job. But as far as negotiations are concerned, is this an option for GM/F/Chrysler?
It’s time to end this farce. Let ’em all go bankrupt, and the unions sink with ’em. Then, whatever’s left worth saving — Corvette, for example — will be picked up by someone with the brains and balls to make it work.
It’s just so amusing to watch this death cycle unfold.
The end-game in a global industry like durables manufacturing is flexible work rules and lowest cost. A union simply doesn’t allow for this and therefore by default will either destroy (like a parasite Katie) the company or be excised. It is that simple.
Now as for the old management getting them into this position, they were simply following the path of least resistance. In good times the union will extract benefits that will limit options in bad times, leaving less profit in the good times, thereby perpetuating the cycle. That is why allowing union classed jobs today (for peace) will again bring ruin tomorrow.
Why are the unions scared to let the market determine what their people are paid? Only reason is because they know their people are overpaid. You are only worth what a company is willing to pay you. If there are no companies on the free market willing to pay you >$70hr guess what..you arent worth it. And your company cant pay you below the real market rate for long because they know you will just jump ship. Artificially forcing/propping up wages is anti-capitalististic and in my opinion anti-american economy.
Hello thats how the rest of the non auto companies work!
MGoBLUE:
An employer must bargain with a union in “Good Faith”. Before negotiations begin unions always conduct a “strike vote” where they vote to strike if a contract is not negotiated. This vote always passes. The union does not expire with the CBA. An employer must negotiate even if they hire temporary workers during a strike/lockout. If a union and a company come to an impasse, Federal Mediators are brought in to help negotiate. The only way I know to bust a union is to convince the workers to vote it out of existence. I don’t know what power a Federal Judge would have in a bankruptcy situation.
I agree with KatiePuckrik, except that I think the unions would be smart to make some concessions in exchange for keeping production in the US.
I would like to see the auto makers go to capital hill and lobby for health care reform. Have the scumbags repeal the law that states that nobody can be turned down for health care even if they are unable to pay (Are you starting to feel like a fool for paying health insurance? Your costs are high because you are paying for all those who do not pay themselves…and as cost go up, more will discover they are “fools” and stop paying causing ever increasing insurance premiums…Vicious cycle). Repealing this theft/redistribution would cause health care costs to fall in half overnight.
Repealing the law will never happen since Govt has to create problems to justify their extortions/power…Heath care costs is a huge cash/power-cow for them.
SO…The retiree health care costs will be funded by taxpayers…by gun-point…Taxpayers are great cash-cows…So obedient…So generous…So reliable when a gun (law) is at their head.
I assume production will continue to move offshore…..
health care costs are driving these companies out of business, huh? And EVERY time someone mentions universal single payer health care, everyone faints. Idiots. Denying old folks decent health care is worth throwing away the american auto building business. Shame on us.
As a former supervisor of UAW employees for one of the big 2.8, I can tell you that what needs to be changed is the work rules. If you have ever witnessed an argument between two maintenance men on who’s job it is to change a broken part, you would understand. The way the union works is slow down and preserve you union brother’s job. If you work to fast and have good quality you may help the big bad company(that grossly overpays you) lay off one of your buddies. So work slow and let little things slip by. In today’s society the attitude of the average union worker to not do their jobs to the best of their ability is ridiculous and archaeic.
@MgoBlue: Your reasoning is used on a regular basis to reduce salaried staff at a whole host of industries, including auto. My organization has endured 5-15% staff reductions every year for the last 10 years. Selection of candidates is marginally rational, usually a combination of buyout offers, “encouragement” to retire or layoff. The organization figures out how to get (at least some of)the job done with fewer people, and the cycle continues. You don’t hear much about it because it’s done quietly over time. And no, I’m not an HR guy, but i know where they sit….
Two generations ago, and even 1 generation back, anybody and everybody that was associated with the auto industry in North America had a license to “print money”.
Twenty years ago the writing was on the wall that the “money printing press” was starting to experience difficulties.
Today the printing press is having additional problems, and running out of ink. Folks can point fingers and play the blame game all they want. If they don’t fix the press and get more ink they will no longer print money.
MgoBLUE wrote on June 26th, 2007 at 1:57 pm
Any chance that the UAW says to management, “We are willing to make a one-for-one financial sacrifice with our colleagues in management. An x% reduction in salaried compensation and benefits will be complemented by an x% reduction in hourly compensation and benefits. And oh, just for good measure, the CEO can’t earn more than 10 times the average hourly employee, and no individual can earn more than the CEO. Oh, and no more personal plane rides, either, Mark. You’re flying coach from now on!”
People, please do not not confuse management with engineering. We are all salaried, but stop insulting the salaried engineers by referring to us as management (even to this day, there are too many hourly workers who have yet to figure out that THERE IS A DIFFERENCE). They are two different mindsets and are associated with two different parts of the job. What I think MgoBLUE really wants to do is decrease salaried management, not salaried engineering, positions and make management pay scales more in line with the business side of the business. Us engineers like the idea of being paid competitive wages and if you start decreasing our wages, the products will only get worse. Don’t forget, we engineers are only doing what management tells us we need to do to get a product out the door. We have too many restrictions also, but take more benefits away that the hourly are still holding onto and decrease our pay outside of the marketplace value and you will see even more droves of engineers getting the hell out of the domestic carmakers’ workforce, people they really cannot afford to let go. After all, without the engineers, you don’t need the hourly folks.
Jolo,
I don’t think anyone is doubting the Big 3 engineers are talented and worth keeping around. The concern has always been the Big 3 leadership, but I think the issue is one of value, rather than cost.
With the exception of Mulalley, Big 3 execs are underpaid relative to their peers in other industries. Wagoner, Lutz et al may make $3M per annum, but the top 2 guys at a company GM’s size in financial services, healthcare or high tech would be making 10 times that amount.
That said, the issue is whether they are appropriately compensated for the value they produce. Obviously, that is for shareholders to decide. On the one hand, GM stock has done quite well for the past 18 months, although from a very low base, and mostly due to the market’s belief that GM has put its Delphi woes behind it. On the other hand, GM does not have the profit margin (let alone cashflow, right RF?)of a market leader, and these guys have been at it for 5 years now.
“I used to believe that the UAW was a parasite and will kill their hosts. But the more I read about the whole affair, the more I believe the UAW have done very little wrong. The real parasites are the big 2.8’s managements.”
I think because the UAW are gun-backed parasites that they encourage the Board to eat corporate assets. If Shareholders had rightful ownership of their property I think you would see that the Board would try to keep assets intacted/expand their assets for a greater return.
When a company starts to fail and the Board sees little they can do to turn the company around, they start to suck-out assets for themselves and their management team (They also give bonuses to key managers to keep them from leaving. It does not look good in the press when the management bails… Shareholders will start to bail)…Happens all the time. Larger 2.801 bonuses in a failing environment means that 2.801 are doomed…Golden Parachute theory (fact?).
How much do Ford, GM and Chrysler actually make up of the US economy? Including suppliers and so forth?
Even if they all filed chap. 11 it would be big news for a few months and then the collective American short-term memory would fade and it would be forgotten. It would have a small impact overall of the entire US economy. The transplants would expand and rehire some of the former UAW at lower wages.
As far as managers getting bonuses, no they shouldn’t. You only get bonuses when the company is doing well. However the jaded American public has heard it all before with Enron and so forth so we would hardly notice.
I’m hoping that Chrysler plays hardball. They have the means to outsource and take the hit for a greater return sans the UAW. This will force Ford and GM to fold with only Chrysler as the last American car manufacturer.
What is interesting is the collective American public has no clue that all this could unfold in a few months. Unless you follow the industry or work for it you have no idea that Ford, GM Chrysler could cease performing business in 2007.
Mikey: While I appreciate your insights from the inside please let us know once they file chap. 11 if the UAW feels like they did the right thing.
The only way to have true deserved job security is to make yourself so valuable to the company you work for that they couldn’t function without you. And then (politely) let them know it.
I do hope MGOBLUE was referring to upper management with the % for % salary reductions idea. Engineers are actually paid less than the market value for their jobs, ask me how I know. Even the Hourly guys get better wages and benefits in some cases. Sure they start competetive but in a few years new hires are already making more. All the while more and more work is being pushed on them as headcounts are continually reduced. There are opportunities in more stable companies with higher salaries in better locations. You can’t make it much harder on them. A few people won’t make that much of a difference? Unfortunately, alot of good ones have already left. Ask Toyota how thats working out for them.
I do completely agree that upper execs are outrageously overcompensated and should make sacrifices.
Concessions in exchange for guarantees of keeping production in the US would make sense.
With the exception of Mulalley, Big 3 execs are underpaid relative to their peers in other industries.
Forget everything else — just with the bungled FIAT deal alone, Rick Wagoner negotiated General Motors out of $4 billion.
No, that is not a typo — he personally cut the deal with FIAT that cost the company $4,000,000,000. How many readers of this article would be permitted to keep their jobs if they cost their employers four billion dollars?
I’d say that on that basis alone, Mr. Wagoner is grossly overpaid, and is profiting from a highly inappropriate job classification. I wouldn’t hire him to balance my checkbook, let alone turn him lose to run a Fortune 500 company.
Rick Wagoner is an employee of GM. The Board and their Lawyers have final decision authority (Actually, by labor law, Gettelfinger does…Why does anybody hold GM shares? Confounding). The Italian courts overrode the implied terms of the contract with Fiat…It was blatent theft…To pad Italian Politicians, Judges, Fiat Owners retirement accounts no doubt.
Pch101,
I don’t disagree. All I’m saying is that people in his position in other industries make a lot more $. For good reason, in some cases.
Luther, you must read some, er, unusual newspapers. Wagoner negotiated a “put” option that would have forced GM to buy FIAT and absorb its liabilities. Being that FIAT has long been a weak company that would surely get weaker in the face of ever growing Japanese rivals in Europe and Latin America, why would anyone with a half a cerebrum have possibly negotiated such a clause?
All I’m saying is that people in his position in other industries make a lot more $.
I agree, but for the fact that those other companies tend to be better run, and therefore have chairmen that are deserving of the money. If all of American industry was run with the same level of competence as has been the Big 2 Pointwhatever, we’d be living in caves and the Fed would be managing the supply of rocks and spearheads….
The domestics should offshore(Mexico, China, etc..were there is no UAW or CAW) the majority of their production with the exception of higher end models with high profit margins.
With only a coulple of lines in the U.S. they can survive and profit.
Then they can say screw you UAW, although they will loose half their market share.LOL
They always promote their quality this despite the fact third world country, Mexico and translpants are assembling quality cars without them proves the UAW are pointless.
My question is this: let’s say the big three get the UAW to play ball and then continue to hemorrhage money.
Who are you all going to blame then?
@guyincognito: OK, I’ll bite. How do you know?
@Luther: re: Fiat: That whole deal stunk like yesterdays diapers (with apologies to Baby Herman)GM coughs up $4 billion, and declares victory. Take a look at Fiat today, they’ve come back with a vengeance on the back of that payoff. something definitely going on there that isn’t being talked about…
Agreed Pch101, It was a dumb move for GM to negotiate a “put” option…With Fiat! I bet GM reckoned that Fiat would never exercise the “put”… A foreign company owning Fiat? Never!
Fiat stole GM’s 10% investment by moving assets away from the contract scope which GM rightly claimed “breach”… Then Fiat extorted ransom money (exercised put) to nullify the contract. The Italian “legal system” looked the other way since Fiat is, um, connected, um, lets just say Mussolini-ism is not totally dead in Italy.
GM should have filed a lawsuit in the US but probably recognized that it would go nowhere without Italian govt cooperation…Time to cut losses…..
Some recent video footage of Ron Gettelfinger:
http://www.autolinedetroit.tv/
Let’s say GM says they can no longer afford to deal this way. What are their options? Can they do that at all? Is it legally possible? I just don’t understand union laws.
Also, do you think the UAW can manage to NOT be violent about it? Every strike I ever heard go longer than a few weeks has been characterized by violence and threats.
something definitely going on there that isn’t being talked about…
Not really much of a secret. If GM had been forced to buy FIAT circa 2005, it would have inherited a company whose sales had fallen almost 50% since 1990, with factories running at about 2/3rd’s capacity (this is what happens to companies that build cars that people don’t want), a burn rate of about $2 billion per year, and over $6 billion in debt.
In other words, FIAT was like a mini version of GM North America, but with an Italian accent — a corporate behemoth with sliding market share that had fared well when it had little competition, but which crumbled when better managed foreign rivals with superior products began entering the market in earnest.
What is amazing that Wagoner would have negotiated such a deal in the first place. FIAT was already on the slide when they negotiated the “alliance” in 2000, so it’s not as if its fortunes had changed unpredictably.
FIAT has enjoyed a bit of a comeback thanks to the Punto, which has sold well in Europe and Brazil. It also gained a new CEO in 2004, who has aspired to build market share and to develop new models that can compete. In other words, FIAT has begun to follow the standard play book for ailing companies that are being turned around — new management, improved marketing and better products that can bring the money and profits in through the door. Of course, Rick Wagoner’s $2 billion donation probably didn’t hurt…
Landcrusher
GM has to “bargain in good faith” under the law. That does not mean they have to give in to the unions demands. They can take a hard line position if they choose to do so but you can’t do it for the sole purpose busting the union.
My prediction is there will be no strike, wages will remain about the same, a greater share of the health care premium will be paid by the workers, the retirees will begin paying for some of their gold plated health care and flexible work rules will be the norm and the jobs bank will become somewhat moot with flexible work rules.
Oh I also predict that GM and Ford will continue to be run in the same miserable fashion as the last 20 years and they will continue to lose market share and Ford will go belly up.
this time they can push the `no -choice` button. why the gas prices are soearing? because there is no choice, no substitute. do those near- high school- graduates that make 70$/hr have an option to go work anywhere else? well, if not, decrease their salaries twofold. they will strike? well they have to understand, if they strike the thunder, they will burn down their own factory.the union must undeerstand that their salaries are also choking the not- so-well patient.don`t crash the mothership, where will you hub your pods?
Jonny Lieberman: My question is this: let’s say the big three get the UAW to play ball and then continue to hemorrhage money. Who are you all going to blame then?
Well, Jonny, let’s review the choices:
– currency manipulating Japanese (unfair playing field!)
– right wingers who oppose socialized medicine
– left wingers and their crazy environmental legislation
– trade negotiators who give strike unfair trade agreements with Korea
– the media who refuse to acknowledge that the quality of Big 3 cars is as good as Toyota
– fickle consumers and their penchant for buying ‘hot’ fuel efficient vehicles.
Have I missed anyone? Huh? a mirror?
All this would not be a problem if people bought their cars, which they do, but not enough of them. Competition is a bitch, but that’s what gives everyone a choice and ultimately better products. From ball joints to spark plug ejections and transmission failures the domestics have burned too many people. I know several Ford, gm and Chrysler owners that went through thousands of dollars in repairs while the manufacturers did nothing. It would have been cheaper to repair the cars and keep the customers than deal with losing market share.
The union’s desire to maintain levels of compensation that were reasonable during a period of record profits, in a time of record losses is akin to the deforestation in third world nations that sell wood for profit.
Yes, some the blame SHOULD be aimed at the international traders that don’t adjust demand for the wood to decrease the depletion of the resource they depend on for profit (management), but the wood cutters (union and their members) are no less to blame for going into increasingly bare forests to chop down the few remaining trees without planting new ones or rotating cutting areas to allow fields to mature…sustainability is as important to the UAW as it is to the manufacturers..but I doesn’t seem that way.
If the UAW’s goal is to protect their members for the long term, they should be communicating the magnitude of the coming disaster to their people and let them know…when the trees are gone, there is no more wood to sell.
Toyota et al are not gonna pick up the slack and allow these folks to maintain the levels they’ve become accustomed to..and I imagine that even the scaled down rates they can negotiate with the domestics will still be much better than they can expect in a world where the big 2.8 are spoken about in the past tense.
The things i see working in Detroit regarding the UAW horrifies me. Britain had an automotive past with a similar problem, but that union problem went away for some reason, the same reasons i can see panning out here soon…
You could never get away with the laziness that the UAW gets away with if the situation was in the UK. Floor sweepers having shouting matches with Design Directors because they have not done their job properly, and then when supervisors are informed not even a slap on the wrist when in any other industry they would have been escorted out the front door. UAW members not having done their job, writing complaint reports as regular employees have to do the jobs that they were required to do. And they get money for doing this, how is this business sense?! the UAW should be fined. So much is so wrong, there is a complete them and us factor in Detroit. There is no accountability so why should they worry, why should they improve and why should they care about where their company is going?
Some examples need to be made quickly, but i don’t see the management having the balls to do this.
Coming from European design studios its been a real shock, there it was team work. If you had to move design properties around to help the studio out or get a show together everyone pitched in (modellers, designers, studio staff), moving boards with design work around the building, no problem, changing wheels, removing foam from a clay model, all could be done with no issues, work orders etc to slow the design process down. Here it feels like the UAW is there to derail this whole process, unbelievable, some people should go and see how the rest of the world gets by then come back read the riot act and make people hang their heads in shame.
Sooner the UAW dies the better good riddance, welcome to the modern world. Everyone is replaceable, wish they could remember/see that. As for the comments of UAW taking like for like hits on wages with reguar employees. Get real, we pay more out for healthcare etc straight off the bat, generally they get better benefits (we have nothing for life, no job bankl if we get let go if i shout at my director i’m out the door), holidays etc and if you want the best talent whether its in engineering or design you have to pay for it or you move/not even consider the company, which happens. It’d be a hard move but if most people really wanted to, the auto world is global and at the very worse you dont have to stay in it, there are other opportunities that cry for auto experienced people. They could move, but where would the non-college educated masses go/do that can only put doors in cars? Yes they’re needed but to a point. But they can do that in mexico etc. I can’t see the remaining foreign car companies taking on ex-UAW liners, they would be stupid to allow that parastical pandoras box into their factories if it all goes tits up. It would be the beginning of the end for them too.
Do they really realise this situation, are they really prepared for their managment if necessary to talk them out of jobs, are they that stupid and sheep like? What would be left?
Would you like fries with that?
Good rant Boston Tea Party!
I agree with about 60% of your thoughts.Next time a sweeper gives you flack.Do the following.
[A] ignore him, he just wants attention
[B] point out to him your a designer and he cleans shit houses.If he is a real idiot he will take a swing at you than he will be fired or a 30 day suspension
[C] Let him know that in Canada the CAW traded the sweepers to get the Camaro. Seems to me we needed the Camaro more than we needed sweepers.
Don’t forget Boston, while I agree there is lots of idiots in the plant,we are not all cut from the same cloth.
I’m fairly sure your an insider,and I allways enjoy reading your views.If your working for GM hang in there,we need guys like you.
Can we stop throwing around the term “record profits”? It sounds way too partisan (class warfare anyone?) when all that happened is that a company WAS successful.
Come on people, that is what they are in business to do. Now if long-term gain is sacrificed for short-term returns isn’t that really their problem…
In defense of Boston’s rant.
It is just easier to ignore the sweeper. If he (Boston) were to even say something to him, he could be written up and that is a HUGE hassle with the only real consequences being for Boston. The UAW are just not accountable.
I have had conversations with people in union relations positions and I do not envy what they do; if you have the opportunity,talk to them, it is serioulsy depressing. And your views on the UAW will never be the same again.
I worked for Magna for many years and I saw the benefits of not having CAW style work rules and job classifications. I was able to do my job without creating grievences from the elctricans, millwrights and other trades.
The down side of this was that management knew could treat employees poorly and get away with it. Management created a climate of fear among general production empolyees. Skilled trades were treated slightly better, but management had difficulty instilling the same climate of fear.
Many employees wished the CAW would represent them, especially when it came to issues like mandatory overtime for example. I was finally let go when I stood up for myself and refused to be bullied into working the never ending 55hr workweek plus saturdays and sunddays.
The CAW/UAW are only partially responsible for the current state of affairs, but both management and the unions are responsibel for the vicious circle of blame passing.
Has anyone noticed: however the editorial starts that sparks a debate it ends up within 30 posts of being a discussion about which party is responsible for the mess, union or management?
My feeling is that it is a whole lot of both. Both parties have always seen the company as a golden goose, and that no matter what they take there will be more tomorrow. I have worked the Ford assembly line, been a foreman on the same line, gone back to schoool and gotten into Quality Engineering. I believe the guy on the line is worth every bit of his hourly rate. It is brutal mind numbing work and takes a physical tole on your body that no amount of money will ever make up for. If the union was there to represent the workers who come to work everyday, do their job with minimal complaint and it was encouraging to be a responsible employee then I the union would get a lot less flack. Unfortunately the union representatives come from the people who learned early on how to get out of work and sit around in the union office enjoying the air conditioning and working with their buds planning for them to get out of work. If somehow the work rules were changed to get rid of the deadwood, slackers and union guys that spent most of their energy playing the system, the auto companies would get their labour savings. For the last few years I have been a supplier quality rep to both the big #? and Japanese compamies. I kid you not I have gone to a Ford plant to shipping to pick up some defective parts and spent 3 hours trying to find someone to help. Seven lift truck guys sitting there in shipping playing cards at the table and not one would interupt his game except to say not my job. Go to a Japanese assembly plant and there are 3 guys tripping over themselves to help you. I don’t know about you, but I am no longer willing to pay for those 7 guys to play cards in my the price of my car. Anyone else like to?
@ Captain Tungsten, It was a rhetorical question… Since everyone is only mentioning the high level management salary vs company performance issues, I thought I'd rant a little about their other shortcomings. How about how they are completely incapable of making a plan and sticking to it? You want to add cost and quality issues to a vehicle, try making a major change to the towing capacity, shock damping, tire/wheel combo, fuel economy target, etc, etc a couple of months before launch. They take a laissez fair attitude to management, hoping their reviews of various 1 pagers on critical issues, seeing tracking matrixes full of green boxes, and instituting 10 layers of paperwork and lower level managment to get through to get anything done means everything is on track, then when they finally evaluate the vehicle and find it not to their liking they expect to be able to change anything and everything at the last minute withouth compromising timing. Meanwhile, the change control process runs with wreckless abandon, programs are staffed lightly and hardly paid attention to until crunch time, engineers spend more time taking out the excess cost added due to late decisions and rushed design changes and firefighting than preventing the same cycle from repeating, minor issues are beaten to death while elephants raom free, compromise after compromise is made to achieve some set in stone goal that suddenly changes, suppliers are squeezed so hard they simply crumble, and Mark Fields lives in Miami. If these guys were more involved in the day to day, and I'm not saying they have to be in tune with every issue, they would realize the reality of their decisions or indecisions. If they were car guys, understood the market, and had some vision they could lay out a plan for a vehicle, ie. platform, content, specs, budget, timing, supply chain, where to share parts with other vehicles, etc. and flush out most of the design issues virtually or with component and system level testing, build prototypes reasonably close to final design level and test them, and then freeze the design and actually have a high quality product in showrooms in 2-3 years rather than 5-7.
Daro31
The reasons that the comments always spiral into a “who’s to blame” debate is really very simple.
1. If you read a newspaper report about how the US economy is in bad shape, which is more productive? Saying “Oh look, the US economy is shrinking. Right, who won last night’s football match?” or “Oh look, the US economy is shrinking, I blame the outsourcing of jobs etc”. One is trying to isolate and solve the problem, the other is being apathetic.
2: Everyone here feels passionately about cars and don’t want to see GM/Ford/Chrysler go to the wall. Nobody reads these sites because myspace.com is down for a while! You read this site because you’re crazy about cars….or just plain crazy! ;O)
3: In this case of the UAW Vs the big 2.8, it’s gone into a who’s to blame situation very logically. One side (like me) says “Why should the UAW make concessions when management have done more to damage the company than the UAW?” and on the other side people are saying “The UAW are going to kill the big 2.8 through their greediness”.
In reality, all of these editorals of this nature are about who’s the blame. What other reason is there? Now had this been a review about a car and it sparked this kind of debate, that would have been illogical.
P.S. Have I taken Daro’s comment a little too seriously…….? :O)
My prediction is there will be no strike, wages will remain about the same, a greater share of the health care premium will be paid by the workers, the retirees will begin paying for some of their gold plated health care and flexible work rules will be the norm and the jobs bank will become somewhat moot with flexible work rules.
This is about as true as the outcome will be Sherman.Also look for 2 tier wage agreements to take place at G.M.Anyone hired after the ratifaction of this contract will top out at a certain amount.Regading a retirement plan for new hires would rest squarly on their shoulders.PSP-401k,ect.
The days of paying yard laborers,janitors & general sanitation (machine cleaners) are out the door.At least the rank and file holding these positions.
One last thing,one of the main reasons why all domestics are ailing in N.A.is health care costs.We could all argue over the contracts that hold these companies responsible for this section of benefits,damn the uaw or damn the companies.Whats really important is that each side(union & company)find a way to rationalize and implement a cure,one beneficial to the companies while still giving decent coverage.
Most people I know are not covered by a non-payment deduction regarding health care.Annual increases are passed to the person and often they explore coverage outside of that offered by their place of employement.With that said,I’d be willing to give up more of my hourly wage toward healthcare concrning the new contract provided they keep coverage as is for all retirees.
What we really need to look at is the situation of health care cost.I’m not convinced universal health care is the be all end all,but its probally better than what we have.Its important to remember that the domestics cover more people in the U.S. with health care than anyone else minus Medicare/cade.Is it to much for our industry to receive help from the govt.?
During a Q&A session with UAW members, a worker asked his president if a strike is an “option in the national negotiation.” Gettelfinger responded with a simple “yes.” In his address to the UAW Bargaining Convention in March, Gettelfinger stated the union would fight at the bargaining table and “if need be on the picket line” to protect their standard of living. In January, the union reported that their strike fund totaled $900m.
Whose standard of living? The auto workers or the union bosses? Forcing the compnay you work for into bankruptcy, generally doesn’t help your financial situation.
We end up arguing about who’s to blame because of a difference in perspective as to where the real problem lies. I read here on TTAC The Union “Stole” (crossed out) chips from the table.
The truth is the wages and benefits were negotiated, and if the UAW are better poker players, so be it.
The other reason for the arument is that some focus on short term profitability (mixed with a great deal of envy and schadenfreude ) while others focus on the long term, which primarily means increasing (or at least stemming the loss of) market share.
The big 3 all had Deming in to show them how the Japanese do it, but they don’t seem to have stuck with the program – at least not to the same extent. Deming was practically a Diety to Toyota.
Management might force some real concessions, and eventually they might even get labor costs in line with the transplants, but that won’t change declining market share because, as has been pointed out on several threads, Camcords cost more than Malibus and Fusions (and Fusion is made in mexico so the profit for unit must be healthy) yet people ante up for them.
One of Deming’s 14 points is “Drive out fear”. It’s clear from the “We’re going to close the plants and eliminate your jobs” talk (even if it’s mostly just talk- or maybe not) that American management just doesn’t get it. Quality won’t improve by offshoring, especially to a country like China where the concept of quality seems compeltely unknown.
Watch for the big 3 to continue loosing share, no matter their costs.
I would like to point out that the opening paragraph of this article clearly indicates that it is GM and Ford that believe that the UAW “stole” their chips– not the author.
As always, TTAC’s posting policy prohibits flaming the site, its authors or fellow commentators.
You may disagree with the opinions on this site, but you may not launch ANY personal attacks.
I keep reading that the Big 2.6 are hobbled by their healthcare costs.
How does their high cost of healthcare influence their making some crappy products that not many purchasers want?
Only possibility seems to be that it limits spending on new decelopment. I think that is a stretch at best.
Dynamic 88, are you suggesting that the unions were all about stepping up to accept the teachings of Deming but were thwarted in doing so by management?
As for driving out fear, I would like to add, “give us our due or we’ll strike” to your list of quotes.
GMrefugee
No, not at all. It would be great if the UAW were to get into the Deming philosophy as well. They didn’t, and as far as I know, didn’t even try. But let’s be fair, it’s management’s place to invite Deming in, which they did, and management’s place to stick with the program (and it appears they did not)
I agree with you about the strike threat. It’s just as much a part of the problem. I may appear to be completely pro-union, but that isn’t the case. There are many legitimate criticisms of the union. But, imo, the union is only 10% of the problem, at most.
jackc10, eventually, all costs of producing a vehicle affect the quality of the materials and components that are built into the vehicle. Consider that for every “extra” $50 in labor costs you incur on a product plan, that is $50 less you get to spend on the soft touch dash coating or the platinum spark plugs, etc. So, higher labor costs do take their toll on the “value” consumers place in the end product. You may have heard of the term; decontenting.
Consider that for every “extra” $50 in labor costs you incur on a product plan, that is $50 less you get to spend on the soft touch dash coating or the platinum spark plugs, etc.
If this was true, the Chevy Aveo, built in South Korea at lower wage rates, would be a superior car to the Japanese-built Honda Fit. But it isn’t.
The consumer is willing to pay thousands of dollars more for a Fit, which generally retails at MSRP and is in short supply. Meanwhile, the Aveo is currently being dumped with a $500 rebate, even though it is already the cheapest new car being sold in the US today.
The Big 2.5 have no history of plowing their profits into building better cars. Reducing costs will do absolutely nothing to help the business if the products and branding are not improved.
When they were generating record profits from SUV sales, they put the money into higher earnings and dividend payments, while neglecting their core products. There is absolutely no reason to believe that lower costs will result in better products, when their past actions indicate that they just don’t care.
Boston,
I’m a little late to the party today.
Way back we were in the Ford studio reviewing headlamp mockups for the 2000 Taurus with a VP – can’t remember the name. Anyway, some jackass in the studio was using a Sawzall to cut up a fender or something right next to the buck. You can imagine the noise level.
We absolutely couldn’t hold a conversation. There was probably $5,000/hour worth of management there screaming trying to hear each other. The VP asked the guy to stop sawing, and though I couldn’t hear the response I’m sure it was “Pound salt.” Some lackey had to actually chase down the direct supervisor of the Sawzall guy to get him to come over and tell the guy to stop.
The guy could have put the saw down anytime without re-percussion. He was just being an unbearable prick. I’ve spent 20 years in the business. I wish the proportion of guys like Mikey to the “other” was higher.
As far as management egos, etc. A totally different VP at Ford walked into the studio and tore up my latest project waaaay after the freeze date, violating all of Ford’s own procedures/processes. Of course timing is shot. So one of the lackeys says “Looks like we’re going to prototype tooling.” So Mullaly’s going to have to sell something else to find the $1 million+ this arrogant prick VP just cost the company. Unbelieveable though not a new thing. See the comments above about the best way to add cost and trash quality.
At any rate, tomorrow is my last day in the industry. GM, Ford, Chrylser and the UAW can all burn. There’s plenty of blame on both sides. I’ll watch from a distance. All future comments will come from an offical outsider.
Pch101: If this was true, the Chevy Aveo, built in South Korea at lower wage rates, would be a superior car to the Japanese-built Honda Fit. But it isn’t.
The Aveo has a lower sticker price than the Fit (even before the rebates).
The Aveo’s sticker price ranges from $9,995-13,765.
The Fit starts at $13,950, and goes up to $15,970.
GM isn’t building the Aveo with lower labor costs, and then selling it at the same price as the Fit, but with a higher content level or superior build quality. The Aveo is considerably cheaper than the Fit, even before the rebates. GM is using the lower labor costs to sell the car at a lower price point.
We can argue ’til the cows come home about whether GM’s strategy is the correct one – the Aveo isn’t exactly flying off the dealer lots, as you’ve noted.
Pch101: The Big 2.5 have no history of plowing their profits into building better cars. Reducing costs will do absolutely nothing to help the business if the products and branding are not improved.
This is true, and others have noted this. But this is entirely different than saying labor costs don’t matter, or higher labor costs don’t put a company at a competitive disadvantage.
If (and that’s a pretty big “if”) the Big 2.5 use concessions to improve the product, they will reap the benefits. If they use it to buy up more companies, line executives’ pockets or increase the dividend…they shouldn’t have bothered.
As you noted, past performance isn’t too encouraging. Merely saying “we need a 30 percent cut in labor costs” is not enough.
Of all the companies, I hold out the most hope for Ford, because Mullaly is an outsider who is at least asking the right questions, and demanding answers when they aren’t immediately forthcoming. Plus, Ford has historically had a better relationship with the UAW than GM or Chrysler.
The Aveo is considerably cheaper than the Fit, even before the rebates. GM is using the lower labor costs to sell the car at a lower price point.
This is **exactly the problem.** This is not a viable business strategy, but a path to failure. Being the low price leader is a brand killer, not a valuable differentiator.
The Big 2.5 have become the K-Marts of the auto industry — cheap, low rent, and undesirable for most of the buying public. They do not compete on quality, and apparently don’t even know how to compete on quality.
Let’s learn a bit from Yugo and Hyundai’s early US efforts — when it comes to car shopping, American consumers generally want quality over price, and will pay extra for something that they perceive to be better, when they can afford it (and often when they can barely afford the financing.)
The Big 2.5 have low margins because they do not create products that are worth a premium. Even with cheap labor, they are uncompetitive. It’s a revenue problem, not a cost problem.
Pch101: The Big 2.5 have low margins because they do not create products that are worth a premium. Even with cheap labor, they are uncompetitive. It’s a revenue problem, not a cost problem.
The problem is how they are using the labor cost advantage (which GM’s Korean operations surely enjoy compared to Honda’s Japanese operations).
They use it to become Walmart, instead of using the cost differential to provide Macy’s quality at Walmart (or at least Target) prices.
At least Ford didn’t make the Mexican-built Fusion into a crappy bargain-basement alternative to the Accord. It used the Mazda6 platform to provide a decent product at a competitive price point, while still being able to turn a profit on it.
At least Ford didn’t make the Mexican-built Fusion into a crappy bargain-basement alternative to the Accord. It used the Mazda6 platform to provide a decent product at a competitive price point, while still being able to turn a profit on it.
This gives me hope that Ford may be in the best position for a recovery. But then I look across the lot at the Five Hundred Taurus (the zodiac sign for the rental car industry) and assume that my hopes were unfounded.
That, and Fusion sales are hitting the skids. If it is going to succeed, it needs to be substantially better than an Accord, not just sorta kinda similar to one, but not really…
The problem is how they are using the labor cost advantage (which GM’s Korean operations surely enjoy compared to Honda’s Japanese operations).
Which is why I wouldn’t bother volunteering for pay cuts if I worked for GM. They aren’t worth it.
It’s a company with a long history of pinching nickels and dimes, and using the savings to lose quarters and half-dollars. Pennywise and pound foolish defined.
Sid
Better late than never!!
We have had that here too, unbelievable that some guy can think that scrapping the floor or doing other noisy jobs such as priming milling machines or attaching wheels to a vehicle can be more important than engineering/design or executive meetings that affect the future of the company. The fact that you have to get their supervisor aswell just gets beyond me, wheres the sanity gone in this industry. They just don’t get it. And to me that is where the UAW will always fail and that theres little chance for change, they will never change and herein lies the problem. Bigger things go on than them.
Good luck for the future Sid.
Mikey
yep we’re both insiders, i know not everyone can be tarred with the same brush but its about time we all started paddling the same way out of s#!t creek, we lost one paddle, we’ve found some more lets get the crew working together for once, i can see the shore.
Pch101:This gives me hope that Ford may be in the best position for a recovery. But then I look across the lot at the Five Hundred Taurus (the zodiac sign for the rental car industry) and assume that my hopes were unfounded.
Actually, I like the new Taurus. Ford did the right thing with the Five Hundred – used a solid Volvo platform to produce a car with excellent room, good safety ratings, and a very good combination of ride-and-handling.
Now, it is addressing the car’s faults while keeping the good points with a thorough mid-model-cycle makeover…just like Honda and Toyota would do.
And with the new drivetrain and other improvements, the Taurus X (formerly Freestyle) offers an excellent combination of safety, room, ride, handling and economy, especially for those of us who need room but don’t want the “handling” and “economy” of a lumbering SUV.