By last Friday, it was clear that the United Auto Workers rank and file found their new, no-strike contract rank, and filed their objections during voting. In other words, the union’s members rejected the deal. Which left Ford CEO Alan Mulally’s rep seriously dinged. After all, Big Al’s been talking-up Ford’s return to profitability ever since he banked that first $25 million paycheck. The union vote against the strike was a vote for Big Al’s plan. If he’d kept his mouth shut or, better yet, constantly warned against looming collapse, the UAW might have made the ultimate concession. But then investors wouldn’t have dumped more money into Ford and the Ford family members signing Mulally’s big ass paychecks would have been seriously spooked. Big Al can’t win from losing, as the Brits would say.
But it is curious that he waited until AFTER the contract went down in flames before telling Automotive News [sub] that Ford “has flexible manufacturing plants and global vehicles ready to go. Throw in the weak U.S. dollar, and that means Ford now could even export vehicles made in its U.S. plants.” Or did he say it earlier, and AN held off? Or did Mulally offer the bribe to the UAW in private before, and only mentioned it to AN on Friday, who held off ’til Monday? In any case, it’s a pretty ridiculous idea. Why didn’t Ford threaten the union to remove work instead? Answer: they did.
Ford of Europe CEO John Fleming told reporters last week that if demand warrants, Fiestas could be shipped from Mexico to Europe.
“The one virtue we’ve got with our One Ford strategy is — apart from anything which legally needs to be different — the products are the same,” Fleming said.
“So in any case, from anywhere, you could import and export products.”
Too subtle? In any case, the UAW wasn’t about to sell their soul for a few good jobs. Now what’s this about a Lincoln Kuga? For one thing, shouldn’t it be a Mercury Kuga?
Fleming noted that volatile currency exchange rates make it difficult to make long-term plans for exporting.
Indeed, when the value of the euro rose sharply in early 2007, Ford scrapped a plan to make a Lincoln-badged version of the Kuga in Germany and export it for sale in the U.S. market beginning in 2008.
Big Al decided to build the Lincoln MKT instead of that? Even so, what does THAT have to do with American luxury? Lincoln: saved by exchange rates only to fall into badge engineering hell.
Big Al decided to build the Lincoln MKT instead of that?
Well, do you really believe American Lincoln buyers want a manual-transmission-only four-cylinder diesel crossover?
Robert,
I don’t get it. Who was Fleming threatening? Was Ford in negotiations in Europe also.
CAW votes lopsided for the new contract and the US locals vote the opposite.
Did the profit figure that was announced today somehow get leaked a week or two early? I can’t beleive the 90%+ votes against without some inside info perhaps leaked to union management.
Mirko:
Worst of both worlds.
carguy65:
Fleming was letting it be known (as others had) that the One Ford strategy lets The Blue Oval produce cars in the most “cooperative” market, and ship them elsewhere. Originally, the 1FoMoCo idea was mooted as a cost saving on parts.
I suspect you’re right: the Ford Q3 profit story (coming) must have made the rounds ahead of the vote. Timing is. Everything.
Today’s news makes Ford’s case for concessions even weaker. With Ford’s claimed 1 billion dollar profit, (thank you Cash For Clunkers…good thing Ford is going at this all by themselves right?…NOT!), there is absolutely ZERO reason why the UAW members should take concessions.
Ford is very greedy.
I have never had a union job and I’ve never wanted one. That said, putting myself in the shoes of a UAW plant worker, I can understand voting against the deal. The company is making money, the boss is getting paid $25 million a year, I’ve already agreed to countless givebacks over the past decade … and now they want me to give up more. That adds up to a no vote.
A few weeks ago I had the chance to hear Jimmy Wales, founder of Wikipedia, give a speech. One of the many interesting things he said that was in recent times his for-profit business (separate from Wikipedia) was forced to cut back and to lay some people off. The first thing Wales did was to cut his own pay to zero. He reasoned that he didn’t need the money, that by cutting his pay he could afford to keep a few people who would otherwise have to be laid off and that the decision makers should take as much of the pain themselves as possible before spreading it around to the rest of the team. That is real leadership.
In contrast, the “I’m good where I’m at” attitude Mulally displayed when asked about cutting his pay at the congressional hearings is part of the dump truck load of problems with modern American business management. Mulally is doing a lot of good things at Ford, but he would be able to accomplish more if he set his total cash compensation at the average full time UAW employee’s level and put the management on the exact same benefits program as the rank and file. Then he could lead by example instead of simply bullying from power.
Gee. Still feeling the same way about Mulally and the quality of his “management” four years hence?
Mulally saved North American taxpayers at least $25B bailout. Now people question his salary at $25M that’s paid, willingly, by his employer?
Yes, wsn…that’s exactly right.
Big Al is talking out of both sides of his mouth. He told Congress that, in regards to his compensation, he was ‘fine where he was at’…then he says that Ford needs these concessions (you know, the same ones that the BANKRUPT companies got) to remain competitive, but NOW, he is claiming that Ford just made a billion dollars in the third quarter.
Big Al should put up or shut up. If he wants his employees to take a pay cut…..then he should too. He could survive on $500K a year. 25 million a year is disgusting.
And don’t get mad at the employees are simply following in the same footsteps as their CEO. If Big Al can say he’s fine where he’s at……so can the employees.
Lead by example right?
Mulally is worth EVERY SINGLE one of those 25 Million.
Sorry, you want talent? You gotta pay for it.
Jerome10 +1: Mulally is worth his money.
@Z71_Silvy, -1. Let Mulally fix the patient. This requires some temporary concessions by the UAW. There will be plenty of time for the UAW in the future to suck the cow dry and get Ford right back into financial trouble. Mulally is worth the money.
Tell me who in a america is worth more money then Mulally? I’d gladly give him his 25 million when he is in charge of billions of dollars turnaround for Ford. To bad GM didn’t hire him about 3 years ago and gave him 25 million. That would be peanuts to what they are going thru now.
Mulally is worth EVERY SINGLE one of those 25 Million.
He may be (although according to Forbes, he makes $9 million in salary and bonus, and $12 million in total compensation.)
But he is not in a credible position to demand sacrifices from others when he earns that much. From the standpoint of corporate culture, he would be better off creating an environment of shared sacrifice, which would include deferring his own fat paycheck to a later time period when results have been clearly achieved. To do otherwise suggests that he is either out of touch with the workforce or else lacking in commitment, neither of which is positive.
1) Mulally’s compensation: 80% of it has been stock options. Options, I might add, that he hasn’t been able to exercise until recently – and it’s still not worth nearly the amount of the “award.”
I’m sick of people misrepresenting stock options in compensation figures. By that measure, I received a $50k bonus in early 2008. But, I couldn’t spend it, it was theoretical. It couldn’t pay off my car or my house. And in 2009 when the first set of options vested, I couldn’t exercise anything because my company lost 60% of its value. I will be lucky if I can exercise them next year.
Mulally’s compensation works the same way. The $50-ish milion he’s been rewarded in stock options is currently probably worth $20M, and only about $1.5M is exercisable right now.
2) You get what you’re worth. There are hundreds of thousands of unemployed people who can do the job that UAW workers are doing on the line. There are fewer who can do the job of skilled trades (which is why they get paid more). There are maybe 3 or 4 people in the U.S. who could have done what Mulally did. If you want to get compensated more, you need to work for it – not just strike for it.
His salary isn’t so much a function of supply and demand of a skilled person capable of running Ford – I honestly believe that the supply of candidates is squeezed so extremely tight by a country-club mentality among our elites. That’s similar to what even Carl Icahn mentioned in his 60 minutes interview – that most major corporate CEOs to him were like the frat president always seen greasing palms but never seen in the library. So that’s an awfully general way of looking at things, and I guess you could disagree with me too if you ever though GW was the most qualified man in the country for commander in chief.
The UAW rank-and-file may need the warm and fuzzy “share the sacrifice” but that is a management call. Big Al decided against it, that ends it. Nothing left to gripe about.
The company president and other executives earns more than the assembly line worker, which the union uses to play the victim card at every opportunity. A better comparison would be the UAW wage package against other minimum-skill, low barrier to entry jobs.
When the wage package is already twice the going average and the company has made it well known they are sick and tired of the strike exposure, it is apparent to everyone but the rank-and-file they are voting keep their job or relocate it elsewhere. By and large they make it clear they do not get the gravity of the situation.
Take a field trip to Ohio to see first hand how it empties offices and factories.
+1 RobertSD
All class issues and wages aside. At the end of the day you are worth what you are worth AFTER you are worth it.
Mully wants a big wage show a big profit. The plant workers want more money/right to strike. Show you are worth it.
I work in the oil industry that is NON-union and as a whole we get paid EXTRA based on Production, Energy, Safety, and others. It works, the money is there BEFORE and paid out AFTER.
So okay, when do we get the Kuga in North America?
Forget the Enrons and the Adelphias of the world,
Michael Eisner and Terry Semel were both much less deserving of what they were paid than Al.
If you’re going to complain, Al’s nowhere near the top of the list. -Even in recent history.
I like the looks of the Kuga. Would cross shop it against a CR-V.