COMMENTARY: Good News Turns Bad for Ford
October 28, 2009
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
Posted by Michelle Krebs at 12:42 PM under Commentary , Featured , Ford | Comments (3) | digg this | Seed Newsvine
UAW still doesn't get it. STARTING wages for a 19 year old high school graduate in a US Ford plant are nearly twice what schoolteachers, firefighters, and police officers earn in much of the country. The skill level required to work in even the most high-tech automotive plant just isn't worth a starting wage of $59k a year.
KIA's new plant in Georgia will start "team members" (assembly line workers) at $31k plus benefits. That's more like it--enough to live on, but not enough to make folks want to sit on their butts and coast for forty years. (Incidentally, school teachers in that county start at $33k, and police officers at $25k).
Posted by: stephen987 | October 28, 2009 at 9:02 AM
And the government put GM and Chrysler into a competitively advantageous situation instead of letting the free market work itself out.
Posted by: greenpony | October 28, 2009 at 10:53 AM
Ford's got 90-odd plants around the world. The Escape/Mariner that Kansas City builds is near the end of its run. The replacement Kuga is slated to be built at Louisville, KY. I don't know what model is planned next for KC, but I would bet Ford has a plan B that doesn't include it. Job security has been moved on to YOUR side of the street. It rests with your ability to adapt to the changes going on around you.
Right down I-435 South from your plant is a good example of another business that didn't keep up with the times; Bannister Mall. A once grand, 180-store mall that is being torn down and a lot of uncertainty about what comes next. People simply went elsewhere for their J. Crew.
Around 11 million vehicles will be sold next year whether or not KC Assembly and the other plants voting NO close. Your jobs as well as the customers will simply go elsewhere.
You have a Right to collective bargaining. It is your Privilege to choose whether or not you are going to be competitive.
Posted by: fulcrumb | October 28, 2009 at 11:53 AM