Ford to slash production by 21%

[ekpolk]

Hoot:

Well, I have to give everyone here credit. This is about the only forum I've seen where such a discussion wouldn't have devolved into a complete, substance-free, mud slinging exercise.

Thank you for having done your part as well.

I guess I just don't see unions as the evil that many do, though I'm certainly not in the class of folks who would take that view because of their own self-interest.

As I see it, there would be no need (or demand) for unions, and thus no opportunity for those who've used unions to further their own selfish ends, if employers had taken the long view and treated their labor as something more than an annoyingly expensive consumable. Hello in the boardroom -- there is a difference between a human employee and a box of hose clamps.

What, you mean we're not determine the meaning of life as we thrash away here on BITOG???

 

[Volvohead]

quote:

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Originally posted by Volvohead:
Here's another clue to the puzzle for the economics students:

The American business model has always been a purely microeconomic creature of very narrow scope and purpose. What fundamental change, substantially occuring after the Second World War, allowed that narrow microeconomic model to finally directly affect macroeconomic scale changes? And more importantly, what essential macroeconomic element does the American business model ignore?

Students of Keynesian theory, of Galbraith and of Marx will readily know the answers.

---

Here are the answers:

1. The evolution of the multinational corporation on a mass scale.

2. Maintenance of the home country market and macrodemand.

This is not a union v. managagement issue. The above sea change in corporate operation has eliminated the traditional leverage of unions. The corporations now move production to a cheaper labor source elsewhere. But this action, while beneficial initially to the corporation, disrupts the natural supports to the local market demand. The share of newly created capital flowing back into the home economy declines and its balance shifts to the more wealthy. To maintain demand eventually requires increased real debt and consumption of capitalized assets. We are seeing that now, with accelerating financing of trade and governmental fiscal deficits. Both have been persisting for decades, but it is now slowly reaching the tipping point. In farming terms, we are now eating the seed corn and borrowing from the crop of others, as the harvests here shrink. It has become an issue of corporate governance and corporate regulation.

The present Ford example is somewhat different, and more involves corporate mismanagement in comprehending demand patterns over many years.

 

[X72]

I feel that this debate about who is at fault is colored by how close you are to the situation and by who you identify with and feel sympathy for.

I see this as the same pattern of death and renewal that is part of capitalism and is what people hate about capitalism, which is what leads to regulation to make the economy less laissez-faire and more "fair." Of course these regulations have unintended negative consequences, but these negative consequences are usually seen as better than no or lighter regulation by most people.

This is the same pattern that has happened in the airline industry (just think Eastern and PanAm). Ford, GM, and Chrysler have older and more expensive workforces than the transplants. Since health and retirement benefits are paid for by companies in the US, the Big 3 have a higher hurdle than the transplants, who have younger and less expensive workforces, and are operating in newer facilities.

All talk of making better cars is like the chicken and egg question; which comes first better cars or more profitability. My argument is that they would make better cars if the Big 3 had the same money to invest in the vehicles as the transplants. But even if their cars were equally as good today, the Big 3 will continue to pay for their sins of the past decades for many years to come as buyers of these products take an entire generation, at least, to forgive their sins.

My prediction is that the political push from the Big 3 is not for a straight bailout, but a national healthcare plan and national pension plan that they feel would even the playing field with the transplants because it would go a long way to shrink their competitive disadvantage; just think if they could off-load their health care insurance and pension costs. But even where this to be enacted, the Big 3 still are at a disadvantage because consumer beliefs of quality are not in their favor.

 

[ekpolk]

I guess this is where this thread took a headlong plunge into bashing the unions.

quote:

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Originally posted by Hermann:
The only way Ford and GM will ultimatly survive is to break the union. Trust me it will happen sooner or later, whether Ford is running Ford, or Toyota is running Ford.

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As I've noted previously, unions and their leaders, have some very serious problems of their own. But let's face it, you could kick out the union labor force today and replace them with uninsured, minimum wage people, and Ford and GM are still ultimately going down if they persist in trying to convince the buyers in the mainstream market that purchasing an F-150, Excursion, Expedition, or Explorer is a "bold move". Maybe I'm going on a limb here, but I'll predict that fuel costs are headed only one direction, and we all know which way that is.

 

[1999nick]

quote:

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Originally posted by LarryL:
Would Ford's sales would go up if more employees had enough confidence in the products to buy one for themselves. If these union workers are not buying Fords, do they know something we don't. If one worker does a better job, does it get him/her anything but grief? After all, it's a union job. Isn't that the union motto, same wage for everyone, but pay your dues.

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Why should Ford's union workers buy the mid-priced Ford Fusion, the model whose price is probably most appropriate for them? Its made in Mexico. Maybe that's why, at last count, the old Taurus was still selling better than the Fusion.

 

[CBDFrontier06]

My brother was telling me about some 'rules' they have at the factories...that if you drive something other than a Ford family vehicle to work, you have to park in a separate, further employee lot than Ford drivers.

I told him beyond the obvious discriminitory content of that rule, I would be relegated to the back lot because Ford just doesn't make anything that suits my style or needs. I'm sure even a 'lifer' teamster isn't gonna drop $20K - $30K on a vehicle that he / she doesn't like. People's taste in vehicles are different, which is why there are so many different models on the roads today. It's outrageous to expect EVERY Ford employee to find something in the lineup they like or can afford. My brother has been with Ford since 1977...but his first brand new car purchase was a 1986 Monte Carlo SS. His work truck is a 79 Ford pickup, so he drove that to work. When I questioned him about his choice in cars, he told me he's loved the SS since he first laid eyes on one, and he'd rather stick needles in his eyes than drive a Thunderbird Turbo Coupe. Everyone...even Ford employees..are entitled to their own individual tastes in cars.

 

[1sttruck]

"But let's face it, you could kick out the union labor force today and replace them with uninsured, minimum wage people, and Ford and GM are still ultimately going down if they persist in trying to convince the buyers in the mainstream market that purchasing an F-150, Excursion, Expedition, or Explorer is a "bold move"."

Yup. An impression that I have is that a lot of people don't know how products are designed and manufactured, and/or how a large multi-national manufacturing corporation is run. Hence the simplistic (polite for ignorant, which can hopefully be cured) 'it's the union's fault' whenever domestic auto companies stumble.

 

[javacontour]

FWIW,

I don't think it's the unions fault. What I do think is the UAW has not been much help to the domestic automakers.

One of the biggest costs for these carmakers is retirement and healthcare costs for retirees.

Those are basically benefits negotiated by the unions.

Nothing wrong with that. If GM, Ford and DC were willing to sign, then they have to live with the outcome.

What about banked jobs? How much these guys get paid to NOT work. Isn't it something like 90%+ of their salary.

Again, the union asked, the automaker said yes.

Is it the unions fault the carmakers said yes.

Nope!

I don't blame them for asking, after watching the golden parachutes leave many other businesses.

I certainly understand why they asked for such benefits.

What I don't understand is why did the automakers say yes?

 

[NJC]

quote:

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Originally posted by ekpolk:
Ford painted itself squarely into a corner with their own greedy and foolish product line decisions. It's a real shame that hard-working "little guys" are the ones who are going to bear the brunt for management's shortsighted idiocy.

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This seems right.

 

[Win]

[[/qb][/QUOTE]Why should Ford's union workers buy the mid-priced Ford Fusion, the model whose price is probably most appropriate for them? Its made in Mexico. [/QB][/QUOTE]

I had a Ford Fusion SE rental a couple of weeks ago, and, having read here that the car is Mexican made, looked all over it for some evidence as to it's place of manufacture. I never found anything on the car to indicate it was Mexican made.

It was actually a pretty nice little car.

 

[1sttruck]

Another fumble that Ford made in it's bread and butter products, the F series trucks, was the new diesel in it's 3/4 ton and larger trucks. GM has a decent offering in it's diesel trucks, the Allison tranny seems to be a big draw, and Dodge has done well with the Cummins engine, but Ford just threw away market share when their new engine had a lot of teething problems. When we moved up here in the Pacific NW it was pretty much Ford country, at least outside of the cities, but now one sees more GMs and Dodges, lots more Dodges. I've run across articles where retired couples finally bought their dream truck to haul their trailer for travelling, and ended up swearing that they'd never buy another Ford after all of the troubles that they had.

 

[cousincletus]

I think the problem with organized labor is that there are too many politicians in corporate America's back pocket. In general, our representatives don't look out for the middle class, but big business and their interests. That's why so many mfg. jobs are leaving the country. There should be import tariffs to level out the playing field. Keep in mind there will never be a shortage of cheap labor, and if we want to keep a large middle class we need to protect our workers. If we don't, it will be a downward spiral since there will be fewer products that workers can afford. Capitalism needs to be kept in check. Ford's problem is high gas prices. Hopefully they can get some small cars out there that people will prefer over the foreign competetion.

 

[labman]

Ford and GM are stupid for building profitable trucks people wanted? Why not push what you make money on?

And Vance Packard was wrong, you can't shove stuff people don't want down their throat.

Now, are people stupid for buying big trucks they don't need?

When you start kicking unions around, forget the UAW, the destructive ones are the ABA and AMA.

 

[ScottB]

You can't keep a company as big as Ford/GM only with truck sales - unless you dump all the ridiculous lines of vehicles people don't buy and only sell trucks.
But, Japan is moving pretty well into that market too, so I wouldn't do that either.

 

[Volvohead]

quote:

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Originally posted by labman:
Ford and GM are stupid for building profitable trucks people wanted? Why not push what you make money on?

And Vance Packard was wrong, you can't shove stuff people don't want down their throat.

Now, are people stupid for buying big trucks they don't need?

When you start kicking unions around, forget the UAW, the destructive ones are the ABA and AMA.

---

There's nothing wrong with selling what people want. Ford and GM are superb small truck builders, the best in the world in my opinion. The U.S. manufacturer problem is failing to anticipate market shifts and plan for them accordingly (something the Japanese are very good at). And both were caught with their pants down - again - when the price of gasoline spiked. Anyone with a basic understanding of international economics could see this latest demand surge coming for at least three years. Every automaker employs people to see this stuff coming.

Now folks are running from those big thirsty trucks like the plague. And at $100 a fill, I can't blame them. But GM and Ford apparently developed nothing palatable in the pipeline to replace them. GM in particular rolled out yet another new line of larger trucks in the face of it and both dumped or underfunded programs that might have helped them out. Now they both have to ride out the storm. Again. You think they would have figured out the lessons after '73. Somehow, I can't blame the UAW for those particular decisions. But they are not completely blameless, either.

I think Ford will be lucky to get through this one. They're in really bad shape and don't have the ready cash reserves GM has. At a minimum, part of the PAG will likely have to be sold off.

Your last statement is simply nonsense. Sorry to be so direct about it.

 

[javacontour]

Ekpolk prompted me to think about something.

I think another way that labor has tied the hands of the domestic automakers is in limiting their flexibility.

A couple of key advantages we hear of regarding foreign carmakers vs the domestic carmakers is in the flexibility of what they can do with the plants and the workers.

True, labor has little to do with the plant flexibility issue, but has a lot to do with labor.

When you look at how much labor goes into building each car, there is more labor going into the average domestic car, than the average Japanese car.

http://www.freep.com/apps/pbcs.dll/article?AID=200660602002

http://www.latimes.com/classified/a...,7062185.story?coll=la-classifieds-autos-news

One can't say that is all labor or all plant design. I'm sure each of those goes into the mix.

I believe the articles are measuring labor times for North American manufacturing facilities.

So for domestic automakers, more labor hours per car produced spells more workers, which, given the benefits package, more potential retirees and healthcare recipients down the road.

FWIW, I've been begging any carmaker to build a $20-25K RWD compact/mid-sized 4 door sedan with a large four and available 6 cylinder (inline preferably) engine with an available manually tranny that gets 25+ MPG and will be as reliable and rattle free as my 13 year old 1994 Geo Prizm with 190K miles on it.

But I haven't seen that happen.

I suppose Ford could do that with the current Mustang platform, making a 7/8's or 3/4's scale sedan platform using the Duratec 2.3L and 3.0 or 3.5L engines.

Or perhaps an Escape like vehicle platform that is RWD or AWD, and make SUV and car variants.

BMW already gets great fuel economy out of their I6 engines (when not driven hard).

So why can't Ford make a reliable, economy based BMW killer.

They have produced so many cars that compare favorable to BMWs, but then can't sell them because they are mismarketed (such as the Contour which often was optioned to cost MORE than the larger Taurus which Ford wanted to sell for bragging rights over the Camry and Accord.) And of course, there are the quality perceptions.

Yes, these are design and management issues.

I'm all over the board here, so I summarize by saying I can still find plenty to blame on both sides of this.

You can bring in the marketing folks as well, who are they trying to reach?

Who knows where more money is spent, advertising and marketing, or design and engineering?

I believe that it's probably ads and marketing, but I'm not sure those numbers are available.

I know warranty costs are. Toyota and Honda just beat up on the domestic car makers here:

http://www.warrantyweek.com/archive/ww20060620.html

Toyota is pretty consistent at 1.3% of auto sales revenue going to warranty repairs.

Interesting, demonstrating how complex these issue are, and yes, I realize the editorial is opinion. But what were the pressures that encouraged GM to consider closing it's plant that produced the fewest numbers of defects / 100 vehicles?

http://www.thetruthaboutcars.com/?p=1709

As one who is concerned about reliability, I have to wonder if GM is comitted to quality when the close the highest quality plant.

 

[labman]

Yeah, the NEA is a big problem too.

 

[Volvohead]

quote:

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Originally posted by ekpolk:
. . . The concept of defensive driving is understood and accepted by most drivers, why not by those who drive our biggest corporate entities?

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Now we both know the answer to that one.

It's called GREED.

 

[ZeroDynamic]

I love Oil and debate. I actually just research a debate case to use justify what is happening to the American automaker. (I compete competitvely in college academic debate)

You can weigh costs, marketing, unions, all that.. but look at what is happening now. Ford and GM have been cutting production because they are not selling. Why are they not selling? Because times have changed. Look at what happened right after WWII. There was no competition! That allowed the Big 3 to grow at a dynamic pace without any resistance.. in essence, if you wanted a car, you had to buy American.

Then look at stagnation and the gas prices of the late 70's and early 80's with opec. What did every other automaker do? they made small compact commuter cars. (**** the average engine size for a compact car in japan was 500cc! and that could haul 4 ppl and luggage around!) What did america do? We took big v8 engines and put restrictor plates on them. There was no hybrid techonology back then. We America tried to copy the small japanese engines, (i.e. pinto, yugo, etc.) what happened? They were pieces of junk! Why? Because they knew Americans would always fall back on good ole American v8 engines, and it wouldn't matter if gas was expensive, there still was no competition.

Fast forward to 1999/2000. Gas was still pretty cheap then, but what did honda do? They made the first hybrid, the insight. Why? Because Japan simply doesnt have the resources that USA has. (Oil buying power) That was 6 years ago it came to America! You would think that American autos would of made SOMETHING by 2002. Or, lets look at Argentina and E85 ethanol. They no longer have oil dependency, and they did it before most of us ever even heard of E85.

Now lets look to today. American auto manufactuers are trying to run the same playbook, but the problem is, they now have competiton. They ignored the Japanese, the Europeans, and now the Koreans, (soon to include the chinese!) and are starting to fail. Why did hyundai, nissan, toyota, honda, bmw, and mercedes build plants in America? Because now the cars they supply to the American consumer will no longer be imported. THEY WILL BE BULIT BY THE MEN AND WOMEN FORD AND GM LAID OFF.

As said earlier, they only way American auto manufactuers can come back is if they follow the import model. How many fords do you see in Germany? Or japan? They need to listen to the american consumer first, then adapt to other nations as they expand using the wealth they made selling to americans. They should of done that while the other motor companies were still in their infacy.

I personally drive a BMW. I love the build quality, and i feel i get the most out of my dollar by driving it. I wouldn't object to purchasing american, however, it must be comparable to what i would expect from my BMW. If ford and gm cant learn that, they should go out of business.

 

[My442]

I have bought a number of new Fords:

87 pick up, 95 pick up, 96 Explorer, 99 pick up, 2004 Mustang (all new)

I have had great luck with them, although the dealer service departments are not too swift.