I am watching the evolution of the American automotive industry from combustion engine driven vehicles to electric driven vehicles. It is interesting to hear about all the potential blood to be spilled as management eventually whacks labor and plants to make the move from combustion to electric vehicles. It is inevitable as a new workforce must be trained and the old one phased out as the vroom-vroom is no longer manufactured. By no means should this have been so drastic. The one thing automotive has never learned is to phase massive technology interventions into its business model. It is always an oh crap moment, we are late to the game and then they over-do.
So, as a result of it’s delayed response to EV technology, Ford is running two business models. One for the old combustion business and the other for the newer EV business. If you have been keeping track of our thoughts, you should know by now, the newer vehicles are going to draw against materials which are limited in abundance. As their availability decreases costs and the resulting prices will increase. We presented some of the issues here: “Role of Critical Minerals in Clean Energy Transitions,” Angry Bear as detailed by the International Energy Agency (IEA). Keep in mind an 1800-2000 lb, battery in a Ford Lighting to satisfy a buyer’s “vanity” is not a solution to energy and resource conservation. It is going down the same path as we did with the old technology. Three points are expressed here:
Gettelfinger’s cost of Labor coincides with my knowledge base in manufacturing consulting. Labor was not the issues since the sixties. Ford’s or Jim Farley’s plan is to gut the salaried workers. Ford is obviously running two businesses to catch up with what they should have started to do a decade or so ago. It would have been an easier transition. Typical . . . Those laid off engineers will find new jobs like I did. Ford’s proposed UAW contract is the goodby kiss to Labor and don’t let the door hit you in the butt on the way out.
The Gov. should force automotive to offer training programs for an easier transition the same as they did in 2008. Labor is and was not the issue. Profit and bonus-oriented management and executives are the drivers of the failure to change. Anyways, enjoy the read.
Testimony of Ron Gettelfinger President Internation Union, United Automotive, Aerospace & Agricultural Workers of America (UAW), senate.gov. December 4, 2008
Ron Gettelfinger: But the UAW vigorously opposes any attempt to make workers and retirees the scapegoats and to make them shoulder the entire burden of any restructuring. Wages and benefits only make up 10 percent of the costs of the domestic auto companies. So, the current difficulties facing the Detroit-based auto companies cannot be blamed on workers and retirees.
(AB: I was listening to his testimony to Congress at the time. Gettelfinger took commercial flights to Washington D.C. while auto execs flew in their private jets. Congress was angry with the auto execs.)
Contrary to an often-repeated myth, UAW members at GM, Ford and Chrysler are not paid $73 an hour.
The truth is, wages for UAW members range from about $14 per hour for newly hired workers to $28 per hour for assemblers. The $73 an hour figure is outdated and inaccurate. It includes not only the costs of health care, pensions and other compensation for current workers, but also includes the costs of pensions and health care for all of the retired workers, spread out over the active workforce. Obviously, active workers do not receive any of this compensation, so it is simply not accurate to describe it as part of their “earnings.” Furthermore, as previously indicated, the overall labor costs at the Detroit-based auto companies were dramatically lowered by the changes in the 2005 and 2007 contracts, which largely or completely eliminated the gap with the foreign transplant operations.
“Ford Plans to Gut Workforce, Cut Thousands” – 24/7 Wall St. (247wallst.com), Douglas A. McIntyre, July 21, 2022
Gasoline or electric is the question for product. Ford could take a gradual change to electric from gasoline. It does not appear to be in the cards for Ford CEO Jim Farley. The Ford CEO wants to
get a jump on technology and be a leader in improving the environment (AB: adjusted) improve Ford margins according to “24/7 Wall St. And they are going to do this how? Ford Motor Co. (NYSE: F) will cut either 4,000 or 8,000 salaried workers according to the Wall Street Journal. This cut is “part” of a plan to eliminate “$3 billion in annual costs by 2026.” Costs deriving from a Dearborn-based salaried workforce.
The cuts would target functions across Ford’s business, including engineering, marketing and sales and corporate functions, the people said. Many of the cuts, which could include buyouts and early retirements, are targeted at employees who work on internal-combustion-engine vehicles, as Ford focuses on growing in electric cars.
AB: Ford has no choice but to catch up. It dilly-dallied around for far too long which they also did with introducing smaller and/or more efficient cars previously. Going to college for my BA, I was driving a Datsun 510 with a Borg-Warner 3-speed transmission during the oil embargo. A great little boxy-tank (30mpg). Again, US OEMs are following the profit motive and playing catchup.
Ford’s UAW Contract Offer Includes Pay Increases, Tiers Eliminated, DBusiness Magazine, Jim Stickford.
Ford Motor Co. in Dearborn has presented its latest labor contract proposal to the United Auto Workers (UAW) for consideration.
After extensive negotiations, Ford’s contract would provide its hourly employees with 15 percent guaranteed combined wage increases and lump sums, and improved benefits over the life of the contract, according to the company.
Wages (including overtime) and lump sum bonuses for Ford’s UAW-represented hourly workers would increase from $78,000 on average in 2022 to $92,000 in the first year of the contract.
On top of $92,000 in wages and bonuses, workers would receive health care coverage worth $17,500 and other benefits worth an additional $20,500 in the first year. Health care for permanent UAW-represented hourly employees would continue to rank in the top 1 percent of all employer-sponsored medical plans for lowest employee cost sharing. Ford CEO Jim Farley . . .
“Overall, this offer is significantly better than what Ford executives estimate workers earn at Tesla and foreign automakers operating in the U.S.”
Full-time permanent Ford employees at the top wage rate could be paid $98,000 – from wages, cost-of-living adjustment bonus, ratification bonus, profit sharing, and overtime – in the first year alone. Farley . . .
“This would be an important deal for our workers, and it would allow for the continuation of Ford’s unique position as the most American automaker giving us the flexibility we need within our manufacturing footprint to respond to customer demand as the industry transforms. This offer would also allow Ford to compete, invest in new products, grow, and share that future success with our employees through profit sharing.
“The contract is meant to create opportunity for every UAW worker to build a career at Ford and to become a full-time permanent Ford employee with wages and benefits that come with it.” (AB: I wonder what that means?).
According to Farley, the offer fully eliminates wage tiers so all employees can achieve industry-leading wages, accelerates the grow-in period to reach the top wage rate by 25 percent, delivers a 20 percent raise for temporary employees, and extends to temporary employees the same ratification bonus that permanent employees receive. He notes . . .
“Only 2 percent to 3 percent of Ford’s hourly workforce are temporary employees, by far the lowest among the Big Three.”
Ford says it will not make a deal that endangers the company’s ability to invest, grow, and share profits with its employees.
“That would mortgage our future and would be harmful to everyone with a stake in Ford, including our valued UAW workers. Bottom line, we believe there is a path to succeed together in what is the most competitive and fast-changing era in the history of the American auto industry.”
AB: The company has already mortgaged itself and Labor with the direction it has taken. Tine will tell if the made the right choice in model design and 1800 to 2000 lb. batteries.