Autoblog

Buzz Hargrove isn't mincing words about his opinion of Chrysler LLC's strategy. Calling the decision to send the Magnum and Pacifica models out to pasture and cut shifts and jobs at the Brampton, Ontario plant "stupid," Hargrove has said the Canadian Auto Workers aren't interested in the type of concessions the UAW recently agreed to. While the UAW is allowing new hires to be given a lower pay level, as well as taking on a health care trust fund, the CAW will be having none of that, according to Hargrove.

Cuts were expected, but Chrysler's recent scaling back is more than necessary, according to Hargrove, who counters that what the company's really trying to do is reduce supply in order to drive up demand and keep prices higher. It sounds like a good way to make the automaker profitable, thinning the lineup and trimming overproduction. The problem, according to The Buzz, is that Chrysler's plan is anathema to the long union tradition of providing jobs that pay well enough to allow a solid middle class life for autoworkers. With the pay cuts, Hargrove says that autoworkers will no longer be able to afford to buy the cars they build. The recent fall of the dollar isn't helping matters, and will likely give Chrysler another point to argue when asking for concessions. The Canadian Auto Workers will begin duking it out with Detroit in July, so expect the rhetoric to become even more heated in the months to come.

[Source: Automotive News - Sub. Req.]

The Big Three automakers' massive pension liabilities are well known. To remove that burden, a fund called a VEBA -- voluntary employee beneficiary association -- has been mooted. Automakers would put an agreed upon sum into the VEBA, after which they would be free from further pension obligations. The UAW would be responsible for administering the fund. Goodyear used that exact setup last year to end a strike with the United Steel Workers.

Goodyear, though, put $1 billion cash into the fund. The automakers have suggested using cash and stock. It's been speculated that GM could need to throw $30 billion into a VEBA to be free and clear, and that's a burden that would be more easily handled with cash and stock. Goodyear's stock increased by 25% after the steel workers agreed to the VEBA, but there are no guarantees that that would happen again with GM, Ford, or Chrysler stock.

To get any of this to work, the UAW will have to agree to the VEBA at all, and then convince members to take the cash and stock option, which would require getting everyone to believe that the stock will appreciate quickly enough and steadily enough to keep pace with disbursements. It is the automakers, however, that are really under the gun. To avoid any chance of a strike, automakers need to come to an agreement with the UAW by September 14. That's the date the current agreement expires, and a strike could occur any time afterward.

[Source: Just Auto, sub req'd]

Just because you spend your days in Maranello crafting F430s, 599s, and 612s, listen to them roar through the streets, and watch customers gleefully receive the keys to their new Italian toys doesn't mean life is perfect. Even though Ferrari was just voted as the best place to work in Europe, Ferrari workers have been on strike since March.

The main reason for the strike is that the workers want higher bonuses, among other things. But they are also unhappy because they believe the quality of Ferraris is declining. Fiat is simply trying to make too many of them to maintain the necessary quality standards that would live up to Ferrari's image. The unique thing about this strike: the workers only strike on Saturday, and not all of them at one time. Production has been slowed, but not stopped. Of course, none of the workers on the Formula 1 team are on strike -- that would be unthinkable.

[Source: Automotive News]

Ford's Broadmeadows facility has run out of at least one key component for V8 engines, and will have to shut down until its supplier resolves labor issues. The supplier, Coghlan and Russell Engineering, owes employees a boatload of money - in the order of 1.5 million-plus Austrailian dollars. Because of the outstanding payments, workers are holding out until they get the funds they're due, including pension and unemployment stipends. Ford and Delphi had offered to float Coghlan and Russell for a couple of months, but the workers rejected that proposal because the two companies would not cover pensions and unemployment obligations, citing the precedent it would set. The two-month loan would have given C&R time to examine a plan for getting out of trouble, as well as giving the automakers time to explore alternate suppliers.

Since an agreement could not be achieved, Ford and possibly GM production will be impacted. Both Holden and Ford have not been having an easy time of it in Australia lately. As hot as we are for their cars -- the boot-stomping Falcon and hotly anticipated Zeta platform -- both Holden and Ford have had to lay off workers. Coghlan and Russell is not the only supplier in dire straits, either. A fastener supplier threatened to shut Holden and Ford production down back in August by going bankrupt. Brake supplier PBR stepped in at the last minute and has been propping up that company, keeping production lines moving. If there's not enough parts now, we can only imagine the clamor that would ensue should supply fail just as US sales of the Oz-developed platforms gets underway.

Thanks for the tip, Simon

[Source: GoAuto]

In all of recorded employment history, it has never been a good thing when the boss "requests" that employees talk up the company, especially when non-employees know that those workers are operating under orders. Nevertheless, that is exactly the road Ford appears to have taken as part of the "Way Forward," asking each employee to become a "walking advertisement" for the blue oval.

Ford's Executive Director of Automotive Communications, Ray Day, petitioned employees in a webcast earlier this week, and that was followed by an e-mail to managers from Mark Fields, president of Ford's Americas group. The mission, should they choose to accept it, is to say good things about the company to absolutely everyone. Fields wrote, "An improving reputation leads to higher purchase consideration among our customers and, ultimately, more vehicle sales. . . . We need to take this role very seriously as we speak with our co-workers, our neighbors and everyone with whom we associate." He even went so far as to urge employees to speak with "a more confident tone of voice."

While we can understand the intent, we haven't yet heard of employees who enjoy being told to be cheerful. Such a step would also seem unnecessary: Ford's vehicles and future look more promising than they did just a few months ago. And let's face it, considering the situation he parachuted into, we are still in the infancy of Mulally's turnaround plan. But surely Mulally was hired (and paid like Croesus) to shepherd the development of models that speak for themselves, not to lead a team of employees that have to be commanded to speak in spite of them.

[Source: Detroit News]

Ford announced today that it will be cracking open the coffers to pay out a bonus to every single one of its salaried and hourly workers in the U.S. and Canada, a number that now stands between 120,000 and 128,000 people. According to Automotive News, the bonuses will range from $300 to $800 for nonmanagers, while management will get a little more (isn't that always the way?). Ford has stated the bonuses are meant to boost morale and recognize the hard work of the entire Ford family to reduce costs, improve quality and pair down the ranks.

The one question that has to be asked is where or not Ford can really afford this right now. If we were to assume the least expensive scenario of the automaker paying 120,000 workers a $300 bonus, the tally would come to $36 million. That's the least expensive scenario, which is a gross underestimate since there could be up to 128,000 eligible for the bonuses that range up to $800 and even more for managers. Morale is certainly important, don't get us wrong, but perhaps such a large payout during these tough times will actually shake the morale of those workers left who believe their leaders aren't making the right decisions. It's something to think about.

[Source: Automotive News]

Word has just come across the wire that Nissan will be offering a "voluntary transition program" to all of its hourly employees working in either its Smyrna or Dechard manufacturing plants in Tennessee. These are effectively buyouts, which can net an hourly worker a lump sum of $45,000 and a bonus $500 for each year of service. It's certainly not the sweet deal offered to members of the UAW who work for General Motors and Ford, but the offer could help Nissan reduce the rank and file of its relatively young and non-union work force in North America. For whatever reason, the offer is only being made to employees at these two plants in Tennessee. The Smyrna plant employs about 6,700 people, though some are surely salaried, and produces the Altima, Frontier, Maxima, Xterra and Pathfinder. The Dechard plant only employs 1,400 people and produces many of Nissan's engines, including the glorious VQ 3.5L V6. This news is pretty fresh, so we'll keep our ears peeled for reaction from the auto pundits.

[Source: Jalopnik]

While more and more import brands have opened up producton facilities in the U.S., a study performed by The Level Field Institute, a domestic industry promotion group (that's an important point, right there), found that domestic automakers (which includes General Motors, Ford and the Chrysler Group) support 2.5 more jobs for each vehicle they build in the U.S. than their import competitors. The study projects the number of jobs both groups will support in 2007, which include both blue- and white-collar jobs, and while domestic automakers will likely shed around 42,750 jobs this year, they will still be responsible for the paychecks of 378,250 workers. While import brands will add around 3,000 jobs to their payrolls in 2007, in total they will only be supporting 106,000 workers. One of the main reasons for this disparity is that while more and more import brands are building their vehicles in the U.S., much if not all of the development work takes place in their lands of origin.

The Level Field Institute is an orginization founded by retirees of GM, Ford and Chrysler and their suppliers. While one may question the report's outcome based on LFI's apparent loyalties, the group is open about its methadology and sources, which they reveal in detail here. You can check out the report in full by viewing the PDF file.

Thanks for the tip, Don!

[Source: The Level Field Institute via the Detroit Free Press]

The protests are said to potentially impact the launch of the Opel Corsa, a subcompact product that is key to GM's European model line-up. GM workers in Western Europe are said to be deeply concerned about the potential for their assembly jobs moving to lower-cost sites towards the east, and GM has also stated that it will be bringing over additional product from South Korea.  

[Source: Reuters]