The UAW has been hearing a lot about how the 2007 labor talks will involve tough concessions. Ballooning health care costs and twice as many retirees as active employees result in a $1,500 per-vehicle disadvantage for the Detroit automakers -- these are among the major factors cited for GM's $10.6 BLN loss in 2005 and Ford's $12.7 BLN loss in 2006. Of course, the UAW will point out that poor management decisions and a lack of new products are every bit as much to blame, which is why recent reports of Ford management bonuses are really hitting home.
This sounds a lot like when Delphi asked a judge to allow the troubled supplier the right to reward management for progress made in bankruptcy proceedings. As that was happening, Delphi CEO Steve Miller told the press that the company would cut line worker pay to as low as $9 per hour to stay competitive. It's a tough situation for both Ford and the union, since Ford needs to retain talent and keep some consistency at the top while the union tries to brace the rank and file for concessions in 2007. Even though Ford does need to hang onto its best employees, it seems like a bad idea to announce possible bonuses on the eve of the worst earnings report in its history. Ford will not decide until March whether to give out the bonuses.
[Source: Detroit News]