Episode 422 – China Urges Better Labor Relations, Cash or Stock?, Fisker Misses Deadline

June 28th, 2010 at 12:00pm

Runtime 9:06

China’s Premier, Wen Jiabao, is urging companies and local governments to build more “harmonious employment relations.” Ford has to make a big payment into the UAW’s retiree health-care trust and Wall Street is very interested if it will pay in cash or in stock. Fisker is not going to meet the production timetable it announced last fall. All that and more, plus a look at an advanced new tire-pressure monitoring system from Continental.

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Transcript and Story Links after the jump . . .

It’s Monday, June 28, 2010 and here’s the news.

Ford has to make a big payment into the UAW’s retiree health-care trust and Wall Street is very interested if it will pay in cash or in stock. Ford needs to pay $859 million into the VEBA trust, but may want to preserve cash and pay with stock instead. According to Bloomberg, Wall Street believes it will pay in stock if it thinks the price of those shares are not going anywhere. If it thinks its stock is still going up, it will pay in cash. I would add that if Ford pays the union with stock, share prices will probably drop more. It’s the psychology of the market. Even though the shares would only represent 1.5 percent dilution, the company would be sending a signal that the future looks weaker than before.

Even though the U.S. financial system faces new regulations, car dealers will pretty much be exempt from the new rules. The Detroit News reports that dealers successfully lobbied Congress, saying they weren’t the cause of the financial collapse and that more regulations on them wasn’t going to fix anything. Consumer groups wanted a new regulatory agency to cover dealers because they write $250 billion in loans every year, which is nearly 80 percent of all car loans.

More about that labor unrest in China. The Chinese Premier, Wen Jiabao, is urging companies and local governments to take more effective measures in addressing labor cost issues and to build more “harmonious employment relations.” According to Bloomberg, China’s cost of labor is expected to hit 30 percent of its gross domestic product over the next decade, double what it is right now.

And speaking of labor unrest, Kia’s workers in South Korea voted to go on strike last Friday.

Ford’s redesigned 2011 Explorer hasn’t even debuted yet, but the company keeps announcing more of the technology and safety features it’s going to have. Months back it was inflatable seatbelts, then, a few weeks ago Ford detailed the SUV’s new terrain management system – complete with a Land Rover-inspired control knob. Now the company is talking about something called “Curve Control.” According to the Detroit News, this safety feature is an add-on designed to complement the existing stability control system. It’s designed to detect oversteer AND understeer, and then use individual wheel braking to correct the vehicle’s path to help keep it on the road. According to Ford, it’ll be the first system of its kind on the market. This patent-pending technology has been in development for about a year and a half

In electric-vehicle news, the Detroit News reports that Fisker is NOT going to meet the production timetable it announced last fall. The $88,000 Karma plug-in sports car was scheduled to go on sale this summer, but wouldn’t you know it, it’s not – NotGonnaHappen.com to quote Peter De Lorenzo, the Autoextremist. A company spokesman says a handful of customers should get their cars by the end of this year and that full production is expected to start sometime in the first quarter of next year. He also said that technical issues are NOT to blame for the delay; instead, the company has had trouble raising money from private equity markets. I would point out Fisker got over half a billion dollars in loans from the Energy Department, but needs to raise more money because that government money can only pay for 80 percent of the cost of a project.

Coming up next, a look at an advanced new tire-pressure monitoring system. We’ll be back right after this.

Tire-pressure monitors are nothing new. In fact, they’ve been mandatory on all new vehicles sold in the U.S. since 2007. On our recent trip to Germany, Continental showed us a sophisticated new type of sensor that it’s developing.

Conti is pushing the boundaries of what these little pressure sensors can do. Relocating them from the rim to the cavity offers engineers a world of new data about what your tires are doing as they go down the road. Of course safety is the company’s main focus with this research, but there are other benefits as well – like convenience.

Ok, big deal you’re saying. The car knows when it’s got the right amount of air in its tires. That’s the whole idea behind these systems, right? True, but this setup goes beyond that. It can monitor pressure in REAL TIME. If you’re topping-off a low tire for instance, it can alert you with a chirp from the horn and a flash of the hazard lights when you’ve hit the proper level. There’s no need for you to use a separate pressure gauge.

The company also demonstrated a slick iPhone/iPod Touch application that dynamically shows the pressure of each tire. Again, if you’re filling one up you can watch your progress on the screen and know exactly when it’s topped off.

Tire-pressure monitoring systems are not mandatory across the globe yet, but more and more countries will require them in the coming years. Look for Continental’s Intelligent Tire Monitoring System to launch in 2013.

And hey, stay tuned, there’s a lot more to Conti than just tires and pressure sensors. We’ll have more reports from our trip to Germany in the coming weeks.

Tonight is our Open Line discussion where we open our phone lines, and any automotive topic you want to tackle is up for grabs. Michelle Naranjo has a report of some of the topics tackled on last week’s show.

Open Line starts tonight at 8 p.m. Eastern Time, 5 p.m. Pacific. Call in at 1-218-936-6581 and enter the PIN 12870. Visit our website to get more details on how you can participate.

And that’s it for the most important news in the global automotive industry. Thanks for watching, we’ll see you tomorrow.

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40 Comments to “Episode 422 – China Urges Better Labor Relations, Cash or Stock?, Fisker Misses Deadline”

  1. pedro fernandez Says:

    More and more electronics in cars = more complications and higher repair bills, have you seen what a replacement tire monitor sensor costs? and what the hell does it do, if you get a blow out, it ain’t gonna help you. For that you need run-flat tires, now that’s real peace of mind.

  2. HtG Says:

    when electronics let a driver know that they’re blocking the left lane, I’ll hold my peace Pedro.

  3. pedro fernandez Says:

    ps. regarding Conti tires, every one I know that has owned a set has complained that they wear out too soon, maybe they should work on that problem and never mind all the electronic bs.

  4. jesse Says:

    CURVE CONTROL??Sounds like electronic stability control to me..which, by the way,the competition has had on cars for years now.At least somebody in Detroit is paying attention to the market.

  5. LEX Says:

    I believe Ford would be better off paying the $859 million to the VEBA Trust in cash and not stock. Paying in stock will dilute is stock price. Cash is King and Ford will attract more customers away from Government Motors and Chrysler with this show on strenght.

  6. Kit Gerhart Says:

    pedro fernandez Says:
    June 28th, 2010 at 1:00 pm

    “ps. regarding Conti tires, every one I know that has owned a set has complained that they wear out too soon, maybe they should work on that problem and never mind all the electronic bs.”

    My ’06 Malibu Maxx came with Conti tires, and they are doing ok. I’ve rotated them once, at about 26K miles, and the car now has 43K. The tires should go ~55-60K as long as the car stays in alignment.

    Yeh, I don’t rotate my tires nearly as often as is generally suggested, but my theory is that as long as the car is in good alignment, you should only need to rotate tires once during their life time. I rotated them front to back, leaving them on the same side of the car, and will end up replacing them with about the same number of miles on the front and back.

  7. pedro fernandez Says:

    Kit, I guess you’ve been luck with those tires or you drive gently, they do come in many luxury German cars and you know they get driven hard mostly, but my co-worker got a set for his Camry and they did not last very long.

  8. dcars Says:

    I’ve had issues with “Conti’s” they wear out fast and poor traction when new. I had a tire monitor let me know when my tire was loosing air on the high way. I was glad I had it.

  9. dcars Says:

    GM introduced “StabiliTrak” in 1997.

  10. pedro fernandez Says:

    So now Tesla announced they’re going public with their stock, so you can add investors to the list of folks screwed over by these clueless, govt. backed, jolly green midgets, on that list are also taxpayers and dummies that have either bought or put money down on these overpriced toys.

  11. Salvador G. Says:

    “harmonious employment relations.”
    -Chinese Communist Zen- Ok!

    So is 859 Million – So Ford Motors has to pay all in full?? …by a deadline? Or why can’t Ford pay Half now and half later??

    “monitor pressure in REAL TIME”
    So basically, I could be receiving phone calls from this monitor inside the tires??? …you know, that could be real annoying; specially in the summer.
    – during the day: Phone rings… too much pressure, need to leak air out… At night: Phone rings.. Low pressure needs, tires need more air.

  12. pedro fernandez Says:

    Hello, hello, Salvador, this is your left front tire calling, I’m running low on air, stop immediately and put some air in me, otherwise I will order the computer in the car to shut off your radio and if you refuse to obey I will disable your engine and you won’t be going anywhere. By the way your windshield washer fluid is also low, Sal, you’ve been a bad owner, I’m telling your wife.

  13. GPL Says:

    Re: Continental tire life

    I replaced the ContiTracs on my wife’s Escape at 70k with a fair amount of tread left, though a little thin on the outer shoulder.

    The price of that wear was grip. They didn’t have much, and squealed like excited little girls in corners at anything above pedestrian pace.

    That said, treadlife is last on my list of criteria for quality of a tire. As someone once told me, “A tire with an eighty-thousand mile guarantee is guaranteed to SUCK for eighty-thousand miles.”

  14. Chuck Grenci Says:

    I think Continental has answered a question that nobody asked. Everything new (these days) seems to take a simple process and compound it with electronics so you need to read a manual for something that used to be intuitive. (I’m guessing Ford’s new stability technology is similar in it’s ability to overcomplicate what is already available).

  15. pedro fernandez Says:

    I also remember buying a set of 80k mile tires and they were horrible in the rain, even new, they would hydroplane all over the place. I think you need to compromise between wear and safe handling.

  16. Kit Gerhart Says:

    pedro fernandez Says:
    June 28th, 2010 at 3:42 pm

    “Kit, I guess you’ve been luck with those tires or you drive gently,”

    I drive gently in that I never use full throttle from a standing start. About the only time I “floor it” in the Malibu is when overtaking on two lane roads, but I tend to corner fairly quickly on curvy roads.

    My tires are ContiProContact, and are considered “performance all-season” tires.

  17. Gary Paul Says:

    According to a Detroit News article today:

    “…Stability control cuts the engine’s power and applies the brakes to individual wheels if it senses a driver going off-course. Curve control adds another layer of monitoring and can cut power even more quickly if it senses the SUV isn’t turning as fast as the driver wants it to. Curve control will be able to drop the Explorer’s speed by as much as 10 miles per hour in a second.

    The system will be standard on the Explorer, which comes out late this year….

    …David Champion, senior director of auto testing for Consumer Reports, said he hasn’t tested Ford’s system but has been briefed on it and believes it will be more effective than standard stability control.

    Stability control has its limitations, Champion said. It’s designed to prevent oversteer, which is when the back end loses traction, slides out and may cause the car to spin. But it’s less effective at controlling understeer, which is when the wheels continue to go straight even though the driver wants them to turn.”

    From The Detroit News: http://detnews.com/article/20100628/AUTO01/6280324/1148/rss25#ixzz0sBMJm4hr

    From The Detroit News: http://www.detnews.com/article/20100628/AUTO01/6280324/1148/?source=nletter-auto#ixzz0sBLG0QRD

  18. Salvador G. Says:

    Pedro you sound worse than my mother.

  19. pedro fernandez Says:

    Kit: living in Fla. we could be using summer tires,we don’t need all-season threads, but they’re so damn expensive, I don’t understand why they have to make summer tires ultra-high performance with the premium price that comes with it. Also the worst enemy for tires in this part of the country is the heat that builds up in the asphalt.

  20. HtG Says:

    maybe it has something to do with a performance tire being able to take higher temps that come with high speed. Being in a hot climate also gets a tire hot.

    For the record, I have all season tires, and hate ‘em. Slip and slide so easy.

  21. M Campbell Says:

    LOL at the lack of discussion here about Fisker. Guess the delay isn’t much of a surprise, eh?

    Conti’s were OE on our VW Rabbit and they were freaky scary in the wet. Thankfully they wore out so fast they got replaced with Michelins.

  22. Kit Gerhart Says:

    pedro fernandez Says:
    June 28th, 2010 at 5:47 pm

    “Kit: living in Fla. we could be using summer tires,we don’t need all-season threads, but they’re so damn expensive”

    Car companies use all-season tires as original equipment so they can use the same tires everywhere they sell cars. I suppose summer tires are expensive because they don’t make nearly as many of them, but I, too, would rather have them for their better performance, and probably less road noise.

  23. pedro fernandez Says:

    Has anyone had Pirelli’s ever, they get good reviews at discounttires.com , have a fair price and even have a rebate going on now!

  24. Kit Gerhart Says:

    pedro fernandez Says:
    June 28th, 2010 at 7:27 pm

    “Has anyone had Pirelli’s ever?”

    I had Pirellis on my ’70 Volkswagen Beetle. They had much better traction than the bias ply Firestones that came on the car, but they didn’t last very long.

    I doubt if my experience from 40 years ago has too much correlation with today’s Pirellis, but I guess it might.

  25. C-tech Says:

    The 2005 300C Hemi had Continetals Contitracts as original equipment. These were puncture resistant tires which really worked. They only lasted about 25,000 miles, the ride was great. Later, Goodyear Assurance tires became original equipment in 2006 or 2007 because of complaints of the short life span.

  26. C-tech Says:

    Ford curve control has been on Chrysler minivans for a couple of years now. Big whoop.

  27. Nick Stevens Says:


    The Inventor of both the SWATCH and the “Dumb” (Smart”) died at 82.

    Guess which of the above the obit says not one word about!

  28. Nick Stevens Says:

    I use the manual recommended Michelin All-season tires for my 740iL, all year round in the snowbelt. They have always behaved well, rain, shine or snow, and the car always rides and handles perfectly. I am always amazed how a huge heavy car like this, probably with the original 13 year old suspension etc, with a 120″ wheelbase can take sharp corners as if it is on rails.

    On electronics, they fail far, far less often than mechanical parts, are cheaper to replace, esp. aftermarket, and after 25 years driving dumb econoboxes with not even an RPM meter for my civic hatch 92 I still drive ( it has a .. stupid but good looking spoiler, but no RPM meter!!!), I am 100% FOR them, and as an engineer I wish I had them all these decades!

  29. HtG Says:

    Nick, on auto electronics, what kind of processing power are cars moving towards? I know Intel and ARM Holdings are battling to dominate the mobile internet device space, so I wonder what you’re seeing. So many appliances in our lives are going to get connected to the net, it’s hard to believe Continental is going to be a lonely leader.

  30. HtG Says:

    Nick wrote… but no RPM meter!!!

    My ’02 Civic has no RPM meter either. But I know where the redline is; ~31,63, and 84 in the first three gears. I just rely sound and feel to judge where I am otherwise.

  31. dcars Says:

    I had Pirelli’s tires on my 84 VW Scirocco, they wore out at 12000, they were bald. If your willing to pay you can get some nice quality tires that will last, give good traction, nice ride and are quiet. I buy my tires from “The Tire Rack.” they are an internet company that provides reviews and customer feed back.

  32. Kit Gerhart Says:

    I’ve found that you need to consider Tire Rack’s customer reviews to be written from the viewpoint of racer wannabes. A few years ago I bought some Goodyear Eagle F1 somethingorother tires based on Tire Rack reviews, and was very disappointed. As expected, the tires had very good traction on dry pavement, but they were terribly noisy. There was no mention of this by any of the reviewers. The tires were on a Lexus IS300 Sport Cross hatchback.

  33. pedro fernandez Says:

    When you factor in shipping costs, Tirerack is not such a great buy,but they do have an incredible selection. I find that these member warehouse clubs like Costco have good tires at a fair price and they dont take you to the cleaners with installation fees that on some tire shops can run into close to $100 xtra on a set of four.

  34. Kit Gerhart Says:

    I’m sure it’s a very small part of their business, but Tire Rack sells to “drive in” customers, if you go to South Bend, Indiana. Unless they have moved in the last few years, they are located in one of the old Studebaker factory buildings.

  35. HyundaiSmoke Says:

    Oh of course its the Sohari Plant that has the strike.

    That place is nothing but trouble. KIA needs a quality/wage incentive program. Every time they step quality scores up they get a small but fair raise. Every time quality drops they get a pay cut.

    That plant from what I understand is responsible for a 5-10 Place deficiency in KIA JD Power VDS Scores.

    Oh well their days are numbered at Sohari.

    You have an 84 Scirocco dcars, sweet!!

  36. pedro fernandez Says:

    Why is that plant so bad smoke? is it located in the slums of Korea or is it near the DMZ and the workers there live in fear of the North attacking anytime? which cars are built there by the way?

  37. HyundaiSmoke Says:

    Its the Frequent Strikes, and the quality of the cars. They make the Rio and Sedona. Its an old plant too. I hear its a bitch to tool that place.


    Hyundai Accent and KIA Rio use the same powertrains, but Accent is twice as reliable as Rio.

    That Sedona, well I have never been a Minivan fan at all, and well… for Minivans…..

  38. Kit Gerhart Says:

    It’s too bad the Sedona is poor quality and so-so design, since it is now the “only game in town” if you want a non-extended minivan.

  39. dcars Says:

    When looking at the reviews, check how many miles they have driven on the tires. If it’s only a couple hundred it probably isn’t enough time to evaluate the tires. The Tire Rack has recommended installers with quoted prices “Upfront.” I’ve looked around and they are the best prices in western New York ie Buffalo. But I’m always open to different ideas. I’ve purchased tires for other persons since I talk about cars a lot.

  40. dcars Says:

    My Scirocco is long gone, I got married and had kids. I had to move “up” to station wagons, mini vans and sedans. Oh the humanity!