AD #2469 – Another Bad Look for UAW, Hub Motors Headed for Production, Ford & GM Lost Millions on Mobility
November 1st, 2018 at 11:40am
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Runtime: 6:59
0:32 UAW Uses Non-Union Labor to Build Former President’s House
1:14 Supplier Linamar Partners with Protean Electric
1:49 FCA Reports Good Q3 Earnings
3:03 Hyundai Announces New Design Leader
3:43 Ford & VW Talk AVs & EVs
4:02 Continental Works to Alleviate Traffic Jams
5:03 Ford & GM Lost Millions on Mobility Services
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On today’s show… where there’s smoke there’s fire and there’s a lot of smoke around Volkswagen and Ford right now… the UAW builds a retirement home for its outgoing president using non-union labor… and Hyundai goes for another European to run its design operations. All that and more coming right up on Autoline Daily.
This is Autoline Daily the voice of the automotive industry.
BAD LOOK FOR UAW
Well this sure looks bad for the UAW. The Detroit News reports the union is building a retirement home for former President Dennis Williams using non-union labor. In fact, they may not have pulled a permit for some of the work. On top of that, the construction is going on at the same time the UAW is being investigated by the FBI for lavish spending on fancy trips and luxury items for union executives. The UAW says it hires union labor when it’s available, and that the retirement home is owned by the UAW and not Dennis Williams. But it’s hard to believe the rank and file workers will be satisfied with that explanation.
LINAMAR PARTNERS WITH PROTEAN
Canadian manufacturing company Linamar is forming a partnership with Protean Electric to build hub motors. That’s where electric motors are moved out to where the brakes normally are, just inside the wheel and tire assembly. And they could revolutionize how electric cars are made. Linamar is a well established supplier and it would not enter into this agreement unless it felt confident of getting orders to start building them. The in-wheel motors improve efficiency because they eliminate gearing, transmissions, driveshafts, axles and differentials.
FCA REPORTS GOOD Q3 EARNINGS
Fiat Chrysler Automobiles made some pretty good money over the last three months. It sold over 1.1 million vehicles in the 3rd quarter, up 3% from last year. Thanks to selling a mix of more expensive vehicles, revenue jumped 9% to nearly 29 billion euros. That boosted its operating profit 13%, but its net profit fell 38%, largely due to a 700 million euro fine FCA had to pay to Uncle Sam for cheating on its diesel emissions. Otherwise, FCA says its net profit would have been up 51%. Even though this beat Wall Street’s expectations, and despite announcing a special 2 billion euro dividend, investors yawned. FCA’s stock dropped nearly 2% yesterday.
| FCA Q3, 2018 EARNINGS | ||
|---|---|---|
| Sales | 1.1 Million | +3% |
| Revenue | €28.7 Billion | +9% |
| EBIT | €1.9 Billion | +13% |
| Net Profit | €564 Million | -38% |
Once again Hyundai is showing a preference for European designers and that’s coming up next.
HYUNDAI ANNOUNCES NEW DESIGN LEADER
Hyundai just announced that Luc Donckerwolke will take over as head of design when Peter Schreyer retires. Schreyer led a revolution in design at Hyundai and Kia which transformed the looks of their vehicles. How interesting that the proud Korean company now wants seasoned European veterans overseeing its design. Schreyer, a German, started his career at Volkswagen, and had a major influence on Audi. He made his way over to Kia in 2006 and was eventually named one of three presidents of the company. Donckerwolke is from Belgium and spent a good chunk of his career at VW, working with Audi, Bentley and Lamborghini.
FORD & VW TALK AVs & EVs
We know that Ford and Volkswagen have been working on some sort of big partnership. Now Reuters reports they’re in talks to develop self-driving and electric cars. An alliance like that could save the companies billions of dollars in research, development and manufacturing costs and could be announced before the year is out.
CONTINENTAL WORKS ON TRAFFIC JAMS
Traffic congestion in urban areas is a growing problem and the supplier Continental believes autonomy and ride sharing can help alleviate traffic jams. It’s currently testing a prototype autonomous pod called the Continental Urban Mobility Experience or CUbE for short. It seats six people and can be summoned with a smartphone app. The vehicle is made by French company EasyMile but the rest of the sensors, control units as well as communication and networking technologies were developed by Continental.
Automakers hope to make a fortune on autonomy and mobility services, but right now they’re racking up massive losses and that is coming up next.
GM & FORD LOST MILLIONS ON MOBILITY
GM and Ford are investing heavily in autonomous cars and mobility services, but so far they’re just piling up a bunch of red ink. GM lost $534 million on Cruise Automation so far this year. That‘s 17% more than it lost last year. Ford lost $364 million on its mobility efforts, but it did earn $18 million in revenues from Chariot, Ford Commercial Solutions, City Challenges, Transloc and Autonomic. And maybe it made some money delivering Domino pizzas in autonomous cars. Here’s our Autoline Insight. Both GM’s and Ford’s mobility businesses are in their infancy, so it’s no surprise they’re losing money. We give them a lot of credit for posting these financial numbers at such an early stage. It’s a gutsy move. Over the next few years we’ll really have to watch where these numbers go. Because if they start posting big growth in revenue, Wall Street is going to sit up and take notice. And that could drive the price of their stock up higher than it’s been in decades.
Hey, don’t forget to join us later this afternoon for Autoline After Hours. We’re going to take a deep dive into the all-new Chevrolet Silverado because we have Tim Herrick, the chief engineer on the truck as our guest. Bob Gritzinger from Ward’s Intelligence will also be there. If you have questions you’d like to ask send it to [email protected], or you can always contact us on Twitter, Facebook or Instagram. Then join John and Gary, on our website or YouTube channel, for some of the best insights into how the auto industry actually works.
And that’s it for today, see you tomorrow.
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Comments (23)
November 1st, 2018 at 12:12 pm
My question on the UAW’s building with non-union labor goes a lot more elemental than the story; why the heck are they building this guy anything, hasn’t he been compensated for his service via salary/pay?
November 1st, 2018 at 12:13 pm
As a member of two unions I would be real interested why my union was building a house for anyone. It really sounds like the UAW needs a severe house cleaning.
November 1st, 2018 at 12:31 pm
Wow , I am so shocked that the Union doesn’t want to pay for union work. Don’t get me wrong I think it’s great that they can great a great pay day ,but it shows that when there is a choice people won’t pay it. A friend of mine just reached journeyman in the Steamfitters and is now making nearly $60 @ hour. Now while I wish I got paid so well ,I wouldn’t want to be the one paying for it. That is a primary reason why illegals flock to the states because the pay rates that some people get are just more than the market wants to bear. The illegals will work for next to nothing and there are plenty that will pay for that. It is a razor edge trying to balance a good fair wage for the work required and getting fleeced by union rates . Great for the worker not so much by the consumer that makes no where close to that.
November 1st, 2018 at 1:44 pm
What is wrong at the UAW? The basics of organization seem to have been lost along the way to the pig trough. Why is a retiring president that has been compensated at a very high level during his tenure being built a vacation home at union expense? Didn’t he save enough money to finance and build his own vacation home? How could the UAW hire non-union builders and expect that anyone would want to join the UAW from the plants owned by foreign car companies that are non-union now? If you are selling the advantages of being a union worked then their isn’t anything that is done by the UAW that shouldn’t be done by union contractors. This makes me sick…
November 1st, 2018 at 1:46 pm
As for the UAW,
All members are equal, but some members are more equal than others.
November 1st, 2018 at 1:53 pm
3
The moral of the story is: “Join a union”
The minimum wage today, factoring inflation and productivity increases, should be in the neighborhood of $24 an hour, just to put that $60 per hour in some prospective. A union has preserved for its members a equitable rate of compensation.
Do we applaud them? Or do we applaud the policies of the past 40 years that have gutted the working class like a trout and led to the dangerous populism of today?
November 1st, 2018 at 2:10 pm
Brett @ % , These kind of wages are the reason why companies are offshoring as many production type jobs as they can so they can maximize their greed. I’m not sure I follow your $24 @ hour rate for minimum wage I think more between $10-12 is where the inflation rate would actually take it to. Biggest thing to me is pay to skill level. Does someone working in fast food or a register in a store deserve $10-12 over someone actually needing skill and intelligence to build something? As soon as you start getting compensated for your ability your told you are too expensive and either replaced by a machine or it is sent overseas to be made by someone getting $10 @ week. So it’s a no win for the little guy trying to scrape by.
November 1st, 2018 at 2:13 pm
Sean, on your comment of giving GM and Ford credit for posting their revenue and losses on their mobility activities, it is not “gutsy” but rather a requirement to disclose these numbers since they are public companies. The stockholders have the right to know what is going on with these risky investments.
November 1st, 2018 at 2:25 pm
5, 6 The UAW helped me from 1977-2001, even though I was a salary employee. The union negotiated wages, vacation, pensions, and health care, and we salary people got the same, or slightly better non-wage benefits. Our wages were, of course, based on our job classification, with increases based on evaluations, and yeah, a certain amount of “who you know.”
I’ve lost track of how things are now, but I do know that, even the union workers today, are not doing as well as they once did. The non-union workers at the transplant factories are doing worse, even the ones building expensive vehicles for BMW and Mercedes-Benz. Germany is probably now the best place to work in the auto industry.
November 1st, 2018 at 2:34 pm
Wheel motors will work for small EV commuter cars where unsprung weight is not much of an issue (there is likely a reasonable market for this in some parts of the world). They will not work on cars that require ride quality, handling, and performance.
November 1st, 2018 at 2:43 pm
Auto sales numbers have been coming in for October today. I am sure you will all be Stunned (stunned, I say!) to hear that Ford, under the disastrous ‘leadership’ of clueless Hatchet, was down again, 3.9% (a little each month, but it adds up!) while FCA thanks to Jeep and Ram, up SIXTEEN Percent. that is for the WHOLE FCA, not just Jeep! FCA sold more than 199,800 units, make it 201,000 if you include Maserati. Ford barely sold 192,000!!! Even Toyota was surpassed by Chrysler, i wonder if prius buyers go upscale and pure EV and buy Model 3s. Nissan and Honda were also off, and the brand new LEAF EV had DISMAL sales. As I said many times, the dog does not like the Compliance Appliances Dogfood!
November 1st, 2018 at 3:03 pm
10 Chrysler is selling a lot of trucks, while Toyota is not. That is why FCA outsold Toyota.
Prius buyers are going various places, including Model 3, Ioniq, and since Americans don’t care about fuel economy these days, probably to big SUVs and pickup trucks. I’m a Prius driver seriously considering going “upscale” with a Camry hybrid. It gets almost the mpg of a Prius, while it is more comfortable, quieter, and quicker. While I like the Prius being a liftback, I have other cars for the times I really need that capability. Toyota should make a Camry hybrid wagon, a no-compromise vehicle which would get essentially the same mpg as the sedan, but with more utility.
November 1st, 2018 at 4:47 pm
I can understand the UAW using some non-union labor as some things are just not feasible. If they are installing Granite counter-tops it does not guarantee there will be a union shop available. But more importantly as pointed out by #1 Chuck why are they even building a retirement home. And its going to be owned by the Union? So that means the union will be paying the taxes and insurance? Is this going to be passed down to each president or will they build each one a new home?
November 1st, 2018 at 5:23 pm
12 Yeah, the national officers are well paid, maybe too well paid. They should be able to afford their own retirement home.
November 1st, 2018 at 6:43 pm
#13 Well Michigan is a right to work state so I guess when union members start to opt out of the union dues for the ridiculous spending by their union leaders I guess they might see the light. But I wouldnt hold my breath.
November 1st, 2018 at 7:15 pm
14. With more and more “right to work” states, all unions will be dead, and we’ll be back to the days of Henry Ford’s hired thugs.
November 2nd, 2018 at 9:49 am
10 Chrysler is selling a lot of trucks, while Toyota is not. That is why FCA outsold Toyota.
Not the real reason. here are the FACTS:
1. 70% of all sales in Oct were “trucks” but that includes Minivans, Crossovers, Large SUVs AND Pickups.
2. I am not sure which of them you include in your “trucks” term, but regardless, Toyota has a FULL truck portfolio, covering ALL the bases, which FCA and even FORD do NOT cover, as for example, the TACOMA medium size Pickup, only GM has serious rivals to it.
3. The “we make no trucks” excuse is NOT valid for Toyota or even Nissan, whose sales dropped even more, 11%.
4. The REAL reason is that FCA makes dogfood the dogs WANT and EAT. JEEP has been a STELLAR success, and Ram is doing well too. Kudos to FCA, no excuses.
5. The automakers who could LEGITIMATELY use this “we make no trucks” excuse are NOT Toyota and Nissan BUT Honda, Mazda (who again did even less unit sales than Tesla) and especially Kia, and it shows.
November 2nd, 2018 at 9:56 am
15 “With more and more “right to work” states, all unions will be dead, and we’ll be back to the days of Henry Ford’s hired thugs”
You really had to go back 110 years to defend the indefensible?
Unions today are a far cry of what they were in 1900 and even in 1880.
Back then their leadership was NOT corrupt and had no ties to criminal organizations, and the rank and file were truly Working Class poor people who needed a lot of help.
Unions in the US Degenerated over time. Their leadership still may provide better salaries to their members, even better benefits (UNTIL their employer cannot compete and goes bankrupt), but their bosses are despicable and corrupt.
The rank and file also have changed from working class to middle class with ridiculous salaries compared to their nonexistent education and very limited skills (the UAW just ASSEMBLE cars, they do not make the components),
and this is exactly what is wrong in the US, crucial professionals like K-12 and even most University TEACHERS getting paid FAR LESS, instead of far MORE (for DESERVING ones) than unskilled UAW workers (esp if they put a little overtime),
November 2nd, 2018 at 10:09 am
10, 16. What I was referring to in number 10 was pickups. Ram outsells Tundra by what, 3 to 1. Yeah, they sell a lot of Jeeps, but Toyota sells a lot of Rav4s, Highlanders, and other crossovers/SUVs.
November 2nd, 2018 at 10:16 am
My Father worked for a union plant building trucks for Autocar in the late 70s. When the recession hit the company asked the Union for temporary concessions until it rebounded. The Union bosses said no dice as they thought the company was trying to screw them. So when the company shut the plant down in Exton , Pa and moved it Utah . Everyone was screwed. Except the Union bosses who were relocated to other UAW plants. It took many workers years to find jobs that paid anywhere close to what they were making.
November 2nd, 2018 at 10:19 am
17 There was corruption in unions in the ’70s and ’80s too, both at the local and national levels.
I don’t know when UAW production workers started making more than teachers, but it was a long time ago, and shouldn’t that way. When I was at GM, there wasn’t as much pay difference between production and skilled trades workers as there should have been.
November 2nd, 2018 at 10:38 am
Not just inflation, but also productivity increases. Why should not improved productivity of the workers be rewarded?
There are two sides to a contract negotiation. Nobody seems to fault the management for making stupid concessions, just labor for winning them.
“Free Trade” is nothing but a race to the bottom.
“I don’t see why people should be able to receive a living wage serving me cheap food.” Really? It takes 2.5 jobs at minimum wage to rent a 1 bedroom apartment practically anywhere. I’d pay an extra 50 cents for my McDonalds meal if the bloke making and serving it to me was making a decent wage that they could live on.
November 2nd, 2018 at 4:41 pm
18. “(the UAW just ASSEMBLE cars)” You’d be surprised what UAW people do. Where I worked, they performed jobs in silicon wafer fabs that required quite a lot of skill and knowledge.