Episode 247 – Ford & UAW Agreement?, LaHood Visits Detroit, AvtoVAZ In Trouble

October 12th, 2009 at 12:13pm

Runtime 6:43

Ford and the UAW have a tentative agreement that would give Ford the same basic agreements GM and Chrysler received. U.S. transportation secretary Ray LaHood is in Detroit this week to meet with all three American automakers. Russian carmaker AvtoVAZ is pushing for more government aid. All that and more, plus a note to the American automakers.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Ford and the UAW have a tentative agreement. Guess who’s coming to Detroit. And Russian carmaker AvtoVAZ could go under.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Monday, October 12, 2009. I’m Rod Meloni, business editor at WDIV Channel 4 news here in Detroit filling in for John McElroy. And now, the news.

As I first reported on local 4 news in Detroit last Thursday…

The United Auto Workers national council… Consisting of the Ford-UAW local presidents, will be in town tomorrow. They’re going to hear the details of a tentative agreement between Ford and the UAW on a concessionary contract that would give Ford the same basic union agreements General Motors and Chrysler received in their bankruptcies. The question today is whether the presidents and their membership are on board. In the deal, Ford gets a no strike guarantee until 2015, and will take skilled trade workers, plant maintenance staffers and return them to the assembly line at their present higher wage rate. In return, UAW workers get a $1,000 signing bonus and a guarantee from Ford it will put products in all its U.S. plants and agrees not to shutter any of those plants.

Washington is headed to Detroit to check on its investments…sort of. U.S. transportation secretary Ray LaHood is in Detroit this week to meet with all three American automakers. The Detroit News reports his focus is on research, safety and that the target everyone continues to aim at — increased fuel efficiency. Today he starts with Ford’s research and innovation center and then it’s off for a tour of Chrysler HQ. Meanwhile, tomorrow he visits GM’s Milford proving grounds before he wraps up his first trip to Detroit with a speech to the local economic club.

The Wall Street Journal reports that Russian carmaker AvtoVAZ is pushing for more government aid (subscription required). The company, which is 25-percent owned by Renault, says there’s “significant doubt” about its continued existence. Over the last year, car sales in Russia have been cut in half, and the company has lost about 660 million dollars in the first six-months of 2009. AvtoVAZ is asking Moscow for an additional 12 billion rubles in aid – about 407 million dollars – beyond the 25 billion ruble interest-free loan it received last spring.

When Magna acquired Opel, some automakers it does business with objected to the deal because they were afraid Magna would share its plans with Opel. But according to ward’s, Mercedes doesn’t seem to be worried. Magna will develop and build aluminum bodies for the upcoming Mercedes SLS AMG (subscription required). The parts will be manufactured at Magna’s plant in Austria.

Automakers aren’t the only ones looking to improve fuel economy. According to Reuters, a group that represents the top airline companies in the world, says that they will go beyond regulation required of them to cut emissions and improve fuel economy. The group pledged to improve fuel economy by 1.5 percent every year until 2020. And they also set a goal of carbon neutral growth by 2020.

Coming up next, a few of my thoughts on the state of our domestic auto industry, we’ll be back right after this.

Here’s a quick note to General Motors management.

It recently held a conference call for a 90-day report card after emerging from bankruptcy.

If you weren’t listening very closely you would have missed how GM CEO Fritz Henderson slid into his remarks the fact the company is still too fat by about 10,000 blue-collar workers and a few hundred more executives.

That will logically mean more pain and trouble for metro Detroit’s economy, more plant closings and a continued slide through the darkest economy in a couple of generations.

This is no small detail and the company needs to address this more directly in the future.

Meantime, mark this day, Monday, October 12, 2009 as the official beginning of the auto industry’s new era. Put up or shut up time!

This week, it’s likely Ford will get its version of the modified national UAW contract. Getting its no-strike guarantee just as GM and Chrysler did in their bankruptcies.

For months, we asked Ford executives how they could compete with “Government Motors” with greatly slashed debt loads and assurances of no strikes… They wouldn’t answer… Because, truth be told, they couldn’t.

So now, we know, they can.

The practical effect of this comes today… The official beginning of the era of no excuses.

For decades we’ve listened to domestic automaker executives tell us they could succeed simply if they weren’t weighed down by… And then fill in the blank… Legacy costs, union contracts, unfavorably rigged foreign exchange rates, government regulations.

No more!

Ford, GM and Chrysler must forever put that inglorious past in the rear view mirror… For executives to get down to the real business of moving metal and leaving the excuses by the roadside.

What that means to you and me is the immediate future is going to be a very interesting and telling time… All the decks are cleared for these companies to soar, to truly compete with the foreign transplants, make boatloads of money… Now it’s up to them to do what made this town so great in the past… Sell great, well-designed cars people want to buy.

It’s that simple.

Whatever company or companies gets this right wins… We as a region and a nation can only hope they all do.

And that’s it for today’s top news in the global automotive industry. Again, I’m Rod Meloni business editor at WDIV Channel 4 news, Detroit. Thanks for watching, we’ll see you tomorrow.

Thanks to our Partners for embedding Autoline Daily on their websites: Autoblog, The Auto Channel, vLane, WardsAuto.com and WWJ Newsradio 950

19 Comments to “Episode 247 – Ford & UAW Agreement?, LaHood Visits Detroit, AvtoVAZ In Trouble”

  1. Nick Stevens Says:

    I predict that after some years of unnecessary expense and hardship, FORD will be the ONLY one left of the so-called “Domestic” Automakers, just as Boeing is the only (and hugely successful world-wide) domestic Planemaker. And it is no coincidence that, before he saved Ford’s A$$, Alan Mullaly saved BOEING’s, as its CEO. And his generous pay ($40 millions every year), with hindshight, seems fully deserved.

  2. Pedro Fernandez Says:

    You tell them Rod: as of today, GM Ford Chrysler, (or is it Fiat): NO MORE BULLCRAP NO MORE EXCUSES NO MORE BLAMING UAW, HONDA, TOYOTA, NO MORE BLAMING AMERICANS. PERFORM OR DIE!

  3. David Sprowl Says:

    It is not that people do not want to buy, it is that North Americans can not afford to buy. All manufactures have this same problem. But you are right the domestic BS has got to stop.

  4. Chuck Grenci Says:

    I too agree with Rod Meloni’s editorial at the end of the broadcast today; put up or shut up time. (though I would like to see the European exclusion be recended; you know that little ‘get out of jail card’ for the fuel economy requirement everyone else has to meet)

  5. B. LONGMATE Says:

    HOW’S THIS FOR A PREDICTION – and a QUICK ONE:

    ALAN MULLALY, due to his & his management team’s competance, & FoMoCo {Worldwide} are so much more efficient than the ‘other’ TWO that I’ll make an almost unbelievable claim.

    POSSIBLY, VERY POSSIBLY – Within the next several days – Ford Motor will be the ONLY Domestic car company to announce, dare I say, a NEAR Profit – 3rd Quarter – even with a less than 10 million units SAAR.

    IF TRUE, BASED ON THEIR CURRENT GLOBAL MOMENTUM – THEIR FUTURE PROFITS WILL BE Supernatural & ‘OFF THE CHARTS’ !!!

    RH LONGMATE

  6. T. Bejma Says:

    What did Mullaly do to save Boeing?

    I didn’t realize they needed saving…

    I predict that the domestics will manufacture the vehicles that our government SAYS we want and be very successful at it, however, no one will buy them because tiny vehicles are not what we want…

  7. Jim Sachetti Says:

    From Wikipedia:

    “Mulally was hired by Boeing immediately out of college in 1969 as an engineer. He held a number of engineering and program management positions, making contributions to the Boeing 727, 737, 747, 757, 767 and 777 projects.

    He led the cockpit design team on the 757/767 project. Its revolutionary design featured the first all-digital flight deck in a commercial aircraft, the first two man crew for long range aircraft, and a common type rating for pilots on two different aircraft. He worked on the 777 program first as director of engineering and, from September 1992, as vice-president and general manager. Later he was the Vice President of Engineering for the commercial airplane group. He is known and recognized for elevating Phil Condit’s “Working Together”-philosophy through and beyond the 777-program. In 1994, Mulally was promoted to senior vice president of Airplane Development and was in charge of all airplane development activities, flight test operations, certification, and government technical liaison. In 1997, Mulally became the president of the Information, Space & Defense Systems and senior vice president. He held this position until 1998 when he was made president of Boeing Commercial Airplanes, Chief Executive Officer duties were added in 2001.[3]

    Following the forced resignations of Phil Condit in 2003 and Harry Stonecipher in 2005, Mulally was considered one of the leading internal candidates for the CEO position.[5] When Mulally was passed over in both instances, questions were raised about whether he would remain with the company.[6]

    For Mulally’s performance at Boeing, Aviation Week & Space Technology named him as person of the year for 2006.[7]…”

  8. John V Says:

    Wow! Today we got a professional talking head for the show. Nice job, Rod!
    I also agree that it is put up or shut up time.
    Semiconductor sales are back up. Real estate inventories are shrinking in the better markets around the country and even in parts of Michigan. The Dow is teasing us about 10,000 points. It’s time to get over past challenges and deliver the goods.

  9. Jim Sachetti Says:

    PS Consumers will go buy tiny cars by the MILLIONS, exactly as they did in May 2008,

    when the 20-year perennial number one best seller Ford F150 plummeted to FIFTH place, behind the CIVIC, the ACCORD, the Corolla and the Camry,

    exactly when gas prices climb to $4 and $5 again, and it will not be a long time before they do, given China’s insatiable growth and appetite for cars (so far this year, Chinese car sales are for the first time higher than UYS sales)

  10. Kit Gerhart Says:

    Part, or maybe a lot of Boeing’s recent success
    has to do with a large increase in war military business for the company. Boeing is the world’s largest war materials supplier in the world, and this business accounts for 48% of company revenue.

  11. Nick Stevens Says:

    I know Boeing very well, having directed two teams of outside consultants on projects as well having worked myself on a fellowship in a Boeing Anaheim CA research facility for almost two months.

    It is a common European excuse, when we take them to task about Boeing’s rival, Airbus’s HUGE Government Subsidies, which were already $29 Billion back in 2003, and probably are close to $50 billion total as of 2009, a clear breach of WOrld Trade agreements (but probably still legal..)

    It is a common excuse that I am really tired of hearing, that Boeing does not need any subsidy because of its profits in its other businesses (which are NOT just Military but a whole lot of NASA stuff, they make a truckload of very impressive satellites, I’ve seen them at work making them, among many other high-value things (not stupid little cars that even Tata can make!)

    Whenever one tells me that, I tell them that Airbus can do the same, and instead of robbing the taxpayers of $50 billion in subsidies over the years, to take a slice of the world, and much more the European, defense-aerospace pie.

  12. Dan Clemons Says:

    Nice job Rod! Thank you for doing this for us while John is away. It was an excellent report!!

  13. G.A.Branigan Says:

    I believe that americans will buy smaller,well appointed cars that are both fuel effcient and comfortable.It ain’t rocket science to build cars like that.Of course it helps too knowing that gas is going to hit the roof a lot sooner then later.There really isn’t much of a need for big cars either.

  14. dave Says:

    I am sorry ,but I need my SUV to tow. That is until the Government takes away your camper, his boat, and my race car!!

  15. Jim Sachetti Says:

    I have no problem with all the SUV owners that use their vehicles as designed, ie, off road, or with pickup truck owners that use them for work or to tow.

    But it is obvious that the vast majority of SUV buyers over the last decade, and even the majority of pickup truck buyers, did not need them off-road or at work, but bought them because they did not want to be seen in a minivan, or because pickups were cool.

    Most of these people switched fast to small cars when gas went to $4 in 2008, and even this year, despite gas being only $2.50, there was a huge switch of the cash-for-clunkers buyers from low MPG trucks and SUVs to very efficient compact cars.

    A realtor I met sunday claimed he gave up a turbo pontiac grand prix (an old 90s or late 80s model) for a 30++ MPG kia Soul small wagon. I was surprised the pontiac car was able to qualify as a clunker (18 MPG or less), most old cars have better MPG than that.

  16. Dave Says:

    Well my father also CFC a Chevy Astro for a HHR ss, now the HHR with the turbo, even not getting into the boost only avg. about 23/24 mpg. Not that good for a 4 banger. Much better than the Astro van though.

    And I had a 87 pont. with a 2.8 v6 and 18mpg was the best it would do and that was with a KN and a high flow cat.

  17. Nick Stevens Says:

    My 83 Pontiac J2000 (2000) with the 1.8 lt 5-speed was rated 28/46 MPG and I routinely got above 40 in long trips, but it had no A/C. 18 is way too low on the highway by any car. Even a much heavier car with a bigger engine (such as an BMW 7 or a Merc S class) and much higher HP can get 22-24 MPG highway, at not too slow speeds either!

  18. Kit Gerhart Says:

    Dave Says:
    October 13th, 2009 at 9:47 am
    “And I had a 87 pont. with a 2.8 v6 and 18mpg was the best it would do and that was with a KN and a high flow cat.”

    I had an ’85 Pont. 6000 wagon with the fuel injected 2.8 (they had both carb and FI versions at that time). I got about 24 on the highway at moderate speeds, and probably 18 around town. I had the 3-speed auto. Some of these cars had 4-speeds, which did slightly better.

    My current Malibu Maxx gets a lot better mileage than the Pontiac, but part of the difference is probably that my driving habits have changed “with age.”

  19. Mouhamad A. Naboulsi Says:

    Slow down on the negativity and threats to the Detroit 3.

    They are doing good job of turning things around AND, yes, they were put in unfair market because they competed agaist practically closed markets(Japan, Korea) or overly nationalistic market (EU).

    Legacy Cost is not an excuse, it is / was a fact that the GM’s, IBMs and Fords of the U.S. were carrying a burden that was carried by foreign government in health care and retirement. Now thgat the burden is gone AND health care reform is on the way , kind off, they will be able to compete from that stand point.

    Be nice, Give them a cheer. This is the home team. We may not like some player, but the team is our own. Amen