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Episode 258 – Ford & UAW At Odds, Honda Triples Forecast, Brazil’s Energy Policy

October 27th, 2009 at 12:00pm

Runtime 7:12

Ford is having trouble getting the same kind of concessions the UAW gave to General Motors and Chrysler. Honda announced it’s tripling its profit forecast for its current fiscal year. All that and more, plus a look at how Brazil’s booming economy has a lot to do with its energy policy.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Ford faces problems with the UAW. Honda triples its profit forecast. Brazil’s booming economy has a lot to do with its energy policy.

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

This is Autoline Daily for Tuesday, October 27, 2009. And now, the news.

Ford and the UAW leadership are running into problems with the rank and file. Ford asked the union for the same kind of concessions it gave to GM and Chrysler, but several union locals have rejected the new contract, and by very wide margins. In fact, the Detroit News reports that when UAW vice president Bob King went to Ford’s Kansas City plant to rally support for the contract he was booed. King is widely expected to replace UAW president Ron Gettelfinger when he retires next year.

Here’s my take on the situation. If Ford does not get these concessions it will become the highest cost manufacturer in the American market. The UAW rank and file says Ford is doing well right now and doesn’t need more concessions. But Ford is clearly going to need something to make it more cost competitive, and if it can’t get it from the union, then more UAW jobs will go away in the future.

Meanwhile, Honda announced it’s tripling its profit forecast for its current fiscal year, the AFP reports. Honda says it expects to hit 155 trillion yen, about $1.7 billion, but it warns that once stimulus programs in Japan, Europe, the U.S. and China come to an end it expects a big drop off in sales.

Meanwhile, Autoblog reports NHTSA is upping its investigation into brake failures on the Honda Odyssey minivan. 500 complaints and 10 crashes have been reported.

Next month Renault will launch the Fluence. It was developed by engineers from Europe and Asia under the Renault-Nissan Alliance and is built on the same platform as the Renault Megane III. It comes with boatload of powertrain options. Five diesel and four gas engines are available. Those can be equipped with a five- or six-speed manual or a  four- or six-speed automatic, plus a CVT as well. Fuel economy ranges from 4.5 to 7.5 l/100km or 31 to 52 MPG. The Fluence rolls out this November in Turkey, Russia and Romania and then will launch in 80 countries starting next year.

Tata is reporting its profit doubled (subscription required) in its second quarter. According to the Wall Street Journal, the company earned $157 million. However, the numbers don’t include results from Jaguar and Land Rover which Tata acquired last year from Ford.

And speaking of Tata, the company’s sales growth could come to a halt if they don’t fix this problem. According to the Times of India, three cases have been reported of steering columns catching on fire in the Nano. A short circuit is causing the fires even if the vehicle is turned off.

Even though Toyota’s FT-86 coupe is strictly a concept car … for now … it’s expected a production version WILL make it to market in the next couple years. Problem is, Autoblog reports that the company may be having trouble deciding what to call it. Conflicting reports indicate that the car could either be the next-generation Scion tC or a reborn Celica, which has been off the market for four years.

Some things have “bad idea” written all over them – in glow-in-the-dark capital letters. Take this auto gadget for example. It comes from Amazon.com via Jalopnik. It’s a tray table that mounts to the bottom of your steering wheel so you can eat, or use a computer in your car. Now OBVIOUSLY this device IS NOT meant to be used while driving, but it’s not hard to imagine someone trying it on their morning commute. At least Amazon’s users have a sense of humor about the whole thing. Some of them posted fake reviews and uploaded pictures of car crashes to the product’s photo gallery. WOW.

Coming up next, we’ll look at why Rio de Janeiro landed the 2016 Olympics. And believe it or not, there is an automotive connection.

As many of you watching know I was just on vacation, and spent some of that time in Brazil. Now as you are probably aware, Brazil’s economy is booming. It’s now the 10th largest in the world. It’s a key reason why Rio de Janeiro landed the 2016 Olympics.

One reason its economy is running so strong is due to the country’s energy policy, using ethanol for its primary fuel source for transportation. In fact, even if you buy gasoline it’s blended with 22 percent ethanol. The United States is still debating whether it’s prudent to blend more than 10 percent ethanol in gasoline, but Brazil’s blew through that number several years ago.

Even more interesting, Brazil is emerging as the leader in developing new fuel injection technology for running on 100 percent ethanol. It’s soon going to move away from injecting gasoline for cold starting E100 engines, and move into preheating the fuel right in the injection system. American, German and Japanese suppliers are eagerly at work in Brazil developing this new technology.

By embracing ethanol, Brazil no longer imports oil for fuel. It is now a net exporter of energy, greatly boosting its balance of payments, and raising the entire country’s standard of living. And I think Brazil’s energy policy offers lessons that many other countries can learn from.

Be sure that you don’t miss Autoline After Hours this Thursday night at 7 p.m. Eastern. Our guest will be Mark Reuss, who is in charge of global vehicle engineering. He’s been responsible for so many of GM’s performance vehicles, this is going to be a great show. That’s this Thursday live at AutolineDetroit.tv.

And that’s it for today’s top news in the global automotive industry. 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

22 Comments to “Episode 258 – Ford & UAW At Odds, Honda Triples Forecast, Brazil’s Energy Policy”

  1. dave Says:

    Brazil makes “e” fuel from suger kane, not corn. That is great plan, why dont we. Even better switch grass the best way to produce fuel. OH, no switch grass farmers lobbist.. Use COrn and buring the food supply is the dumbist thing..US GOV>&$^&%&*

  2. Bill Klein Says:

    I see the UAW isn’t satisfied destroying just 2 of what use to be the big 3 auto makers they also want to take down Ford.
    The UAW members must feel it’s better to be a goverment employee.

  3. Nick Stevens Says:

    Brazil’s economy is not doing well because of the stupid ethanol.

    It is doing well because of the enormous amounts of iron ore it exports, to China mainly, and its recently very high prices, and the recently discovered far greater deepwater offshore oil reserves, that are quaranteed to make it a major net oil exporter for years to come.

  4. dcars Says:

    Ford has a mountain of debt. What’s more important money now or crippling the company in the future.

  5. Alex Kovnat Says:

    I took the time yesterday afternoon to watch the video of Professor Bruce Dale being interviewed on the matter of cellulosic ethanol and the 10% blend limit.

    Since we have to blend more than 10% C2H5OH in gasoline to create a market for all the ethanol we now have the capacity to produce, and since one wonders if today’s cars fuel systems might be degraded by more than the 10% limit on ethanol we already have, I’d like to input my suggestion:

    Either impose a carbon tax on petroleum at the wellhead or at the port of entry (we should then also have a carbon tax on coal, tar sands, and shale), or else have an anti-tax (i.e. a subsidy) on E-85 to incentivize those who have flex-fuel vehicles to go out of their way to use it as much as possible.

    Since we seem go grow a lot of apples for processing at cider mills (i.e. Franklin, not far from my home and the Yates Cider Mill), we should keep in mind the possibility of fermenting the sugar in those apples into C2H5OH.

  6. John V Says:

    Most, if not all, current vehicles can tolerate at least between 10% and 15% ethanol.
    A significant number of vehicles from the Detroit 3 (depending on engine) can use anything from 0% to 85% ethanol. These “Flex Fuel” vehicles have been available for several years.
    The problem with ethanol is the price does not always make better economy than the price of gasoline when you consider the lower mileage you get from a gallon of ethanol. Buying wisely is difficult for the consumer, so most consumers buy gasoline.
    I think John McElroy was hinting around at this issue when he mentioned Brazilian Policy. In the US, we still have no clear energy policy, especially when it comes to fuels.
    Until we get a good policy, we should consider fermenting those apples into some nice brandy!

  7. Edward Lipman Says:

    As I said in an earlier time I am against Ethanol in motor fuel. Even the 10% now mandated.
    Will congress pay for the damage caused by using more than 10% ethanol in our cars ?
    Ethanol has a higher carbon footprint than gasoline and it costs more to distribute , therefore also raining its carbon footprint. It also causes food to cost more , where does a lot of our corn crop , why to make Ethanol , which is subsidized by out tax dollars too !
    Fuel mileage is also reduced about 10% too !
    We need to open up MORE domestic oil production , in the ocean and on land.
    There is supposed to be MORE oil and gas under the states of N and S Dakota , Montana and Idaho and extending into Canada than in the whole middle east. Lets develop these and other domestic sources so that WE are not paying the Arab Fanatics to destroy us.

  8. Pedro Fernandez Says:

    You can sit there and criticize Brazil’s energy policy all you want, the fact remains they have become energy independent and we ‘re still at the mercy of OPEC, where most of its members hate our guts, and would harm us if they could.

  9. Art DesJardins Says:

    Unfortunately the UAW has been short sighted before and caused a large portion of the problems regarding the cost of building American cars and trucks. If they think that a short term gain by not giving Ford the same deal as they gave GM and Chrysler will benifit anyone, then they are blind to the big picture of the future of the industry. If they want to lose more jobs and members of their union due to cutbacks that will be inevitable if costs are too great to compete, then they will only have themselves to blame. The industry needs a fresh start without the legacy costs that have crippled them for the last few decades that have been directly the result of the demands of the unions. Don’t screw up the progress in making American cars competitive with the rest of the world by thinking in the past. Make a level playing field work for a brighter future for the American aautomobile industry.

  10. Pedro Fernandez Says:

    The UAW is being stupid and shortsighted, if they continue in their present course, Ford will just move more and more production out of the US, into Mexico, for example and then we’ll see who the UAW is going to represent when all the assembly jobs leave this country, I suppose with Obama’s help, they’ll try to get the transplants into the union too.

  11. C-tech Says:

    With all the UAW bashing I wonder if you guys heard what was said? The Leadership of the UAW has been out front trying to partner with Ford, while some members are dragging feet (Gotta love democracy!). Who is out there selling the plan and educating the rank and file? By the way, transplant employees should thank the UAW for the benefits they receive, after all Honda, Hundai, and Toyota wouldn’t be so generous WITHOUT the threat of a union.

  12. FrankCanada Says:

    What about Italian engineers. Fiat is #1 in Brazil. You have it in for them don’t you John. Go Chryco!

  13. Don J Says:

    I kind of understand where the ford employees are coming from when I heard a local UAW president say, let Alan Mullaly take a concession comparable to what the leaders of GM and Chrysler are making if he expects the rank and file to do so.

  14. Jim Sachetti Says:

    As a forced US investor in two auto companies, it pains me that my tax dollars are propping up the bottom half of the Consumer Reports list, and NONE of my investments made the top half.

    COngrats to Ford who has been making progress and now is almost on par with the best from Japan. No wonder they are not picking my pocket, like GM and Chr does!

    Hot off the press: Best to worst brand list:

    1. Scion

    2. Honda

    3. Toyota

    4. Infiniti

    5. Acura

    6. Mitsubishi

    7. Lexus

    8. Hyundai

    9. Porsche

    10. Mercury

    11. Saab

    12.Subaru

    13. Suzuki

    14. Kia

    15. Mazda

    16. Ford

    — Middle —

    17. Nissan

    18. Volvo

    19. Buick

    20. Lincoln

    21. Volkswagen

    22. Pontiac

    23. Mercedes-Benz

    24. Audi

    25. Chevrolet

    26. BMW

    27. Mini

    28. GMC

    29. Saturn

    30. Jeep

    31. Dodge

    32. Cadillac

    33. Chrysler

  15. Jim Sachetti Says:

    “# Pedro Fernandez Says:
    October 27th, 2009 at 3:57 pm

    You can sit there and criticize Brazil’s energy policy all you want, the fact remains they have become energy independent and we ‘re still at the mercy of OPEC, where most of its members hate our guts, and would harm us if they could.”

    OPEC hates the US, it does not hate Brazil. Therefore, according to your own criteria above, Brazil’s econ policy makes zero sense.

    I am 100% in favor of breaking OPEC’s back, and we have FOUR Saudi Arabias in unconventional oils to extact, that will last us for ever at our current decreasingf rate of consumption. No need to meeddle with the stupid ethanol, which is just another multi-billion GM -Chrysler rescue Govt subsidy program.

    Canada already produces millions of barrels a day from its oil sands, it will end up makign FOUR mill barrels a day from them, while we have far vast-er amounts of oil in oil shales and are sitting on our ignorant butts.

  16. Jim Sachetti Says:

    Actually, FOrd is barely above average above. The article I read was far more enthusiastic than the actual rankings. Ford is nowhere near Honda or Toyota, but still is much better than the Welfare Queens GM and Chrysler.

  17. Dave Says:

    Its interesting that Ford is 16 but Lincoln is 20 and there are the same cars and trucks and Mercury is is 10? I dont know about that at least Mini and BMW are side by side as they should be. And Mitsubishi in the near the top? I just wonder if the scoring was very close all the way down because some of this seams to be out of line

  18. Nick Stevens Says:

    These are very strange results, Porsches are up there but do not have a good rep for reliability, they used to be far below BMW and MErc. Same with Saab and Mitsu. A lot of these companies do not sell many cars, so the data could be statistically meaningless if their samples are too small (Saab, Merc, Porsche, even Mitsu)

  19. dcars Says:

    Give backs are tough and hurt in regular people’s pockets. The automotive industry has changed and giving in to union’s demands has left the US Automotive industry in shambles.

    It appears that companies like VW, M&B and Porsche are out sourcing the manufacturing portion of building cars and retaining the engineering and design side. The UAW’s membership does not appear to want any changes in the way they have done business; yet, they might get forced to change in a very unpleasant way.
    The Unions have done a lot of good things in the past, but its future might need more consideration.

  20. Jim Sachetti Says:

    http://www.autoextremist.com/

    Our own Mr. Autorextremist exposes the UAW’s utterly disgraceful behavior recently in his today’s main editorial.

  21. Alex Zauder Says:

    the energy industry here in the US knows exactly what to do to become independent from middle east oil exporting countries. Our rabid environmental establishment howesver seems to control democratic party thinking about climate change (note, not temperature increase any more) and imposes extreme environmental considerations that make no sense on our energy policy, which results in no policy.

  22. Keith Says:

    Ford should get rid of its union ties. Its time to move on, there is no reason to do what the union wants anymore. It is time to start building cars in Michigan without union “assistance”. Its time to stop doing what the union wants. There are plenty of capable non-union people with the abilties to build great automobiles, in fact the cars may turn out better. In the past, all of our “union” familiy members in Michigan really got the short end when Ford cut back on the number of employees a few years ago. The union still demanded all its dues while these folks where laid off. These folks where caught having to pay the union first and not having enough money for day to day expenses. This forced the many of these families into bankruptcy – oh thank you Mr. Unionn for watching out for us!!