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Episode 261 – Ford Faces UAW Rejection, GM Supplier Problem, Toyota’s Carbon Fiber Loom

October 30th, 2009 at 12:10pm

Runtime 7:28

Ford’s problems with the UAW are turning out to be more serious than anyone anticipated. GM has to shut down an assembly plant because of parts shortages for transmissions from a supplier in India. A look at Toyota’s breakthrough in using carbon fiber for cars. All that and more, plus Mark Reuss the vice president of global vehicle engineering for General Motors, explains why GM needs to make its vehicles lighter.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Ford’s problems with the UAW are more serious than thought. GM runs into problems with a supplier. And a look at Toyota’s breakthrough in using carbon fiber for cars.

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

This is Autoline Daily for Friday, October 30, 2009. And now, the news.

Ford’s problems with the UAW are turning out to be more serious than anyone anticipated. The Associated Press reports that eight locals representing 12,500 workers have rejected a new contract. Only four locals representing 7,000 workers have approved it. But the Detroit News reports that Ford’s axle plant in Sterling Heights, Michigan may ask for a re-vote. Workers there rejected the contract but now some are afraid Ford will outsource a lot of the work done at that plant, and they want to vote again.

A report from the Associated Press says that General Motors has to shut down an assembly plant because of parts shortages for transmissions from a supplier in India, losing production of the GMC Acadia and Buick Enclave. As you’ll remember, we reported the same problem at Ford earlier in the week, losing production of the Edge, the Flex, the MKT and MKX. These vehicles use the same six-speed automatic transmission that GM and Ford designed together. And it shows the risk of buying parts from allegedly “low cost suppliers” who are half a world away.

Edmunds.com says the cash for clunkers program was mighty expensive. It claims that most of the 690,000 vehicles that qualified for the program would have been sold anyway. Only 125,000 were incremental sales, meaning it cost taxpayers $24,000 per car. Now, the White House is hitting back Fox News-style, calling the report “faulty” and “implausible” according to the Detroit News. The White House says the number could be as high as 560,000 incremental sales. Ford estimates the number at 280,000 and GM predicted it was around 500,000. Autoline Daily estimates them at 140,000, and while I fully support the clunkers program, Edmunds is making a really good point.

And speaking of sales, General Motors is extending its 60-day satisfaction guarantee. The company says its “May the Best Car Win” campaign has been successful in boosting consumer’s opinion of the company and getting them to consider its vehicles. The guarantee, which allows customers to return a vehicle up to 60 days after they bought it, will now run until January 4.

As you know, Bob Lutz threw down the gauntlet with the “V-Series Challenge.” He dared anyone with a stock, four-door car to beat his lap time in a Cadillac CTS-V. It’s a real-life version of GM’s new, “May the Best Car Win” advertising campaign. John Heinricy, GM engineer and race driver officially took first-place, but a mystery driver allegedly beat his time. No, it wasn’t “the Stig” from Top Gear, Autoline Daily has learned it was Johnny O’Connell, a Corvette-racing American Le Mans winner.

Cost be damned, many supercars – and even some not-so-super cars – feature carbon fiber. This high-tech material is strong and light, which is why Toyota is using it extensively in the new Lexus LFA. Autoblog has a mesmerizing video of how the company weaves the car’s A-pillars. It uses a circular loom with what looks like hundreds of little spindles to form the parts. This is interesting because TOYOTA started out as a loom company over a century ago. The company is probably using its experience building the LFA to start moving the material down to mass-market vehicles. They’ve just got to figure out how to do it cheaper.

And speaking of how to design light-weight cars, you’ll want to hear what Mark Reuss had to say on last night’s edition of Autoline After Hours, we’ll be back right after this.

Mark Reuss is the vice president of global vehicle engineering for General Motors. Last night he joined us for Autoline After Hours and the talk turned to how and why GM needs to make its vehicles lighter. In the following clip Mark gets into some of the specific details of how GM is going to do that.

By the way, Mark Reuss says these changes he’s talking about making cars lighter will not add any cost. You can watch the entire episode on our website at AutolineDaily.com.

Ok, it’s the end of the week and that means it’s time to announce the winner of our trivia contest. We asked you to identify what kind of car this is. As most of you correctly responded, it’s a Land Rover Defender. And today’s lucky winner is Robert Petrach of Troy, Michigan. Congratulations Robert, you’ve just won a Volkswagen Golf model car.

And that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you next week, and have a Happy Halloween.

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

38 Comments to “Episode 261 – Ford Faces UAW Rejection, GM Supplier Problem, Toyota’s Carbon Fiber Loom”

  1. Jim Sachetti Says:

    Hi John,

    You said: ‘Only 125,000 were incremental sales, meaning it cost taxpayers $24,000 per car. Now, the White House is hitting back Fox News-style, calling the report “faulty” and “implausible” according to the Detroit News. The White House says the number could be as high as 560,000 incremental sales. Ford estimates the number at 280,000 and GM predicted it was around 500,000. Autoline Daily estimates them at 140,000, and while I fully support the clunkers program, Edmunds is making a really good point.’

    Your valid estimate of 140,000 is almost identical to Edmund’s 125,000, and a far cry from the White House’s 560,000 and GM’s 500,000, or even Ford’s 280,000.

    Therefore, I hope you can now see the light and agree with me and all the rest of us here who, from the very beginning, were adamantly against this CFC program, even when we mistakenly thought that the taxpayer was robbed of only $4,500 per vehicle. It turns out the cost is AT LEAST $24,000, which means many of the cheapo econoboxes sold did not even cost, with taxes and everything, nearly as high as that $24,000!!!

    What a horrible, Former Suvoet Union-Inefficient way to help Auto sales!

    And, don’t forget, many, many CFC sales were Hondas and TOyotas and not the Detroit 3 they were supposed to help!!!

  2. dcars Says:

    Hello,
    Last night’s Mark Reuss show was excellent. I think Mark R. and Csaba Csere were some of the best shows.
    How much difference is their having a low cost factory in India shut down due to a labor strike, than a high priced factory in the US shut down due to labor unrest? Toyota and Honda don’t seam to have these problems. I hope Ford doesn’t have to go to the brink bankruptcy to get it’s costs in line.

  3. Chuck Says:

    The $24,000 per car is specious accounting mumbo jumbo. The fact is 690,000 vehicles were sold, and the CFC paid a chunk of each of them.

    The rest is like when congress takes what should have been a 10% raise of some political budget, reduces it to a 5% raise, and then crows about how they saved 5%.

    Or that CAFE reduces our dependancy on foreign oil.

    It’s all in how you slice it up.

  4. Jim Sachetti Says:

    “# Chuck Says:
    October 30th, 2009 at 12:40 pm

    The $24,000 per car is specious accounting mumbo jumbo. ”

    Just because you don’t understand ANYTHING anybody said, does not mean that there is anything mumbo-jumbo in this.

    Everybody, even the idiots at the WH and GM, ADMIT that NOT ALL of the 690,000 were NEW demand, but many of them would have OCCURRED ANYWAY!!!!!!!

    The only dispute is HOW MANY were really NEW. I will take Autoline’s 140,000 over tbe BIASED, WHITEWASHED Obama-GM’s 500,000 and 580,000 ANY TIME.

    But you seem to not at all understand that even if you use GM’s infated 500,000, the cost per NEW sale generated by the program will far, far exceed the $4,500!!!!

    AM I going too fast for you?

    OF COURSE I am!

  5. Jim Sachetti Says:

    AND, I REPEAT:

    “What a horrible, Former Suvoet Union-Inefficient way to help Auto sales!

    And, don’t forget, many, many CFC sales were Hondas and TOyotas and not the Detroit 3 they were supposed to help!!!”

  6. Nick Stevens Says:

    Congrats, John McElroy, for admititng the utter failure and the gross expense per NEW car purchased (NOT those that people would have bought ANYWAY) of the CFC program!!!

  7. Tony Gray Says:

    Agree with dcars above. Last night’s show was very very insightful. Mr. Reuss seemed very forthcoming (where he could) and to me, appeared to be an honest guy. I wish he could have been asked about the upcoming Caddy ATS though.

  8. Wayne Says:

    I thought this was supposed to be a serious forum for discussing the latest in automotive news, not an opportunity to insult and belittle the opinions of others. Over the last few weeks this activity has gotten worse. Constructive discussion and criticism is one thing but if immature comments are the future of this forum I won’t be returning!!

  9. Chuck Grenci Says:

    Loved the AAH show will Mark Reuss (I’d have called the show “Reuss rolls”). Very insightful and intelligent.

    I don’t get the UAW’s consistant war it wages with the manufacturers. When a maker shows a glimmer of hope……………BAM labor problems.

  10. pedro Fernandez Says:

    You’re happily married, couple of kids, everything is great and then some ex flame shows up with a kid you didn’t even know about, claiming it’s yours and you need to pay for it, well that flame is the UAW and you’re Ford.

  11. paulstewart Says:

    Wayne, this is nothing compared to “thor” when he would write in the comment section. Ask anybody, right now this is nirvana. He soon will read what I have written and will smite me down. Beware the t hor from Marvel comics.

  12. Edward Lipman Says:

    I love the idea of lighter cars , don’t you ?
    Lighter cars accelerate better and get better fuel mileage. What’s not to like ? Well the fact that lighter cars are unsafe ? They are because they are lighter they will crush easier and will be deadlier ! Now we can think about that ! More highway deaths as a result.
    C4C WAS a boondoggle , it helped mostly foreign based manufacturers , when it was supposed to help AMERICAN car manufacturers , and no matter how you manipulate the numbers it COST the taxpayer an inordinate amount of money per car.
    The UAW has bitten its nose off again in rejecting Fords contract. The auto unions with their extravagant and wasteful demands have brought the auto industry to it knees as usual.
    I wish that I could have worked for a company that pays 90% of my salary while I am laid off !
    The auto industry is not blameless either by agreeing to all this !
    Boycott CHINESE GOODS ! TURN THE TRADE DEFICIT AROUND !

  13. Pedro Fernandez Says:

    These domestics just can’t seem to do anything right, just when you see a trace of light at the end of the tunnel (Ford-GM).they now get this supply problem from India? Wow, even transplants are using AMERICAN suppliers, but our dear domestics have to outsource their parts from India and most likely China (well at least there’s no chance of strikes over there)

  14. vrmchris Says:

    hello to all.

    if anyone paid attention to who was doing the rejecting it was the rank and file. not the heads of the uaw. the heads were pushing for approval of the contract.

    i understand many of you hate the uaw. however, the uaw has been conceding to the big 3 for many years. unfortunately, management squandered the opportunities that were given to them.

    so in that way, i cannot blame the uaw. yes, they have overreached. but they did what they were supposed to do. look out for their interests.

    hopefully, the rank and file will think again and reconsider their position.

    regards,
    vrmchris

  15. dcars Says:

    I have to believe that Mark Reuss is going to run GM someday. I wonder if Mr. Reuss was thinking of carbon fiber for mass market cars when he was talking about better joints.

  16. Glenn E Says:

    I leased a Honda CRV and traded in a Dodge Ram C4C. Here is the big debate. The CRV is built in Ohio, U.S.A. Would it have been better to buy a Ford Fusion, Chevy HHR, or Chrysler PT Cruiser made in Mexico? The debate goes on. John, by the way great show again last night. Peter and David were great as well, and I wish Mark and GM a lot of luck.

  17. G.A.Branigan Says:

    I believe the domestics are using foreign suppliers because of the high union labor costs here.The imports I believe source what they can here to comply with regs to be here.I could be wrong on this.

  18. Nick Stevens Says:

    Not a Halloween Story, and not a lawyer Joke. This is from today’s NYT Obits. Moral: Not wearing your seatbelt can sure kill you and y our passenger, and Giant SUVs willoffer you little protection from Human Error

    “John O’Quinn, a plaintiff’s lawyer whose outsized personality matched the jury awards he won for his clients, died Thursday when the sport utility vehicle he was driving jumped a median, crossed several lanes of oncoming traffic and smashed into a tree along a parkway in Houston. Mr. O’Quinn was 68 and lived in Houston.

    John O’Quinn died Thursday.

    A spokesman for the Houston Police Department said Mr. O’Quinn was found dead when emergency crews extricated him from the mangled vehicle. A passenger, Johnny Lee Cutliff, 56, Mr. O’Quinn’s personal assistant, was also killed. Neither man was wearing a seat belt, the police department said. An investigation into the cause of the crash is continuing. …”

  19. Nick Stevens Says:

    “# dcars Says:
    October 30th, 2009 at 4:56 pm

    I have to believe that Mark Reuss is going to run GM someday. I wonder if Mr. Reuss was thinking of carbon fiber for mass market cars when he was talking about better joints.”

    I watched the show and was far less enthusiastic than others here. I was also disappointed in the Journalists, who let him brag and spin all the time, and never really challenged or criticized him and Government Motors. I sure hope that future GM CEOS are true Heavyweights like ALfred Sloan, or Ed Cole, and not like this likeable but not really much to write home about, regional VP.

  20. Nick Stevens Says:

    “# G.A.Branigan Says:
    October 30th, 2009 at 7:08 pm

    I believe the domestics are using foreign suppliers because of the high union labor costs here.”

    Well, of course, and especially the infamous Jobs Bank, where UAW types were generously paid full time even when doing nothing! And no Automitive Journalist told anybody about it until the very end, when GM was broke and the Govt took over!

    “The imports I believe source what they can here to comply with regs to be here.I could be wrong on this.”

    There are many transplant imports that have more domestic content than many “Detroit” products. In small cars, Detroit just gave up and makes them in Mexico and Korea (and many in Canada too). And when they tell me “yes, but the profits stay in the US, and do not go to TOkyo or Seoul”, I tell them, “WHAT profits????? two thirds of the detrpit 3 are bankrupt or sold to Fiat, and even Ford, did make any serious profits recently?

  21. Phil Says:

    It really bothers me when people will insult others to try and make their argument stronger. I also think it could be “accounting mumbo jumbo”. In this case it all depends on your starting data. If you look at the edmunds piece it states:

    “To conduct the analysis, the Edmunds.com team of PhDs and statisticians examined the sales trend for luxury vehicles and others not included in Cash for Clunkers, and applied the historic relationship of those vehicles to total SAAR to make informed estimates.”

    I don’t really know if the sales trend for luxury vehicles is a good predictor for economy cars.

    I am not saying that GM and the White house are correct either. I don’t have the time or the inclination to look any deeper into something that did what it was supposed to. Exchange less fuel efficient cars for more fuel efficient ones.

  22. Pedro Fernandez Says:

    If I was a journalist, it would be hard to drill a guest who is NOT responsible for his company’s many past screw ups. It has fallen to him and others like him to try to make things better but their job is made so hard by the company’s past, and the reputation they have build up during the last 2+ decades. GM was a big, clumsy giant that either refused or was unable to change with the times.

  23. Jim Sachetti Says:

    I just finished watching (while working on clearing my office by recycling junk), this week’s “Autoline Detroit”, and I was deeply, really deeply, disappointed with the silly young woman guest and her teenage quality (and an immature teen at that) comments on fuel from algae, with little, if any, mention of the COSTS.

    But I was even more incensed at the “teasers” that ran at the beginning of the show, where the utterly discredited and serially failed CHARLATANS of “peak oil” “running out of oil” and assorted other unscientific BS, especially that clueless clown Matt Simmons, a BANKER that pretends he is a… Geologist!

    Sickening.

    John Mc Elroy, I know you can do FAR, FAR, FAR better than that!

    Jim Hall should also have asked far tougher and probing questions of these self-described fake hippies!

  24. Wayne Says:

    Nick;
    FYI the only “small” cars built in Canada are done so by Honda and Toyota. Chrysler assembles the 300, Charger, Challenger and Minivan at plants in Windsor and Bramalea. Ford assembles the Escape, Flex, Crown Vic and a couple of Lincoln models at facilities in Oakville and Talbotville. GM assembles midsized Buicks and Chevs and the new Camaro in Oshawa and the Equinox and Terrain and the Cami facility in Ingersoll. GM and Ford also used to assemble pick-ups in Canada until recently. I would hardly call any of these models “small”.
    As a side note, the Canadian assembly plants for all of the Detroit 3 are consistently winning top awards for quality and efficiency but are also continuously under threat of closure in favour of assembly south of the border (meaning the U.S. not Mexico). The loss of the pick-up assemblies are cases where it was more than just threats. This smacks of being politically motivated as opposed to proper business decisions on the part of the parent companies.

  25. Wayne Says:

    To paulstewart;
    It was the antics of Thor and others that helped to initiate my rant yesterday!!!!

  26. Nick Stevens Says:

    “# Pedro Fernandez Says:
    October 31st, 2009 at 12:09 pm

    If I was a journalist, it would be hard to drill a guest who is NOT responsible for his company’s many past screw ups. It has fallen to him and others like him to try to make things better but their job is made so hard by the company’s past, and the reputation they have build up during the last 2+ decades. ”

    GM engineers sure do not deserve as much blame as the UAW and its leadership, and above all, GM Management. I know this because I have known both GM and Ford engineers, that, where given the chance to work for TOyota, did much better, and told me how better the work environment at Toyota was for them, and how much more pride they took in their job.

    This guest was 100% a GM VP manager, and even if he does not share some part of the blame, at a minimum, we should be very worried that he has learned how to manage from the incompetent Wagoners and their ilk, so it could potentially be disastrous to keep running GM with its own “talent”, but, like Ford, try to recruit some excellent outsiders with truly new ideas, and responsible management style. No Bullsheet artists or spin doctors may apply.

  27. Pedro Fernandez Says:

    Nick: if that’s the case, then they need to bring in “new” innovative, forward thinking personnel, even if they come from other industries. The problem with that is how can you get talent to come aboard a ship that’s almost ready to sink. And you need to start at the top, like Hyundai did many years ago and Toyota did last year.

  28. Jeff Cunningham Says:

    “Jim Sachetti Says:
    October 31st, 2009 at 12:18 pm

    I just finished watching (while working on clearing my office by recycling junk), this week’s “Autoline Detroit”, and I was deeply, really deeply, disappointed”

    In fact, I watched it myself and had very similar reactions, well before I read yours. It is a real shame to give a podium to these voo-doo “peak oil” artists, as if what they said was … fact and not serially failed predictions about WORLD peak oil. Their arrogance also boggles the mind.

    Nobody can predict what exactly will happen, but if you have any idea of how economics work, you will see that we will never, ever “run out” of any resource, even a resource far less plentiful than oil and gas!

  29. Jeff Cunningham Says:

    “# Wayne Says:
    October 31st, 2009 at 1:12 pm

    To paulstewart;
    It was the antics of Thor and others that helped to initiate my rant yesterday!!!!”

    Nonsense. I visit this site daily and there was NO post by Thor not only on the day you complained, but even for weeks before that. Autoline has Archives and we all can go and see for ourselves, BTW.

    And there were NO ANTICS. Again, those who cannot understand the most elementary, first grade, concepts such as the simple extimates Autoline, Edmunds, Ford, GM and the WH have made, ALL of them admitting that far less than the 690,000 cars under the CFC program were NEW demand, the rest would have been sold ANYWAY, and understand where the correct $24,000 comes from, have some nerve to falsewly accuse the serious posters of antics and the like, and associate them with ‘extinct’ posters like that Thor character!

  30. Nick Stevens Says:

    # Pedro Fernandez Says:
    “October 31st, 2009 at 1:48 pm

    Nick: if that’s the case, then they need to bring in “new” innovative, forward thinking personnel, even if they come from other industries. The problem with that is how can you get talent to come aboard a ship that’s almost ready to sink. And you need to start at the top, like Hyundai did many years ago and Toyota did last year.”

    Pedro,

    we have the evidence, it worked at Ford and saved that company from bankruptcy, and GM is in even worse shape, with even worse internal VPs. They have to make a point to bring an external guy, or they will keep going to hell, to the misery of ALL of us, the Taxpayers, who will never see any of our $25 or 50 billion we bailed them out with, and we instead will be asked to cough up more!

  31. Pedro Fernandez Says:

    I don’t know what “young People” these 2 are referring to, most young people I know couldn’t give a rat’s behind about gas or oil or where it’s coming from. They’re too busy with their I-phones and laptops, texting and downloading. The new generation seems to be completely disinterested in cars. those who are, buy old ones and fix them up to their tastes.

  32. Wayne Says:

    Jeff;
    I also visit this site daily and okay, if you want to be that anal maybe I should have said months instead of weeks. I did not mention Thor as the final straw that brought out my rant but one of initiators. And my complaint had nothing to do with the subject of the comments above but with the immature insulting tone. Enough said!

  33. Nick Stevens Says:

    “Ford Posts an Unexpected Profit of $997 Million

    The automaker said it had its first profitable quarter in North America in more than four years”

    Not totally unexpected… but welcome news anyway, since this hopefully means they will not become a GM sized Welfare Queen any time soon..

  34. dcars Says:

    After reading the recent posts I have a couple of suggestions for posting they are:
    Don’t make personal attacks.
    Don’t take it personally.
    Stay relevant to the topic.
    No name calling.
    No vulgar language.
    We all like the car industry, so play nice. However, some times its fun to read some of these comments! ;)

  35. Nick Stevens Says:

    We all like the car industry,

    I assume you mean “We all like cars”. I am interested in the car industry and can’t wait to get the October sales nos hot off the press from PR Newswire in the next few hours, but its gross mismanagement in the US the last decades, in which both the CEOS and the UAW share huge blame

    (not to mention the majority of Auto Journalists, who closed their eyes to the three decades of losing home games to the imports and blaming everybody else (and above all the poor consumer!!!) about it)

    makes it really hard to like most of that industry, foreign or domestic.

    I believe the problem in auto sites is not the personal attacks, but bringing bad news. Nobody likes bad news, esp. those that work or used to work in the domestics.

    In the middle ages, they killed the messenger, remember?

  36. Pedro Fernandez Says:

    Do any of you like the new Ford 15 second TV spots? I think they’re better than Howie Long’s Chevy is better than Honda comparison commercials.

  37. Jim Sachetti Says:

    Have not seen the Ford comm, but I am sure it can’t be any worse than the utterly unconvincing “Chevy better than Honda” ones that I’ve seen.

  38. Pedro Fernandez Says:

    In the Ford spots, they show a young person who supposedly bought a hip new Ford and is showing a particular feature that they like, whether it’s the capless fuel system or the choice of interior accent lights, little things like that, but it works better than the old-fashioned “our car is better than their car” type ad.