FORD: buyouts, plant closings, is it enough?

Returning home today from a trip I have been trying to catch up on some of our local news. Chicago has a large Ford plant and that plant appears to have been spared from the announced plant closings. In fact they announed that the Hegewish (Chicago) Ford Plant is going to be needed for some new product models.

Still, while the plant is remaining open, apparently it will operate differently as FORD is trying to prevent its demise.

Workers are being given the opportunity to take a retirement buyout. That will leave many without jobs but with a wad of cash. Ford makes out by eliminating a lot of long term labor expenses. But is it enough to save the company? Even with the plant closings and the buying out the laborers, and laying off what sounds like will be up to 10,000 manager, will they be able to offer cars that A) appeal to consumers and B) are profitable to manufacture?

By the way, I heard a rumor that British equipment manufacturer JCB (maker of TLBs, skid loaders, etc) may be interested in buying the Jaguar division of FoMoCo.

The unions were breaking the companies back. I think they had no option but to die a slow death or try this buyout. No guarentee it will work, but they'll have a better chance of survival.

Doc said:

The unions were breaking the companies back. I think they had no option but to die a slow death or try this buyout. No guarentee it will work, but they'll have a better chance of survival.

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In the late 70's there were over 20,000 union (UMWA) miners working in the state of Indiana. Today there are less than 25 union mine workers working in the state of Indiana. They often had strikes that turned violent if someone tried to cross their picket lines. Their demands forced the union coal companies to charge considerably more for their coal in order to turn a profit. They spent millions of dollars on ads saying "buy union".

It didn't work. The economy demonstrated that union coal mines couldn't compete in a free market. The UAW is much like the UMWA was 25 years ago. The employer basically cannot fire an employee for anything. I frequently heard stories about union workers who would only work 3 days a week, who stole items constantly from the employer, who slept through an entire 3rd shift, who destroyed company property for fun, and who just flat wouldn't put forth any effort to work but yet kept their jobs.

The UAW has completely out lived their usefulness. The auto makers will have to rid themselves of the unions or go out of business. There is a Toyota plant (non-union) close to me, and know several people who work there. They all are happy with their jobs and make good wages. They positively have no desire to be in any union.

Dargo said:

They often had strikes that turned violent if someone tried to cross their picket lines.

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If you want a fun job, try being a "rent a cop" at one of those union picket lines . Did one while I was out of college looking for work, never again. I had no clue what I was getting myself into. I couldn't figure out beforehand why they were offering "better" money to work that job.

Dargo said:

The UAW is much like the UMWA was 25 years ago. The employer basically cannot fire an employee for anything. I frequently heard stories about union workers who would only work 3 days a week, who stole items constantly from the employer, who slept through an entire 3rd shift, who destroyed company property for fun, and who just flat wouldn't put forth any effort to work but yet kept their jobs.

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At one time we had a union in our company. The worst employees, those you are describing, were the first ones to demand higher wages, more paid holidays, longer vacations, increased benefits. Eventually the dedicated employees got sick and tired of them and voted the whole union out. That was over a decade ago. Every once in a while a newer employee will suggest a union. They are typically driven out of the company by the other laborers long before management hears about the effort. Its actually odd, because we are in an area of the state where unions are still pretty strong.

As to the issues of FORD, they do have some serious labor issues that they need to deal with and this buyout is one way to reduce their problems. But can they design and build a car that will be competitive against the reliability of Japanese cars or the quality of the Europeans?

Dargo, I usually stay out of these UAW discussions because I'm a very poor representative for the UAW. I agree with most of what you said, lived it all my life. I'm a recently retired 31 year member and son of a long-retired 32 year GM supervisor. Guess growing up as the son of a supervisor gave me a different view of things. The horror stories I could tell all day long would make you sick. The only thing you said that irritates me is the Toyota workers part. What gets me is the fact that those people owe their good living to the UAW but don't realize it. The only reason they receive the wages they do is to keep the UAW out. If the UAW folds up you watch how fast those folks start losing their benefits. Hutch

Even if UAW folds, I think the memory of it will be enough to keep things good for the current employee crop. 20 years or more after it folds companies might try to take advantage of employees....after they've forgotten what a thorn in their side a union can be.
But benifits for employees will never be the same. DuPont is a non union employer. They just changed the pension plans leaving the spouse of the employee completely out of the picture. That change takes effect in 2008.

B_Skurka said:

But can they design and build a car that will be competitive against the reliability of Japanese cars or the quality of the Europeans?

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Although I cannot deny this statement degree, mostly it is false. A large part of the "Japanese reliability" perception is old and based in the past.. While American cars, in general are not always what they are cracked up to be, for the most part when sheer volume is taken into account, I believe you will find that the tables are much closer than the American(or should I say anti-American) media would lead you to believe.. American trucks(not just Ford) are better suited to "truck" like duties than any Japanese counterpart, realisticaly I dont think I need to present examples... As for the cars, being that I am more familliar with Ford I will stick with them as an example... The Ford Focus and Fusion are direct competitors to Japanese competitors, and I think upon searching you would find that the reports are prety even too.. The Taurus, though long in the tooth, was a nearly flawless car in the past few years, as has the Cown Vic, both of wich are used much more than any other car in this country for rental and municipality fleets because of their reliability..

I'm not arguing that the Japanese make an inferior product.. My point it mearly to ask that when you shop for a car/truck that you give all makes a fair chance.. If you arent brainwashed by the '80s way of thinking that the Japanese cars are superior to the American cars, you may find that you actually prefer something made stateside...IMO, the troubles that American auto makers are facing are in large part due to union agreements and poor marketing of their products..

B_Skurka said:

But can they design and build a car that will be competitive against the reliability of Japanese cars or the quality of the Europeans?

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Like HGM, I to think they can built a car that will be competitive. Agreed they have more problems than just union, but by moving the union out and getting back control of the workforce they will actually be able to reprimand or fire problem workers. Quality workers are out there and I think they can find them. Workers that will do a quality job and provide input which will help the manufactoring process. Actually take pride in their work. With the union in place would a worker put in a suggestion that would save time or possibly loose a union laborer position? I don't think so.

B_Skurka said:

But can they design and build a car that will be competitive against the reliability of Japanese cars or the quality of the Europeans?

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I just spent some time searching for an article I read several years ago, but I can't find it online anywhere. The point of the article was that the design methods used by the Japanese during the 80's allowed them to build a vehicle with a lower defect rate than the American manufacturers. What magic did they use? Simple. They re-defined what consists of a defect, essentially widening their tolerances of what is acceptable. Now, at first this sounds like an incredible way to cheat, however in manufacturing this concept can (and does) lead to a final product that is much more reliable and "correct". By reducing the manufacturing tolerances in the areas of the vehicle that can accept such changes, and even changing the design of related parts, you are reducing the occurence of rejected parts and assemblies.

American auto makers during this same time (80's) wanted to improve their products to compete with the soaring Japanese sales, but they took a more traditional aproach to their improvements, and they went for accuracy and repeatability. In other words, the parts were designed to be the absolute, exact size, shape and functionality that was required, and dammit, they had to be manufactured to that exact specification, or it was no good. This lead to a huge increase in manufacturing costs and assembly complexity at the American auto makers, and essentially backfired as a product improvement policy.

By the time the mid 90's rolled around, the American makers had realized their mistakes, and started to adopt some of the Japanese methods of design and manufacturing. I can't say if this was the result of industry migration of managers at the domestic and foreign makers, or if it was good old fashioned corporate spying and copying. This has lead to the current state of quality at the domestic manufacturers where their design and build defect count is approaching that of the imports.

I believe all the desire and capability is there for Ford, GM and DC to build high quality, low defect vehicles. If they can resolve or ameliorate their labor and debt issues, they have a good chance of being in good condition.

(whew!)

Folks, it is more than defects. I own foreign and domestic cars and trucks. For Pick-Up trucks, nobody matches the Americans. For cars, the clearly superior designs belong to Europe and Japan. For SUVs I think the debate rages on depending the tasks required of it, so sometimes it is the American and sometimes it is the foreign.

But owning a fleet of cars, and having been in all of them, I know good and bad design, I know quality versus inferior materials. American cars are NOT very good vehicles when ALL things are considered. In my parking lot you can look at all of them side by side. Sometimes the lack of quality is glaring.

Hutchman said:

Dargo, I usually stay out of these UAW discussions because I'm a very poor representative for the UAW. I agree with most of what you said, lived it all my life. I'm a recently retired 31 year member and son of a long-retired 32 year GM supervisor.

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I see that I did forget to mention that my father is one of the remaining 25 UMWA workers in the state of Indiana. I've most certainly heard that the "scab" mines owe their benefits to the UMWA. Perhaps that is partly true, but the non-union mines are void of most all of the horror stories I'm sure you have heard of about poor union workers and corrupt unions. The sad fact of the matter is, the auto and mine unions have been successful in negotiating themselves right out of being competitive. As a consumer, I'm sorry to say that, I couldn't care a rat's ass about whether a union employee built my auto. I'm more concerned about the quality, reliability, fit, finish, and driving pleasure of what I buy. Even though my father has been a UMWA member about 35 years, I still won't pay more to buy "union made" if the quality is equal to, or less, than a non-union made product.

It is clear for all to see that the UAW is walking the U.S. automakers down the primrose path. I do not see how they can possibly survive without shedding the UAW in today's competitive market. They simply drive the cost up way too far as well as compromise quality with some of the poor workers who cannot be easily replaced when they do not perform (because the union 'protects' them).