Ford and GM say factories in US face axe

Ford and GM say factories in US face axe http://observer.guardian.co.uk/business/story/0,,2156191,00.html
James Doran in New York Sunday August 26, 2007
The Observer
Ford and General Motors have threatened to leave Detroit and take their car manufacturing operations overseas if unions do not agree to a massive pay cut for hourly paid workers.
The threat to quit the city they call Motown because of its rich automotive heritage would be a crippling blow to Detroit, which is suffering amid a prolonged economic downturn and has been hit by the sub-prime mortgage crisis.
Ford and GM are in the thick of negotiations with the United Auto Workers union, the most powerful labour group in the industry. The car makers maintain they must dramatically reduce manufacturing costs if they are to survive in today's global economy.
Their biggest burden is the current labour cost per vehicle - an estimated $71 (around 35) per man hour. Workers earn about $27 an hour with the remainder made up of overheads such as pensions and healthcare costs for the thousands of retirees on their books.
Ford and GM have made it clear that they expect to reduce the hourly cost from $71 to about $50 - a cut of about 30 per cent. The companies are keen not to cut workers' hourly pay, but they insist that other overheads must be reduced.
If a deal cannot be reached, Ford and GM negotiators have said the companies will have no choice but to move their North American operations to countries in Latin America and Asia where manufacturing costs are cheaper.
The current credit crisis is not helping the ailing US car manufacturers to reverse their fortunes. Many senior figures in the industry are calling for action from the Federal Reserve to spur markets and the economy. Bob Nardelli, the new Chrysler CEO, has been most vocal in calling for an interest rate cut to help boost consumer activity.
Alan Mulally, the Ford chief executive, said last week that economic conditions were proving to be a 'big headwind' working against the company's turnaround plan. He stopped short of calling for an interest rate cut but stressed the importance of 'focusing on economic growth'.
A GM spokesman said: 'From a GM perspective, the focus of the talks is on closing the competitive gaps and building a viable long-term future for the company and our people.'
Sources close to senior GM executives confirmed that the prospect of shifting operations away from North America was very real. 'We have seen it in every other industry,' one said. 'There are no sacred cows today. Globalisation means just that, it's a worldwide playing field.'
Dave Cole, chairman of the Centre for Automotive Research, a leading car industry think tank in Detroit, said: 'This threat is very real and the UAW is aware of it. Both GM and Ford have made it clear to the union that you do whatever you have to do to stay in business.'
The car makers are also discussing ways in which they can work together with the UAW to offload billions of dollars of pension and healthcare costs they have amassed. It is understood the talks focus on creating a 'Voluntary Employee Beneficiary Association', which would be part-funded by the companies to take care of retiree health care costs. The talks must reach a conclusion before their current contract with the UAW expires on 14 September.
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If the go to Mexico they had better sell them there (you know to the cheap work force) because there will be no decent wages left behind in the us to but their products.

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Naw, the way the American public is today, they would probably suddently "discover" this great "import" and start buying them like never before!
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Chevy Man wrote:

The vast majority of non-government workers in the US are non-union, and those are the hearty of your vehicle buying market.
You could close every US unionized car related manufacturing plant tomorrow and put only a minor dent in the ability of people to buy cars and trucks. For a short time there would be a supply problem, but that would get fixed. Demand would be hardly touched.
Those are the facts of the situation.
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"Facts" aren't your strong suit.
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Most people that are not employed by an employer using collective bargaining should thank the unions for helping to maintain a living wage. You certainly live in a fools world if you think any employer pays wages and benefits out of the goodness of their hearts.Most non union workers I have talked to wished they had a union to support them. enough said........................

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You must talk to a small circle of people.
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-Mike-
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Just keep counting on your employer and think you are not replaceable and remember this conversation when it is YOU who they get rid of!!!!Assuming you do work.....

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I worked for two companies that had union shops. Both moved away and left the union people without jobs. The non-union place was sold and every employee was retained. Most Unions no longer care about works, just the union itself. Just like car companies try to sell more vehicles to expand and make more money, union organizers recruit new members to pay into their funds.
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Yes - indeed I do work.
You should probably get in touch with all of the un-employed union workers who are sitting around the hall waiting for work. They'd love to hear about how well the union protected their jobs. Make sure you reach out to the retired union workers who have seen their pensions/benefits cut over the years too. Don't bother talking to the union leaders - they're making all the money they want so they won't understand what you're talking about...
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-Mike-
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If it was still 1930 maybe into the 1950's, I'd agree with you. In 2007, no way most want a union today. I've been involved with negotiations and I've first hand seen how some unions screw the employees and just take care of themselves.
Most employers today pay a decent and fair wage because they realize they have to in order to retain skilled people.
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Most people get their opinion of Unions from their boss or the new media, that does not like the unions to which their employees belong. My experience is far different, since I had worked over thirty years in the automotive business for union and nor union business.
My partner and I owed a fleet service business that operated three shops in two states. In the early eighties our technicians voted to join the Machinist Union. My partner said no union is going to tell me how to run my business and wanted to end our partnership. I had to beg to get loans from friends and family to buy him out or we had to sell the business.
I negotiated job classifications and pay scales with the union that were higher and more restrictive than previously. Over time it became apparent, as the business grew, the union was the best thing that ever happen for us. Because at the time we were paying around $2 a hour more than any of the surrounding dealerships or auto shop we begin to get the best of the best coming to work for us, drastically reducing come backs and down time and productivity doubled. Some of my tech traveled fifty miles or more to work in our shops. Because of the increased productivity we were able to maintain our shop rate as other went up and we attracted more customers and our business grew and grew.
I had all the rights to operate the business that I had before but I had to abide by the job description of who did what in the shop. We had "A" "B" and "C" rated techs and only those qualified could do those jobs. I could employ anybody that passed at least the "C" classification test and I could discipline and eventually fire those that repeatedly did not perform up to their qualifications, did not come to work on time, did not stay the shift, did not report off as required, stole from me or the best clause, "disrupted the operations of the business."
Eventually I sold the business, that now operated twenty four corporate, government and small fleet service shops in six eastern states that provided maintenance and warranty service for just about every brand you can name, for more money than me and my extended family will ever spend in our lifetimes. God bless the Machinist Union
mike

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Amazing how that when I saw the title of this little thread, I somehow know who the author was without looking.
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If people wouldn't buy cars like the Ford Focus, Mercury Zephyr and the Milan which are all made in Mexico. It may show the big wheels that we don't like our jobs shipped out of the country. I only pick on Ford because I was just in this plant in Hermosillo, Mexico. They get paid an equivalent of 4.20 an hour but they still get $30,000 for the cars they build. What a bunch of bull!

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It is a world wide market today. The above mentioned cars have far more AMERICAN parts than does the average Toyota and American consumer buy more Toyota cars, including those that are imported from Canada and Japan, than any other brand name.
The average Toyota sells for more than the average American made car, of similar size and with similar equipment, so what's the problem?
mike

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The problem is we shouldn't be buying those rice burners either. Buy American keep Americans working. Oh by the way it is the Ford Fusion made in Mexico, not the Focus That makes it a foreign car an NASCAR should not allow it to race.

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Good old Mike playing fast and loose with the "facts".
The government mandated domestic content labels put the Ford Fusion at 30% domestic content, the Chevy Malibu at 80% and the Honda Accord at 70%.
Here is where I got my information:
http://www.motortrend.com/features/auto_news/2006/112_news38
Mr. Hunter rarely posts sources for his assertions.
Mike Hunter wrote:

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One of the strange things about the argument for buying Detroit branded cars is that many people say it isn't the final assembly point which matters, but rather "where the profits go". Setting aside that the Detroit gang doesn't have much in the way of profits to point to, there is another side to this argument. If point of assembly doesn't matter in driving a person to "buy American" than it stands to reason that GM, Ford and Chrysler can build their products anywhere and still be "American" cars. Ford's only current decent selling car is the all Mexican built Fusion triplets. I guess that the horse is already out of the barn.
I wouldn't want to be the UAW negotiators this time around!
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